Colorado amends doing business definition for sales tax purposes, addresses ‘presumptive physical presence’

June 2014


On June 6, 2014, Colorado enacted House Bill 1269, which expands the definition of ‘doing business in this state’ for sales and use tax purposes. Effective July 1, 2014, a person is presumed to be doing business in the state (1) if it is part of a controlled group that has a component member with physical presence in the state that engages in certain defined activities or (2) if it enters into an agreement or arrangement with an in-state person that engages in certain defined activities. The bill also expands the doing business standard to include activities related to the sale, lease or delivery of taxable services; the maintenance of a distribution facility or storage place; and the employment of residents who work from home offices. 
Out-of-state retailers should review the activities performed by related and third-party persons with Colorado physical presence to determine whether a sales and use tax filing responsibility may be created due to those activities. 

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