Things to make sure you are doing this year that changed last year
Thanks for working with us!
2022 flew by and we wanted to make sure you had the information you need to make this year a success. Here are some important policy changes that happened last year that you may need to be put into effect this year if you have not already!
We Had An Address Change
STM had an address change! Please send all mail, checks, and correspondence to…
155 Gerrald Road, Simms, TX 75574
Destination Sourcing Rules for All Businesses in Colorado
Original source:
https://tax.colorado.gov/transition-to-destination-sourcing
Effective October 1, 2022, all Colorado businesses must comply with destination sourcing rules for sales and use tax.
Since 2019, small businesses have been an exception to destination-sourcing rules in the state of Colorado. However, Colorado now provides a geographic information system online that allows sellers to determine the applicable tax rates for destination sourcing. With this addition, the state is requiring that all businesses, regardless of size, transition to destination-sourcing rules by October 1, 2022, if they are not already doing so (businesses in Colorado with over $100,000 in sales should already be using destination-sourcing rules for sales and use tax).
What is Destination Sourcing?
Under destination sourcing rules, sales tax calculations are based on the address where the taxable product or service is delivered to the customer rather than the seller's location. Here’s how it generally works:
If the purchaser takes possession of the purchased item or first uses the purchased service at the seller's business location, the sale is sourced to that business location.
If the property or service is delivered to the purchaser at a location other than the seller's business location, the sale is sourced to the location the purchaser receives the purchased item or first uses the purchased service.
If the purchaser requests delivery of the property or service to another recipient (i.e. the purchase is a gift), the sale is sourced to the location the recipient takes possession of the item or first uses the purchased service.
If a sale cannot be sourced using the preceding rules, section 39-26-104(3)(a), C.R.S., provides additional guidelines for sourcing retail sales based upon the seller's records, the purchaser's payment instrument, or the location from which the property was shipped. These sourcing rules do not apply to leased property.
Iowa Changed Their Policy on Filing Frequency
Iowa did away with quarterly sales tax filings so now you will either be a monthly or annual filer. The determining factor is whether you have collected more or less than $1200 in sales tax during the previous year. If more, then you will be monthly. If less, then you will be annual.
No action is required on your part if STM is doing your returns. Iowa will automatically change your frequency and we will do the rest. If you are using another provider, Iowa will still make the change, but you will generally need to let your provider know of the frequency change.
Action Needed: Colorado Delivery Fee
We suggest keeping things simple and adding a line item to all invoices with deliveries to Colorado. The line item should read “retail delivery fees $.27”. In addition, there is a separate return that needs to be filed for this. If you wish to be compliant, we can file this return on your behalf. Contact us here.
Oklahoma Broadens the Scope of Marketplace Facilitators
Each state has its own definition of what is considered a marketplace. Like most things in sales tax, the definition of a marketplace can be altered, or broadened. For example, effective January 1, 2023, Oklahoma will broaden the scope of marketplace facilitators to “include persons that sell all products that are taxable under Oklahoma’s sales tax code rather than just taxable tangible personal property.” The alterations to this law will additionally impact what marketplaces will need to collect such as local jurisdictions and lodging taxes. We expect to see continual provisions to marketplace rules and regulations. We will keep you updated as they occur.
By: Ellie Moffat
This blog is intended for educational purposes and not as tax advice. Tax policies and procedures change frequently, so specific information, such as thresholds, rates, etc. included in this blog may have changed since it was originally published. Please request a consultation for more in-depth information.