As you probably know by now, the State of Colorado is changing its regulations on sales tax collections and submissions effective December 1, 2018.
Previously, we have encouraged members to attend the Department of Revenue (DOR) seminars and webinars on the issue to get up to speed. Tomorrow the DOR is holding such a webinar. You can find more information by clicking here or just doing a search.
As a quick refresher, in June the U.S. Supreme Court ruled in South Dakota vs. Wayfair Inc. that states could require retailers to collect sales tax on transactions taking place in the state even if the retailer had no substantial physical presence in the state.
While primarily aimed at major online retailers, all companies selling online will be effected in time as states rush to implement this new taxing bonanza.
What may be a fairly straight-forward process in a place like South Dakota is a huge hassle for small retailers in Colorado. According to a story in the Denver Post early in November, there are 344 cities, counties and special taxing districts in the state. When layered on top of each other, according to the Post there are 683 potential sales tax combinations.
By the way, it doesn’t matter if you’re selling the product online to a customer a few towns away, the DOR expects you to collect and submit the taxes appropriate to that locale.
In time I expect some of this will be tested in the courts and the DOR may get such a blow-back from small companies that they’ll have to rethink all of this. In the meantime, this is the law of the land, and we advise you do your homework and figure out a system to comply, if you can…a big IF for many small companies.
There is an enforcement grace period until March 31.
Again, we suggest you read the information about this on the DOR website and plan to attend one of their free seminars.