United States

Colorado: Recently-Introduced Bill would Revise Use Tax Notice Reporting Requirements

Mar 27, 2017
From KPMG TaxWatch

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Recently, legislation (Senate Bill 238) was introduced in Colorado that, if enacted, would make changes to the state’s controversial use tax notice reporting requirements. Recall, in 2010 Colorado became the first state to adopt use tax notice and reporting requirements applicable to non-collecting retailers. The use tax reporting statute mandated three separate notice requirements—a transactional notice at the time of purchase, an annual notice to purchasers with over $500 worth of purchases in the prior year, and an annual report to the Department by March 1 of each year showing the total amount of purchases made by each Colorado purchaser during the prior calendar year.

Due to litigation, the Department was enjoined from enforcing these requirements until recently. Per the terms of a recent settlement, the Department is set to begin implementing the use tax notice and reporting requirements as of July 1, 2017. Under the settlement agreement, non-collecting retailers will be required in January 2018 to provide a report to Colorado purchasers on the purchases they made after July 1, 2017. Under current law, the annual notice is required to be provided by first class mail. If Senate Bill 238 is enacted, this annual notice would not be required to be sent via U.S. mail, but could be provided to customers by email. The email would be required to be separate from any other emails sent to the purchaser and must contain the words “Important Tax Document Enclosed.” Senate Bill 238 would also eliminate the requirement that the non-collecting retailer provide an annual statement for each purchaser to the Department of Revenue by March 1 of each year. The obligation to notify the customer of the potential use tax obligation at the time of the purchase remains unchanged. Please stay tuned to TWIST for future updates on Senate Bill 238. 


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.