CO LA Sales Tax 101 VT

Use Tax Notification Laws Go into Effect in Colorado, Louisiana & Vermont

by Jennifer Dunn

Colorado, Louisiana Vermont notice and report sales tax use tax laws

Three new state laws going into effect on July 1, 2017 will impact some eCommerce sellers. This article will detail each law and help you determine if your eCommerce business is affected.

Keep in mind that these laws only apply noncollecting vendors, meaning vendors who do not have sales tax nexus in the state and therefore are not required by law to collect sales tax in the state. If you have sales tax nexus in these states, these laws and thresholds don’t apply to your business.

Colorado’s Use Tax Notification & Reporting Law

Starting July 1, any retailer who makes more than $100,000 per year in sales in Colorado and does not collect Colorado sales tax is required to send an annual use tax notification to all Colorado customers and to the state of Colorado.

This notification should be sent to each customer by January 31 of the following year and include the following:

  • date of the purchase(s)
  • amount and category of the purchase(s)
  • whether or not the purchase(s) was tax exempt (if known by the retailer)

The seller must also send the following to the Colorado Department of Revenue by March, 1:

  • names of all Colorado customers
  • addresses of all Colorado customers
  • date of the purchase(s)
  • amount and category of the purchase(s)
  • whether or not the purchase(s) was tax exempt (if known by the retailer)

Failure to send this notification will result in a penalty of $5 per customer. Colorado has not yet introduced any specific guidance or tax forms for retailers to use in this reporting and filing. We assume they’ll provide more guidance before the first January 31, 2018 deadline.

You can read more about Colorado’s use tax notice and reporting law here. And you can read the text of Colorado H.B. 10-1193 here.

Louisiana’s Use Tax Notification & Reporting Law

Starting July 1, any retailer who along with it’s affiliates makes more than $50,000 in Louisiana per calendar year is required to send two use tax due notifications and an annual notification to the state of Louisiana.

Point of Sale Notification

At the point of sale, all noncollecting Louisiana sellers must provide notice to all Louisiana buyers that use tax is due on the purchase. The notice should state that items bought on the internet are not tax exempt and that the buyers should pay use tax either on their annual income tax return or by other means as required by the Secretary of the Louisiana Department of Revenue.

Annual Notification

Noncollecting sellers with more than $50,000 in sales to buyers in Louisiana must also contact customers and the Louisiana Department of Revenue annually.

A notification should be sent to each customer by January 31 of the following year and include the following:

  • A list of dates and the amount of purchases the buyer made in the preceding calendar year
  • Whether the property or service was exempt (if known)
  • The name of the retailer
  • A statement notifying the customer that Louisiana laws requires use tax to be paid to the state of Louisiana through their individual income tax return or other means

Retailers must also file an annual statement with the Louisiana Department of Revenue by March 1 of the following year. It should contain:

  • The purchaser’s identifying information (the bill does not go into detail if this is merely name and address or other identifying information)
  • The total amount paid to the retailer by the purchaser during the calendar year

By law, the notice should NOT include any detail as to the specific property and services purchased.

Louisiana has not yet introduced any specific guidance or tax forms for retailers to use in this reporting and filing. We assume they’ll provide more guidance before the first January 31, 2018 deadline.

You can read Louisiana H.B. 1121 here, and our post specifically about the Louisiana use tax notification law here.

Vermont’s Use Tax Notification Law

Beginning July 1, any retailer who does not collect Vermont sales tax but makes at least $100,000 in sales to Vermont buyers, or has 200 or more individual sales transactions with Vermont buyers, is required to send use tax notifications to buyers and to the Vermont Department of Revenue.

While the bill does not specify when notice must be given, noncollecting sellers subject to this law must notify Vermont purchasers that sales and use tax is due. Failure to notify buyers of use tax due may result in a penalty of $5 for each instance of noncompliance.

Also, by January 31 of the following year, the seller should send an additional notice to any Vermont buyer who made more than $500 in purchases from their store during the previous calendar year. The notice should:

  • Be sent via first class mail or email and include the words “Important Tax Document Enclosed” on the outside of the mailing
  • Include the name of the noncollecting vendor
  • Include any information required by the Vermont Tax Commissioner

Failure to send this notice to buyers by January 31 will result in a penalty of $10.00 per buyer (unless the noncollecting vendor shows reasonable cause.)

Vermont has not yet introduced any specific guidance or tax forms for retailers to use in this reporting and filing. We assume they’ll provide more guidance before the first January 31, 2018 deadline.

You can read the text of Vermont H.873 here (p. 21).

Other Resources

In our own view and in the view of accounting experts we work with, these notice & reporting laws (sometimes called “tattle tale” laws) are likely an effort for states to make not collecting sales tax such a challenge that online retailers give up and start collecting sales tax in states where they have no other obligation to do so.

Also, while these laws were challenged all the way to the Supreme Court (and back) in the Direct Marketing Assoc. v. Brohl case, they were ultimately held up as Constitutional. Unless another challenge comes along, these laws are now in effect.

You can read more about these laws here:

Is Colorado the domino leading to internet sales tax?

Louisiana Use Tax Law Aimed at Remote Online Sellers

What does the Colorado Amazon sales tax law mean for online sellers?

Have questions or something to say about these new laws? Start the conversation in the comments.

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