US Supreme Court Sustains Ruling on Colorado Non-Resident Retail Tax Reporting Law

As reported in the Sovos blog, the US Supreme Court denied certiori (that is, it will not review) to a ruling by the 10th District Court of Appeals on a Colorado law imposing certain reporting and notice requirements on out of state retailers. By denying cert, the Supreme Court essentially says that the lower court's ruling is to be upheld, meaning that the law in question is valid.

Under this law, out of state retailers with more than $100,000 in total annual gross sales will need to notify their customers in Colorado that use tax is due on their purchases (use tax is an analog to sales tax, paid directly by the purchaser to the state instead of indirectly by the seller). These retailers will need to send a notice with every purchase; an annual notice to customers who purchased more than $500 of goods the previous year; and an annual report to the Colorado DOR indicating who their customers were in Colorado, and how much use tax they should be expected to pay. Alternatively, non-resident sellers could elect to collect and remit sales tax themselves, avoiding the notice requirement and relieving their customers of their tax burden.

This may have knock-on affects on the direct to consumer wine industry in Colorado. Unlike most other states, Colorado does not currently require wineries licensed for DtC sales to remit sales tax. However, wineries that sell over $100,000 annually in Colorado would fall under this new law, and thereby have to either collect and remit sales tax or comply with the notice and reporting requirements. (It is as yet unclear if the $100,000 "de minimis" amount includes both DtC and Wholesale sales, or just DtC sales.)

As more information is released by the Colorado DOR on how this law will be implemented and how it will affect the DtC market, we will be sure to report on it.

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