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Colorado has issued a general letter ruling regarding the taxability of advance payments made on vehicle rentals. Although there is not specific provisions in the statutes regarding these charges for vehicle rentals, there is for hotel occupancy rentals.  The Department has indicated that these rentals are similar in nature and therefore, following the occupancy provisions seems appropriate. 


Any advance payment applied toward the charge for a vehicle rental is subject to sales and use tax. The letter ruling states that any nonrefundable advance payment that exceeds 50% of the daily rental charge is subject to tax, which may be collected at the time the payment is made. Nonrefundable advance payments are subject to sales and use tax either in their application toward the charge for the ultimate vehicle rental or as a forfeited deposit if the vehicle rental is canceled, either by explicit cancellation or by failure to appear at the designated time. Sales and use tax should not be collected for a refundable advance payment or an advanced payment that is 50% or less of the daily vehicle rental charge. If a refundable advance payment is refunded due to cancellation, no tax is due and any collected tax should be refunded.(GIL-16-011, Colorado Department of Revenue, July 6, 2016)


On April 27, 2017, a bipartisan group of senators introduced the Marketplace Fairness Act of 2017 (MFA). Similar legislation was introduced in both 2013 and 2015 and failed to be enacted both times. If enacted, the legislation would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. The small seller exception is set again at $1 million of remote sales annually. The only other significant change from the 2015 version is a prohibition of making the effective date during the 4th quarter of the calendar year. For information on the previous versions of the bill, visit Senate Introduces Marketplace Fairness Act of 2015.  


On April 27, 2017, a bipartisan group of lawmakers introduced the Remote Transactions Parity Act (RTPA) of 2017. Similar legislation was introduced in 2015 but failed to be enacted. Like the MFA, the legislation would also create sales and use tax collection obligations for remote sellers, but has some differences and additional provisions. Some key differences from the Marketplace Fairness Act include a different definition of a small seller.  The RTPA has a phased in threshold starting at $10million in year one, then $5million, then $1million.  In year 4, there is no threshold.  In addition to the monetary thresholds, any seller that sells on an electronic marketplace is considered a small seller.  A difference from the 2015 version of the bill is an inclusion of a definition of remote seller which specifies when a company is NOT a remote seller which includes physical presences for more than 15 days in a state, leasing or owning real property and using an agent to establish or maintain the market in a state if the agent does not perform business services in the state for any other person during the taxable year.  For more information on the Remote Transaction Parity Act of 2015, visit House Introduces Remote Transactions Parity Act of 2015. (Marketplace Fairness Act of 2017, Remote Transactions Parity Act of 2017)


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))


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)


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.



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