Sales Tax Information for Out-of-State Retailers

Destination Sourcing:

 

As businesses have moved toward an online sales model, sales tax collection for the State of Colorado has changed with the passage of HB19-1240 to account for that shift. Beginning June 1, 2019, sales tax will be calculated based on the buyer’s address when the taxable product or service is delivered to the consumer. This is called destination sourcing


Destination sourcing is also used when a product or service has a lease/rental agreement with periodic recurring payments. Businesses will now be required to collect and remit sales tax for all retail sales to Colorado consumers, regardless of the physical location for the business. Exceptions to the new sales tax law may apply to small businesses and marketplace sellers. Information regarding exceptions to the new sales tax is below.

 

Small Business Exception:

 

If a business does not have more than $100,000 of taxable sales into the state of Colorado in the past calendar year they are exempt from collecting and remitting state sales tax. They must still notify customers of their obligation to remit use tax

 

Marketplace Sales Tax:

 

HB19-1240 has a second provision that impacts marketplace sellers and facilitators starting October 1, 2019. Please refer to the Department of Revenue Marketplaces Guidance publication for details. 

 

More Information:

 

Information regarding sales and use tax in Colorado can be found in the Department of Revenue Sales Tax Guide and the Marketplaces Guidance publication. Visit RevenueOnline to find information about how to remit sales tax and to file a Colorado Sales Tax Return. To view a copy of HB19-1240, visit the Colorado General Assembly website

 


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