Colorado Releases Final Emergency Regulations for Out-of-State Retailer Notification Requirements

Colorado's notification requirements as imposed or created by HB 1193 (in February 2010) for non-collecting retailers has obtained additional guidance.

Colorado recently released "final" Emergency Regulations (39-21-112.3.5) which provide clarification regarding several issues raised in the previously released Emergency Regulations. See previous posts for all of the details and confusion.Here are a few of the main points as outlined in the Final Emergency Regulations:

  1. A "retailer that does not collect Colorado sales tax" does not include retailers that only make sales in Colorado by means of download of digital goods or software. It includes a retailer that makes sales in Colorado both by means of download of digital goods or software and by means of shipping goods to a Colorado purchaser.
  2. A "retailer that does not collect Colorado sales tax" only includes retailers that make more than $100,000 in Colorado gross sales in the prior calendar year and reasonably expects total gross receipts in Colorado in the current year to exceed $100,000. The term "total gross receipts" only includes the sales of goods. It does not include sales of services.
  3. A "Colorado Purchaser" is a purchaser that requests the goods be shipped to Colorado. In other words, the purchaser may not be in Colorado, but may still be considered a "Colorado purchaser" if the purchaser requests the goods to be shipped to Colorado.
  4. For sales of downloaded or digital goods, a Colorado purchaser is a purchaser whose "bill to" address is in Colorado.
  5. A "Colorado Purchase" is one that is shipped to Colorado. For downloaded goods it is the "bill to" address.
  6. A non-collecting retailer must give notice to all Colorado purchasers that Colorado sales or use tax is due on all purchases that are not exempt from sales tax. This notice must be provided with respect to each transaction.
  7. The notice must be clearly legible, reasonably prominent and located in close proximity to the total price. It shall be sufficient if the non-collecting retailers provide a prominent linking notice that reads: "See important sales tax information regarding the tax you may owe directly to your state," if the linking notice directs the Colorado purchaser to the principal notice required.
  8. A non-collecting retailer is required to provide an end-of-year summary of Colorado purchases to the customer.
  9. A non-collecting retailer is required to provide the Colorado Department of Revenue with an annual report of the total dollar amount of all of a Colorado purchaser's Colorado purchases at the end of the year. The only detail to be provided is the amount of the purchase.
  10. If the retailer is required to provide a similar notice for another state in addition to Colorado, the retailer may provide a single notice to all purchasers with respect to items purchased for delivery in all states if the notice contains substantially the information required in a form that is generalized to any state.

BOTTOM LINE: If your company or your clients meet the definition of a "retailer that does not collect Colorado sales tax," then you need to meet the notification requirements (invoice and annual) as outlined by the Emergency Regulations.

Please contact me at brian.strahle@bakertilly.com for assistance in determining if you meet the definition, and how to comply with the notification requirements.

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Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website: www.leveragestateandlocaltax.com

You can reach Brian at strahle@leveragesalt.com.

Connect with Brian on LinkedIn. Follow Brian on Twitter. Join the Leverage | SALT LinkedIn Group, connect and contribute with your colleagues!  

Because state and local taxes are deceptively simple and endlessly complicated.

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