SALT Report 2367 – The Colorado General Assembly introduced legislation that, if enacted, would satisfy the minimum requirements set forth in the federal Marketplace Fairness Act of 2013. As written, the Marketplace Fairness Act would authorize states to require out-of-state retailers with gross annual receipts of more than $1 million to collect and remit sales tax on behalf of the state. However, the Act provides that states will only be granted this authority if certain minimum simplification requirements are met.
The Bill introduced in Colorado will meet the minimum requirements by:
- Establishing remote sales as a part of existing sales tax law,
- Specifying that only the state’s sales tax base, not a local sales tax base, will apply to all remote sales,
- Requiring that the Department of Revenue be responsible for all state and local sales tax administration, return processing and audits for remote sales,
- Adopting the sourcing definition provided in the federal Act to properly source all interstate sales to the state,
- Requiring the Department to provide information to remote sellers that indicates the taxability of products and services along with any product and service exemptions from sales tax in the state,
- Requiring the Department to provide remote sellers a sales tax rate database and a database of local taxing jurisdiction boundaries,
- Requiring the Department to provide, or to contract with certified software providers to provide on its behalf, software to remote sellers, free of charge, that calculates sales taxes due on each transaction at the time the transaction is completed, files sales tax returns, and updates to reflect any tax rate changes for the state or any local taxing jurisdiction, and
- Providing the required relief of liability to remote sellers for errors
Additionally, the Bill will allow home rule cities to opt in by passing an ordinance or resolution accepting the state’s administration and distribution of its local sales tax on remote sales as authorized by the Act.
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