Colorado DOR Schedules Stakeholder Work Group on April 25th to Discuss Possible Revisions to Remote Seller Notice & Reporting Regulation
Scheduled Work Group: Notice and Reporting Requirements for Retailers that Do Not Collect Sales Tax, Colo. Dept. of Rev. (3/17). The Colorado Department of Revenue (Department) has scheduled a stakeholder work group on April 25, 2017, to discuss possible revisions to Colorado Administrative Regulation 39-21-112.3.5, which was promulgated pursuant to state statutes imposing notice and reporting requirements on out-of-state retailers that generally do not collect Colorado sales tax and are making sales into Colorado. The Department states that it “will be reviewing this rule to determine if there are issues that need to be addressed before the Department begins enforcement of the law’s notice and reporting requirements with respect to transactions on or after July 1, 2017” – specifically noting that it intends to examine whether the administrative rule should address “marketplace” sellers.
Providing some background on Colorado’s remote seller notice and reporting legislation, which became effective on July 30, 2010, the Department explains how the law was then challenged in state and federal courts, and how injunctions against enforcement of the law were obtained in both state and federal courts. The Department notes how the case went to the US Supreme Court in 2015 on a jurisdictional issue where the Court held that federal courts have jurisdiction to hear challenges to the constitutionality of state laws such as the one imposed by Colorado; and how the Tenth Circuit Court of Appeals subsequently upheld the Colorado remote seller notice and reporting law – and that the federal litigation concluded in 2016 when the US Supreme Court chose not to hear the case [see previously issued Multistate Tax Alert for more details on this litigation and prior case coverage]. The Department then states that “with the federal injunction having been previously dissolved, the state court injunction, which was the last remaining bar to enforcement of the statute and the rule, was dissolved on February 28, 2017.” The Department explains that as part of the underlying settlement between the litigants, it had agreed that any penalties for failure to follow Colorado’s remote seller notice and reporting requirements would be waived with respect to transactions occurring prior to July 1, 2017. Accordingly, the Department now states that it will be reviewing Colorado Administrative Regulation 39-21-112.3.5, to determine whether any revisions are warranted before enforcement of Colorado’s remote seller notice and reporting requirements begins for transactions occurring on or after July 1, 2017.
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