Update on Colorado Remote Sellers Law

Last fall, Wine Institute reported on the Supreme Court’s refusal to hear a Colorado-based case on “remote sellers” legislation passed several years ago. The law requires remote sellers to send customer sales reports to the Department of Revenue (DOR) if they do not collect sales taxes on remote purchases in Colorado. With the Court’s refusal, enforcement of the law began on July 1, 2017. Over the last two months, the Colorado DOR has been developing a rule to implement the new law. Wine Institute has been involved in the committee devising this rule to ensure that wineries’ remote sales are considered in the rulemaking.

The DOR adopted an emergency rule June 30. The rule requires remote sellers that have more than $100,000 in “Total Gross Sales” (the de minimus, threshhold) to (a) notify the customer at the transactional level that the customer may owe tax on their purchase, and (b) send (via email or mail) an annual purchase summary with tax information to each of their customers that purchased a product. The definition of “Total Gross Sales” includes the total sales of “Colorado Reportable Purchases” made by all entities controlled by or under common control with the “Non-collecting Retailer.” A “Colorado Reportable Purchase” does not include a purchase on which sales tax was collected at the time of sale, whether collected by the non-collecting retailer or a third party. In answering a question posed by Wine Institute, the DOR has averred that wines sold to wholesalers are not included in reportable purchases.

Based on the law that went into effect July 1 and the corresponding rule implementing the law, Wine Institute recommends that all wineries shipping directly to customers in Colorado collect and remit the tax to avoid (a) the need to calculate whether they fall below or above the de minimus standard, and (b) any and all reporting requirements relating to remote sellers transactions.

Winery Direct Shippers that wish to collect and remit Colorado sales and use tax, should download and complete the Sales Tax/Wage Withholding Account Application (CR 0100AP) to request a Retailer’s Use Tax Account. For more details, download the instructions here.