I_TaxTask_2018A 08/22/2018 10:01:34 AM Committee Summary

Mr. Brendon Reese, Deputy Director, Taxation Policy and Legal Analysis, Department of Revenue (DOR), discussed the review of the responses to a request for information (RFI) issued pursuant to House Bill 18-1022 for a simplified electronic sales tax system.  Task force members received a summary document about the procurement process, prepared by DOR (Attachment A).

Ms. Esther van Mourik, Office of Legislative Legal Services, discussed whether legislation is required to issue a request for proposals for a new electronic sales tax system. Ms. van Mourik responded to task force questions.

Mr. Reese continued to discuss the RFI process. Task force members received a matrix showing vendor responses to RFI requirements (Attachment B). Mr. Reese explained the key components that should be included in an electronic sales tax system. He responded to task force questions about how to pay the costs of a new system and discussed potential changes to sales tax collections following the U.S. Supreme Court decision in South Dakota v. Wayfair. He also continued to discuss vendor responses to the RFI.

Mr. Reese responded to task force questions. The task force members commented on existing electronic sales tax remittance and collection systems in other states. Ms. van Mourik also responded to a question about whether an appropriation is required in order to issue a request for proposals for a new system.

A panel of experts presented about the use tax in the auto and aviation industry. Mr. Johnny Medved, representing the Medved Auto Group, discussed how the state's sales and use tax affects the auto industry, and associated industries. Mr. Medved described the state's complicated sales and use tax system, over collection of sales and use tax by the auto industry, and associated negative consequences on dealerships and customers.

Mr. Ty Little, representing Carrier & Little and the Colorado Aviation Business Association, discussed how the state's sales and use tax affects the aviation industry. He described complications associated with use tax remittance that are unique to the aviation industry. Mr. Medved responded to a question from the task force about an address locater tool used by his business. Discussion ensued on this topic.

Discussion continued about changes that would improve sales and use tax collection and remittance in the auto and aviation industries.

Ms. Meredith Moon, Legislative Council Staff, presented on sales and use tax collections in three states with home rule jurisdictions: Alabama, Arizona, and Louisiana. A copy of Ms. Moon's presentation was distributed to the task force (Attachment C). Ms. Moon walked the committee through her presentation.

Ms. Moon responded to questions from the task force.

Mr. Reese gave an update about the implementation of the collection of tax for online sales following the decision in the South Dakota v. Wayfair. He responded to task force questions.

Ms. van Mourik displayed a map showing remote sales tax enforcement dates in the states, prepared by the National Conference of State Legislatures.

The committee recessed for lunch.

Mr. Jeff Hansen, representing the city of Golden, testified about the information presented earlier during the hearing and about potential topics of discussion for the afternoon.

Ms. Cheryl Cheney, representing Brannon Sand and Gravel Company, commented on task force activities and discussions to date.

The committee returned to order.  Public testimony was reopened. Mr. Tim Singleton, representing Strive Technology Consulting, introduced himself and discussed challenges associated with sales and use tax remittance and collection for his business. Mr. Singleton responded to task force comments.

Representative Kraft-Tharp explained the legislative bill request process.  Members of the task force commented on the process. Representative Kraft-Tharp introduced the possibility of updating House Bill 13-1295, which implemented the minimum requirements set forth in the federal "Marketplace Faireness Act of 2013."  Task force members received a one-page description of the bill, prepared by the Office of Legislative Legal Services (Attachment D), and a copy of the bill (Attachment E).  Ms. van Mourik talked the committee through Attachment D.  Mr. Reese responded to the possibility of requesting a bill draft to update the language in HB 13-1295.  He said that he does not want the draft to be limited to the scope of HB 13-1295.  Task force discussion ensued.

Ms. van Mourik responded to a question from the task force about whether updating HB 13-1295 should address sales tax collections from remote sellers. Task force discussion about whether a bill draft to update HB 13-1295 should be introduced, and, if so, what should be included in the draft legislation.

Mr. Reese suggested potential legislation that would revise statutory language to conform with the South Dakota v. Wayfair decision. Task force discussion ensued.

Ms. Vorndran shared her concerns with creating a taxability or exemption matrix. Other task force members commented on the relative merits of creating and maintaining a taxability or exemption matrix.

Discussion continued about whether a matrix should include taxable items or exempt items. Mr. Reese commented on how DOR could incorporate a taxability or exemption matrix into its current taxpayer resources.

The task force discussed next steps following the review of the responses to the HB 18-1022 RFI. In response to a question from the task force, Ms. van Mourik explained next steps in the solicitation process and whether legislation is required. Various task force members commented on whether DOR should proceed with solicitation of an electronic sales tax system. Representative Kraft-Tharp explained why she thought it might be preferable to move forward with solicitation through legislation, rather than through the procurement process. Discussion ensued.

Discussion continued about soliciting an electronic sales tax system.  Mr. Jack Wylie, representing the Department of Personnel and Administration, responded to questions about whether an appropriation is required prior to solicitation under the State Procurement Code.  He responded to additional questions.

Discussion returned to the topic of whether there should be draft legislation requiring DOR to solicit an electronic sales tax system.

The committee recessed.

The committee returned to order.

Discussion continued about the requested legislation.

The task force members discussed the next meeting and when meeting materials for the next meeting will be made available.