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The Direct Marketing Association has reached a settlement agreement with the Colorado Department Revenue in regards to its lawsuit over the state’s use tax notice and reporting requirements. Pursuant to the settlement agreement, the use tax notice and reporting requirements legislation becomes effective on July 1, 2017. Per the agreement, the Department of Revenue will waive penalties for non-collecting retailers who fail to comply with the legislation prior to July 1, 2017. Non-Collecting Retailers will be required to include the required transactional notices on all invoices issued after July 1, 2017 per Sec 39-21-112(3.5)(c)(I) and 1 Colo Code Regs Section 201-1: 39-21-112.3.5(2).


The first annual summaries of customer purchases required of non-collecting retailers must be mailed to customers by January 31, 2018. The Department will waive all penalties for non-collecting retailers who do not include customer purchases made prior to July 1, 2017 in any annual summary provided to Colorado customers before the January 31, 2018 deadline. This summary must include all transactions dated after July 1, 2017 and if possible all 2017 transactions.


The first customer information reports required of non-collecting retailers must be filed with the Department by March 1, 2018. The Department will waive all penalties for non-collecting retailers who do not include customer purchases occurring prior to July 1, 2017 in their customer information report provided to the Department on or before the March 1, 2018 deadline.This information report must include all transactions dated after July 1, 2017 and if possible all 2017 transactions.


To view our previous news item on this case, click here


Based on this settlement, all Colorado non-collecting retailers should review their marketing materials, invoices and systems to ensure they will be able to comply. Penalties for non-compliance are harsh.  


(Direct Marketing. Association v. Colorado Department of Revenue, Colo. Dist. Ct., No. 13-CV-34855, settlement announced 2/23/17)


On December 31, 2107, all Colorado sales tax licenses are set to expire. Sales tax licenses are used for the collection and filing of Colorado and local sales taxes. Separate, individual licenses and a $16 renewal fee are required for each physical location. The renewed licenses will be valid for a two-year period beginning January 1, 2018. Even if a license was recently applied for and received, renewal for the new two-year period is still required. Before beginning the renewal process, you should verify your open locations using the Colorado Department of Revenue’s tax filing portal, Revenue Online.

There are several options to renew your sales tax license.  First, you may complete your renewal online through Revenue Online, which allows payment for each license using credit card or e-check. Online renewal is also possible through Electronic Funds Transfer (EFT), as paying for renewed licenses by EFT fulfills the requirement of filing a license renewal application. Finally, paper renewal is also available using the DR 0594 form. When you send in your payment, remember to include your Colorado Account Number and the words “sales tax renewal” on the check or money order.


Companies doing business in Colorado should take advantage of the Colorado Department of Revenue’s Sales and Use Tax Lookup page to accurately determine company sales and use tax rates. The page provides resources such as the DR 1002 document that details sales and use tax rates for all Colorado cities, counties, and special districts, a spreadsheet that combines the tax rates in the DR 1002 document with location filing or jurisdiction codes from the DR 0800 document into a single lookup tool for filing sales tax, and links to electronic address database providers certified by the Department of Revenue as accurate. The Sales and Use Tax Lookup page is regularly updated, serving as an excellent resource for current and correct Colorado tax rates. The information includes both state administered and home rule authority information.


The Multistate Tax Commission (MTC) has announced a sales/use tax and income/franchise tax amnesty program for online sellers that will run from August 17 to November 1, 2017 (previously October 17, 2017). Qualified online sellers with potential tax liability may be able to use the MTC's voluntary disclosure agreement (VDA) to negotiate a settlement during the amnesty period if they meet certain eligibility requirements. Taxpayers that have not been contacted by any of the states participating in the amnesty program will be able to apply to start remitting sales tax on future sales without penalty or liability for unpaid, prior accumulated sales tax in the participating states. 25 MTC member states have agreed to participate in the amnesty program. The participating states include: 


  • Alabama
  • Arkansas
  • Colorado (sales/use tax only)
  • Connecticut
  • District of Columbia (may not waive all prior periods)
  • Florida
  • Idaho
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Massachusetts (special provisions apply)
  • Minnesota (special provisions apply)
  • Missouri
  • Nebraska (may not waive all prior periods)
  • New Jersey
  • North Carolina
  • Oklahoma
  • Rhode Island
  • South Dakota
  • Tennessee
  • Texas 
  • Utah
  • Vermont
  • Wisconsin (will require payment of back tax and interest for a lookback period commencing January 1, 2015 for sales/use tax, and including the prior tax years of 2015 and 2016 for income/franchise tax)


Some of the additional states may require a limited look-back period for prior tax liabilities. Sellers who wish to participate in the program will need to file the voluntary disclosure program paperwork during the program dates. The MTC will route the paperwork for each participating state for which the seller is seeking amnesty protection. For more details visit the MTC website.


UPDATE: The Multistate Tax Commission's online seller amnesty program is now over. If you didn't take advantage of this program but realize you need to evaluate your activities, you can contact us here.


On June 12, 2017, Rep. Jim Sensenbrenner (R-WI) and House Judiciary Chairman Bob Goodlatte (R-VA) introduced the No Regulation Without Representation Act of 2017. A previous version of this bill had been introduced in 2016 and failed to pass. Under the proposed bill, a State may tax or regulate a person’s activity in interstate commerce only when such person is physically present in the State during the period in which the tax or regulation is imposed. Under the proposed bill, the physical presencerequirement would apply to sales and use taxand net income and other business activities taxes, as well as the states’ ability to regulateinterstate commerce. “Physical presence” in a state includes:


  • maintaining a commercial or legal domicile in the state;
  • owning, holding a leasehold interest in, or maintaining real property such as an office, retail store, warehouse, distribution center, manufacturing operation, or assembly facility in the state;
  • leasing or owning tangible personal property (other than computer software) of more than de minimis value in the state;
  • having one or more employees, agents or independent contractors present in the state who provide on-site design, installation, or repair services on behalf of the remote seller;
  • having one or more employees, exclusive agents or exclusive independent contractors present in the state who engage in activities that substantially assist the person to establish or maintain a market in the state; or
  • regularly employing in the state three or more employees for any purpose.


“Physical presence” in a state would not include:


  • entering into an agreement under which a person, for a commission or other consideration, directly or indirectly refers potential purchasers to a person outside the state, whether by an Internet-based link or platform, Internet Web site or otherwise;
  • any presence in a state for less than 15 days in a taxable year (or a greater number of days if provided by state law);
  • product placement, setup or other services offered in connection with delivery of products by an interstate or in-state carrier or other service provider;
  • Internet advertising services provided by in-state residents which are not exclusively directed towards, or do not solicit exclusively, in-state customers;
  • ownership by a person outside the state of an interest in a limited liability company or similar entity organized or with a physical presence in the state;
  • the furnishing of information to customers or affiliates in such state, or the coverage of events or other gathering of information in such state by such person, or his representative, which information is used or disseminated from a point outside the state; or
  • business activities directly relating to such person's potential or actual purchase of goods or services within the State if the final decision to purchase is made outside the state.


In addition, the bill prohibits the imposition or assessment of a sales, use or other similar tax or a reporting requirement unless the purchaser or seller has physical presence in the state.  This would prohibit all the remote seller legislation (click through, affiliate, economic, marketplace and reporting/notification). If enacted, the legislation would apply with respect to calendar quarters beginning on or after January 1, 2018. (No Regulation Without Representation Act of 2017)



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