United States

Colorado: Emergency Regulation Published to Address Use Tax Notice and Reporting Requirements

Jul 17, 2017
From KPMG TaxWatch

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On June 30, 2017, the Colorado Department of Revenue published an emergency rule, Rule 39-21-112(3.5), addressing the state’s use tax notice and reporting requirements that became effective July 1, 2017. Earlier this year, a lawsuit stemming from the state’s 2010 enactment of the use tax notice and reporting requirements was settled, and Department subsequently announced its intent to begin enforcing the requirements. (See this TWIST for more information.) The Department had issued a regulation addressing the use tax notice and reporting requirements shortly after the law was enacted in 2010. However, that regulation was never utilized because the Department was enjoined from enforcing the use tax notice and reporting requirements during the pendency of the litigation.

There are certain key details in the recently-published emergency rule, and all affected retailers should read the rule thoroughly. For instance, while the statute requires the annual purchase summary to be sent to customers by first class mail, the emergency rule allows a non-collecting retailer to provide customers the option to receive the summary by email if the customer annually agrees to receive tax notifications by email via an annual opt-in notification from the retailer. Additionally, the rule clarifies that the use of an online marketplaces does not relieve a non-collecting retailer from the obligation to provide a transactional notice. However, a marketplace may provide the notice on behalf of the non-collecting retailer. The rule also describes, in detail, the manner in which the transactional notice must be provided for both online and offline purchases, including where and how the notice must be displayed. Guidance is also provided on reporting by corporations that are part of a controlled group. Notably, all corporations included in a federal controlled group of corporations are considered a single “non-collecting retailer” for purposes of the rule. Thus, when determining whether the de minimis threshold (less than $100,000 in Colorado sales) is met, a retailer must include sales for all corporations in its federal controlled group. Further, a noncollecting retailer may file the annual customer information report for all noncollecting retailers within the group. The emergency rule will be in effect for 120 days unless terminated or replaced by permanent rules. Please contact Rebecca Bearden at 303- 382-7107 with questions.

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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.