Colorado is Closer to Revising its Record Keeping Requirement for Wholesale Transactions

The Colorado Department of Revenue is revising its sales tax rules for documenting wholesale transactions. The revised rules seeks to change the amount of due diligence required for accepting resale certificates in lieu of collecting sales tax. Under the old rule, the wholesale vendor was relieved of the liability to collect sales tax when the vendor accepted in “good faith” a resale exemption certificate. Under the proposed rule the vendor is required to either verify the sales tax license number of the purchaser with the Department or collect a physical copy of the license.

The Department has until June to adopt the new rule or terminate the proceeding. This gives Colorado vendors time to review the documentation they have on file for their retail customers and if needed start collecting the proper documentation.

For assistance with complying with Colorado law, contact your state and local tax professional.



Colorado Sales and Use Tax Notice & Reporting Requirements

Colorado’s sales and use tax notice and reporting requirements for remote retailers…Still Alive! Previously, the District Court granted DMA’s motion for summary judgement and granted an injunction against the Department of Revenue from enforcing such requirement.  However, on February 22 the U.S. Court of Appeals for the Tenth Circuit held that the requirements do not violate the Commerce Clause.  In other words, (depending on any further litigation/appeals) Colorado can reinvigorate its efforts to force certain out-of-state retailers selling to in-state customers to:

1) notify Colorado customers that they are obligated to self-report and remit use tax on their purchases;

2) to provide Colorado customers with an annual report, detailing a customer’s purchases in the previous year;

3) notify the customer that the retailer was required to report the customer’s name and amount of purchases to the Department; and

4) report to the Department, the name, billing address, shipping address and total amount of purchases made by Colorado customers.

While Colorado has led the charge, many others states may jump on the reporting requirement band wagon.

Read Sutherland’s full legal alert outlining the background on Colorado’s Use Tax Reporting Requirements, District Court Ruling, Tenth Circuit Ruling, and the possibility of Future Congressional Intervention here.

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

Colo. Gov. Asks Supreme Court To Ax Taxpayer Rights Row

Share us on: By Eric Kroh
Law360, New York (October 27, 2014, 2:03 PM ET) — Colorado Gov. John Hickenlooper has asked the U.S. Supreme Court to block a challenge by state legislators and educators to the state’s taxpayer bill of rights, which allows voters to approve or deny new taxes, saying the case is not justiciable.
Solicitor General Daniel D. Domenico, on behalf of Hickenlooper, asked the high court to review the Tenth Circuit’s decision in July to let the case go forward, contending that the question on the state’s government should be left out of federal courts.

“Courts throughout American history would have dismissed this case as non-justiciable,” Domenico said in his petition for certiorari, filed Oct. 17. “More than a century of Supreme Court precedent prohibits the federal judiciary from wading into the political questions raised by the guarantee clause.”

The Supreme Court should put to rest the confusion it created in New York v. United States when it opened up the question of whether to maintain the per se rule that prohibits federal courts from ruling on the structure of state governments, Domenico said.

Since the New York decision, a three-way circuit court split has emerged, with the Tenth Circuit standing alone in holding that some guarantee clause claims are justiciable, Domenico said. Meanwhile, the Eleventh and Ninth circuits have continued to apply a per se bar to guarantee clause claims, and other courts have raised the possibility of adjudicating a guarantee clause case but have not done so, he said.

“In parting ways with these other approaches, the Tenth Circuit has taken at least two leaps beyond current law,” Domenico said. “It not only questioned the per se rule but affirmatively rejected it — something no other court has done.”

The Supreme Court should also decide that the plaintiffs in the case do not have standing because they cannot point to a specific legislative vote that has been undone by the taxpayer bill of rights and so fail the test the high court had established in Raines v. Byrd, according to Domenico. Only three of the plaintiffs remain in the state Legislature, he said.

A representative of the plaintiffs was not immediately available for comment.

The Colorado taxpayer bill of rights, or TABOR, adopted in 1992, mandates that a tax law passed by the state Legislature and signed by the governor always be placed on the next election’s ballot for voters to decide whether to approve it. Various groups including state legislators and educators sued Hickenlooper in 2011, claiming that requiring the electorate’s advance approval of tax increases dilutes the power of the legislators, violating the guarantee clause.

Immediately after being sued, Hickenlooper tried to dismiss the suit, saying the plaintiffs did not have standing because they were not individually injured by TABOR. The district court denied the motion, and the governor appealed to the Tenth Circuit.

The three-member Tenth Circuit panel upheld the lower court’s decision on strictly jurisdictional grounds in March, affirming that the plaintiffs had provided adequate proof that TABOR, by requiring voter referendum on most tax issues, caused them injury. The appellate court did not address the case’s merits. In July, a divided Tenth Circuit decided against rehearing the lawsuit en banc.

Hickenlooper is represented by Colorado Solicitor General Daniel D. Domenico.

The case is Hickenlooper v. Andy Kerr et al., case number 14-460, in the U.S. Supreme Court.


–Editing by Christine Chun.

Colorado — Sales And Use Tax — Verifying sales tax rates through Revenue Online.

The Colorado Department of Revenue (CDOR) is reminding taxpayers that Colorado has more than 700 sales tax combinations (in addition to the state sales tax rate of 2.9%, counties, cities, and special districts have different rates) and advising them that they can use Revenue Online to find the correct sales tax rates their business should be collecting and reporting. Revenue Online offers three different services for checking the rates: (1) View Local Sales Tax Rates – taxpayers then select a city or county. When taxpayers select a city, the service also discloses the county or counties in which the city is located, and they will see the tax rates and explanations; this service is the online version of publication DR 1002 (Colorado Sales/Use Tax Rates). (2) View Business Location Rates – taxpayers enter their Colorado account number (CAN), and they will see their branch/site information, jurisdictions, and tax rates. (3) Find Local Taxes by Address. When taxpayers rely on these services to determine the tax rates they should collect, they will be “held harmless” regarding the rates they used if they print out the information and keep it in their records. These services are on the front page of Revenue Online, under “Other Services,” and taxpayers do not need to be logged into Revenue Online to use them. The CDOR also reminds taxpayers that they should check for rate changes before January 1 and July 1 each year. (Verify Sales Tax Rates Several Ways Through Revenue Online, Colorado Department of Revenue Taxation Division Weblog, 05/08/2014.)