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The Colorado Department of Revenue has released a general information letter stating that a marketplace provider’s payment of sales tax on sales by third-party retailers relieves the obligation of the third-party retailers to collect and remit sales tax (note that general information letters are general discussions of tax law and are not binding on the Department). In this instance, the marketplace provider represented that it is an agent of the third-party sellers for the purpose of selling their goods. The marketplace provider also represented that, if it collects and remits sales tax on sales subject to tax in Colorado, it does so as a “jointly responsible” retailer. The Department determined that the payment of the correct amount of sales tax by one jointly responsible retailer discharges the payment obligation of the other jointly responsible retailer. However, this does not discharge or otherwise limit the Department’s authority to administer and collect taxes from either jointly responsible retailer if a deficiency occurs in the future. The Department further added that if the marketplace provider exercises reasonable diligence when accepting the exemption certificate or sales tax license, then both the marketplace provider and third-party seller are relieved of liability for collecting tax if the Department later determines that the exemption did not apply. (Colo. Gen. Info. Letter No. GIL-16-020 (Colo. Dep’t Revenue Oct. 4, 2016, released Dec. 7, 2016))

(02/14/2017)

Colorado has updated its publication regarding the state’s sales and use tax exemption on residential energy usage to state that that the exemption applies to all purchases of propane and wood pellets used to heat a home or prepare food. This is in addition to the exemption that applies to all gas, electricity, coal, wood, fuel oil, or coke sold for residential use. This exemption applies to residential use of fuel in single-family homes, apartments, condominiums, mobile/trailer parks, dorms, nursing homes, assisted living homes, and any other dwelling in which people reside, even if the units are not billed from their own meter. (FYI Sales 66, Colorado Department of Revenue, January 2017)

(02/14/2017)

On November 8, 2016, four jurisdictions in California and Colorado approved “soda taxes” through ballot measure. San Francisco, Oakland, and Albany, CA each approved “soda taxes” in the amount of one-cent per ounce. Boulder, CO approved a tax in the amount of two-cents per ounce. On November 10, 2016, the County Board in Cook County, IL (which includes Chicago) approved a tax in the amount of one-cent per ounce. It should be noted that Chicago, IL has imposed a 3% soft drink tax since 1993. These jurisdictions join Berkeley, CA and Philadelphia, PA, which have also adopted soda taxes.

(12/04/2016)

On August 25, 2016, House Judiciary Committee Chairman Robert Goodlatte released a discussion draft of the Online Sales Simplification Act of 2016. The legislation would implement a “hybrid origin” approach for remote sales. Under the legislation, states could impose sales tax on remote sales if the origin state participates in a clearinghouse.In this case, the tax is based on the origin state’s baseand taxability rules. The rate would be the origin state rate, unless the destination state participates. In that case, the rate used would be a single state-wide rate determined by each participating destination state. A remote seller would only remit sales tax to its origin state for all remote sales. Only the origin state would be able to audit a seller for remote sales. Non-participating states would not be able to receive distributions from the clearinghouse. Sellers would be required to provide reporting for remotes sales into participating states to the Clearinghouse so it can distribute the tax to the destination state. We will continue to monitor activity and update when the official bill is introduced.  (Discussion draft of Online Sales Simplification Act of 2016)

(09/08/2016)

On July 14, 2016, Rep. Jim Sensenbrenner (R-WI) introduced the No Regulation Without Representation Act of 2016.  Taking the opposite approach of the Marketplace Fairness Act and Remote Transactions Parity Act, this proposed bill would limit the ability of states to require remote sellers to collect use tax. If enacted, the Act would codify the physical presence requirement established by the US Supreme Court in Quill Corp v. North Dakota.  The bill would define physical presence and create a de minimis threshold. If enacted, the bill would preempt click-through nexus, affiliate nexus, reporting requirements and marketplace nexus legislation. The bill would be effective as of January 1, 2017. The bill defines “seller” and provides that states and localities may not:

 

  • Obligate a person to collect a sales, use or similar tax; 
  • Obligate a person to report sales; 
  • Assess a tax on a person; or 
  • Treat the person as doing business in a state or locality for purposes of such tax unless the person has a physical presence in the jurisdiction during the calendar quarter that the obligation or assessment is imposed.

 

Persons would be considered to have a physical presence only if during the calendar year the person: 

 

  • Owns or leases real or tangible personal property in the state; 
  • Has one or more employees, agents or independent contractors in the state specifically soliciting product or service orders from customers in the state or providing design, installation or repair services there; or 
  • Maintains an office in-state with three or more employees for any purpose.

 

Physical presence would not include: 

 

  • Click-through referral agreements with in-state persons who receive commissions for referring customers to the seller; 
  • Presence for less than 15 days in a taxable year; 
  • Product delivery provided by a common carrier; or 
  • Internet advertising services not exclusively directed towards, or exclusively soliciting in-state customers.

 

The bill defines seller to exclude marketplace providers; referrers; third-party delivery services in which the seller does not have an ownership interest; and credit card issuers, transaction or billing processors or financial intermediaries.Marketplace Providers are defined as any person other than the seller who facilitates a sale which includes listing or advertising the items or services for sale and either directly or indirectly collects gross receipts from the customer and transmits the amounts to the marketplace seller. (No Regulation Without Representation Act of 2016 (H.R. 5893))

 

UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.

(08/23/2016)

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