The Grace Period is ending soon!   Are you ready to comply on June 1st?

Summary
Colorado requires all in-state retailers plus any out-of-state retailers with Economic Nexus to collect sales tax state-wide  for all Colorado state-collected jurisdictions beginning June 1^st, 2019.

Who?
All retailers in Colorado and all out-of-state retailers with Economic Nexus in Colorado (Sales in excess of $100,000)

Common Misunderstanding
Colorado’s 70+ home-rule cities such as Denver, Colorado Springs, Aurora, Fort Collins, Lakewood are not State-collected and thus are not governed by the same sales tax laws.

They have not as yet adopted Economic Nexus so there is no general requirement to collect.  However, business that deliver into these home-rule cities or perform installations likely already have a physical presence and are considered to be “doing business”.

Many home-rule cities consider making more than one delivery in a company vehicle as sufficient to require licensing and remittance of the city’s sales tax.  Companies may find they have substantial prior liabilities with some cities going back to day one of business on sales and use tax audits.

Brief History
Colorado enacted Emergency Rules concerning Destination based sourcing and Economic Nexus.  The rules were adopted as law. An automatic grace period was allowed and extended through May 31, 2019 to allow the Colorado Legislature to make changes.

The Destination Based sourcing changed the old method of requiring collection of sales tax for only the State-collected jurisdictions the Retailer and Purchaser had in common. As of June 1^st, 2019 Retailers are required to collect and remit sales tax for all applicable State-collected jurisdictions’ where the customer takes delivery/ possession, etc.

Any Chance of Relief?
HB19-1240 Sales & Use Tax Administration  passed second reading in the Senate un-amended on April 30^th, 2019.  It has a provisional small seller exception. It also proposes requirements on Marketplace Facilitators. It may become law between now and the end of the legislative session.

Resources for In-state and Out-of-State Retailers and Marketplace Facilitators:
Colorado Sales Tax Changes
Colorado State Sales Tax Instructions and Forms
All States and Colorado Home-rule City Sales Tax Revenue Departments
Simplifycosalestax.com (Simplification efforts and Legislative updates)

Action To Take

• In-state retailers – Register online with the Colorado Department of Revenue or mail in an application CR 0100AP.
• Out-of-State retailers with no physical presence in Colorado sign-up online through Revenue Online using the Out-of-State hyperlink under the Sales Tax Registration section.
• Sign-up for Revenue Online account if not already done
• Login then select your Sales Tax account and add non-physical location sites (Branch Ids) to your account
• Be sure to verify your customer’s delivery point addresses to ensure collection of the correct jurisdictions’ sales tax and the correct rates.
• Track sales by site if filing returns manually or uploading a spreadsheet.

Return Filing Options

1. File all physical location sites (required) and any nonphysical site returns where you had taxable sales individually through Revenue Online
2. Get set-up and approved as a Spreadsheet Filer
3. Recommended!!! – Use a 3^rd-party sales tax software compliance company to automate
   1. Sovos and Taxify, a Sovos Company, are the only two Colorado State-certified address database providers that are also sales tax compliance companies. They provide certified address verification and the Hold-Harmless benefit plus filing of your returns and payment of the sales tax.
   2. There are a number of other approved providers as well
   3. Choosing a cost-effective provider often depends on the accounting software and online shopping carts you utilize. Providers tend to have direct integrations with more common software and carts.  For example, Taxify and Avalara both have direct integrations with Xero, but Taxify doesn’t have one for QuickBooks online, just QuickBooks Desktop.
   4. All of the possible 683 sites should then roll-up into one Colorado State return.

From the Colorado Department of Revenue:

Filing Electronically

1. Log in to Revenue Online. (If you do not have a login click here.)
2. Access your sales tax account.
3. Find the filing period you are reporting and click on File Return.
4. File your return. There are three ways to file electronically in Revenue Online.
   1. Prepare the return in Revenue Online.Select the method File Retail Sales Tax Return. If you have more than one business location, you must file a separate return in Revenue Online for each location
   2. Upload an XML file. Select the method Upload a Spreadsheet or XML file. Upload the XML file created using an Approved Sales Tax Software Vendor. This is the preferred upload method.
   3. Upload a spreadsheet. Select the method Upload a Spreadsheet or XML file. Upload an accepted spreadsheet file. Multiple Location Filers that do not use approved software: See the Sales Tax — Spreadsheet Filing page.

Filing by Paper
If you cannot file through Revenue Online or another electronic method, please download the Retail Sales Tax Return Form DR 0100. Do not use old versions of the form. We cannot process old or photocopied forms.

Need more help?
While the above information provides some specifics, we understand there is much more to it and help is often needed.  We’re here to help.

If prior liabilities are discovered, we also assist in determining and minimizing the amounts though Voluntary Disclosure Agreements including seeking to limit the lookback period and waive or reduce penalties and interest.

Please Contact Us as needed.

 

Disclaimer: This information is provided as a courtesy.  Though intended to be thorough and accurate, changes and errors can occur and there are commonly varying interpretations when it comes to sales tax.  We will not accept liability for reliance upon the information provided herein.