Agenda Date: 11/17/2020
Subject:
Title
Ordinance 42-2020: An ordinance on second reading amending various sections of Title 3, Chapter 9 to require collection and remittance of Littleton sales tax by remote sellers
Body
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Prepared by: |
Tiffany Hooten, Finance Director |
PURPOSE:
Does council support amendments to the Littleton City Code Title 3, Chapter 9 to require collection and remittance of Littleton sales tax by remote sellers?
PRESENTATIONS:
Staff Presenter(s): Tiffany Hooten, Finance Director
Additional Presenter(s): N/A
SUMMARY:
Colorado’s sales tax system is perceived by multijurisdictional businesses as complex and burdensome. As part of a statewide taxation simplification movement organized by the Colorado Municipal League (CML), Staff is proposing amendments to our sales tax code while maintaining the integrity of our taxation system and preserving our rights as a home rule city. The purpose of the proposed ordinance is to simplify the sales tax collection process for businesses, including “remote sellers” as discussed below, while ensuring that Littleton receives the sales tax revenues it is owed.
PRIOR ACTIONS OR DISCUSSIONS:
This ordinance passed on first reading on October 20, 2020.
ANALYSIS:
Staff Analysis
Littleton levies sales tax on all sales and purchases of tangible personal property or taxable services at retail unless doing so is prohibited by law. In 2018, the United States Supreme Court in South Dakota v. Wayfair held that a State is not prohibited from requiring a retailer to collect sales tax based solely on the fact that such retailer does not have a physical presence in the State (sales by these remote retailers are sometimes called “remote sales”). In other words, a retailer’s obligation to collect taxes from remote sales is no longer based on the retailer’s physical presence in the jurisdiction. As a result, Littleton’s sales tax ordinance needs to be amended to clearly reflect retailers’ remote sales obligations.
This ordinance adopts uniform definitions to encompass marketplace facilitators, marketplace sellers, and multichannel sellers that do not have a physical presence in the City, but that still have a taxable connection (or “economic nexus”) with the City. It also clarifies that remotes sellers have an obligation to collect and remit sales tax to Littleton.
Council Goal, Objective, and/or Guiding Principle
This ordinance supports Goal 2: Financial Sustainability.
Fiscal Impacts
The proposed IGA may result in a slight increase in sales tax revenues as more taxpayers come into compliance. The anticipated increase in sales tax revenues may not be significant since several larger remote online vendors are already collecting and remitting Littleton sales tax.
Alternatives
City Council may wish not to adopt the ordinance as proposed which would result in Littleton not being able to require remote online vendors to collect Littleton sales tax.
STAFF RECOMMENDATION:
Staff recommends approving the ordinance on second reading amending various sections of Title 3, Chapter 9 to require collection and remittance of Littleton sales tax by remote sellers.
PROPOSED MOTION:
Proposed Motion
I move to approve Ordinance 42-2020 on second reading amending various sections of Title 3, Chapter 9 to require collection and remittance of Littleton sales tax by remote sellers.