Ongoing advocacy, collaboration, and policy reform are helping shape a more efficient and equitable tax environment for businesses across Colorado. 

This week, we dive into the work of the Coalition to Simplify Colorado Sales Tax, a group dedicated to reforming one of the nation’s most complex sales and use tax systems. Our guest, Jenn Penn, founder of Dome Strategies, joins us alongside Shawna Shafer, owner of Absolutely Advanced Accounting, to discuss the Coalition’s mission and milestones since its launch in 2014. Together, they share insights into the Coalition’s legislative successes, and we explore key initiatives, like the SUTS (Sales and Use Tax System) portal.

Key Takeaways:

• Coalition’s Goal: Simplifying Colorado’s complex sales tax.
• Key Wins: Reforms making tax compliance easier for businesses.
• Collaboration Matters: Working together drives change.
• Looking Forward: Continued advocacy shapes the future of tax reform.

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Welcome to Saltovation.

The Saltovation show is a podcast series featuring the leading voices in SALT where we talk about the issues and strategies to help you make sense of state and local tax.

In this episode of Saltivation, we're joined by Jen Penn, owner of domestrategies, and Shawna Shafer, owner of Absolutely Advanced Accounting, to talk about the grassroots organization, the Coalition to Simplify Colorado Sales Tax. Since its founding, the Coalition has led the charge to reform one of the nation's most complex sales and use tax systems.

Advocating for fairness, simplicity, and economic competitiveness, the Coalition has made major strides in streamlining compliance for businesses across Colorado. Welcome back to SALT Evasion. We have a conversation today that kind of is going to focus on the Colorado Coalition to Simplify Sales Tax.

And so we're very grateful to our guests here today. So thank you very much, ladies, for being here.

Thank you for having us.

Thank you. So let's start with, what is the Coalition to Simplify Sales Tax?

Pot isn't the only thing that gets people here.

It gets a lot of people here.

It might be enough to, like, offset the sales tax stuff. Maybe that's why they deal with it.

Voters approved it.

That's right.

So, Jen, can you speak to some of the initiatives of the coalition and what specifically maybe they're focusing on?

So a lot of people aren't really familiar with how that system was created, but when this group came together, that was kind of their vision.

You know, let's have one portal where all taxpayers can file their sales and use tax instead of going to all of these various local jurisdictions and the state and other places. So the SUTS system was a multi year effort.

And I know, right. I actually enjoyed it. I've learned a lot. I mean, I've learned a lot about our cities and the fears they have. And.

And so I think it's important for people to get over their fears. Just because things are a certain way doesn't mean they have to always be that way. We need to be transformative as a state and the cities.

So I think we've made that business case for the jurisdictions to get on board, quite honestly.

Yep, absolutely.

And you know, growing that trust through the task force has been really instrumental and for all of the different stakeholders to come to the table and work on these issues collaboratively has made a huge difference. Right.

And, you know, system's not perfect, but it's definitely working a work in progress towards the vision of having one portal for all taxpayers to go and pay their sales tax and use tax, which is another issue that we're working on, is the use tax. There's a whole variety of other successes, Judy. I don't know which ones you really want to highlight.

Well, obviously we got rid of the vendor fee for all the home rolls for a remote seller. Huge deal. It was a huge barrier to entry to pay 10, 20, 175 bucks.

Some towns charged to be licensed in their city just for the privilege of giving them money that was thousands of dollars if you were going to comply at every single city level with the license fee. So we did get rid of the license fee.

That was huge to show what that really was and get legislation and also cities to say we don't need that 10 bucks, 20 bucks, 30 bucks a year. We are happy to waive that if you use sut.

So that that was a big win for taxpayers and also just a win for the cities, quite frankly, to like create administrative ease.

However, we do have clunkiness between their independent systems and our set system, which is something the taxpaying community needs to give a little grace about. But. And Shanna can talk about that because it is a kerfuffle.

And I really think we've got to work more on the city's understanding the burden that taxpayers are because they are the funders of government. But I think that we need to understand that you don't have a job at a city or a town or the state if taxpayers don't pay it.

So you need to make it easier for them so that they can comply because they will comply if you make it easier. And so the cost of compliance was a high number to license in all the cities. And so we got rid of the license issue.

Now we still haven't figured out the license issue for in city people. Right. Say you have a situs there and you're not a remote seller. But do they really care if you're in sets?

I think the cities really don't care that much about their annual license fee because they're now getting some revenue every month from a lot more taxpayers. 28,000 taxpayers are participating in SUDs now. So if about a third of the 100,000 licensed registrants at the state participating in such.

So we're still not at 100% yet.

But that's TR, that's traction because we took a while for our cities to get in line and get participatory because there are hurdles in their own systems and they're small to be more expansive. Right. They are like, ah, we're used to seeing this.

I mean, we went from paper, you know, tokens is how sales tax used to be paid to online wire all the things. So, you know, that's an evolution in how the technology works and how the money gets into the right buckets.

So we still don't have full participation of every home rule city. But that's huge, huge traction.

And thank you, Denver And Lakewood and I think they led the way as Denver being the biggest city in the state at the table. Lakewood is at the table. So we had, and then we had small towns at the table. So we had participation from smaller cities, bigger cities and counties.

I mean people sat at the table and explained their concerns. We built consensus and we were able to get participation, which is huge because everybody's like down in my backyard, I want to do it.

I'm like, you guys don't realize how much money you're not getting because you made it so difficult to get it. So it's easier to get it. So I feel like that's the way we need to go. And the money has come in.

We've certainly seen that money coming into those cities and they cannot complain about that.

Yeah, exactly. We know that compliance, making compliance easier will get more taxpayers to remit appropriately. Yeah.

Well, nobody, you know, there's some place when within our state we have, we work on analyses all the time of like what do you owe? Where we look at what they cite a sale. Right here's what your destination is. Here's the money. We're like you owe five bucks to crested BE.

You're going to license there for 20 bucks a year, 40 bucks a year. No you're not. You're not going to give them their five bucks. So you need to get that there or they're never going to get the $5.

So it's too de minimis for business to care about. They're willing to pay that $5 later on an audit and they think the risk of audit is low. So why would they comply?

So but then those cities aren't getting their rightful money based on the destination delivery. So it's, it's been a mindset shift. I think a lot of us have really been really change how we buy ourselves. As my dogs are working.

Earlier we had a FedEx delivery, UPS delivery, mail delivery. I ordered things online. I didn't go to the store and get them. I don't we don't all do our business consumption at the store anymore.

And so tax needs to count it on our front door. And it. It's supposed to happen at our front door based on the Wayfair case. Well, that includes cities, towns and counties.

Yep.

Want us. You know, Suts is here. Suds is real. Right?

There's.

Yes, it's not perfect, but it was a, it was a huge lift that, you know, some people thought would never happen. What would you say are some of the challenges that taxpayers face with the subsystem?

That question is probably Shanna's. Yeah, yeah.

You know, just like any new software, you're going to have some issues and things. This was a huge undertaking. I mean, the coalition did so much by getting this going and working with these different cities in the states.

But there's still work to be done. So there are a few pain points. First of all, let's make sure that everybody understands that we're talking about two totally different versions here.

We have the original release and then the coalition pushed to make sure that, that there was an update done that would make it actually usable because the original release was very clunky. So anybody who might have jumped in that when they very first released it got scared and said they'll never use it again.

Right.

It might be time to give it another look because now we have Soot 2.0 and Soot 2.0 again still has a couple pain points, but. But it's not anything like it was before. It's much more streamlined and user friendly.

There's two things I want everybody to make sure you're watching out for. Number one, the system is still having a little confusion with a null return versus a zero return.

And we want to make sure that when it comes to those individual jurisdictions that you're making sure if they do require that you file a $0 return in their jurisdiction, that you might have to do that independent of the software. The other issue is money movement. And guys understand there's a lot going on here. You've got a lot of banks and a lot of movement that has to happen.

It doesn't happen in moments. So there is some lag there. And anybody who's pushing that deadline date might have some late notices from the cities.

It's not that the cities won't work with you, but as we all know, time is money and making those phone calls to the cities is what takes that time.

So if you're able to utilize the system, make sure you have your stuff ready or your bookkeepers have things ready for you to get done and get it done early enough where we don't have to worry. And you can give a good five business days or so for that money movement and you should be okay.

Those are a couple of the big ones, there's a couple little ones. And absolutely always happy to hear what anybody else has come up with as well.

Well, I was just gonna say what I'm hearing you say, Shannon, is we need to file your return five days early. If you really want to avoid local notices just for now, don't file in the last minute. It just will not work anymore yet. We're just not there.

It's best practice.

And really, again guys, so software, software, software, if you leave things to the last minute, it's Murphy's law, you're always going to have some sort of glitch. Right. So if we can all get in the habit of just jumping in those few days early, we give plenty of time for money.

Right. Well, and it's funny you say that because most books close on the 30th, 31st of the month. Do you have 20 days to file this return?

So it's not really pushing it to file 15 days. Right. But what I think people do is they delay and they procrastinate or whatever and they don't do it.

But then it ends up being this huge backend problem and really cost inefficient.

So we're going to have that for a while because we're still working through the software connections between the cities and the state and the money movement. And they, there's, there's auto generated things. And I think a lot of us see this even now. I know I do with my doctor's appointment.

Like I have a doctor's appointment and I get an auto reminder like three days before, then I get it two days before. I'm like, I accepted it. Stop sending me a reminder. I don't think software knows to turn that off.

And so that is a challenge with like autogenerated notices that you'll see from cities. There's a lot of stuff that just is autogenerated because it is a timely thing. So that is a challenge that software is created to do that.

We get notices after the fact. The return's been filed. Why did I get a return? I did send it. Yeah.

And we're not only dealing with that, we're still dealing with a lot of those notices being delivered via snail mail.

Yeah.

So have all sorts of those issues occurring. Right. And it just, if you want to Utilize the software because it helps and it is amazing.

I mean, if everybody just stops and remembers doing this in the first place was a huge undertaker. If the coalition hadn't done all of the things they've done, we never would even be close. No. So leaps and bounds and jumps we've gone.

And if everybody can just kind of hang in there.

But yeah, because we need that money going to those cities. Because you don't have protection. Now that we have sets, we are seeing enforcement. Even though we're not sure it's legal, it's not worth fighting.

Just file is where I'm at.

Cost of the fight is more than the battle.

And usually.

Oh, no.

A lot of money. Damn. Couple thousand dollars. You're not gonna fight that in court. Like. No, you're just gonna capitulate.

So what happens is we've got this push pull of what the jurisdictions are doing for enforcement, and there's their deadlines. And of course, we're at tax ops. Call us, because they may be over enforcing, but that's something we can deal with logistically.

But the cities have a way to get money, too. So they're getting taxes into their communities. So they're going to go after you, send you notices. You might not know what to do with those notices.

You should call an expert, because what is happening may or may not be right. But it does require a section of advocacy.

We had a situation where a client, I think it was Littleton or Louisville, contacted them to participate in the VDA after they did the SUDS registration. We're like, why would we do this? Well, we owe them $250. I mean, we just didn't have any sales into the city.

But the client's like, I'm not gonna do something special for that. I'll give them the money. Big deal. Right. But it is sort of a fairness thing where the cities are just trying to get people to be compliant.

But there is this disconnect between how it got. They got compliant client.

Absolutely. Absolutely.

Yeah. Well. And the SUDS system is still a work in progress. We continue to point out all the issues that you all have been talking about to the department.

The coalition meets with the department frequently. We have, you know, key meetings with them. We're able to raise all of these issues. And Shauna is also on the work group for the SATS system, and so.

Are some of our teammates. College Connie Zoring from our team sits on that as well. Yes.

Yeah. So we, you know, we have not declared success. That is, you know, we know that there's work to do.

There's a lot of work to do here in Colorado, and that's why Simplify is here for that. Yeah.

But the coalition's really brought it far, and I'm just.

Yeah, and people need to join and help out and participate because we're fighting the battle, you know, you know, we need more bench strength. I mean, I don't know about you. You know, I've noticed in media, you know, advertising was their way of, like, getting licensed.

Now you're seeing people wanting you to subscribe 100 bucks a year. 100 bucks a year. You want to listen to this substack. Pay, pay, pay the price to belong.

And I think it's a shift in membership, and I find it very frustrating that the business community doesn't participate more in even a small, tangential way to help make a change. And they just complain, complain, but then they don't put their neck out to help us fix it.

And Jen has been instrumental working with our legislatures for the last 10, 12 years. Every time we get new legislators, we have to teach them what they don't know about our state and they don't understand it.

Half these people, I mean, I don't even think one of them has done a sales tax return.

I don't know that they have.

We do have a couple of people that are, you know, have backgrounds in tax and, you know, you know, the property tax assessments and some income tax, but really not anybody who is really well versed in sales tax. Except for the information that we and other business community members.

Right.

So we need more of that information so we can tell those stories to the legislators and to the, to the operations people, the government level, to tell them the story of what this is to going, creating for them. Nobody goes into business to collect sales tax. No one.

Nobody. Nope.

So added this burden to the business community. We need to make it easier on them to comply.

I was absolutely floored when I joined the board, how much time Jen and everybody else is spending.

We could never do it without Jen. She knows everybody at the state that she needs to know.

But we definitely need you guys as business owners to come and. And, you know, join. We have ways for you to be a part of the coalition.

Yeah.

And we need you. We need your support, we need your stories because that's what, that's what fuels Jen and. And those that are standing up there.

Man, we have some great, great people on the team. I. I just am floored.

Well, we're a grassroots organization. Organized.

We were organized by the Colorado automobile dealers because automobile as the highest sales tax collection collection of any business in the nation. Automobile. That's the biggest single purchase any human makes of a significant material value. 30,000, 20,000, 40,000.

Tax on that is 8% to 10% or more.

That's a huge amount of money getting cycled through the systems when you buy a vehicle, whether you lease it, whether you own it, whatever, huge sales tax and they're getting burned on audits. These are independent dealers that came together as a coalition themselves and an organization that said this has to change, change.

And we changed our pay to play rule where you could take this up to the courts versus going through the administrative process and didn't have to pay the tax that they say you owed, that you did not owe, but you had to pay it in order to take a court case up. That is not acceptable way to do to deal with the dispute where you think legally the government is wrong and.

You have to pay.

No, we got rid of that. That was our first legal change.

So it took effort by the business community and associations representing lots of small businesses who have to deal with this and don't have the time or the advocacy.

But you could still contribute because then your small hand in helps people like Jen to sit at the table of the legislatures, talk to them, get to know them, tell the story.

Unfortunately, the way laws get made is by explaining them because our administrators and legislators don't understand really what the business community is dealing with. They're hired to administer, they're hired to talk about it. They're not hired to figure out how to make it better without our information.

I think that's a great call to action and we'll make sure that, you know, we put the coalition's information, you know, in the show notes and continue to sing the praises of the coalition and all the people who are, you know, more or less volunteering their time to make significant changes in Colorado.

This body, this podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.