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January 24, 2022 SB 22-006
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-0729
Sen. Kolker; Rodriguez
Rep. McLachlan; Snyder
Date:
Bill Status:
Fiscal Analyst:
January 24, 2022
Senate Finance
David Hansen | 303-866-2633
David.Hansen@state.co.us
Bill Topic: SALES TAX ASSISTANCE FOR SMALL BUS INESS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill increases the state vendor fee in 2023 from 4.0 percent to 5.3 percent for
retailers with less than $100,000 in taxable sales per filing period. The bill decreases
state revenue and increases state expenditures in FY 2022-23 and FY 2023-24.
Appropriation
Summary:
For FY 2022-23, the bill requires an appropriation of $61,980 to the Department of
Revenue.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under SB 22-006
Budget Year
FY 2022-23
Out Year
FY 2023-24
Revenue General Fund ($2.5 million) ($2.8 million)
Expenditures General Fund $61,980 $44,380
Other Budget Impacts Tabor Refund ($2.5 million) ($2.8 million)
General Fund Reserve $9,297 $6,657
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January 24, 2022 SB 22-006
Summary of Legislation
The bill increases the state vendor fee from 4.0 percent to 5.3 percent starting January 1, 2023. The
increase is effective for one calendar year and applies only to retailers with less than $100,000 in
taxable sales per filing period.
The bill clarifies that the calculation of the amount that is credited to the Housing Development Grant
Fund is based on the changes to the vendor fee under House Bill 19-1245, and not on any subsequent
modifications, including those changes made in this bill.
Background
Retailers are required to collect and remit sales and use tax and are allowed to retain a fee to help
cover these expenses, which has changed over time as shown in Table 3. Under current law, retailers
with less than $1.0 million in sales during a filing period (generally each month), may retain
4.0 percent of collections, up to $1,000 per account per filing period.
Table 2
Colorado Vendor Fee History
Dates Vendor Fee
July 1, 1935 to June 30, 1965 5.00 percent
July 1, 1965 to June 30, 2003 3.33 percent
July 1, 2003 to June 30, 2005 2.33 percent
July 1, 2005 to February 28, 2009 3.33 percent
March 1, 2009 to June 30, 2009 1.35 percent
July 1, 2009 to June 30, 2011 0.00 percent
July 1, 2011 to June 30, 2014 2.22 percent
July 1, 2014 to December 31, 2019 3.33 percent
January 1, 2020 to current 4.00 percent
1
1
Available for retailers with less than $1.0 million in sales during a
filing period and subject to a $1,000 cap per retailer, per filing period.
House Bill 19-1245. Recent legislation modified the vendor fee over the past few years. Beginning
January 1, 2020, House Bill 19-1245 increased the fee from 3.33 percent to 4.00 percent and capped the
fee at $1,000 per retailer per filing period. The revenue raised by the cap is credited to the Housing
Development Grant Fund, administered by the Division of Housing in the Department of Local
Affairs. The vendor fee was modified further by House Bill 21-1312, which limited the fee to retailers
with less than $1.0 million in taxable sales per filing period beginning January 1, 2022.
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January 24, 2022 SB 22-006
State Revenue
The bill is expected to decrease state revenue by $2.5 million in FY 2022-23, and by $2.8 million in
FY 2023-24. For the 12 months ending October 2021, an average of 58,832 retailers with monthly
taxable sales less than $100,000 retained a total of $14.1 million, based on data from the Department
of Revenue. The vendor fee will be increased for these accounts under the bill. This revenue estimate
assumes a similar share of taxable sales for retailers with less than $100,000 in monthly sales, and
projected growth consistent with the December 2021 Legislative Council Staff sales and use tax
forecast. Sales and use tax revenue is subject to TABOR.
State Expenditures
The bill increases state expenditures from the General Fund by $61,980 in FY 2022-23, and by $44,380
in FY 2023-24. Expenditures are displayed in Table 3 and described below.
Table 3
Expenditures Under SB 22-006
FY 2022-23 FY 2023-24
Department of Revenue
Computer and User Acceptance Testing $33,705 $21,105
GenTax Computer Programming $16,875 $16,875
Office of Research and Analysis $6,400 $6,400
Sales and Use Tax System Computer Programming $5,000 $0
Total Cost $61,980 $44,380
The changes to the vendor fee require computer-programming changes that will result in costs within
the Department of Revenue for development support, testing, and contactor services. The required
changes will result in costs in FY 2022-23 when they are initially implemented, and in FY 2023-24 when
the fee drops back to 4.0 percent. The analysis assumes contract services for GenTax computer
programming will require 75 hours in both FY 2022-23 and FY 2023-24, billed at $225 per hour. Sales
and Use Tax System (SUTS) computer programming is assumed to have a one-time cost of $5,000 for
the Department’s contractor in FY 2022-23. Additionally, the Office of Research and Analysis will
incur additional costs for both implementation and reversal of the vendor fee change.
Other Budget Impacts
Tabor refunds. The bill is expected to decrease the amount of state revenue required to be refunded
to taxpayers by the amounts shown in the State Revenue section above. This estimate assumes the
December 2021 Legislative Council Staff revenue forecast. A forecast of state revenue subject to
TABOR is not available beyond FY 2023-24.
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January 24, 2022 SB 22-006
Because TABOR refunds are paid from the General Fund, decreased General Fund revenue will lower
the TABOR refund obligation, but result in no net change to the amount of General Fund otherwise
available to spend or save.
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve beginning in FY 2022-23. Based
on this fiscal note, the bill is expected to increase the amount of General Fund held in reserve by $9,297
in FY 2022-23 and $6,657 in FY 2023-24, which will decrease the amount of General Fund available for
other purposes.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
State and Local Government Contacts
Information Technology Local Affairs
Personnel Revenue
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.