CO, CT set to implement online sales tax collection in December

Next month Colorado and Connecticut will join the growing list of states implementing online sales tax as a result of the U.S. Supreme Court’s groundbreaking South Dakota v. Wayfair ruling in June.

According to the Colorado Department of Revenue's guidelines for the sales tax collection, out-of-state retailers must apply for a sales tax license by Nov. 30. The first day the companies can start collecting sales tax is Dec. 1.

In 2010, Colorado passed HB 10-1193, requiring retailers not having a physical presence in the state to notify Colorado customers that they owed the sales tax on their purchases. The law applied to retailers with more than $100,000 in annual sales. The legislation was tied up in litigation for several years before the Supreme Court upheld it in 2016. The Wayfair decision occurred after the Colorado Department of Revenue finalized regulations in 2017 to ensure compliance with HB 10-1193.

Connecticut’s law will require online retailers without a physical presence in the state to collect and remit sales tax if they meet a standard of $250,000 in annual in-state sales and 200 separate transactions.

Thirty-four states will have enacted online sales tax laws by the end of the year. Additional states will consider legislation or other policy changes in 2019, including Arkansas, Arizona, California, Florida, Kansas, Missouri, New Mexico, New York, Texas, Virginia, West Virginia.