Colorado Sales Tax Changes for DTC Delayed

The Colorado Department of Revenue (DOR) announced that it is extending the grace period through May 31, 2019, to in-state AND out-of-state retailers to comply with new sales tax collections rules. These new rules would have required wineries with “substantial nexus” to begin collecting Colorado state, local and special district sales taxes on sales shipped to consumers in Colorado beginning Dec. 1, 2018.

Colorado is one of only three states that allows for the separate administration of local sales taxes, meaning that the city or county collects its own sales tax. As a result, Colorado has nearly 700 different sales-tax combinations depending on how local taxing jurisdictions overlap. Additionally, a separate tax return must be filed with each local jurisdiction making compliance with the new rules requiring local sales tax collection especially burdensome. Wine Institute attended a hearing on the sales tax changes on Nov. 30 and requested that DOR postpone the requirement to collect local sales taxes until there is a streamlined process for doing so.

A business, including a winery, with “substantial nexus” that does not collect sales tax during the grace period must continue to collect and remit Colorado Use taxes or comply with Colorado’s reporting requirements relating to remote seller transactions. Please note that a business holding a Sales Tax Permit must file sales tax returns during the grace period, and such a business cannot collect Colorado use tax and file use tax returns. More details on the sales tax changes and grace period can be found on the DOR’s website.