Governor Bill Ritter signed a bill, effective March 1, 2010, that imposes a sales tax collection responsibility on out-of-state remote retailers that do not collect Colorado sales tax. The nexus presumption bill applies to any retailer that is part of a corporate group that includes another retailer with a physical presence in Colorado. As a result, the out-of-state retailer is presumed to effectively be doing business in Colorado. Out-of-state retailers can challenge the presumption by proving that the Colorado retailer (who is part of the same corporate group) did not solicit on their behalf. Affected retailers must notify Colorado purchasers that sales or use tax is due on their purchases and that a sales or use tax return must be filed. Failure to provide notification could result in a penalty of $5 for each failure. The retailer must also notify Colorado customers by January 31 of the year following purchases that sales or use tax is due. The bill authorizes the Colorado Department of Revenue to require out-of-state retailers to submit annual statements summarizing purchases made by Colorado residents. EMERGENCY REGULATION 39-21-112.3.5 was also promulgated by the Department of Revenue further detailing the requirements and the language required to be included on each invoice. (H.B. 1193, Laws 2010, EMERGENCY REGULATION 39-21-112.3.5 )
For an update on this news item, see Colorado Use Tax Notice and Reporting Requirements Become Effective July 1, 2017.