(1) (a) No later than June 30, 2018, the department of revenue shall issue a request for information, in accordance with the procurement code, articles 101 to 112 of title 24, and within the department's existing resources, for an electronic sales and use tax simplification system that the state or any local government that levies a sales or use tax, including home rule municipalities and counties, could choose to use that would provide:
(I) Accurate address location information to be used by a retailer to determine the correct taxing jurisdiction for which the retailer should collect and remit sales or use tax;
(II) A single application process for state and local sales tax licenses;
(III) A uniform sales and use tax remittance form;
(IV) A single point of remittance for state and local sales and use tax; and
(V) A taxability or exemption matrix.
(b) The electronic sales and use tax simplification system must provide access to the data that the state or any local government may need for purposes of auditing taxpayers or for reconciling sales and use tax revenue projections.
(c) The request for information process must:
(I) Identify initial costs for the electronic sales and use tax simplification system and any possible ongoing annual costs;
(II) Explain how, to the maximum extent practicable, the system could be able to interface with all existing accounting systems used by the retailers, the state, or local governments;
(III) Allow for various payment options to pay for the cost of the development or implementation of the electronic sales and use tax simplification system, including contributions by the state, local governments, or retailers, or any combination thereof;
(IV) Anticipate that the sales and use tax base or rates of the state or any local government that levies a sales or use tax may change over time and maintain a history of those changes, including the effective date of such changes; and
(V) Anticipate that the jurisdictional boundaries of a local government that levies a sales or use tax may change over time, and maintain a history of those changes, including the effective date of such changes.
(d) A responder to the request for information shall not expect or anticipate that the state or any local government that levies a sales or use tax and that might use the electronic sales and use tax simplification system will, for simplification purposes:
(I) Adjust their sales and use tax base or rate;
(II) Adopt uniform definitions; or
(III) Unify their audit authority and process in any fashion.
(2) When the request for information issuance is complete, the department of revenue shall notify the sales and use tax simplification task force created in section 39-26-802. The task force shall hold a meeting within ninety days of the notification to review the information received pursuant to the request for information and determine next steps. The task force shall invite a representative of the department of revenue's purchasing department to help ensure that all procurement issues are considered when the task force determines its next steps.
Source: L. 2018: Entire section added, (HB 18-1022), ch. 10, p. 159, � 2, effective March 1.
Cross references: For the legislative declaration in HB 18-1022, see section 1 of chapter 10, Session Laws of Colorado 2018.
39-26-802.7. Electronic sales and use tax simplification system - sourcing method - implementation - legislative intent - definitions. (1) As used in this section, unless the context otherwise requires:
(a) Department means the department of revenue.
(b) Local taxing jurisdiction means a city, town, municipality, county, special district, or authority authorized to levy a sales or use tax pursuant to title 24, 25, 29, 30, 31, 32, 37, 42, or 43, and any county, city and county, or municipality governed by a home rule charter.
(c) Office of information technology or office means the office of information technology created in section 24-37.5-103.
(d) Sales and use tax simplification task force or task force means the sales and use tax simplification task force created in section 39-26-802.
(2) (a) The office of information technology, on behalf of the department, within existing resources, shall conduct a sourcing method in accordance with the applicable provisions of the Procurement Code, articles 101 to 112 of title 24, and any applicable rules, for the development of an electronic sales and use tax simplification system. The office and the department shall involve stakeholders to develop the scope of work.
(b) On and after the date the electronic sales and use tax simplification system is online, and notwithstanding any law to the contrary, the department shall accept any returns and payments processed through the system for state sales and use tax and for any sales and use taxes that are collected by the department on behalf of any local taxing jurisdiction.
(c) (I) On and after the date the electronic sales and use tax simplification system is online, it is the general assembly's intent that at least three local governments governed by a home rule charter voluntarily use the system for accepting returns and processing payments of any local sales and use tax.
(II) It is the general assembly's intent that the voluntary use of the system increase every year so that no later than three years after April 12, 2019, all local governments governed by a home rule charter are voluntarily using the system.
(d) As soon as possible, but no later than January 1, 2025, the department shall modify the electronic sales and use tax simplification system:
(I) To populate a local account number on all returns and summary reports, if the retailer filing the return has a number and provides the number in the sales and use tax simplification system;
(II) By developing a simplified user interface for filing returns as an alternative to the current spreadsheet method, and, in doing so, the department shall take into consideration the features of other sales and use tax filing interfaces that have favorable user recommendations;
(III) To provide retailers with a bulk testing option for address files; and
(IV) To include:
(A) A column to allow a description for a deduction that is described as other;
(B) Filtering options for local taxing jurisdictions to sort retailers and create reports that are exportable as spreadsheets;
(C) Local account numbers on a detail tab for retailers; and
(D) A tab for a retailer's filing history and payments.
(e) With the exception of a charge for a payment by credit card, the department shall not impose a convenience fee or any other type of charge for a payment through the electronic sales and use tax simplification system. The department shall not deduct an amount from the amounts distributed to the local taxing jurisdictions in lieu of the convenience fee or other charges that are prohibited by this subsection (2)(e).
(3) For the 2020-21 state fiscal year, the general assembly shall appropriate eight million seven hundred fifty thousand dollars to the office of the governor for use by the office of information technology for the initial funding and ongoing maintenance of the electronic sales and use tax simplification system. Any contract entered into for the system must provide that initial funding payments to the vendor are made on a quarterly basis.
(4) In the interim between the 2019 and 2020 legislative sessions, the office and the department shall regularly provide the sales and use tax simplification task force with any such detailed information regarding the sourcing method progress as is allowed under the procurement code.
(5) (a) The department shall create a campaign to promote the electronic sales and use tax simplification system for the purpose of increasing awareness, participation, and compliance by retailers and local taxing jurisdictions. The campaign must include information for taxpayers about the zero return process and additional requirements that may apply when filing a return for a home rule local taxing jurisdiction, and it must also include demonstrations for cities of the registration and filing processes from a retailer's perspective.
(b) The department shall solicit and consider feedback from interested stakeholders of the electronic sales and use tax simplification system, such as local taxing jurisdictions, organizations representing local taxing jurisdictions, representatives of the business community, and retailers, about additional potential enhancements to the system that will lead to greater local taxing jurisdiction participation and greater compliance by retailers.
Source: L. 2019: Entire section added, (SB 19-006), ch. 105, p. 376, � 2, effective April 12. L. 2023: (2)(d), (2)(e), and (5) added, (HB 23-1017), ch. 365, p. 2195, � 1, effective August 7.
Cross references: For the legislative declaration in SB 19-006, see section 1 of chapter 105, Session Laws of Colorado 2019.
39-26-802.9. Retailers without physical presence or with only incidental physical presence in local taxing jurisdictions - streamlined application process and no fee for local general business license - legislative declaration - definitions. (1) The general assembly hereby finds and declares that:
(a) Licensing of retailers that are subject to payment of sales and use taxes in one or more local taxing jurisdictions but either do not have physical presence in or have only incidental physical presence in those local taxing jurisdictions is a matter of statewide concern;
(b) The state's electronic tax administration infrastructure, including the electronic sales and use tax simplification system created and brought online pursuant to section 39-26-802.7 and commonly known as SUTS, can be used to make the imposition, collection, and administration of local sales and use taxes collected by retailers that either do not have physical presence or have only incidental physical presence in the local taxing jurisdictions imposing the taxes simpler and more efficient so long as:
(I) Each local taxing jurisdiction is required to grant a general business license, free of charge, to any retailer that has a state standard retail license and either does not have physical presence or has only incidental physical presence within the local taxing jurisdiction so long as the local taxing jurisdiction has not previously revoked the retailer's general business license due to the retailer's failure to comply with the local taxing jurisdiction's requirements for holding a general business license; and
(II) Sufficient information about any such retailer is collected when the retailer applies for a state standard retail license to address any local taxing jurisdiction concerns, including but not limited to concerns relating to administrative efficiency, retailer compliance, and collection of sales and use tax revenue;
(c) Because it is important to ensure that the concerns of local taxing jurisdictions are addressed, it is necessary and appropriate to require the department of revenue to consult with local taxing jurisdictions when modifying application requirements for the state standard retail license as required by this section; and
(d) It is appropriate to eliminate the cost of a general business license to a retailer that has a state standard retail license and either does not have physical presence in a local taxing jurisdiction or has only incidental physical presence within the local taxing jurisdiction by prohibiting a local taxing jurisdiction from charging a fee for a general business license to such a retailer until such time as the local taxing jurisdiction is required to allow any such retailer to make retail sales within the local taxing jurisdiction without applying separately to the local taxing jurisdiction for a general business license.
(2) As used in this section, unless the context otherwise requires:
(a) Department means the department of revenue.
(b) General business license means a license issued by a local taxing jurisdiction that a retailer must obtain to legally make retail sales in the local taxing jurisdiction regardless of whether the license is called a business license, a sales and use tax license, or by another name. An occupational license or any other license required to engage in a business activity other than making retail sales of goods is not a general business license.
(c) Incidental physical presence means, with respect to a local taxing jurisdiction, physical presence as described in subsection (2)(e)(I)(B), (2)(e)(I)(C), or (2)(e)(I)(E) of this section, or any combination of said subsections, within the local taxing jurisdiction that occurs infrequently and is not regularly scheduled within the ordinary course of an individual or entity's business activities.
(d) Local taxing jurisdiction has the meaning set forth in section 39-26-802.7 (1)(b).
(e) (I) Physical presence means, with respect to a local taxing jurisdiction, performing or providing services or selling, leasing, renting, delivering, or installing tangible personal property for storage, use, or consumption within the local taxing jurisdiction. Physical presence includes any of the following activities:
(A) Directly or indirectly by a subsidiary maintaining a building, store, office, salesroom, warehouse, or other place of business within the local jurisdiction;
(B) Sending one or more employees, agents, or commissioned salespersons into the local jurisdiction to solicit business, to install, assemble, repair, service, or assist in the use of its products, or for demonstration or other reasons;
(C) Maintaining one or more employees, agents, or commissioned salespersons on duty at a location within the local taxing jurisdiction;
(D) Owning, leasing, renting, or otherwise exerting control over real or personal property sales within the local taxing jurisdiction;
(E) Engaging in activities within the taxing jurisdiction that are subject to other business, fire, zoning, or other regulations of the local jurisdiction; or
(F) Being subject to taxable privileges other than the requirement to collect sales tax imposed by the local taxing jurisdiction.
(II) Incidental presence by employees, agents, or commissioned salespersons within a local taxing jurisdiction when not otherwise engaged in the activities set forth in subsection (2)(e)(I) of this section does not constitute physical presence.
(f) State standard retail license means a license issued under section 39-26-103 that authorizes a retailer to make retail sales in the state.
(g) SUTS means the electronic sales and use tax simplification system created and brought online pursuant to section 39-26-802.7.
(3) (a) In order to enable the streamlining of the imposition, collection, and administration of sales and use taxes imposed by local taxing jurisdictions on retail sales made by retailers that have a state standard retail license and either do not have physical presence within a local taxing jurisdiction or have only incidental physical presence within a local taxing jurisdiction by streamlining the application process for and eliminating the expense of general business licenses for such retailers, the department of revenue shall require sufficient information to be collected from such a retailer, when the retailer applies for or renews a state standard retail business license through SUTS or by other means or at any other time to the extent necessary, and made available to local taxing jurisdictions to ensure that concerns of local taxing jurisdictions, including but not limited to concerns relating to administrative efficiency, retailer compliance, and collection of sales and use tax revenue, are addressed. In determining what information to collect and how to make the information collected available to local taxing jurisdictions as required by this subsection (3)(a), the department shall consult with local taxing jurisdictions, including but not limited to large, medium, and small home rule and nonhome rule municipalities and large, medium, and small counties. The department shall also consult with retailers to address any reasonable concerns they may have.
(b) The department shall accomplish the tasks set forth in subsection (3)(a) of this section expeditiously so that no later than July 1, 2023, and sooner if feasible, a retailer that has a state standard retail license and either does not have physical presence within a local taxing jurisdiction or has only incidental physical presence within a local taxing jurisdiction can make retail sales within the local taxing jurisdiction without having to apply separately to the local taxing jurisdiction for a general business license.
(4) (a) On and after July 1, 2022, a local taxing jurisdiction shall not charge a fee for a general business license to a retailer that has a state standard retail license, makes retail sales within the local taxing jurisdiction, and either does not have physical presence in the local taxing jurisdiction or has only incidental physical presence within the local taxing jurisdiction.
(b) On and after July 1, 2023, a local taxing jurisdiction shall not require a retailer that has a state standard retail license, makes retail sales within the local taxing jurisdiction, and either does not have physical presence in the local taxing jurisdiction to or has only incidental physical presence within the local taxing jurisdiction to apply separately to the local taxing jurisdiction for a general business license. If the local taxing jurisdiction requires a general business license, it shall automatically issue a general business license at no charge to such a retailer using the information provided by the department pursuant to subsection (3) of this section; except that a local taxing jurisdiction is not required to issue a general business license to a retailer if the local taxing jurisdiction has previously revoked a general business license held by the retailer for a violation of its local code. In addition, nothing in this subsection (4)(b) prohibits a local taxing jurisdiction from suspending or revoking a general business license for a violation of its local code.
Source: L. 2022: Entire section added, (SB 22-032), ch. 119, p. 553, � 1, effective April 21.