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Colorado Home-Rule Municipalities With Economic Nexus and Marketplace Facilitator Code

by | Sep 15, 2020 | STC Blog | 0 comments

Last updated 6/15/21 (Note: the CML has not updated their list since 6/15/21. More Home-Rule cities may now be participating)

Economic Nexus and Marketplace Facilitator laws have swept across the states in the U.S.  The home-rule municipalities in Colorado have self-governance taxing authority and thus are like states themselves in this regard, and they too are adopting Economic Nexus and Marketplace Facilitator municipal codes.

The Colorado Municipal League (“CML”) Model Ordinance on Economic Nexus and Marketplace Facilitators was developed in early 2020 by home rule municipal tax professionals, working with the business community and the Colorado Department of Revenue (“DOR”), as part of a sales tax simplification effort. The Model Ordinance is only for the 71 self collecting home rule municipalities in Colorado.

Some cities have now already adopted the Economic Nexus and/ or Marketplace Facilitator model code with effective dates as early as June 2020:

Colorado Municipalities that have adopted the CML Model Ordinance:

Colorado Municipalities that have only adopted marketplace facilitator language not economic nexus:

What does this mean for businesses within and outside of Colorado?
It means for in-state and out-of-state companies doing business with customers in Colorado just got a whole lot more complicated.  If you exceed the State’s $100,000 threshold you’ll be subject to Economic Nexus and/or Marketplace Facilitator requirements with these home-rule municipalities too. Each require their own licensing and remittance of their sales tax.  They will have registered with Colorado’s new SUTS system, which is designed to be a one-stop portal, but it is still a work in progress.

For in-state companies, the typical physical presence standards of “Engaged in Business” are still the applicable but these two new broader inclusions have been added by some cities:

(5)        Any retailer who does have a physical presence in the State of Colorado, without having a physical presence within the city, that in the preceding calendar year or the current calendar year makes more than one retail sale of tangible personal property, products, or services, where the location at which property or a product is delivered by any means, including common carrier within the city, or the service rendered occurs within the city; or

(6)        Makes retail sales of tangible personal property, products, or services sufficient to meet the definitional requirements of economic nexus, as set forth in this Section 3.02.010. (Sales Tax Colorado, LLC Interpretation – $100,000 in Colorado and “any” of the product is delivered into the city or services are rendered in the City)

What about the special districts and the counties, cities and towns are not self-collecting home-rule municipalities?
All State-collected or “Statutory” local jurisdictions fall under Colorado State’s adoption of Economic Nexus (Effective June 1, 2019) and Marketplace Facilitator (Effective October 1, 2019) statutes.  See Colorado H.B. 19-1240

The small seller exemption for in-state businesses under the $100,000 threshold are still under a reprieve from state-wide collection of all local state-collected jurisdictions sales tax, but the GIS System is online and being tested.  The 90-day period described in section 39-26-104(3)(c)(III) has not started.  As required in subsection (3)(c)(III)(B), the Colorado DOR will notify retailers when that period has started.  If you haven’t already, you can sign up to receive emails alerts on the SUTS system (including the statutory notice when it’s issued) on the SUTS information page: https://www.colorado.gov/pacific/tax/what-is-SUTS

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Contact Us if you need further information or if you need help resolving issues for prior periods.