Initial Number of Reports "Disappointing" Under Colorado's Tattletale Use Tax Law

The state of Colorado’s number of reports received from out of state sellers under its tattletale use tax law were “disappointing” in the words of Phil Horwitz, director of tax policy analysis for the Colorado Department of Revenue.  Mr. Horwitz’s comments to the Multistate Tax Commission’s Uniformity Committee on April 25 were reported on by Tax Notes Today in an April 26 story.[1]

The law took effect on July 1, 2017, with the first reports due by March 1, 2018.

Mr. Horwitz report the state received reports on over 800,000 people or businesses in the state on which the use tax was not collected, with the amounts purchased totaling over $250,000,000.  If all those amounts are taxable, then the state of Colorado would be looking at collecting $7.5 million of tax from those buyers. 

However, sellers are not required under Colorado law to determine if the items purchased are subject to the use tax and at least some of those buyers may have filed use tax reports, so the actual amount of uncollected revenue that could be obtained from these reports is likely less than that potential maximum amount.

The largest amount of reported purchases not subject to use tax by a single taxpayer was $900,000, with the next highest amount of purchases reported being $300,000.  One seller filed 115,000 reports of untaxed sales in the state.

Mr. Horwitz noted that the state believes it still has work to do to inform out of state sellers of their obligation to file such reports.  The article cites MTC General Counsel Helen Hecht’s statement that since Colorado passed its law, the states of Vermont, Washington, Pennsylvania, Minnesota, and Rhode Island have passed similar laws.

[1] Amy Hamilton, “Remote Sellers Report $250 Million in Untaxed Sales in Colorado,” Tax Notes Today, April 26, 2018, 2018 STT 81-1,