HB 18-1185

House Bill 18-1185, which has been signed into law, changes how businesses are taxed in Colorado. Instead of basing taxes on where services are performed or intangible property is sold, the new law looks at where customers receive those services or use that property. This means companies will pay more tax to Colorado if their clients are based here rather than elsewhere. The change applies to income earned from January 1, 2019, onwards and affects businesses with operations both inside and outside of Colorado.

Official Summary

For income tax years commencing on and after January 1, 2019, the bill generally replaces the method for sourcing of sales for purposes of apportioning the income of a taxpayer that has income from the sale of services or from the sale, lease, license, or rental of intangible property in both Colorado and other states from the cost-of-performance test in the case of services and the commercial domicile test in the case of intangible property to a market-based sourcing system. Under this new system, receipts for the sale of services or from the sale, lease, license, or rental of intangible property are apportioned to Colorado based not on where the service is performed, but where the service is delivered. (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.) , Read More

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