The Colorado Department of Revenue (DOR) has issued a general information letter (GIL) providing guidance on use tax notice and reporting requirements for certain types of non-collecting retailers. The GIL addresses two questions:
Regarding the first question, the applicable rule (which was updated for this provision dated January 1, 2018) states, “With respect to any subscription or membership whereby the retailer ships products to a customer at regular intervals, without any additional action by the customer (commonly referred to as subscription boxes or “_______ of the month” clubs), a Transactional Notice is required only with respect to any transaction whereby the customer subscribes, enrolls or renews her or his subscription or membership. Separate Transactional Notices are not required for the subsequent, repeated shipment of products to the customer made automatically and without additional action by the customer.”
If a taxpayer’s subscription service meets the above criteria, then a recurring transactional notice is not required for subsequent, repeated monthly shipments.
Regarding the second question, non-collecting retailers must provide a transactional notice and annual purchase summary to all Colorado Purchasers. A Colorado Purchaser is “a purchaser who makes a Colorado Reportable Purchase.” The applicable regulation states that “if tangible personal property is purchased by one party, who may be inside or outside of Colorado, and is shipped to another party in Colorado, the Colorado Purchaser is the purchaser of the tangible personal property, not the recipient of the tangible personal property.”
As a result, the non-collecting retailer must provide the out-of-state purchaser with the transactional notice and annual purchase summary and include the out-of-state purchaser in the annual customer information report sent to the DOR.
For our previous news item on this topic, click here. (General Information Letter GIL-18-001, Colorado Department of Revenue, 1/9/18)