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’s Amazon Win

In 2010 Colorado passed a law requiring internet retailers, whose gross sales exceeded $100,000, to mail annual use tax owed notices to customers that bought over $500 worth of merchandise.

Last year a lower court threw the statute out, claiming that it placed an “undue burden on interstate commerce.”

Yesterday the U.S. Court of Appeals for the 10th Circuit remanded the case back to the lower court, claiming that it had overstepped its authority, and that it had to lift the permanent injunction on the tax. The reason cited was the U.S. Tax Injunction Act, which prevents federal courts from taking on state tax disputes when a state court could handle the matter. It also prohibits Federal lawsuits that could restrain the collection of state taxes.

The suit was brought by the Direct Marketing Association (DMA); a trade association based out of New York.

If the lower court reverses the injunction, then the Amazon act will be back in effect; however the DMA could still try to get an injunction in state court.

Read more:

http://www.bizjournals.com/denver/blog/boosters_bits/2013/08/colorados-amazon-tax-isnt-back.html

http://www.denverpost.com/breakingnews/ci_23904271/colorados-internet-tax-law-scores-win-federal-appeals