Online retailers get another reprieve from collecting sales taxes in Colorado

May 31 enforcement deadline gives the legislature time to untangle Coloardo's messy sales-tax collection system.

Dec 6, 2018 6:14PM MDT Business

Online retailers selling in Colorado got a reprieve from the state’s messy sales-tax collection rules until at least May 31.

This is the second time the state Revenue Department has extended the deadline, this time to allow the legislature to attempt to simplify and streamline the process for collecting and remitting online sales taxes.

“As part of our rulemaking process to implement sales tax rules for in-state and out-of-state retailers, we have heard from legislators and the business community, and the Department of Revenue agrees it is important for the state to take the time to get this right,” Department of Revenue chief Mike Hartman wrote in a statement.

Colorado businesses and those selling to Colorado customers were supposed to begin collecting sales taxes on Dec. 1. The state set a new deadline of March 31, after the U.S. Supreme Court ruled in South Dakota v. Wayfair. In that case, the court found a state can require retailers to collect and remit sales taxes, regardless of whether they have a physical presence there, so long as the state does not put an excessive burden on interstate businesses.

MORE: Colorado’s messy sales tax system could get more complicated as the state tries to tap into online revenue

Colorado’s sales-tax system, with its patchwork of tax-collecting districts, is famously troublesome.

Tony Gagliardi, Colorado state director for the National Federation of Independent Business, small businesses “will not breathe a big sigh of relief until they see what lies ahead in the coming months.

“Rightfully, the department has decided to slow down, but not before causing a collective anxiety in a state that already has a mess of a sales tax structure with more than 700 taxing entities,” he wrote in a statement.

He added: “Simplifying and harmonizing its sales tax structure is Colorado’s biggest public policy challenge by far.”

The Revenue Department still is encouraging businesses that have the ability to collect and remit taxes collected on online purchases to do so, even in advance of the May 31 enforcement deadline.