There are some significant changes under Colorado proposed legislation:

SB 143 – Retail Delivery Fee (PASSED – Awaiting Governor’s signature)
SJR-004 – Uniform Sales and Use Tax Construction Materials
HB 1017 – Electronic Sales and Use Tax System (SUTS Improvements)
SB 207 – Sales And Use Tax Refund For Data Center Purchases
SB 156 – Sunset Private Letter Ruling And Information Letter

Other Notable Legislation:
HB 1260 – Advanced Industry and Semiconductor Manufacturing Incentives 

Opinions*

1. Uniformity on Construction Materials – HURRAY!!!  This impacts building permits, etc. Handling construction material sales and use tax is one of the most difficult areas of tax in Colorado.
2. SUTS Improvements (HB 1017)- Strike out these provisions:
   1. Require retailers to register with a local taxing jurisdiction in which taxes are due before using SUTS; and
   2. Prohibit a retailer from filing a return in SUTS unless the retailer has the correct local number on the account.

Such SUTS provision prevent retailers from readily remitting tax collected in error or prior to registration.

In the very common event that a retailer has an obligation to or otherwise does collect prior to getting registered, the system should provide for prompt remittance of the tax. Sales tax is a trust fund tax with serious consequences for collecting and not remitting.  Circumstances arise leading to collection such as a lack of awareness about home-rule registration requirements, turning on all local collection without understanding the distinction between the CO DOR’s June 2019 requirement to collect for all state-collected jurisdictions, not home-rule jurisdictions, one time sales, or occasional sales in a jurisdiction.

Just allow the retailer to promptly remit the tax!  Having unremitting late obligations leads to significant assessments of penalties of 10% – 15%  plus interest. Interest is  commonly 1% to 1.5% per month or 12% – 18% per year!   A typical Voluntary Disclosure Agreement(VDA) limits the past due obligation to 36 months, but there is no Statute of Limitations when tax has been collected, but not remitted.  The tax, interest and penalties will be assessed upon audit. Under a voluntary disclosure, penalties are often waived, but interest often cannot be waived.  By the time an audit occurs or the retailer seeks to resolve the issue under a VDA, the interest assessment can be as much or more than the tax itself. The same error in collection typically includes a number of home-rule jurisdictions, thus compounding the problem and costs of resolution.

The SUTS system currently allows retailers to remit to all participating home-rule jurisdictions without requiring a current license. The Home-rule jurisdictions that accept payment through SUTS now without licensing generally already have provision to set up a “Tax Account” or even to issue a license.  Having helped many businesses resolve their prior liabilities, I strongly recommend continuing to all remittance through SUTS regardless of license status with a particular home-rule jurisdiction.

Other SUTS Recommendations:
Fees:
I also recommend reducing the convenience fees associated with filing through SUTS as the costly fees lead to split filings between SUTS and jurisdictions directly. When there are high taxable sales in a jurisdiction, the high fees from SUTS leads to filing directly with the jurisdiction

Timing Issue: Home-rule cities need to know about filing through SUTS sooner as some reach out to retailers indicating their return filing is past due.

*Note: These are the opinions of the author and not necessarily representative of the Company.