July 11, 2017
Notice and reporting requirements take effect in three states and Puerto Rico, no physical presence required for affected retailers
On July 1, 2017, new sales and use tax reporting requirements took effect in Colorado and Vermont that apply to any retailer making at least $100,000 in sales to in-state customers during the previous 12 months, regardless of whether the retailer has any physical presence in the state. Similar provisions that took effect in Louisiana and Puerto Rico on the same date do not contain the sales exception, but Louisiana's provision does apply a $250 per transaction threshold.
Under these provisions, non-collecting retailers in Colorado, Louisiana, and Vermont that meet the sales thresholds are required to: 1) notify customers, at the time of the transaction, that tax is due on their purchases; 2) send annual notification (by January 31st) to all in-state customers that made $500 or more ($250 or more in Louisiana) in purchases from the retailer in the previous calendar year, informing them that tax is due on such purchases; and 3) provide the state Taxing Authority (by March 1st) with an annual statement for each in-state purchaser showing the total amount of purchases made during the preceding calendar year. In Puerto Rico, the report to the local Taxing Authority must be submitted on a quarterly basis.
Failure to comply with the provisions will result in the following penalties in Colorado and Vermont:
— $5 per customer invoice that does not contain the required notification that tax is due
— $10 per customer for failure to send the annual notification by January 31st
— $10 per customer omitted from the annual report if such customer should have been included.
Penalties for non-compliance are significantly higher in Puerto Rico but, it is worth noting that the Louisiana statute (La. Rev. Stat Section 47:309.1) does not refer to any penalties for non-compliance.
On June 28, 2017, the Colorado Department of Revenue issued emergency regulations that provide some guidance on complying with the reporting requirements, but there continues to be some uncertainty as to their practical operation. The Puerto Rico Treasury Department is said to be formulating regulations, but the Vermont Department of Taxes has not issued significant guidance. In Louisiana, it should be noted, the Department of Revenue may require remote retailers subject to the reporting provisions to file their reports electronically if their total Louisiana sales exceed $100,000 for the calendar year.
Any business that makes any sales into Colorado, Louisiana, Vermont, or Puerto Rico needs to immediately review their sales data to determine whether there is a reasonable possibility that they might meet the reporting thresholds, and to ensure that they are able to capture the required information. Businesses also should make certain that invoices issued to customers in those states/territories contain the required statutory language.
It should be noted that in each jurisdiction, non-collecting retailers can enter into voluntary collection agreements with the relevant taxing authority and, thus, not be subject to the notification requirements previously noted.