Colorado reschedules rules hearing, provides compliance grace period

If you’re confused about what to do in Colorado, you’re not alone. The recent emergency rule changes to sales tax requirements that the Colorado Department of Revenue (DOR) is trying to adopt are creating quite the controversy. As we outlined last week, DOR would like all out-of-state sellers to register for sales tax (any wineries already registered in Colorado likely have a Retailer’s Use Tax permit, not sales tax) prior December 1st.

DOR had scheduled a hearing to discuss the new rules on October 30th, but then cancelled and rescheduled the hearing for Friday, November 30th – one day before the new rules take effect.

Another confusing part of the implementation in Colorado is that DOR is providing a “grace period” to comply with some of the changes. DOR maintains separate FAQ pages for in-state retailers and out-of-state retailers, and on the in-state page they explain that retailers have until March 31, 2019 to make the necessary systems changes to handle “destination sourcing”.

The big difference between sales tax and use tax collection in Colorado is the requirement that those with sales tax permits also collect the “state-collected” local jurisdictions (cities and counties) but not the “home rule” local jurisdictions. We asked DOR whether the grace period would apply to out-of-state sellers, and they explained the grace period does apply to out-of-state sellers, but only for complying with the destination sourcing rules. Although ambiguity remains, our interpretation of that is that out-of-state sellers above the threshold must still register for sales tax prior to December 1, but do not have to designate (and therefore collect) the state-collected local jurisdictions that they will be shipping to until March 31, 2019.

More information will likely surface prior to the November 30th hearing. DOR previously stated that the new online registration process for sales tax permits would open today (November 1st), and that may also provide additional information.


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