As previously reported in this forum, on July 1, 2017, Colorado’s long anticipated notice and reporting requirements for non-collecting retailers goes into effect. In the last few days, Colorado moved to finalize the details as to how the rule will be enforced, which are described in Emergency Rule 39.21-112.35.
This law requires retailers that do not have sales tax nexus but make $100K or more in annual sales to Colorado customers to report transactions to the state as well as notify purchasers of their use tax obligation. During the brief period that Colorado afforded interested parties time to comment on their proposed rule, Sovos submitted a request to clarify a number of points, including whether wholesale sales count toward the $100k threshold. In the final rule, Colorado adjusted their definition of “Colorado Reportable Purchase” and “Total Gross Sales” to explain that exempt sales of tangible personal property may be excluded from the calculation. While not specifically utilizing the word “resale” or “wholesale,” our interpretation of the revised rule is that such sales need not be counted.
As to what’s next, at some point prior to November 1, Colorado is required to publish the transmittal schema for the Annual Customer Information Report which is first due on March 1, 2018.
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About the Author
Charles Maniace is the Director of Regulatory Analysis at Sovos. An attorney by trade, Chuck leads a team of attorneys and tax professionals responsible for all the tax and regulatory content that keeps Sovos clients continually complaint. Over his 15 year career in tax and regulatory automation, he has given talks and presentations on a variety of topics including The Taxation of High Tech Transactions, The Taxation of Remote Commerce, The Regulatory Implications of Brexit, The Rise of E-Audits, Form 1042-S Best Practices and Penalty Abatement Practices for Information Returns. Chuck is a member of the Massachusetts Bar and holds a BS in Business Economics from Bentley College, a JD from Boston University School of Law, and an LL.M in Taxation from Boston University School of Law.More Content by Charles Maniace