Big Sales Tax Hurdle for Small Businesses

Colorado Legislators Reject Simplified Sales Tax for Small Businesses

On February 19, Senate Democrats voted against a bill that some say would have provided small businesses relief from the new sales tax collection rules.

Senate Bill 19-131 would have exempted any small business that creates less than $100,000 in annual online sales from the Colorado Department of Revenue’s new “destination sourcing rule”. The rule requires that all in-state retailers collect and remit sales taxes on items purchased by and shipped to a consumer based on the buyer’s address.  Prior to this, taxes were collected based on where the business is located and not where products were being shipped.

As it stands now, by May 31, small businesses will have to collect and remit taxes for every transaction outside of their home jurisdiction, no matter the amount of the sale. According to The Denver Post; “There are 683 possible sales tax combinations” in Colorado alone. Some business and legislators believe this new rule could be a detriment to small business growth and sustainability within the state and are being pressed for a solution.