Colorado explains notice and reporting requirements for non-collecting retailers
- Jul 26, 2017 | Gail Cole
The Colorado Department of Revenue has published a regulation clarifying the state’s notice and reporting requirements for non-collecting retailers that took effect July 1, 2017. It explains what retailers who do not collect the state’s sales tax must do to comply with 39-21-112(3.5) C.R.S.
It’s worth a close read.
Where to send annual purchase summaries
Non-collecting retailers are required to send to all Colorado customers an annual purchase summaries by January 31 of each year. These must be marked “Important Tax Document Enclosed” and “sent by first class mail to the last known address of the Colorado purchaser.” If retailers cannot reasonably ascertain the physical address, they may send the summary to the most recent email address on file.
However, non-collecting retailers are also permitted to give customers an “electronic opt-in” — the option of receiving their summary “by electronic means” — so long as the Colorado purchaser agrees to receive tax notifications by electronic means. Opt-in notices must be sent to customers on or after December 15 of each year and must “make clear that the electronic communication is a tax document that may require action on the part of the Colorado purchaser.” Like their paper counterparts, all electronic annual purchase summary communications must be marked “Important Tax Document Enclosed.”
Non-collecting retailers that use online marketplaces
The notice also underscores that selling taxable goods through online marketplaces (rather than one’s own website) “does not relieve a non-collecting retailer from the obligation to provide a Transactional Notice with each Colorado reportable purchase.” However, online marketplaces are permitted to provide transactional notices on behalf of non-collecting retailers.
Transactional notices must contain the following information:
- A statement that the retailer doesn’t collect Colorado sales or use tax
- An explanation that the purchase is not exempt from Colorado sales or use tax simply because the sale occurred over the internet or by another remote means
- Instruction that Colorado requires purchasers to file sales or use tax returns and pay tax on all taxable purchases when tax wasn’t collected by the retailer at the time of sale
Notices may also contain additional information, such as how to file use tax returns and details about forthcoming annual purchase summaries.
When non-collecting retailers are part of an affiliated group of corporations
In the event a non-collecting retailer is part of an affiliated group of corporations, the affiliated group of corporations may file the Annual Customer Information Report for all non-collecting retailers within the group. Any entity within the affiliated group is permitted to prepare and file the annual report, provided it includes information about all Colorado purchasers and reportable purchases made from non-collecting retailers within the group.
However, an affiliated group of corporations may also require each non-collecting retailer to file its own annual customer information report.
The above are just a few of the requirements imposed on remote retailers who don't collect Colorado sales and use tax. Non-collecting sellers doing business in Colorado are advised to read this regulation thoroughly.
Alternatively, they can become collecting sellers and register with the state to collect and remit Colorado sales and use tax. Tax automation software helps businesses of all sizes comply with sales and use tax rates, rules, and regulations in all states. Learn more.