Sales Tax on Professional Services Rendered in Colorado
The Second Regular Session of Colorado’s 73rd General Assembly starts January 5th, 2023, and when it convenes, sales tax on professional services rendered in Colorado can happen.
The Assembly is made up of a new super majority all wearing the same color shirt, which means that – provided they stay organized and disciplined – they can get all sorts of legislation championed.
It is easy to speculate that the traditional precepts of ‘party moderation’ after the midterms may be out the window in 2022/2023 for Colorado. Governor Polis is quietly organizing an ‘exploratory committee’ to ‘help’ him decide whether to run for PRESIDENT in 2024.
The upcoming 2023 legislative session seems ever more challenging with our new congress searching for ways to offset the forecast loss in oil/gas tax revenue through other ‘revenue generating’ legislation with little moderation anticipated. One hint of what to expect…
The Legislative Oversight Committee Concerning Tax Policy Task Force produced a 2022 ‘final report’ in which, among other items…
The imposition of sales tax on services is considered -YIKES!
What Services Are Being Considered For This Prospective New Tax?
TANGIBLE PERSONAL PROPERTY SERVICES (TPP)
TPP services involve specialized knowledge, expertise, or ability.
EXAMPLES OF TPP SERVICES INCLUDE:
- carpentry
- car repair
- equipment repair and installation.
REAL PROPERTY SERVICES ARE DIRECTLY PERFORMED ON LAND, BUILDINGS, OR OTHER STRUCTURES
- janitorial
- electrical
- air-conditioning & heating
- drywall
- roofing
- masonry
- painting
- landscaping
- fertilizing.
PERSONAL AND PROFESSIONAL SERVICES
COMMON EXAMPLES OF PERSONAL SERVICES INCLUDE:
- lawn mowing
- tanning salons
- hair salons
- nail salons
- pet grooming
- diaper service
- health clubs
- amusement park admission.
COMMON EXAMPLES OF PROFESSIONAL SERVICES INCLUDE:
- legal
- accounting
- healthcare
- architectural
- consulting
- engineering
- private investigation
- training
- design
- employment
Why Are We Speculating That A Sales Tax On Services Is Imminent?
Each year, the Colorado General Assembly considers dozens, if not hundreds, of pieces of tax-related legislation & the Department of Revenue promulgates many rules. For example, in the last legislative session, one of the most inanely arcane and inefficient taxes was passed.
- The General Assembly adopted SB21-260 Sustainability Of The Transportation System, causing the imposition of a new $0.27 Retail Delivery Fee.
- A seemingly innocuous irritation to Colorado taxpayers.
- An overtly challenging law for BOTH industries to comply with AND authorities to enforce.
Industry representatives assert that it can cost up to $1 in administrative burden PER TRANSACTION to collect/remit this new $0.27 fee.
What Can You Do? Be Part Of The Law-Making Process!
- Join us to meet state tax policymakers and legislative leaders from across Colorado.
- Participate in the Colorado Society of Enrolled Agents’ 3rd Annual Legislative Day.
- February 9th, 2023, at 8:00 am at the Colorado State Capitol in the ROTUNDA.
I’ll be sure to follow – stay tuned. If you are interested in rallying with us on February 9th, RSVP ASAP or by no later than February 3rd, 2023.
Please feel free to contact me today with questions or to seek clarification.
