On Friday afternoon, the Colorado Department of Revenue (DoR) made a change to the way taxes will be charged when delivering a product. These changes will impact both in-state and out-of-state businesses. CNGA submitted a letter to the Department of Revenue opposing the changes to the sales tax rules. You can read the full rules here, see page four.
The official compliance date is Dec. 1, but the DoR has provided a grace period that extends to March 31, 2019 to ensure companies have enough time to make the required system changes.
Here are the basics of the tax rule changes for in-state and out-of-state businesses.
In-State Businesses - The change requires that taxes are charged, collected and remitted to the place of delivery, instead of the place of origin. As an example, if your business is located in Denver but the products are being delivered to Colorado Springs, tax will need to be collected and remitted for State sales tax, Colorado Springs sales tax, the county sales tax and any Special District sales tax. The DoR recorded a webinar for in-state retailers that reviews the changes and provides clear explanations.
Under the state's new tax rules, out-of-state sellers must collect and remit Colorado sales tax if, in the previous or current calendar year, they have:
- $100,000 or more of gross sales or services delivered in Colorado, including exempt sales; or
- 200 or more transactions selling tangible personal property or services delivered in Colorado
Out-of-state retailers that are required to collect will need to add non-physical locations to their Colorado sales tax accounts. You can apply for a Colorado sales tax license at www.colorado.gov/cbe. The DoR recorded a webinar for out-of-state retailers that reviews the changes and provides clear explanations.
In its letter to the DoR, CNGA executive director Allison Gault wrote that the proposed changes to the tax law would be a detriment to the small businesses and owners within the green industry.
"The work required to properly identify correct city, county, and special districts for each point of delivery would be nearly impossible," she said in the statement. "Some members would experience over 600 possible tax combinations as they ship across the state of Colorado. For a small business, employees who work in the office often do many different jobs. In many cases, it would take a full-time person to process taxes in an accurate manner. Our small business members cannot afford to pay an individual full-time to figure out the various tax combinations and submit them correctly."
Additionally, Gault is concerned about the business expense of the DoR's proposed tax assistance software and its ability to integrate with CNGA member companies' existing invoicing software.
She concluded that the proposed change will significantly hurt the green industry small businesses and will have an impact on the economy in Colorado. In the state's 2015 economic impact study, Colorado's nursery, greenhouse and garden center industries contribute more than $598.3 million to the state's economy.