DENVER — It seems on paper to be a simple enough change. It isn’t.
On December 1, Colorado’s Department of Revenue started requiring businesses that sell products online to start collecting the sales tax from the city the item is being shipped to.
Previously many businesses collected taxes based off of their physical location.
“It is absolutely ridiculous,” Peter Novak, owner of RockHill Designs, a jewelry company in Longmont, said.
Novak says there are currently over 650 different possible tax rates in Colorado. Every city is different.
Calculating the tax, Novak added, is burdensome and expensive for small businesses like his.
“We ship to every state in the union. With this new change in sales tax we may not be able to,” Novak added.
Novak’s biggest complaint is that many home rule cities in Colorado charge a fee for small businesses to collect taxes.
It ranges from $15 in Lakewood to $100 in Crested Butte.
Novak says he rarely ships anything to Crested Butte and may just decline orders from there going forward.
“We would cancel the order from there; we can’t afford to ship a $50 pair of earrings and pay $102.50 in taxes,” Novak added.
The Department of Revenue declined our request for an interview Wednesday but officials said businesses have until the end of March to comply. Audits or fines could take place if businesses fail to comply.
Why is the state doing this? Some have estimated a windfall of tens of millions of dollars for the state if these businesses comply.
If you are wondering if this could impact your shopping? It could — especially if you live in a high sales tax area.
For instance, if you live in Denver — you could pay 7.65% in sales tax while your grandma in Lewis, Colorado could pay 2.9% in sales taxes — for the same item.