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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

Last updated February 20, 2018

Use tax “notice & report” laws have now been in effect for months in Colorado, Louisiana and Vermont. The first deadlines for retailers are hitting on January 31, 2018. This post offers a brief rundown of each state’s law, and how sellers who fit the criteria can comply.

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. In December, Colorado issued specific guidance to sellers who are required to comply with the law.

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

Updated February 20, 2018 with more info

Beginning July 1, any retailer who does not collect Vermont sales tax is required to abide by Vermont’s notice and reporting law. Vermont has provided guidance to noncollecting sellers on this page.

Vermont’s definition of a noncollecting vendor is as follows. A vendor that

  1. makes sales into Vermont that are subject to sales tax but
  2. does not collect sales tax and
  3. lacks sales tax nexus with Vermont.

In summary:

  • All noncollecting vendors are required to provide a “transactional notice” to Vermont buyers that the buyer owes use tax on their products
  • All noncollecting vendors who sold $500 or more in total purchases to a single Vermont buyer are required to send an annual purchase summary notification to Vermont buyers showing the total amountpaid by the purchaser for Vermont purchases made in the previous calendar year.
  • Noncollecting vendors who made $100,000 or more in sales to Vermont buyers are required to transmit an annual customer information report to the Department of Taxes on or before January 31 of each year for every purchaser required to receive an annual purchase summary.

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

And you can read Vermont’s guide for noncollecting vendors here.

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:

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

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