In this Capitol Report:
Discussions Continue on Adopting a Statewide Electronic Sales Tax Simplification System
Last week, the legislative Sales & Use Tax Simplification Task Force met and continued their discussions on specific state tax related issues including the Wayfair Supreme Court decision and an update on next steps toward a centralized, electronic sales tax simplification system. As background, the Task Force was created in 2016 and includes members of the CACI Tax Council as well as other business representatives. Council member, Bruce Nelson, EKS&H, is the appointee to the Task Force on behalf of the Colorado Chamber of Commerce, CACI. The goal of the group is to focus on opportunities for simplifying Colorado’s current tax reporting system which is known as one of the most complicated systems in the country.
During the meeting held on July 26th, the Task Force members focused on the following areas:
- Next steps for implementation of a centralized electronic sales tax simplification system;
- The timeline and overview of vendors who responded to the Request for Information (RFI) for implementation of a centralized system;
- Costs associated with funding a centralized system;
- An update on the adoption of the streamlined sales & use tax definitions by municipalities;
- A presentation by the National Conference of State Legislatures (NCSL) & the American Legislative Exchange Council (ALEC) on the S. Dakota v. Wayfair Supreme Court decision; and
- A discussion of use tax by the CO Dept. of Revenue and construction industry representatives.
The Colorado Chamber of Commerce, CACI, has long advocated for a centralized system that enables taxpayers to collect and remit sales and use tax to one location as well as provide one location for licensing and registration by a business. The cost associated with adopting a centralized system has been one of the most significant challenges to overcome for many years, and is an issue that the Task Force will be facing in upcoming meetings. During the meeting, the legislative staff provided a list of funding options for implementation of such a system which included:
- Retention of an administrative fee prior to distribution of tax revenue to local governments;
- Use of State General Fund dollars;
- Reduction of the State’s Vendor Fee from 3.33% to 3.0%;
- Increasing the State’s sales tax rate by 0.1%;
- Increasing the sales tax license fee;
- Collecting Streamlined Sales Tax voluntary compliance revenue.
Since some of these funding options are not only controversial but are also untenable due to State budget limitations, the Task Force will be forced to narrow the funding options for final consideration.
Other opportunities for taxpayer simplification discussed by the Task Force include the opportunity for the Department of Revenue and local governments to agree to using a uniform sales and use tax return. This is a simple concept that does not require passage of legislation and allows for consistency and simplification for businesses filing taxes with State and local jurisdictions.
Task Force members also shared a quick update on the adoption of the streamlined sales tax definitions by municipalities. As background, the Colorado Chamber of Commerce, CACI, worked with the CO Municipal League beginning in 2014, and developed uniform definitions for all 106 definitions of goods and services that are taxable within the state. The intent was that those uniform definitions would be adopted by all municipalities. Once final approval was reached between CACI and CML in 2016 on the uniform definitions, and since that time, approximately thirty-nine (39) cities have adopted the standardized definitions and more cities are coming on-board.
Finally, the Task Force heard presentations from NSCL and ALEC on the Wayfair Supreme Court decision. Given the significance of this case, the Task Force has spent the last two meetings discussing the implications of the case which now changes how states and local jurisdictions will tax items purchased online. The issue is further complicated here in Colorado due to the 70+ home rule cities that have the authority to determine how those taxes will be collected in their jurisdictions.
Despite the significance of the Wayfair decision, we anticipate that the Task Force will focus on the practicalities of what can be achieved prior to the start of the 2019 Legislative Session. Such opportunities continue to include the adoption of a centralized electronic tax system, the creation of a uniform tax return, and approval of the uniform sales and use tax definitions by all municipalities in the State.
Please contact Loren Furman at [email protected] or at 303-866-9641 with any questions regarding this Task Force.
The SBA Wants to Hear From YOU!
Are there regulations you would change if you were in charge? Are you struggling with regulatory burdens?
The Small Business Administration (SBA) will be holding a Regional Regulatory Reform roundtable in Fort Collins on August 8th and Colorado Springs on August 9th to help identify specific regulatory barriers to small business growth.
The SBA wants to hear the first-hand testimony and wisdom of those business owners and managers who shoulder the burden of regulatory compliance every day.
Consider sharing your experience regarding:
- Duplicative or overlapping rules affecting your business
- Burdensome audits
- Federal standards not effective at meeting federal goals
- Roadblocks experienced while seeking capital
- Reasons you’ve considered expanding your business but chose to wait
The SBA has conducted 30 of these small business regulatory reform roundtables in 18 states since last June and there are great success stories coming from the SBA’s efforts on behalf of the business community.
What you need to know:
August 8 – Fort Collins, CO – https://www.eventbrite.com/e/sba-office-of-advocacy-regional-regulatory-roundtable-fort-collins-co-tickets-48218998322
August 9 – Colorado Springs, CO – https://www.eventbrite.com/e/sba-office-of-advocacy-regional-regulatory-roundtable-colorado-springs-co-tickets-48219156796