Colorado’s Sales Tax Collection Requirements Changed Significantly on June 1^st, 2019.

So a year and a half later, there are still problems of both over-collection and under-collection.

Problems:

1. Companies’ tax compliance software may have immediately turned on collection for all Colorado local jurisdictions, though many weren’t registered for all home-rule cities for their system has now collected sale tax.
   1. Sales tax is a trust tax, so excess cannot be retained by the vendor and must be remitted.
   2. How should it be handled?  There are options for getting the tax remitted properly or otherwise handled properly.
2. Unless under the $100k smaller seller exception, companies needed to collect for all Colorado State-collected local jurisdictions.
   1. Companies may still not be in compliance for multiple reasons, but the obligation builds and does not diminish.
   2. The Colorado DOR anticipates the small seller exemption will be removed effective June 30^th, 2021 with state-wide collection required as of July 1^st, 2021.
3. Increased Audit Risk and Collection Requirements:
   1. Home-rule cities are aware of these problems and both want and are entitled to their sales tax. This is true even if tax was collected in error, unless refunded to the customer.
   2.  Many of the home-rule cities have now adopted Economic Nexus so no physical presence is required for a business to have a registration and collection requirement with them.

These are complicated issues just touched upon briefly here. We’re here to help.