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On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.

 

On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.

 

For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.

 

For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.

 

(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)

(02/12/2015)

Colorado has issued a private letter ruling determining if sales tax nexus is established for an online wine retailer by a Colorado-based employee who supports internet sales indirectly. The employee’s job is to identify wine cellars in Colorado to be acquired by the company. The employee is not a sales representative and doesn’t promote the company’s sales. Once a wine cellar has been identified for purchase, a team of company’s employees visits Colorado to inspect and potentially purchase the wine. Sales tax nexus is established in Colorado for the wine retailer for two reasons. While not directly soliciting or promoting the company's sales, the first employee is performing work in Colorado in connection with the company's sales of tangible personal property in the state. In the ruling, the Department of Revenue noted that nexus does not require that the activity creating nexus relate to the taxable transaction at issue. Second, the team of employees who visit Colorado to inspect and purchase wine creates sales tax nexus for the company in Colorado. As a result, the company must collect Colorado sales tax on wine sales that are delivered to a buyer located in Colorado. (PLR 14-005, Colorado Department of Revenue, July 28, 2014, released December 2014)

(12/29/2014)

President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.

 

For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)

(09/26/2014)

Colorado Governor John Hickenlooper has signed legislation which creates a rebuttable presumption that an out-of-state retailer has substantial nexus, effective July 1, 2014.  The legislation outlines the types of business activities that create taxable sales for not only a controlled group of corporations but also for unrelated persons who perform activities on behalf of an out of state seller.

 

The following activities apply regardless of whether the person who has physical presence in Colorado is part of a controlled group or not.  A person is presumed to be doing business in Colorado if that person enters into an agreement or arrangement with a person who has physical presence in Colorado, other than a common carrier, and the person who has physical presence:

 

  • sells under the same or a similar business name tangible personal property or taxable services similar to those sold by the person against whom the presumption of physical presence is asserted;
  • maintains an office, distribution facility, salesroom, warehouse, storage place, or other similar place of business in the state to facilitate the delivery of tangible personal property or taxable services sold by the person against whom the presumption is asserted to such person’s in-state customers;
  • delivers, installs, or assembles tangible personal property in the state, or performs maintenance or repair services on tangible personal property that is sold to in-state customers by the person against whom the presumption is asserted; or
  • facilitates the delivery of tangible personal property to in-state customers of the person against whom the presumption is asserted by allowing such customers to pick up tangible personal property sold by such person at an office, distribution facility, salesroom, warehouse, storage place, or other similar place of business maintained in Colorado.

 

The presumption may be rebutted by proof that the person, during the calendar year in question, did not engage in any activities in Colorado that are sufficient under U.S. Constitutional standards to establish nexus. The presumption does not apply to certain agreements or arrangements concerning advertising, affiliate marketing, and small businesses. The small business exception applies if the cumulative gross receipts from sales by the person outside of Colorado to instate customers in the prior calendar year is less than $50,000.

 

A person is also presumed to be doing business in Colorado if that person is part of a controlled group of corporations, and that controlled group has a component member, other than a common carrier, that has physical presence in Colorado, and the person who has physical presenceperforms any of the above activities or:

 

  • uses trademarks, service marks, or trade names in Colorado that are the same or substantially similar to those used by the person against whom the presumption is asserted;

 

The presumption may also be rebutted by proof that the component member with physical presence, during the calendar year in question, did not engage in any activities in Colorado that are sufficient under U.S. Constitutional standards to establish nexus. (H.B. 1269, Laws 2014, effective July 1, 2014)

(06/24/2014)

Colorado has issued a reminder that current Colorado sales tax licenses will expire on December 31, 2013.  Colorado sales tax licenses are valid for two years and expire at the end of each odd-numbered year.  The license renewal costs $16 and is required in order to collect and file Colorado state and local sales taxes.  If a business has multiple physical sales locations, each location requires a separate license. Licenses can be renewed through the Colorado Department of Revenue’s website or by mailing in Form DR 0594, Renewal Application for Sales Tax License. (Reminder: Sales Tax License Renewal Time, Colorado Department of Revenue Weblog, December 5, 2013)

(01/28/2014)

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