Colorado Publishes Permanent Rule for Notice and Reporting Requirements

On November 25, 2017 Colorado published a permanent rule in regard to its Notice and Reporting requirement for out-of-state retailers. The permanent rule includes a few minor changes and clarifications from the previously announced requirements.

Summary of Rule

Effective July 1, 2017, Colorado required an out-of-state retailer whose total gross sales into Colorado are $100,000 or more, and who does not collect Colorado sales tax, to give a transactional notice to their Colorado purchasers that sales tax has not been collected and that use tax may be owed. Additionally, if any of their Colorado purchasers purchased more than $500 worth of products in a calendar year, then a Purchase Summary must be mailed to that purchaser and a corresponding Informational Report given to the Colorado Department of Revenue.

Noteworthy Changes with Permanent Rule

  1. Colorado has recognized that some out-of-state retailers making online sales utilize third party payment processing vendors. Previously, to give a transactional notice, an online retailer would be required to display a transactional notice on the “check out” page. However, for retailers that use a third party payment processor, they may not have control of the content that is on the “check out” page. Therefore, those retailers can now give the transactional notice on the “product page” of their website.
  2. For retailers that utilize subscription type sales such as a “Jelly of the Month Club,” Colorado has clarified the notice requirements. For subscription type sales, a transactional notice is only required when the purchaser enrolls in the subscription or renews it.
  3. The maximum penalty limitation given to out-of-state retailers for the first year that they are required to comply, has been removed. Now, if an out-of-state retailer fails to comply with Colorado’s Notice and Reporting rules they will have to show that they “reasonably had no knowledge” of the requirement, to be subject to a maximum penalty.
  4. Unlike Washington, Colorado does not directly impose a duty to either collect sales tax or comply with their Notice and Reporting requirement on marketplace providers, such as Ebay. But, sellers (with gross sales of $100,000 or more), that utilize online marketplaces, are still required to comply with Colorado’s Notice and Reporting requirement regardless of their use of a marketplace provider platform. However, the permanent rule allows marketplace providers to satisfy the Notice and Reporting requirements on behalf of the sellers.

Transactional Notice

Colorado has indicated that online retailers must include certain elements in the transactional notice. Sample language would include the following:

[Name of retailer] does not collect Colorado sales or use tax. This purchase is not exempt from Colorado sales or use tax merely because it is made over the internet or by other remote means. The State of Colorado requires purchasers to (A) report all purchases that are taxable in Colorado and for which no tax was collected by the retailer and (B) pay tax on those purchases.

The permanent rule will be effective on January 1, 2018.

If your company makes sales into Colorado without collecting sales tax, contact Eide Bailly’s State and Local Tax Team for assistance with how to comply with Colorado’s Notice and Reporting requirements.

Town of Breckenridge, Vail Resorts reach lift-ticket tax accord

From the Denver Business Journal

Link: http://www.bizjournals.com/denver/news/2015/08/27/town-of-breckenridge-vail-resorts-reach-lift.html

Town of Breckenridge, Vail Resorts reach lift-ticket tax accord

Aug 27, 2015, 7:20am MDT

Ben Miller, Contributing Writer

The town of Breckenridge and Vail Resorts Inc. have reached a compromise deal

regarding a lift-ticket tax to fund transit improvements in the town.

If voters approve the plan in November, a 4.5 percent tax would be added to lift tickets at

Breckenridge, which would raise at least $3.5 million for transit improvements. The tax

would add about $6 to a Breckenridge lift ticket.

The Denver Post reported the compromise was reached after the tax plan excluded taxes on

Vail’s Epic Pass, which also includes skiing at Vail Resorts’ (NYSE: MTN) other Colorado

resorts.

“In the spirit of compromise, the council felt this amount would be adequate to begin to

work on the much needed improvements for this vital issue for our community,” said

Breckenridge Mayor John Warner, in a statement.

Ben Miller contributes to the Denver Business Journal and compiles the Morning

Edition email newsletter.

 

 

Colorado Department of Revenue Update System Enhancements Implemented for 2014 Return Processing

The Colorado Department of Revenue (CDOR) has made the following system enhancements for the 2014 tax return processing season, as a result of discussion with COCPA members who participate on the COCPA/CDOR Joint Task Force.

New Reduced Refund/Carry-Forward Letter – This new letter will be sent when refunds or carry-forwards claimed on a return are reduced because of a penalty assessment for under payment of estimated tax during the year. The letter will show the penalty amount and the resulting net refund or carry-forward amount.

Enhanced Deceased Spouse Credit Transfer – This enhancement automates the available credit transfer in deceased spouse situations when the surviving spouse was not listed as the primary tax filer the prior year. The system will automatically transfer claimed credits for which it finds a match between the two accounts if the deceased check box is selected on the return.

New POA Correspondence Functionality – The system will automatically send the following letters to the POA on-file for the periods covered by the POA. This will be the new default for the system, but the POA or taxpayer can opt-out of this functionality by calling the CDOR call center (NOD, NOFD, Return Adjustment, Inquiry, Inquiry Resolution, Protest Resolution).

Enhanced Estimated Payments Letter – The Estimated Payments Inquiry Letter will show the date and amount of estimated payments on file with the Department. This letter generates when the taxpayer is claiming more estimated payments than are on the account.

Remember, as a Colorado Society of CPAs member, you can request assistance with particularly difficult client issues involving the CDOR by emailing the following information to COCPA CEO Mary E. Medley. Medley will forward your email and attachment(s) to the COCPA’s contact in the Department for assistance.
Taxpayer Name(s)

Colorado Account Number(s) or last four digits of the SSN(s)

Brief summary of the issue(s)

Whether you have a Power of Attorney on file – If yes, the CDOR will contact you to resolve the issue. If no, the CDOR will contact you to let you know a representative will contact your client directly.

Attached recent notice in pdf format, redacted, if you wish, to preserve client(s) confidentiality

Judge Puts Temporary Injunction on Colorado’s Amazon Law

A Denver judge has granted a request to temporarily block a 2010 law aimed at requiring remote sellers, including online merchants, to collect sales tax. The injunction comes after an August decision, where a U.S. court of appeals reversed a previous injunction that was put into place by U.S. District Court Judge Robert Blackburn. The previous injunction was reversed on the grounds that Blackburn had overstepped his authority with the injunction (see story here). The current injunction is only temporary, and will stay in place until the case is resolved further.

Read more:

Denver Judge Temporarily Blocks Colorado’s “Amazon Tax” Law

Same Sex Tax Guidence

The Tax Foundation has come out with a comprehensive summary on state guidance for same-sex couples  who are filing joint federal tax returns for 2013.
The summary can be found here:

States Provide Income Tax Filing Guidance to Same-Sex Couples