Minnesota Passes "Jobs Bill" (includes Credits and Incentives)

On Monday, March 29, 2010, the Minnesota House and Senate both passed HF 2695 and sent it to the Governor for signature. The Governor is expected to sign it.

The bill includes the following provisions:

1. An investment credit for “angel” type venture capital investments
2. A refundable historic structure rehabilitation credit
3. Authority for local governments to finance energy conservation improvements and collect repayments as special assessments (at the request of the property owner)
4. Authority of the Public Finance Authority to issue revenue bonds for city transportation projects
5. Compact development tax increment financing districts
6. Expanded authority to temporarily use TIF for economic development
7. Expanded authority to use excess TIF revenues for construction of new private development
8. Provision of modified JOBZ benefits to the Ford Motor Company site in St. Paul, if certain conditions are met
9. Expanded authority for several cities to use TIF for housing replacement
10. Additional flexibility for the city of Bloomington to develop the Mall of America site
11. An appropriation for additional tax compliance activities expected to result in new general fund revenue beginning in fiscal year 2011
12. Distributions to taconite cities and townships for public works projects (from taconite production revenue) and makes other miscellaneous mineral changes

SUMMARY

Overall, the bill does provide refundable credit opportunities for taxpayers that meet all of the qualifications and criteria provided. Upfront negotiation, annual reporting and pre-certification may be required depending on the credit you are attempting to obtain.

Please contact me at brian.strahle@bakertilly.com for assistance in helping you qualify and obtain any of these new credits, etc.

FREE WEBINAR: "State of Confusion: Sales and Use Tax in an Electronic World"

On April 7, 2010 from 12:00 pm to 1:15 pm CST, Jon Skavlem and myself from Baker Tilly Virchow Krause, LLP will be presenting a free webinar entitled, "State of Confusion: Sales and Use Tax in an Electronic World."

E-commerce and digital products and services expand opportunities for growth far beyond the physical location of a business. However, failing to comply with applicable sales and use tax rules can put an organization at risk for tax assessments that include interest and penalties. Understanding the tax consequences connected to Internet transactions is critical.

Go to STATE OF CONFUSION for all of the details and to register for this FREE webinar.

The program will cover:

1. Aggressive new nexus standards for multistate sellers
2. Sales and use tax rules for electronic commerce
3. The role of the Streamlined Sales and Use Tax Agreement
4. Treatment of digital goods in various states
5. Evolving rules for software and Software as a Service (SaaS)
6. The "Amazon.com tax" -- New York and other states
7. U.S. Value Added Tax (VAT) and e-commerce

Does Your Company Sell, Purchase or Develop Software in Colorado? Then Read This.

Colorado recently enacted HB 1192 which impacts companies who develop, sell and/or purchase software in Colorado.

One of the biggest changes is the definition of "tangible personal property" for sales tax purposes. Tangible personal property NOW includes standardized software without regard to how such standardized software is acquired by the purchaser or downloaded to the purchaser's computer.

Another main change impacts developers of standardized software. Developers of software are now considered "manufacturing" for the purposes of the machinery and machine tools exemption. This creates opportunities for developers of standardized software to purchase qualifying machinery or machine tools exempt from sales tax.

HB 1192 clarified Colorado's definition of "standardized software" to include:

1. Prewritten upgrades, that is not designed or developed to the specifications of a specific purchaser;
2. Software designed and developed to the specifications of a specific purchaser but then sold to another purchaser.
3. Standardized software that is modified or enhanced even if modifications or enhancement is designed and developed to the specifications of a specific purchaser, UNLESS such standardized software is a de minimis component of such software.
4. The combination of two or more standardized software programs or portions thereof.

"Standardized software" does NOT include:

1. Software or information technology services that modify or enhance standardized software if there is a reasonable, separately stated charge, invoice, or other statement of price given to the purchaser for such software or information technology services that modify or enhance the standardized software.
2. Maintenance agreements for the maintenance of standardized software.
3. Software developed for a person's or affiliates own use. However, if such software is subsequently sold, such software sold shall be considered standardized software.

KEY TAKEAWAYS - SELLERS OF SOFTWARE

If a company sells "standardized software" to Colorado purchasers (regardless of how the software is delivered),and the seller has nexus in Colorado, the seller will be required to collect sales tax.

A seller should also separately state information technology services and maintenance agreements on any contracts and invoices to avoid be required to charge and collect sales tax on those pieces of the sale.

KEY TAKEAWAYS - PURCHASERS OF SOFTWARE

Companies that purchase software in Colorado will want to verify what type of software they are purchasing, and make sure that any information technology services and maintenance agreements are separately stated on contracts and invoices before signing any purchase agreement.

KEY TAKEAWAYS - DEVELOPERS OF SOFTWARE

Companies that develop or create "standardized software" may now be able to purchase machinery or machine tools exempt from sales tax. Developers of standardized software should review the types of equipment they purchase and determine if it qualifies for the exemption. Then they should take the necessary steps to utilize the exemption on current and future purchases.

Note, all of the above changes took effect March 1, 2010.

If you would like assistance in helping your company determine the impact of these changes and/or take advantage of the machinery exemption, please contact me at brian.strahle@bakertilly.com.

Michigan Update: Kmart Case Correction Bill IN-PROCESS!

According to my sources, the Michigan Senate Finance Committee will meet at 9 am today to discuss HB 5937. HB 5937 would nullify the Kmart case notice which created retroactive filing obligations for disregarded entities. See PRIOR POSTS for details.

The Senate Finance Committee is expected to unanimously pass the bill. If it does, it is also expected that the bill will immediately be presented to the full Senate for a vote where it will easily pass. If all goes according to plan, the bill will be on the Governor’s desk by Friday for her signature.

As stated before, there could be legal challenges to this bill as the bill denies refund claims that could be made based on the Kmart case.

For all past posts regarding this issue, and future updates, go to MICHIGAN.

REMINDER: NEW California Use Tax Registration and Reporting Due April 15th!

As I reported back in September, 2009, California enacted new registration and reporting requirements for "qualified purchasers" to report and pay use tax directly to the Board of Equalization (BOE). The first report is due April 15, 2010. Go to CALIFORNIA for all of the details.

This new requirement is mostly impacting service providers such as law firms, medical offices, accountants, and other professionals operating in California who have not had any reason in the past to register with the California Board of Equalization for sales or use tax. Despite not being required to register or report, service providers have always had an obligation to file and pay use tax on purchases.

California has imposed these requirements to get California taxpayers to remit use tax on taxable purchasers where the seller has not charged sales tax. Tax has rarely been remitted to the state voluntarily on these types of purchases due to the difficulty in enforcing compliance.

Therefore, if you meet the conditions to be a "qualified purchaser," then you need to follow the new registration and reporting requirements or you may be subject to penalties and interest. California has automatically registered and sent “welcome letters” to approximately 180,000 individuals and businesses.

Unfortunately, it appears that California is using old records to identify "qualified purchasers." Hence, businesses that are under the $100,000 gross receipts threshold in 2009, may have been over the $100,000 threshold in prior years. Therefore, you may have received a letter to register and report. A general recommendation would be to register and report. With that said, you would not technically be a "qualified purchaser."

Remember, use tax is not a new tax. Only the registration and reporting requirement is new. Therefore, if you have unreported use tax liability, it exists whether you file a report or not.

State Taxes on Internet Sales: What is the ANSWER?

Tax Analysts held a meeting back on February 5, 2010 with several top state and local tax practitioners, academia, etc. to discuss "State Taxes on Internet Sales: Are Amazon Laws the Answer?"

In my opinion, the majority of the speakers feel that Amazon laws are not the answer, but they disagree on what the answer is. The disagreement appears to be based on the lack of certainty regarding a solution that actually has a chance of being implemented or enacted.

For the full transcript, go to AMAZON LAWS.

What do you think the ANSWER is?

City of Philadelphia: Tax Amnesty Program Coming in May!

The City of Philadelphia is conducting a tax amnesty program starting May 3, 2010 and running through June 25, 2010.

Benefits of Amnesty Program

During the amnesty period, Philadelphia will waive all penalties and half the interest due on eligible delinquent tax bills.

Eligible Taxes

All taxes of the City of Philadelphia are eligible for tax amnesty, except for the Sales and Use Tax and Hotel Occupancy Tax imposed pursuant to Section 19-2701 and the General Acute Care Hospital Assessment and High Volume Medicaid Hospital Assessment. The Sales Tax is eligible for amnesty through the Commonwealth of Pennsylvania.

Additional information regarding who can participate and how to participate is provided on Philadelphia's website.

If you have any questions or need assistance in determining if or how to participate, please contact me at brian.strahle@bakertilly.com.

Washington: Legislation Not Passed; Special Session In-Progress!

Last week the Washington House and Senate adjourned without passing legislation (SB 6143) that would have imposed economic nexus standards and market-based sourcing for service income.

With that said, the Governor has called a 'special session' which began yesterday.

We will have to wait and see what gets proposed and eventually passes.

Click on WASHINGTON for all prior posts and updates.

"Amazon Tax" Laws: "Unwise and Unconstitutional"?

Joseph Henchman, Tax Counsel, Director of State Projects at The Tax Foundation ,has published a REPORT on the hazards of states imposing "Amazon Tax" laws.

The report provides a great overview of the controversial aspects of "Amazon Tax" laws and also provides a current list of the status or proposal of "Amazon Tax" laws in various states.

Some of the key findings Joseph mentions are:

1. Frustrated by their inability to impose tax collection obligations on companies with no substantial connection to their state, several states are considering the adoption of "Amazon" tax laws. Such laws currently exist in New York, Rhode Island, North Carolina, and Colorado.
2. An Amazon tax law requires retailers that have contracts with "affiliates"-independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business-to collect the state's sales and use tax.
3. Amazon taxes are unlikely to produce revenue in the near term. New York continues to face a lengthy legal constitutional challenge. Rhode Island has even seen a drop in income tax collections due to the law.
4. Amazon taxes do not level the playing field between brick-and-mortar and Internet-based businesses because they require Internet-based businesses to track thousands of sales tax bases and rates while brick-and-mortar businesses need to track only one.
5. Unconstitutionally expansive nexus standards like the Amazon tax undermine legal certainty, burden interstate commerce, and harm economic growth.

Go to "Amazon Tax" Laws for all of the details.

Personal Opinion

As an advocate for taxpayers, I think the Amazon Tax laws are overreaching, burdensome, and potentially unconstitutional. On the other hand, I understand our economy has changed, and perhaps, states’ tax systems need to change as well.

With that said, states should seek to create reasonable and enforceable tax laws that do not create a compliance burden that is unfair or impractical.

I understand each state’s budget/fiscal problems are serious; therefore, they are looking for revenue everywhere.

Has anyone ever stopped to think . . . . would the states be attempting to pass and enforce Amazon tax laws if they were not experiencing budget problems?

Just a thought.

Michigan and Disregarded Entities: Relief From Kmart Case Legislation????

Michigan introduces Kmart legislative "fix" language in the House of Representatives.

On Wednesday, the Michigan House Tax Policy Committee unanimously passed a bill that would reverse the Kmart notice and prevent retroactive state filings. They expect a vote by the full House next Tuesday (3/16).

It is believed that the full House and Senate will pass the bill, but the legislative process is unpredictable. With that said, organizations involved in pushing the legislation believe this bill will ultimately pass.

The next few days will be crucial for this bill. Even if the bill does pass there could be legal challenges to the bill as it retroactively denies refund claims that could be made under the Kmart court case, and attempts to make retroactive law changes which might not withstand legal challenges.

A Michigan Court of Claims case last year ruled a law written in 2007 to apply retroactively back to 2002 and for all opens years, was not valid. The decision was based on a U.S. Supreme Court case which stated retroactive law changes could only have a modest period of retroactivity. In this case, the legislation is attempting to fix something going back to 1997, which would appear not to be a "modest period."

The Michigan Association of Certified Public Accountants (MACPA) and other organizations have been involved in pushing for this legislative "fix" to the Kmart case legislation 'burden."

So What?

If this legislation passes, companies that filed a Michigan Single Business Tax (SBT) return which included a disregarded entity, will not be required or allowed to file an amended return or original return (for the disregarded entity) for prior tax years. This would definitely reduce the compliance cost, but may or may not reduce a company's tax cost depending on the situation.

Stay tuned for more. For all current and future updates, go to MICHIGAN.

Colorado: Amazon Drops Affiliates!

An article by Michael Cohn at WebCPA discusses how Colorado has dropped affiliates in response to Colorado's enactment of burdensome compliance requirements (HB 1193).

The article discusses how Amazon is dropping affiliates to hopefully persuade Colorado to change their law. If Colorado would change their law, Amazon says they would reinstate affiliates.

At this point, I am not sure if Colorado is open to those discussions, but we will have to wait and see.

Also, be prepared for other states to impose similar nexus standards OR notification requirements/obligations.

For all of the details, go to the ARTICLE.

Colorado: Further Guidance on Requirements on Out-of-State Retailers

In previous posts, I raised areas of confusion regarding Colorado's new sales tax nexus and notification requirements enacted by the signing of HB 1193. See earlier posts.

With that said, I thought I would provide some additional clarifications:

1. The first section of the legislation (HB 1193) dealing with presumption nexus for remote retailers with component members of a controlled group is in a different statute separate from the second part of the legislation. Therefore, the second part of the legislation dealing with "non-collecting retailers" appears to apply to all "non-collecting retailers" as defined in the emergency regulations. In other words, the notice requirements appear to apply to all retailers that sell into Colorado and do not collect sales tax, regardless of nexus, and regardless if the remote retailer has an affiliate with a physical presence in Colorado.


2. In regards to the $100,000 threshold, if you read the legislation closely, you will see it simply says any retailer with "total Colorado sales of more than 100,000 in year" is required to file the annual statement by "magnetic media." It doesn't say that those retailers with less than $100,000 in Colorado sales are not required to file an annual statement at all. The emergency regulations say that each non-collecting retailer with less than $100,000 "total gross sales" is exempt. Therefore, this exemption is based on "total gross sales" of the entity and not "total Colorado sales." Again, the statute does not provide the exemption, the regulations do. Who will trump?

CAVEAT: Those are my interpretations at the moment. We will have to wait and see if Colorado issues any more guidance or changes.

ADDITIONAL ITEMS TO NOTE

I have become aware that the Multistate Tax Commission (MTC) is currently in the process of creating 2 model statutes regarding sales tax:

1. The Affiliate Nexus standard - similar to New York's


2. The Notification standards - similar to Colorado's

MEANING: We could see other states adopt statutes similar to New York's and Colorado's.

CONSTITUTIONAL BURDEN?

It is believed that someone may file a lawsuit against Colorado's notification requirements prior to May 1st (when the grace period is over). The issue is that the requirements being imposed on out-of-state retailers without nexus is unconstitutional. The defense may be that the requirements being imposed are not a tax, but simply informational.

Please contact me at brian.strahle@bakertilly.com to discuss the impact on your company's situation.

For all blog posts related to this issue (past and future), go to COLORADO.

Minnesota: R&D Credit Under Attack!

I just recently became aware that Minnesota is aggressively auditing companies who have filed research and development (R&D) credit claims on their Minnesota return.

Minnesota is hiring additional auditors to pursue invalid R&D credit claims. Despite the fact that Minnesota follows the IRS' rules in regards to the R&D credit, it is not going to approve an R&D credit simply because the IRS signs-off on it.

SO WHAT?

Therefore, if you have taken an R&D credit on your Minnesota return over the past 3 or 4 years, or will be taking one this year, please make sure your documentation is in order in preparation for an audit. In other words, an R&D credit on your Minnesota return may have turned into a "red flag" for Minnesota audit purposes.

With that said, if you do have adequate documentation to support your R&D credit, you can win under audit.

We have defended several clients recently in this position, and expect the number to rise. As always, winning or losing depends on your facts and how your position is presented.

ACTION?

If your company has taken a Minnesota R&D credit or will be taking one on this year's return, please contact me at brian.strahle@bakertilly.com to discuss if a review of your files or documentation may be helpful.

Also, if you are contacted by Minnesota for an audit, please contact me at brian.strahle@bakertilly.com for representation or assistance.

State Income Tax Compliance Reminders / ALERT!

As we approach the 2009 state income tax return deadlines of March 15th, April 15th and May 15th, I wanted to provide a brief list of some items to watch out for:

1. Service companies should be aware of the different state apportionment rules.
2. Texas and Michigan should be reviewed very closely due to the volume of notices most companies received last year.
3. Treatment of Disregarded entities by Michigan, and Michigan's Unitary test.
4. Wisconsin combined reporting rules in effect for 2009.
5. Treatment of COD income by states – apportionable income? Included in apportionment factor?
6. For Minnesota residents, cannot take a credit for taxes paid to Texas, Michigan and Ohio.
7. Most corporations are not subject to the Ohio Franchise tax anymore (for tax years ending in 2009 and beyond). The Ohio CAT tax is now fully phased-in.
8. Ohio S Corporation Status Filing requirement (FT-1120S) no longer required to be filed.
9. State depreciation adjustments (bonus depreciation and Sec. 179).
10. Composite return requirements and nonresident shareholder agreement requirements.
11. California $800 minimum tax due with 1st quarter 2010.
12. California LLC fee estimate for 2010 due 6/15/2010.
13. Remember: CA LLC Fee is based only on California receipts, not everywhere gross receipts.

Need a Second-Opinion?

As your company or your clients get closer to the filing deadline, please contact me at brian.strahle@bakertilly.com with any questions.

I am available to review any state income tax returns, provide a consultation on any state income tax FIN 48 reviews, or questions involving apportionment, nexus, business vs. nonbusiness income, unitary analysis, audit/notice representation, etc.

Thank You!

As always, I hope you find the information I provide helpful. I want to thank those of you who have contacted me with questions and comments, and the positive feedback I have received. I really appreciate it.

Colorado Imposes New Requirements on Retailers Without Nexus?

Updated for Emergency Regulations as of March 3, 2010!

As stated yesterday and in earlier posts, Colorado has not only enacted a rebuttable nexus presumption on remote sellers that are part of a controlled group of corporations that contains a retailer with a physical presence in Colorado, but they have also imposed some burdensome notification and filing requirements on "retailers that do not collect Colorado sales tax."

According to Emergency Regulations,

A retailer that does not collect Colorado sales tax is a retailer that sells taxable property or services to customers who are not exempt from sales tax but does not collect Colorado sales or use tax. Such retailers are also referred to in this regulation as “non-collecting retailers”.

NOTICE REQUIRED ON EACH INVOICE!

A non-collecting retailer must give notice with respect to all Colorado destination sales that Colorado tax is due on all non-exempt purchases. This notice must appear on each invoice. See the Emergency Regulations for details on what the notice should include.

Non-Collecting Retailers with Less than $100,000 in Total Sales are Exempt From Requirement???? (Emergency Regulations vs. HB1193 statute)

This is what the Emergency Regulations state.

Any non-collecting retailer that made total gross sales in the prior year of less than $100,000 shall be exempt from the notice requirement in (3)(a).

(NOTE: Despite this exemption, are you going to know if you will be under this threshold for the year, at the time you are making sales into Colorado?)

The actual statute under HB 1193 states:

the Executive Director of the DOR may require any retailer that does not collect Colorado sales tax that makes total Colorado Sales of more than one hundred thousand dollars in a year to file the annual statement described in sub-subparagraph (A) of this subparagraph (II) by magnetic media or another machine-readable form for that year.

Therefore, under the statute, the $100,000 gross receipts threshold or exemption does not exist in regards to the "notice requirement."

Unfortunately, until Colorado clarifies, this remains unclear.

Penalty for Non-Compliance ($5 for EACH INVOICE)

The non-collecting retailer shall pay a penalty of $5 for each invoice documenting a sale to a Colorado purchaser on which the required notice does not appear.

GRACE PERIOD (Waiver of Penalties March 1 - April 30)

Because of the brief time period between enactment of the governing statute and required implementation, if a non-collecting retailer begins to provide the required notices or begins to collect Colorado sales tax prior to May 1, 2010, any penalties that would otherwise be due for invoices issued between March 1, 2010 and April 30, 2010 shall be waived. However, no such waiver shall automatically apply if the non-collecting retailer does not begin to issue the required notices or begin to collect Colorado sales tax prior to May 1, 2010.

SUMMARY

In addition to the above notification requirement per notice, there is the annual notices (one to the purchasers by 1/31; and one to Colorado DOR by 3/1). See yesterday's post.

Current Confusion:

1. Do these notice requirements only apply to remote retailers that do not collect sales tax, and are part of a controlled group of corporations that contains a retailer with a physical presence in Colorado?
2. Or do the notice requirements apply to all retailers that sell into Colorado regardless of nexus, and regardless if the remote retailer has an affiliate with a physical presence in Colorado?
3. Can the state impose information reporting requirements on remote retailers that lack nexus on their own just because an affiliate has nexus, if the affiliate does not act or represent the remote retailer in any way?
4. Are remote retailers that sell less than $100,000 in total sales in a year exempt from the notification and filing requirements?

If these changes impact your company, please contact me at brian.strahle@bakertilly.com for guidance. Also, stay tuned for additional updates or changes.

For current udpates go to COLORADO.

Colorado: New Retailer Nexus Presumption Standard Begins March 1, 2010! (plus other filing requirements)

As I stated in earlier posts, Colorado has suspended several tax exemptions, and expanded or clarified the taxation of software, etc. However, one of the bills the Governor signed creates a rebuttable nexus presumption that out-of-state retailers (that do not collect Colorado sales tax) are doing business in Colorado if they are part of a controlled group of corporations which contains a retailer with a physical presence in Colorado. This new law takes effect March 1, 2010; or in other words, today!

Here is the excerpt from the Bill (H1193):

COMMENCING MARCH 1, 2010, IF A RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX IS PART OF A CONTROLLED GROUP OF CORPORATIONS, AND THAT CONTROLLED GROUP HAS A COMPONENT MEMBER THAT IS A RETAILER WITH PHYSICAL PRESENCE IN THIS STATE, THE RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX IS PRESUMED TO BE DOING BUSINESS IN THIS STATE. FOR PURPOSES OF THIS SUBPARAGRAPH (II), "CONTROLLED GROUP OF CORPORATIONS" HAS THE SAME MEANING AS SET FORTH IN SECTION 1563 (a) OF THE FEDERAL "INTERNAL REVENUE CODE OF 1986", AS AMENDED, AND "COMPONENT MEMBER" HAS THE SAME MEANING AS SET FORTH IN SECTION 1563 (b) OF THE FEDERAL "INTERNAL REVENUE CODE OF 1986", AS AMENDED. THIS PRESUMPTION MAY BE REBUTTED BY PROOF THAT DURING THE CALENDAR YEAR IN QUESTION, THE COMPONENT MEMBER THAT IS A RETAILER WITH PHYSICAL PRESENCE IN THIS STATE DID NOT ENGAGE IN ANY CONSTITUTIONALLY SUFFICIENT SOLICITATION IN THIS STATE ON BEHALF OF THE RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX.

Requirements of Retailers That Do NOT Collect Colorado Sales Tax

In addition to the rebuttable nexus presumption standard, Colorado has also created a few additional requirements for companies that do NOT collect Colorado sales tax. Again, for your convenience, I have published the actual excerpts from the bill.

Notification to Purchasers

EACH RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX SHALL NOTIFY COLORADO PURCHASERS THAT SALES OR USE TAX IS DUE ON CERTAIN PURCHASES MADE FROM THE RETAILER AND THAT THE STATE OF COLORADO REQUIRES THE PURCHASER TO FILE A SALES OR USE TAX RETURN.

EACH RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX SHALL SEND NOTIFICATION TO ALL COLORADO PURCHASERS BY JANUARY 31 OF EACH YEAR SHOWING SUCH INFORMATION AS THE COLORADO DEPARTMENT OF REVENUE SHALL REQUIRE BY RULE AND THE TOTAL AMOUNT PAID BY THE PURCHASER FOR COLORADO PURCHASES MADE FROM THE RETAILER IN THE PREVIOUS CALENDAR YEAR. SUCH NOTIFICATION SHALL INCLUDE, IF AVAILABLE, THE DATES OF PURCHASES, THE AMOUNTS OF EACH PURCHASE, AND THE CATEGORY OF THE PURCHASE, INCLUDING, IF KNOWN BY THE RETAILER, WHETHER THE PURCHASE IS EXEMPT OR NOT EXEMPT FROM TAXATION. THE NOTIFICATION SHALL STATE THAT THE STATE OF COLORADO REQUIRES A SALES OR USE TAX RETURN TO BE FILED AND SALES OR USE TAX PAID ON CERTAIN COLORADO PURCHASES MADE BY THE PURCHASER FROM THE RETAILER.

Notification to the Department of Revenue

EACH RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX SHALL FILE AN ANNUAL STATEMENT FOR EACH PURCHASER TO THE DEPARTMENT OF REVENUE ON SUCH FORMS AS ARE PROVIDED OR APPROVED BY THE DEPARTMENT SHOWING THE TOTAL AMOUNT PAID FOR COLORADO PURCHASES OF SUCH PURCHASERS DURING THE PRECEDING CALENDAR YEAR OR ANY PORTION THEREOF, AND SUCH ANNUAL STATEMENT SHALL BE FILED ON OR BEFORE MARCH 1 OF EACH YEAR.

THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF REVENUE MAY REQUIRE ANY RETAILER THAT DOES NOT COLLECT COLORADO SALES TAX THAT MAKES TOTAL COLORADO SALES OF MORE THAN ONE HUNDRED THOUSAND DOLLARS IN A YEAR TO FILE THE ANNUAL STATEMENT.

Penalties for Non-Compliance

There are penalties for not filing the appropriate notifications to Colorado purchasers and the Colorado DOR. See the bill for all of the ugly details.

Conclusion

If these new provisions impact your company, please be aware that Colorado is in the middle of issuing emergency regulations surrounding this new law. If you have any questions regarding these new requirements and standards, please contact me at brian.strahle@bakertilly.com.

For current updates, go to COLORADO.