Colorado DOR Says Timing of Nonfiler Guidance Was Coincidental

In last Friday’s Weekly Round-Up (Sept. 13), we posed the question of whether a Colorado DOR blog post and a court ruling were related. By Monday, a spokesperson for the tax agency told Bloomberg BNA that the timing of the two events was “purely coincidental.”

On August 20, the Colorado Department of Revenue received a favorable ruling over the constitutionality of a Colorado law imposing certain reporting and notice requirements on out-of-state e-commerce and other vendors. Specifically, in Direct Mtkg. Assn. v. Brohl, the Tenth Circuit declined to rule on the merits of a Commerce Clause challenge, saying the Tax Injunction Act deprives the district court of jurisdiction to enjoin the state’s tax collection efforts.

On August 29, the Colorado DOR postedguidance on its blog for responding to a sales tax Nonfiler Notification letter, which is sent to taxpayers for failure to file a return for a particular tax period. In addition, the posting provided further guidance on how to avoid receiving such notification altogether.

In response to the Bloomberg BNA blog post, Ro Silva, author of the department’s post and manager of the Office of Public Information and Education with the Taxation Division of the Colorado Department of Revenue said the nonfiler notice and court ruling were unrelated.  “The purpose of posting [the] information on our Weblog … is to assist taxpayers with information about how they should respond to these notices,” she said in an email to Bloomberg BNA.  Silva further noted that any connection between the blog posting and the federal court ruling “is purely coincidental.”

To clarify the department’s guidance, Ms. Silva told Bloomberg BNA that the nonfiler notification letters are reserved for taxpayers with current sales tax accounts. The reason for the posting is “to answer [taxpayers’] questions and remind them what they need to do when they receive these notices – so they don’t need to call us,” Silva said. 

The out-of-state vendors targeted by Colorado’s law will not receive such notifications unless they already have an account with the department and subsequently fail to file a return, she added. As a result, those vendors will not receive a notification for their failure to comply with the state’s new sales and use tax reporting and notice requirements, according to Silva. 

In addition, Ms. Silva told Bloomberg BNA that her office is unaware whether formal guidance will be issued in response to the Tenth Circuit ruling.

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