On July 1, 2017, the Colorado Department of Revenue began enforcing new use tax notice and reporting requirements relating to retailers that make sales into Colorado but do not collect state sales tax (non-collecting retailers). The legislation on the issue was passed in 2010, but the requirements were not implemented until July 1, 2017 due to litigation on the matter. Any penalties for failure to comply with the notice and reporting requirements prior to the July 1, 2017 effective date have been waived by the Colorado Department of Revenue.
Retailers that are subject to the new use tax notice and reporting requirements are non-collecting retailers that make at least $100,000 of annual sales into Colorado. The use tax notice and reporting requirements require that these retailers provide:
- A transactional notice to their Colorado customers
- An annual purchase summary to their Colorado customers
- An annual customer information report to the Colorado Department of Revenue.
The transactional notice must inform all customers at the time of purchase that Colorado state sales tax was not collected and that the purchaser may be obligated to report use tax to the state. An annual purchase summary must be sent by January 31 of each year to all customers with more than $500 of reportable purchases in the prior calendar year. The purchase summary must include detailed transaction information and an explanation of tax obligations on those items.
Any retailer that is required to provide at least one annual purchase summary to a Colorado customer must also submit an annual customer information report to the Colorado Department of Revenue by March 1 of each year. The customer information report must include:
- The name of each Colorado purchaser
- The billing address of each purchaser
- The total dollar amount of reportable purchases, including any taxable shipping charges or other fees
Please be advised that additional states such as Alabama, Louisiana, Oklahoma and Vermont have adopted similar use tax notice and reporting requirements. Several other states have introduced legislation that will impose reporting requirements on out-of-state retailers in the near future.
Please contact one of RubinBrown’s State and Local Tax (SALT) professionals to assist you in understanding the impact that this law change may have on you and your business.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.