Sales and Use Tax Simplification Task Force extended until 2025; changes made to hold harmless provisions for users of tax remittance software made crucial in wake of Wayfair Supreme Court decision
DENVER, CO– The Sales and Use Tax Simplification Task Force today advanced two bipartisan bills that would extend the task force until 2025 and continue to support the state’s compliance with the United States Supreme Court Wayfair ruling.
“For 30 years, Colorado’s complex system of tax jurisdictions, home rule municipalities and TABOR have led to challenges for businesses trying to navigate different rates,” said Task Force Chair Rep. Tracy Kraft-Tharp (D-Arvada). “The Wayfair decision made the situation more complex, and our task force has been working hard since 2017 to address these concerns. Last session we tasked the state with creating a GIS database and software system to make the tax remittance process easy for businesses. Today, we continued this work by advancing legislation to protect vendors from being liable for any errors made as a result of using the GIS database or third-party software applications that rely on the underlying GIS data.”
With local jurisdictions imposing different tax rates, vendors face a challenge in determining the correct tax amount and in accurately remitting payments to the proper local tax jurisdiction. Large retailers and market facilitators, such as Amazon, must remit taxes based on the location of the purchaser. However, smaller businesses are currently allowed to remit taxes based on their business location until the state can create a simplified way for remitting taxes based on the purchaser’s location.
Last session, lawmakers passed SB19-006, sponsored by Rep. Kraft-Tharp, which required the state to create a Geographic Information System (GIS) database and software to assist vendors in remitting sales and use taxes to local jurisdictions. The new system will help businesses navigate the patchwork of sales and use taxes across the state and accurately remit sales taxes.
A bill that the task force advanced today would hold vendors harmless for errors made as a result using the new state GIS database or a third-party software that relies on the GIS database, once the state develops and releases the new database and software. Additionally, the Department of Revenue must ensure that the information provided in the state database is 95 percent accurate.
The other bill lawmakers advanced today would extend the taskforce until July 2025 and eliminate the requirement for a Department of Regulatory Affairs sunset review process. The bill expands the scope of the task force’s work to include a review of legislation passed last session.