Marketplace Facilitator Guide

Effective November 6, 2020, the City of Boulder adopted Ordinance 8425 amending the definition of Retailer or Vendor to include the terms “Marketplace”, “Marketplace Facilitator”, “Marketplace Seller” and “Multichannel Seller.” The result of these amendments results in new sales tax collection responsibilities for marketplace facilitators. This responsibility applies to sales made in or through a marketplace facilitator’s marketplace.

Please Note: The contents of this document apply to taxes administered by the City of Boulder only . Please refer to https://www.colorado.gov/pacific/tax/marketplaces for guidance regarding State of Colorado requirements.

Marketplace

A marketplace is a physical or electronic forum, including, but not limited to, a store, a booth, an internet website, a catalog, or a dedicated sales software application, where tangible personal property, taxable products, or taxable services are offered for sale.

Marketplace Facilitator

A marketplace facilitator is a person or business who operates a marketplace and:

1. Contracts with a marketplace seller or multichannel seller to facilitate for consideration, regardless of whether or not the consideration is deducted as fees from the transaction, the sale of the marketplace seller’s tangible personal property, products, or services through the person’s marketplace;
2. Engages directly or indirectly, through one or more affiliated persons, in transmitting or otherwise communicating the offer or acceptance between a purchaser and the marketplace seller or multichannel seller; or
3. Either directly or indirectly, through agreements or arrangements with third parties, collects payment from the purchaser on behalf of the seller.

Marketplace Seller

A marketplace seller is an individual or business who has an agreement with one or more marketplace facilitators to sell tangible personal property, products, or services exclusively through a marketplace owned, operated, or controlled by a marketplace facilitator.

Multichannel Seller

A multichannel seller means a retailer that offers for sale tangible personal property, products, or services through a marketplace owned, operated, or controlled by a marketplace facilitator, and through other means: such as their own store or their own website.

Licensing requirements

Please note: No part of Ordinance 8425 has changed the nexus requirements under Title 3 of the Boulder Revised Code. However, any marketplace facilitator who maintains any place of business in the City of Boulder directly, indirectly, or by a subsidiary must first obtain a business license by completing a Business License Application at https://boulderonlinetax.gentaxcpc.net/TAP/. Marketplace facilitators apply for a single business license, unless they have established separate legal entities with different Federal Employer Identification Numbers (FEINs) for their own direct sales and sales made by marketplace sellers.

Marketplace sellers that sell tangible personal property, goods, and services exclusively through a licensed marketplace facilitator are not required to obtain a separate business license from the City of Boulder.

However, any marketplace seller who also maintains a place of business in the City of Boulder, directly, indirectly, or by a subsidiary (Multichannel Seller) must first obtain a business license by completing a Business License Application at https://boulderonlinetax.gentaxcpc.net/TAP/.

Collection requirements

A marketplace facilitator licensed with the City of Boulder must collect and remit all applicable City of Boulder sales taxes for any sales made in the City of Boulder through its marketplace, including direct sales made through its marketplace and sales made by marketplace sellers through the facilitator’s marketplace.

Filing requirements

Marketplace facilitators must file sales tax returns with the City reporting all sales made to customers in the City of Boulder through their marketplace, whether taxable or exempt, at the intervals specified on their business license. Tax returns are due by the 20th day following the end of the applicable period**. Sales and use taxes are due according to the following schedule:

Multichannel sellers that maintain a place of business in the City of Boulder, directly, indirectly, or by a subsidiary are required to file sales tax returns for all sales made in the City of Boulder, regardless of the sales channel. Sales made through licensed marketplace facilitators should be reported in Total Gross Sales and listed as a deduction in Sales to other licensed dealers for purpose of taxable resale. NOTE: Multichannel Sellers using a Marketplace Facilitator should obtain a copy of the marketplace facilitator’s City and State tax licenses in the event of an audit.

**If a tax deadline falls on a holiday or weekend, the due date is the first business day following the 20th of the month.

City of Boulder businesses that use marketplace facilitators have a responsibility to confirm with their marketplace facilitators that the marketplace facilitator is licensed with the city and collecting and remitting city of Boulder sales tax on all sales sourced to Boulder. Local businesses that make sales of tangible personal property and taxable services are ultimately liable for the sales taxes due on those sales.

Using a marketplace facilitator does not relieve a City of Boulder licensed business from the responsibility to file tax returns. Please indicate any sales conducted through a marketplace facilitator in the following deduction fields:

• For Sales and Use Tax Returns: “Sales to Other Licensed Dealers for Purpose of Taxable Resale”
• For other return types: “Other”

The 2019 Colorado General Assembly passed, and the governor signed HB19-1240, the legislation that implements an economic nexus standard remote (out-of-state) sellers and that imposes new tax collection responsibilities on both in-state and out-of-state businesses. This legislation pertains only to state-collected taxes and does not impact locally collected home-rule taxes such as the city of Boulder’s salestax.

The Colorado Department of Revenue has implemented a portion of this legislation with respect to Marketplace Facilitators – an online business that contracts with local businesses to facilitate local businesses’ sales on the Marketplace Facilitator’s internet platform, and that collects payment from purchasers/customers and then transmits it to the local business. These new Marketplace Facilitator rules are effective October 1, 2019.

More information on the new State rules for Marketplace Facilitators can be found here

Additional information on the state’s implementation of HB19-1240 can be found here