Colorado Releases Additional Guidance on Destination Sourcing for Local Sales Tax

Effective December 1, 2018, Colorado has adopted adopt destination sourcing for local sales tax. The Colorado Department of Revenue has released additional guidance to help businesses meet these new requirements.

Compliance Grace Period

The Department of Revenue will offer a grace period through March 31, 2019 for both in-state and out-of-state retailers. Businesses will receive an automatic waiver during the grace period.

Retailers that do not collect sales tax during this grace period are still required to comply with Colorado’s reporting requirements. Non-collecting retailers must provide certain notices to:

  • individual Colorado customers; and
  • the Colorado Department of Revenue.

These requirements will be strictly enforced.

Key Facts Regarding Sales Tax Changes

The department has compiled a list of key facts regarding the sales tax changes. These facts include:

  • the changes will standardize sales tax laws;
  • 33 other states have similar rules;
  • the changes prevent certain businesses from have a sales tax advantage;
  • local registration is not required to collect state-collected local jurisdiction sales taxes;
  • five hold-harmless databases are available to determine collectible taxes;
  • all required returns and payments can be made with Revenue Online; and
  • additional questions can be answered on the sales tax webpage.

The full text of the department’s guidance is available at https://www.colorado.gov/pacific/tax/sales-tax-changes-grace-period-and-key-facts.

What Businesses Need to Know About Colorado’s Sales Tax Changes, Colorado Department of Revenue, November 30, 2018

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