{"id":10511,"date":"2022-06-21T15:35:12","date_gmt":"2022-06-21T15:35:12","guid":{"rendered":"https:\/\/taxops.com\/?p=10511"},"modified":"2022-06-21T15:45:31","modified_gmt":"2022-06-21T15:45:31","slug":"colorado-moves-on-simplifying-sales-and-use-tax","status":"publish","type":"post","link":"https:\/\/taxops.com\/colorado-moves-on-simplifying-sales-and-use-tax\/","title":{"rendered":"Colorado Moves on Simplifying Sales and Use Tax\u00a0"},"content":{"rendered":"\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-gallery has-nested-images columns-default is-cropped wp-block-gallery-1 is-layout-flex wp-block-gallery-is-layout-flex\">\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" data-id=\"10520\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-1024x536.png\" alt=\"\" class=\"wp-image-10520 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"536\" data-id=\"10520\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-1024x536.png\" alt=\"\" class=\"wp-image-10520 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1-1-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><\/noscript><\/figure>\n<\/figure>\n\n\n\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em><em><em><em><em><em><em><em><em><em><em><em>Two pieces of legislation were signed into law in the state of Colorado. Senate Bill 22-032 is aimed at simplifying the state\u2019s complex sales and use tax policy, while House Bill 22-1118 provides a process for sales and use tax refunds (that comes with some hidden challenges).\u00a0<\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/em><\/p><\/blockquote>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">By <a href=\"https:\/\/www.linkedin.com\/in\/judyvorndran\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"\">Judy Vorndran<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a href=\"https:\/\/leg.colorado.gov\/sites\/default\/files\/2022a_032_signed.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Simplifying Local Sales and Use Tax Administration<\/a>\u00a0<\/h2>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Colorado Senate Bill 22-032, as signed into law, eliminates double dip registration fees from local jurisdictions on businesses that hold a standard license. As such, the law prevents local jurisdictions, of which there are 70, in Colorado from charging business license fees on remote businesses that do not have a physical presence in that jurisdiction. The law further requires that the Department of Revenue collect and distribute retailer information to local jurisdictions, which will use the information to issue local general business licenses to those retailers at no charge.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This law provides a two-year phase-in period, as follows.&nbsp;&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>On and after July 1, 2022, home rule municipalities are prohibited from charging a fee for a local general business license to a retailer that holds a state standard retail license, makes retail sales within the local taxing jurisdiction, and either does not have physical presence within the local taxing jurisdiction or has only incidental physical presence within the local taxing jurisdiction.\u00a0\u00a0<\/p><p>On and after July 1, 2023, a local taxing jurisdiction is prohibited from requiring such a retailer to apply separately to the local taxing jurisdiction for a general business license. A local taxing jurisdiction must automatically issue a general business license to such a retailer unless the local taxing jurisdiction has previously revoked a general business license held by the retailer for a violation of its local code.\u00a0<\/p><p><\/p><\/blockquote>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Takeaway&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Double-dip licensing fees in home rule states have been a problem for years in Colorado, and a particular burden on small businesses. This law eliminates layers of auto-renewable licensing fees on businesses (See <a href=\"https:\/\/taxops.com\/where-sales-tax-and-business-licenses-meet-in-colorado\/\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Where Colorado Sales Tax and Business Licenses Meet<\/em><\/a>). Colorado cities cannot require remote sellers to pay a fee for a business license in order to be able to report and pay taxes to those local cities. You still get the license, you just don\u2019t pay the fee.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Both the state legislature and the\u202f<a href=\"https:\/\/www.simplifycosalestax.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Simplify Colorado Sales Tax Coalition<\/a>, of which I am a founding member, worked hard to resolve this issue in a reasonable manner. The General Assembly\u2019s override of licensing at the home rule city level favors statewide uniformity and fairness and is a taxpayer win.\u00a0\u00a0<\/p>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a href=\"https:\/\/leg.colorado.gov\/sites\/default\/files\/2022a_1118_signed.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Colorado Amends Sales &amp; Use Tax Refund<\/a>&nbsp;<\/h2>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">In a second piece of enacted legislation, Colorado House Bill 22-1118, interest on sales and use tax refund claims filed by a purchaser between July 1, 2022, and July 1, 2026, will begin accruing interest on the date the claim was filed rather than the purchase date if the refund is paid more than 180 days from the date the claim was filed.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When these claims are filed incorrectly or frivolously, the law allows the Department of Revenue to assess and collect civil penalties equal to 5% of the total refund claimed, if the claim is materially incomplete, and 10% of the total refund claimed if the claim is duplicative or lacking a reasonable basis in law or fact.&nbsp;&nbsp;<\/p>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Takeaway&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Many companies file simplified refund claims to get the process started but it now comes with risk. Governments are curtailing refund claims that are incorrect or frivolous. If you are going to file a refund claim, all items need to be reviewed and the value of the claim properly assessed to avoid a ruling by the state that the claim is incorrect or frivolous.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And remember, the state of Colorado doesn\u2019t want to be your bank account. They are limiting interest on the lookback period.&nbsp;&nbsp;<\/p>\n\n\n\n<div style=\"height:38px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let&#8217;s Talk Tax<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">More Tax News<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Two pieces of legislation were signed into law in the state of Colorado. Senate Bill 22-032 is aimed at simplifying the state\u2019s complex sales and use tax policy, while House Bill 22-1118 provides a process for sales and use tax refunds (that comes with some hidden challenges).\u00a0 By Judy Vorndran Simplifying Local Sales and Use [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":10518,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:gallery {\"linkTo\":\"none\"} -->\n<figure class=\"wp-block-gallery has-nested-images columns-default is-cropped\"><!-- wp:image {\"id\":10182,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/04\/Texas-High-Court-Clarifies-Service-Receipt-Apportionment-1-1024x536.png\" alt=\"\" class=\"wp-image-10182\"\/><\/figure>\n<!-- \/wp:image --><\/figure>\n<!-- \/wp:gallery -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em><em>The Texas Supreme Court has ruled in favor of apportioning service receipts to the location of personnel or equipment, a position providing clarity to taxpayers on whether to source receipts from services performed versus where customers are at.<\/em>&nbsp;<\/em><\/p><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><\/p><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https:\/\/taxops.com\/tram-le\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Tram Le\">Tram Le<\/a> <\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>On March 25, 2022, the Texas Supreme Court held in favor of the taxpayer that services revenue is apportioned to the location where services are performed, consistent with Texas law.<sup>1<\/sup> The Court found that the performance of service is located where the taxpayer\u2019s personnel or equipment is physically doing useful work for the customer.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The case involves Sirius XM (Sirius XM Radio, Inc. v. Hegar, Tx. Sup. Ct. No. 20-0462 (3\/25\/22)), whose headquarters, transmission equipment and production studios used in providing a subscription-based satellite radio service are largely located outside of Texas. In the 2010 and 2011 tax years, Sirius XM apportioned tax based on costs of activities in Texas and outside of Texas. Under Texas rules, service revenue is apportioned to Texas based on the \u201cfair value of the services\u201d rendered in Texas where services are performed in more than one state.<sup>2<\/sup>&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>For those tax years, the Texas Comptroller adjusted on audit to base the tax on the percentage of Sirius XM\u2019s Texas subscribers. The Comptroller argued that service revenue is sourced to Texas if the \u201creceipt-producing, end-product act\u201d takes place in Texas. In this case, such an act was considered the decryption of the satellite network and enabling of each subscriber\u2019s radio to receive Sirius XM\u2019s signal. However, Sirius XM argued that its services \u2013 the production and broadcasting of radio content \u2013 was mainly performed outside of Texas.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Texas Supreme Court ultimately agreed that Sirius XM was providing satellite radio content and those services are performed in Texas if the labor employed in that service is doing the work in Texas. This constitues a natural reading of the law, which requires taxes due \u201cwhere service [is] performed in this state.\u201d This rejects the Comptroller premise of service taking place at the customer location. The Court also rejected the use of the \u201creceipt-producing, end-product\u201d test to determine where a service is being performed.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although the Court ruled in favor of the taxpayer, the case was remanded to the Appellate court for further review of Sirius XM\u2019s cost of performing services and evidence to support its \u201cfair value of services\u201d performed in Texas.&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Texas Supreme Court opinion provides clarification in apportioning service revenue in Texas and determining whether services are performed in the state. Taxpayers doing business in Texas should carefully review business operations, nature of services, i.e., properly characterizing the services provided to customers and location of equipment, facilities, and personnel to properly apportion revenue.&nbsp;&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In addition, if services are being performed in Texas and outside of Texas, taxpayers must properly evaluate methods of determining the fair value of services and maintain sufficient evidence to support what revenue is apportioned to Texas. Contact a TaxOps advisor is you need assistance assessing nexus and taxability in the state of Texas and everywhere you do business.&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Tram Le is a member of the SALTovation team at TaxOps and an adjunct professor at the University of Texas at Arlington. She writes about hot topics in state and local tax affecting business operations and growth strategies and the Spreading SALTovation column for Tax Notes.&nbsp;Reach out to Tram at <a href=\"mailto:tle@taxops.com\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Tram Le\">tle@taxops.com<\/a>.&nbsp;&nbsp;<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let's Talk Tax<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3>More Tax News<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:latest-posts \/-->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"47px\"} -->\n<div style=\"height:47px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[229,226],"tags":[974,252,967,284,12,126,977,975,978,265,968,913,976,269,19,101,80,964],"class_list":["post-10511","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-state-and-local","category-tax-news","tag-27-cents","tag-accountant","tag-amazon-web-services","tag-cfo","tag-colorado","tag-cpa","tag-deliveries","tag-delivery-fee","tag-delivery-tax","tag-finance-professional","tag-mainframe-access","tag-new-tax","tag-retail-delivery","tag-returns","tag-sales-tax","tag-state-tax","tag-tax-provider","tag-tax-service"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/Colorado-Moves-on-Simplifying-Sales-and-Use-Tax-1.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=10511"}],"version-history":[{"count":4,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10511\/revisions"}],"predecessor-version":[{"id":10521,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10511\/revisions\/10521"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/10518"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=10511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=10511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=10511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}