{"id":10571,"date":"2022-06-30T19:58:14","date_gmt":"2022-06-30T19:58:14","guid":{"rendered":"https:\/\/taxops.com\/?p=10571"},"modified":"2022-06-30T19:59:06","modified_gmt":"2022-06-30T19:59:06","slug":"taxops-response-to-the-new-colorado-delivery-fee","status":"publish","type":"post","link":"https:\/\/taxops.com\/taxops-response-to-the-new-colorado-delivery-fee\/","title":{"rendered":"TaxOps&#8217; Response to the New Colorado Delivery Fee"},"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=\"10575\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-1024x536.png\" alt=\"Colorado Delivery Fee\" class=\"wp-image-10575 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-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=\"10575\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-1024x536.png\" alt=\"Colorado Delivery Fee\" class=\"wp-image-10575 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee-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<p class=\"wp-block-paragraph\">By the <a href=\"https:\/\/taxops.com\/state-and-local-tax\/\">TaxOps State and Local Tax Team<\/a><\/p>\n\n\n\n<div style=\"height:42px\" 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>In advance of a June 23 workgroup session discussing the new Colorado Delivery Fee, TaxOps submitted the following letter to the Colorado Department of Revenue. As tax specialists working with thousands of dynamic businesses across the nation and internationally, we recognize that this fee adds a layer of compliance complexity for both in-state and remote sellers and generates a host of application questions and concerns. This fee is effective as of July 1 and there are few exceptions.&nbsp;&nbsp;<\/em><\/p><\/blockquote>\n\n\n\n<div style=\"height:42px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Letter to the Colorado Department of Revenue<\/h2>\n\n\n\n<div style=\"height:42px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<p class=\"wp-block-paragraph\">June 22, 2022<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Colorado Department of Revenue<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">2882 Pierce Street<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Lakewood, CO 80214<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Re: Stakeholder Workgroup: Colorado Delivery Fee<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We are writing to address concerns and questions on the Colorado Delivery Fee in advance of the Colorado Department of Revenue (CDOR) workgroup session scheduled for June 23, 2022, at 10 am in Lakewood. We understand that this workgroup is being convened to discuss information in advance of the effective date of the new Colorado Retail Delivery Fee on July 1, 2022. This fee requires retailers to collect a $0.27 fee every time they deliver taxable goods and services to a Colorado address.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As tax specialty providers who work with thousands of dynamic businesses across the nation and internationally, we recognize that this fee adds a layer of compliance complexity for both in-state and remote sellers and generates a host of application questions and concerns, as noted below.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>INITIAL CONSIDERATIONS<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Home Rule Treatment<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Should the fee be effective July 1, 2022, there are initial considerations for the workgroup to consider. Some of the Colorado home rules \u2013 of which there are 70 \u2013 are as of this writing taking the position that the fee is part of the purchase price and is considered taxable. Thus, there are some implications that the State did not give thought to the layering effect of this fee when they enacted it, which may need further consideration. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Regarding Rule 43-4-218 (3)(a) per sale basis:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 Is there one delivery fee for the state, including local jurisdictions that the state collects, or is it a fee imposed by each individual jurisdiction (i.e., a fee applicable at the statutory city and county level)?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 Similarly, is the delivery fee considered to be a part of the sale, and therefore taxable at the state level? For example, is it like a Public Improvement Fee, or PIF? Is the delivery fee included in the definition of a sale and therefore, taxable at the local level? Home rule cities have indicated that they will likely be taxing this fee as a part of the sale; we would like to confirm the proper treatment for sales tax purposes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Denver, for example, is the largest home rule and is considering taxing the fee, as is Fort Collins. So, even if the fee is stated separately, cities are wondering why it should not be included in the purchase price, and subject to tax, given that the fee is mandatory.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some officials acknowledge, however, that before including the fee in the purchase price, a thorough analysis would be necessary to consider whether a customer has the ability to obtain the taxable item without paying that particular charge \u2013 in this case of the delivery fee \u2013 on the invoice. It does not appear that this fee is associated with a specific service by the vendor but rather is a mandatory charge imposed by the State.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Denver does not currently have an exemption in its municipal code for this fee. As it appears, the fee would likely be taxable in Denver. Other home rule cities have similar municipal codes, and they would likely follow Denver\u2019s direction on taxing these mandatory delivery fees imposed by the State of Colorado.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Grace Period for Enforcement<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Those business taxpayers with over-the-road tangible personal property deliveries must figure out how they are going to charge this fee for each applicable sale to Colorado customers, get registered and file. (Note that registration is automatic for those taxpayers who already have a sales tax account with the state of Colorado.) Sellers must add a line item to all items delivered to Colorado for the fee on invoices ($0.27). This fee will require a separate return as well.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 As of the writing of these comments, website cart software providers have not yet figured out how to implement and write into the platform how to collect this fee. It is possible that there is skepticism as to legal impact of writing code that determines if a taxable product in Colorado is added to a website cart and is then delivered via motor vehicle. Was there any consideration from the State as to how the software vendors would address, essentially, offering tax advice when supporting an online shopping cart?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 Due to the rushed nature of administering this fee, and to allow time for sales tax automation and website cart software providers to incorporate this fee into their software solutions, we request the CDOR consider extending a grace period for enforcement through July 1, 2023.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>RULE 43-4-218: RETAIL DELIVERY FEES<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With regard to Rule 43-4-218. Retail Delivery Fees, the purpose of the rule is to set forth the manner in which retail delivery fees are collected, administered, and enforced. We have the following questions and concerns by section.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Rule 43-4-218 (1) Definitions<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 Please provide further clarification on the private company application of \u201centerprise retail delivery fee\u201d and the implications regarding public access fees.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Rule 43-4-218 (4)(b)(ii) Drop Shipments<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 In a drop shipment, we understand that the retailer, who does not have the item in its warehouse and may never directly handle the item, is nevertheless required to charge the retail delivery fee under this rule. Should the retailer send an invoice for $0.27 to the drop shipper or to the ultimate purchaser? Alternatively, would a drop shipper have any<br>requirement to collect the fee?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Rule 43-4-218 (4)(e) Exemption Certificates<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 With respect to exempt customers, are sales tax exemption certificates sufficient proof that a retailer is exempt from collecting the retail delivery fee? If not, what documentation should be requested and for how long should the retailer retain such documentation after the sale?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Rule 43-4-218 (5) Deliveries of Marijuana<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 While marijuana is exempt from the retail delivery fee, how are other related products treated, such as CBD and edibles?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Rule 43-4-218 (7) Collection of the Retail Delivery Fees<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 Can sellers absorb the cost of the fee, or must the fee be passed through to the buyer? (i.e., can the seller pay the retail delivery fee, likely as a matter of administrative ease)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Rule 43-4-218 (9) Refunds and Credits<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 How does the vendor file a claim for refund?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>GENERAL QUESTIONS<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 Do vendors who do not meet the nexus threshold for sales in Colorado have to collect the fee if they are not responsible for collecting sales tax? Or is this fee only applicable once a seller has nexus in Colorado?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 What about customer product or service returns or exchanges \u2013 would the return trigger a new fee on the return transport of the item?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 How will this fee be administered and enforced or audited?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2022 What type of remediation is anticipated, if any, to non-compliant vendors?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>LEGALITY OF THE &#8220;FEE&#8221;<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We understand opposition has been raised to the fee, with concerns centered on how the fee evades the Taxpayer Bill of Rights (TABOR) and is therefore deemed unconstitutional. TABOR requires a vote any time that taxes are increased; naming a chargeable item a \u201cfee\u201d should not circumvent voter requirements. In 2020, voters approved Colorado Proposition 117, the Require Voter Approval of Certain New Enterprises Exempt from TABOR Initiative, which requires statewide voter approval when an enterprise&#8217;s projected or actual revenue from fees and surcharges is greater than $100 million within its first five years. This retail delivery fee (along with the other revenue raising components of the bill) is projected to raise $5.4 billion by the 2031-32 fiscal year and therefore exceeds that $100 million threshold.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This fee is collected, remitted, and administered at the same time as a sales tax, falls under the same penalty and interest implications of sales tax, and requires the same exemption documentation as sales tax. How is this not a tax?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We appreciate the opportunity to comment on a rule that creates a substantial burden on businesses selling into the state of Colorado.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sincerely,<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/taxops.com\/judith-vorndran\/\">Judy Vorndran<\/a>, Partner<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/taxops.com\/stacey-roberts-3\/\">Stacey Roberts<\/a>, Director<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/taxops.com\/connie-zoerink\/\">Connie Zoerink<\/a>, Director<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/taxops.com\/meredith-smith\/\">Meredith Smith<\/a>, Senior Tax Manager<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n<div style=\"height:8px\" 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>Read more at <a href=\"https:\/\/www.law360.com\/tax-authority\/articles\/1505497\" title=\"\">Law360<\/a> (subscription required).<\/em><\/p><p><em>For more guidance, reach out to the tax professionals at <a href=\"https:\/\/taxops.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">taxops.com<\/a>.<\/em><\/p><\/blockquote>\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>By the TaxOps State and Local Tax Team In advance of a June 23 workgroup session discussing the new Colorado Delivery Fee, TaxOps submitted the following letter to the Colorado Department of Revenue. As tax specialists working with thousands of dynamic businesses across the nation and internationally, we recognize that this fee adds a layer [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":10575,"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":[252,284,12,126,977,975,978,265,913,976,101,80,964],"class_list":["post-10571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-state-and-local","category-tax-news","tag-accountant","tag-cfo","tag-colorado","tag-cpa","tag-deliveries","tag-delivery-fee","tag-delivery-tax","tag-finance-professional","tag-new-tax","tag-retail-delivery","tag-state-tax","tag-tax-provider","tag-tax-service"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2022\/06\/TaxOps-Response-to-the-New-Colorado-Delivery-Fee.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10571","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=10571"}],"version-history":[{"count":15,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10571\/revisions"}],"predecessor-version":[{"id":10595,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/10571\/revisions\/10595"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/10575"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=10571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=10571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=10571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}