Effective Dec. 1, 2018, the Colorado Department of Revenue (DOR) expects all retailers doing business in the state to begin collecting sales tax on their Colorado taxable sales no matter where the sale is delivered in Colorado. Yes, you read that correctly: wherever the sale is in Colorado. For example, if you are in Denver and sell something to someone in Wray, Colorado, you now have to collect not just the state sales tax, but also the city of Wray and Yuma county sales tax. The rule does not apply to home-rule cities, only state-collected jurisdictions.
Why the change?
The DOR issued new emergency regulations in response to the U.S. Supreme Court’s Wayfair decision and, in doing so, revised their regulation regarding the sourcing of retail sales.
Can they do this?
Yes. The DOR has authority to issue such emergency regulations. There are, however, some troublesome questions. First, the revised regulations do not clearly support the notification language in the letters the DOR sent everyone telling them they now have to collect sales tax on sales delivered outside the retailer’s jurisdiction. Second, the requirement may be a violation of Colorado’s Taxpayer Bill of Rights (TABOR). Finally, it is not clear that the DOR is going to be ready to handle the increased demand for setting up new accounts for the hundreds of different state-collected jurisdictions by Dec. 1.
What can I do?
The DOR is holding a public hearing on Oct. 30, 2018, to finalize the regulations at which it will take public comment and suggestions. In addition, you can provide comments or suggestions to these rules directly to DOR staff at dor_taxrules@state.co.us by 5:00 p.m. Oct. 26, 2018.
