Colorado has one of the most complicated sales tax environments in the nation, creating a heavy burden on every business selling in the state. With nearly 300 taxing authorities — home rule, special districts, local, and state — and overlapping boundaries, there are over 700 areas with different tax rates for different products with different taxability determinations (Colorado Department of Revenue, 12/2013). Basically, it’s a logistical nightmare for businesses to follow.
And it’s about to get a whole lot more complicated, particularly for small businesses with limited staff and sales tax technical expertise. On September 11, the state of Colorado Department of Revenue (DOR) mandated sales tax collections based on the buyer’s address (39-26-102(9)). This means for every product or service sent to an end-user within Colorado, various jurisdictions will require the seller to collect and remit sales tax, regardless of the business’ physical location.
The rule becomes effective December 1, almost certainly before the state and businesses are ready to go. Although the DOR has indicated it will allow a grace period prior to enforcement, heavy lifting will be required to get systems and the state filing requirements set up for compliance.
Denver Business Journal
by Judy Vorndran, on behalf of the Coalition to Simplify Colorado Sales Tax
November 30, 2018