The Colorado Department of Revenue has extended the deadline for Colorado businesses to comply with new sales tax rules to May 31, 2019. The emergency rules, which were enacted Sept. 26, originally were to take effect Nov. 30, but amid concerns from legislators and the business community, the DOR announced that it was granting an extension until May 31.
“As part of our rule making process to implement sales tax rules for in-state and out-of-state retailers, we have heard from legislators and the business community, and the Department of Revenue agrees it is important for the state to take the time to get this right,” said Colorado Department of Revenue Executive Director Mike Hartman.
According to Dan Carr, Department of Revenue taxation communications manager, Colorado is among 33 states that created the emergency rules in response to the Supreme Court ruling in the case of South Dakota vs. Wayfair, in which South Dakota won the right to receive sales tax on items purchased on the internet and shipped to the state.
The emergency rules make it mandatory for Colorado retailers who ship products out of their jurisdiction to collect sales tax based on the rate of where the item is shipped. Supporters of the decision have said the move levels the playing field, and could bring in as much as $48 million in revenue to Colorado in the first year, with as much as $200 million in subsequent years.
“This has opened the door for all states to say `We can fix this unfair competition problem and start telling internet sites they have to pay sales tax,'” said Democratic state Rep. Tracy Kraft-Tharp of Arvada, chair of the Sales and Use Tax Simplification Task Force. “This new law could bring in as much as $48 million this year.”
The website colorado.gov/tax was created by the DOR to help Colorado retailers understand and navigate the new laws, and includes a “hold harmless” list that makes it easier for business owners to look up the tax at the item's destination.
“If a retailer uses the platform and the charge is wrong, they will be held harmless,” said Carr.
The DOR will evaluate the need for another extension as May 31 nears, and said “the additional time will give the state Legislature an opportunity to find innovative solutions to streamline and simplify our sales tax collection laws in accordance with the wishes of the residents of Colorado.”
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