Colorado “Tattletale” Tax Ruling
Colorado “Tattletale” Tax Ruling
As you may have heard or seen on the news, states have been cracking down on collecting sales tax for interstate and online sales. If your business has any sales to customers in Colorado, a recent emergency “tattletale” rule published by the Colorado Department of Revenue (Rule 39-21-112(3.5)) may require your attention.
The general rule applies to all sellers who have more than $100,000 of sales into Colorado and that do not collect Colorado sales tax. If this rule applies to you, Colorado now requires you to provide a transactional notice to all Colorado purchasers, an Annual Purchase Summary to all Colorado customers whose purchases total $500 or more, and an Annual Customer Information Report to be filed with the Colorado Department of Revenue.
There are heavy penalties for sellers who fail to comply with these rules. The maximum penalties are capped at $125,000 for failing to comply with all of these requirements. However, the penalties are only capped if you had no knowledge of the requirement and file within 60 days of demand by the Colorado Department of Revenue.
It is likely that more states will follow in Colorado’s footsteps, as Washington has recently enacted its own “tattletale” rule with an even lower threshold for reporting set at $10,000.
These rules are currently in effect, so if you anticipate your business having $100,000 or more in sales to Colorado customers in a calendar year and you do not currently collect Colorado sales tax, please contact us to discuss what needs to be done to comply with the new reporting requirements.