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(May 23) – Gov. Polis signed Rep. Tracy Kraft-Tharp’s bill to update the way the state collects sales taxes to comply with the South Dakota v. Wayfair Supreme Court decision
“This new law will help small businesses and our economy stay on the path to success,” said Rep. Kraft-Tharp, D-Arvada. “I will continue working help simplify our tax system and am thankful to all of the stakeholders involved in getting this bill signed into law.”
Rep. Kraft-Tharp has been a staunch advocate for tax reform at the legislature. Kraft-Tharp is chair of the Business and Labor Affairs Committee and chair of the Sales and Use Tax Simplification Task Force Interim Committee.
HB19-1240 codifies the Colorado Department of Revenue rule applying destination-based sourcing to all retailers. Online retailers will now be required to collect taxes based on the buyer’s address, and marketplace facilitators, such as Amazon and Etsy, are required to collect and remit sales taxes for the sellers on the platform. Smaller retailers would be able to continue to calculate sales taxes based on their business location until an online system is available to calculate tax rates for addresses. The bill is a result of the 2018 United States Supreme Court decision in South Dakota v.Wayfair, which expanded the ability of states to collect sales taxes on online purchases. Previously, the standard was that a business had to have a physical presence in a locality in order to pay local sales taxes there.
Rep. Kraft-Tharp is also the co-prime sponsor of SB19-006 which requires the development of an electronic sales and use tax simplification system. This new system will help address the patchwork of sales and use tax across the state and help small businesses thrive.
This law will require the Office of Information Technology to develop the electronic sales and use tax simplification system following a stakeholder process conducted with the Department of Revenue. It then authorizes the Department of Revenue to accept any returns processed through the new system and also provides a dedicated funding stream to fund and maintain the system.
SB19-006 was signed into law this April. HB19-1240 was signed in the Governor’s office today.