Colorado Legislative Council Staff

NO FISCAL IMPACT

TITLE:            CONCERNING THE USE OF A DIRECT PAYMENT PERMIT NUMBER BY A QUALIFIED PURCHASER IN CONNECTION WITH SALES THAT ARE SUBJECT TO SALES AND USE TAX.

Summary of Assessment

            This bill authorizes the Executive Director of the Department of Revenue to issue a direct payment permit number to any “qualified purchaser” who purchased at least $10 million of goods and services that are subject to Colorado state sales tax during the preceding 12-month period. Any retailer or vendor who receives a direct payment permit number from a qualified purchaser would not be liable for collecting and remitting the sales and use tax due on the sales of items to the qualified purchaser.

            The qualified purchaser would be responsible for collecting and remitting the sales and use tax due directly to the Department of Revenue before the twentieth day of each month subsequent to the month in which the sale was made. The tax would be remitted along with a form prescribed by the Executive Director of the Department of Revenue. The qualified purchaser would be entitled to retain the state vendor’s discount (currently 3.33 percent of the sales tax due) that a vendor or retailer would otherwise have been entitled to retain to cover the expense of collecting and remitting the sales tax. The bill subjects the goods and business fixtures of a qualified purchaser to a lien if the qualified purchaser neglects or refuses to remit the sales and use tax due.

            The number of direct payment permits that would be issued annually by the Department of Revenue is not known. However, given the $10 million sales threshold required to qualify for the permit, the number of permit applications is expected to be relatively small. The Department of Revenue anticipates that a manual system can be established to track the sales of qualified purchasers. At the $10 million sales threshold, the bill would not require the expenditure of state moneys to collect or track sales tax revenues from direct purchasers. Sales tax receipts to the state will remain unchanged since the qualified purchaser will retain the vendor’s discount that would otherwise be retained by the vendor or retailer. Therefore, the bill is assessed as having no fiscal impact.

            The direct payment permit would be used for the collection of sales tax for statutory cities and counties, as well as the Regional Transportation District, the Scientific and Cultural Facilities District, the Denver Metropolitan Major League Baseball Stadium District, the Metropolitan Football Stadium District, and other local improvement districts. Qualified purchasers may make separate sales tax agreements with home-rule cities and counties. The bill would become effective January 1, 2000.

Departments Contacted

            Revenue