House Bill 25b-1005 Introduced

A Bill for an Act

• Page 1, Line 101Concerning the elimination of the sales tax vendor fee that

• Page 1, Line 102retailers are authorized to retain in connection with

• Page 1, Line 103collecting and remitting state sales tax.

Bill Summary

(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)

Current law requires a retailer to periodically remit to the department of revenue the sales tax revenue that it collects and allows some retailers to retain a sales tax vendor fee to cover the retailer's expenses incurred in collecting and remitting state sales tax.

Beginning January 1, 2026, the bill eliminates the sales tax vendor fee that retailers are authorized to retain in connection with collecting and remitting state sales tax.

The bill also makes conforming amendments to prevent additional sales tax revenue from being included in the calculation of state sales tax increment revenue for purposes of the "Colorado Regional Tourism Act" and to maintain the amount of sales and use tax revenue that the state treasurer annually credits to the housing development grant fund.

• Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 2, Line 2SECTION 1.  Legislative declaration. (1)  The general assembly finds and declares that:

• Page 2, Line 3(a)  The vendor fee in section 39-26-105, Colorado Revised

• Page 2, Line 4Statutes, was designed to reimburse retailers for a specific service

• Page 2, Line 5performed on behalf of the state: The collection and remittance of state-collected sales tax revenue;

• Page 2, Line 6(b)  Not all retailers are equally compensated for their services.

• Page 2, Line 7Only retailers that have total taxable sales of $1 million or less for the

• Page 2, Line 8filing period are able to collect the vendor fee, and most of Colorado's

• Page 2, Line 9home rule cities do not pay similar vendor fees for the collection and

• Page 2, Line 10remittance of local sales tax. In addition, not all state taxes have vendor fees.

• Page 2, Line 11(c)  The vendor fee is being removed to promote fairness and

• Page 2, Line 12equality between all retailers by ending this benefit that some retailers

• Page 2, Line 13receive and others do not receive. Further, the vendor fee is being

• Page 2, Line 14removed to simplify the collection of state-collected sales tax, ease

• Page 2, Line 15administrative burden, and relieve retailer confusion. Any revenue gain

• Page 2, Line 16caused by the removal of the vendor fee is incidental to the primary

• Page 2, Line 17purposes of promoting fairness and equality, simplifying the collection of

• Page 2, Line 18state-collected sales tax, easing administrative burdens, and relieving

• Page 2, Line 19retailer confusion.

• Page 3, Line 1(d)  Any revenue gain caused by the removal of the vendor fee is de minimis.

• Page 3, Line 2(2)  The general assembly further finds and declares that:

• Page 3, Line 3(a)  Removal of the vendor fee is not a tax policy change for

• Page 3, Line 4purposes of section 20 (4)(a) of article X of the Colorado constitution

• Page 3, Line 5because it does not in any way affect the amount of sales tax imposed on

• Page 3, Line 6and paid by taxpayers but instead only distributes a small portion of gross

• Page 3, Line 7sales tax revenue collected to vendors for their collection and remittance of state-collected sales tax revenue;

• Page 3, Line 8(b)  Further, even if removal of the vendor fee could be considered

• Page 3, Line 9a tax policy change, consistent with the Colorado Supreme Court's

• Page 3, Line 10holding in TABOR Found. v. Reg'l Transp. Dist., 2018 CO 29, that

• Page 3, Line 11legislation that causes only an incidental and de minimis tax revenue

• Page 3, Line 12increase does not amount to a new tax or a tax policy change that requires

• Page 3, Line 13advance voter approval under section 20 of article X of the Colorado

• Page 3, Line 14constitution, the removal of the vendor fee is neither a new tax nor a tax policy change that requires voter approval; and

• Page 3, Line 15(c)  The removal of the vendor fee does not create new

• Page 3, Line 16responsibilities or burdens on retailers. Instead, the removal of the fee

• Page 3, Line 17demonstrates the general assembly's intent that the collection of sales tax

• Page 3, Line 18revenue be fair and equal throughout the state, and that the burdens of doing so are limited, fair, and equal throughout the state.

• Page 3, Line 19SECTION 2.  In Colorado Revised Statutes, 39-26-105, amend (1)(c), (1)(d)(I), and (5)(c); and add (1)(d)(V) as follows:

• Page 3, Line 2039-26-105.  Vendor liable for tax - definitions - repeal.

• Page 3, Line 21(1) (c) (I)  Every retailer shall remit, along with the return required in

• Page 3, Line 22subsection (1)(b) of this section, an amount equivalent to the percentage

• Page 4, Line 1on sales as specified in subsection (1)(a)(I) of this section to the executive

• Page 4, Line 2director of the department of revenue, less an amount as set forth in

• Page 4, Line 3subsection (1)(c)(II) or (1)(d) of this section to cover the retailer's expense in the collection and remittance of said tax.

• Page 4, Line 4(II)  For sales made prior to January 1, 2020, the amount retained

• Page 4, Line 5by a retailer to cover the retailer's expense in collecting and remitting tax

• Page 4, Line 6pursuant to this section is three and one-third percent of all sales tax reported.

• Page 4, Line 7(III)  If any retailer is delinquent in remitting said tax, other than

• Page 4, Line 8in unusual circumstances shown to the satisfaction of the executive

• Page 4, Line 9director of the department of revenue, the retailer shall not be allowed to

• Page 4, Line 10retain any amounts under this subsection (1)(c) or subsection (1)(d) of this

• Page 4, Line 11section to cover such retailer's expense in collecting and remitting said

• Page 4, Line 12tax, and an amount equivalent to the said percentage, plus the amount of

• Page 4, Line 13any local vendor expense that may be allowed by the local government to

• Page 4, Line 14the vendor, shall be remitted to the executive director by any such

• Page 4, Line 15delinquent vendor. Any local vendor expense remitted to the executive director shall be deposited to the state general fund.

• Page 4, Line 16(d) (I) (A)  For sales made on or after January 1, 2020, except as

• Page 4, Line 17provided in subsection (1)(d)(I)(B) of this section but before January

• Page 4, Line 181, 2026, the amount retained by a retailer to cover the retailer's expense

• Page 4, Line 19in collecting and remitting tax in accordance with this section is four

• Page 4, Line 20percent of the tax reported; except that a retailer shall not retain more than one thousand dollars in any filing period.

• Page 4, Line 21(B)  For sales made on and after January 1, 2023, but before

• Page 4, Line 22January 1, 2024, the amount retained by a retailer to cover the retailer's

• Page 4, Line 23expense in collecting and remitting tax in accordance with this section for

• Page 5, Line 1any filing period that the retailer's total taxable sales are less than or equal

• Page 5, Line 2to one hundred thousand dollars is five and three-tenths percent of the tax

• Page 5, Line 3reported; except that a retailer should not retain more than one thousand

• Page 5, Line 4dollars in any filing period. This subsection (1)(d)(I)(B) is repealed, effective January 1, 2032.

• Page 5, Line 5(V)  Beginning January 1, 2026, a retailer is not permitted

• Page 5, Line 6to retain any money to cover the retailer's expenses in

• Page 5, Line 7collecting and remitting state tax in accordance with this

• Page 5, Line 8section regardless of the retailer's total taxable sales for any filing period.

• Page 5, Line 9(5) (c)  From the amount of the tax required to be remitted

• Page 5, Line 10pursuant to subsection (5)(a) of this section, a qualified purchaser shall

• Page 5, Line 11be entitled to retain the amount specified in subsection (1)(c)(II) or (1)(d)

• Page 5, Line 12of this section that a retailer would otherwise be entitled to retain to cover

• Page 5, Line 13the retailer's expense in collecting and remitting the tax imposed by this

• Page 5, Line 14article 26 if the qualified purchaser had not provided a direct payment permit number to the retailer.

• Page 5, Line 15SECTION 3.  In Colorado Revised Statutes, 24-46-303, amend (12) as follows:

• Page 5, Line 1624-46-303.  Definitions. As used in this part 3, unless the context otherwise requires:

• Page 5, Line 17(12)  "State sales tax increment revenue" means the portion of the

• Page 5, Line 18revenue derived from state sales taxes, including any revenue attributable

• Page 5, Line 19to the baseline growth rate, collected within a designated regional tourism

• Page 5, Line 20zone in excess of the amount of base year revenue. "State sales tax

• Page 5, Line 21increment revenue" does not include any additional revenue derived from

• Page 5, Line 22state sales taxes that are due to the changes set forth in section 39-26-105

• Page 6, Line 1(1)(d), enacted in 2019 and as amended thereafter, to the amount

• Page 6, Line 2retained by a vendor to cover the vendor's expenses in collecting and remitting sales tax.

• Page 6, Line 3SECTION 4.  In Colorado Revised Statutes, 39-26-123, amend (3)(b)(I); and add (3)(b)(III) as follows:

• Page 6, Line 439-26-123.  Receipts - disposition - transfers of general fund

• Page 6, Line 5surplus - sales tax holding fund - creation - definitions. (3)  For any

• Page 6, Line 6state fiscal year commencing on or after July 1, 2013, the state treasurer

• Page 6, Line 7shall credit eighty-five percent of all net revenue collected under this

• Page 6, Line 8article 26 to the old age pension fund created in section 1 of article XXIV

• Page 6, Line 9of the state constitution. The state treasurer shall credit to the general fund the remaining fifteen percent of the net revenue, less:

• Page 6, Line 10(b) (I) (A)  Except as set forth in subsection (3)(b)(II) of this

• Page 6, Line 11section, prior to January 1, 2026, an amount equal to the fiscal year

• Page 6, Line 12increase in sales and use tax revenue attributable to the vendor fee

• Page 6, Line 13changes made by House Bill 19-1245, enacted in 2019, which amount the

• Page 6, Line 14state treasurer shall credit to the housing development grant fund created in section 24-32-721 (1).

• Page 6, Line 15(B)  Except as set forth in subsection (3)(b)(II) of this

• Page 6, Line 16section and subject to subsection (3)(b)(III) of this section,

• Page 6, Line 17beginning January 1, 2026, an amount equal to one and six

• Page 6, Line 18hundred fifty-five thousandths percent of net revenue

• Page 6, Line 19excluding net revenue collected under part 2 of this article 26,

• Page 6, Line 20which amount the state treasurer shall credit to the housing development grant fund created in section 24-32-721 (1).

• Page 6, Line 21(III) (A)  Beginning January 1, 2026, the treasurer shall

• Page 6, Line 22credit the excess of the amount set forth in subsection

• Page 7, Line 1(3)(b)(I)(B) of this section over one-twelfth of the amount set

• Page 7, Line 2forth in subsection (3)(b)(II)(D) of this section on a monthly

• Page 7, Line 3basis. The treasurer shall first take into account any reduction

• Page 7, Line 4made pursuant to subsection (3)(b)(II) of this section for the fiscal year to date.

• Page 7, Line 5(B)  Beginning with state fiscal year 2026-27, the

• Page 7, Line 6treasurer shall credit the excess of the amount set forth in

• Page 7, Line 7subsection (3)(b)(I)(B) of this section over one-twelfth of the

• Page 7, Line 8applicable amount set forth in subsection (3)(b)(II) of this section on a monthly basis.

• Page 7, Line 9SECTION 5.  Safety clause. The general assembly finds,

• Page 7, Line 10determines, and declares that this act is necessary for the immediate

• Page 7, Line 11preservation of the public peace, health, or safety or for appropriations for

• Page 7, Line 12the support and maintenance of the departments of the state and state institutions.