HB 1005: Eliminate State Sales Tax Vendor Fee - Colorado

Final Act → Signed Act · 5 edits · Aug 28, 2025

MODERATE

This bill eliminates the sales tax vendor fee that retailers could keep from collecting and remitting state sales tax, effective January 1, 2026. The change aims to promote fairness by removing a fee that only larger retailers could access, simplify tax collection, and reduce administrative burdens. The bill also updates related statutes to reflect the elimination of this fee and clarifies how certain revenue is defined.

Scope change

The bill applies to all retailers in Colorado, removing a previously available fee retention option that was only accessible to retailers meeting certain sales thresholds.

ELIGIBILITY

Removed the ability for retailers to retain a vendor fee from sales tax collections, which was previously allowed for retailers with taxable sales over $1 million.

TIMELINE

Set January 1, 2026 as the effective date when retailers can no longer retain any money to cover collection and remittance expenses.

DEFINITION

Added a new definition for 'State sales tax increment revenue' to clarify that revenue from vendor fee changes does not count as new tax revenue.

REQUIREMENT

Updated Colorado Revised Statutes to remove references to vendor fee retention amounts and adjust related subsections accordingly.

TECHNICAL

Made minor formatting and punctuation corrections throughout the bill text.

Rerevised → Final Act · 5 edits · Aug 26, 2025

MODERATE

This bill eliminates the sales tax vendor fee that retailers could previously keep to cover collection and remittance expenses, effective January 1, 2026. The change promotes fairness by ending a benefit available only to small retailers and simplifies tax administration. The bill also adjusts how certain sales tax revenue is credited to state funds and includes an appropriation for document management services.

Scope change

The vendor fee benefit is now removed entirely for all retailers, regardless of size, meaning only retailers with total taxable sales of $1 million or less could previously retain these fees.

ELIGIBILITY

Retailers can no longer retain any money to cover expenses for collecting and remitting state sales tax, effective January 1, 2026.

DEFINITION

The definition of 'State sales tax increment revenue' was updated to exclude revenue from the removed vendor fee changes.

FISCAL

Adjusted how sales tax revenue is credited to the housing development grant fund, beginning January 1, 2026.

Added $36,383 appropriation for document management services to support the department of revenue.

TECHNICAL

Technical formatting changes including bill number updates and signature block additions.

Revised → Rerevised · 3 edits · Aug 25, 2025

MINOR

The rerevised version of HB 1005 updates the bill's header information, adding additional Senate sponsors (Coleman, Cutter, Gonzales J., Michaelson Jenet, Sullivan, Weissman) and changing the reading status dates to reflect the most recent legislative actions. The substantive policy content regarding the elimination of the sales tax vendor fee on January 1, 2026, remains unchanged from the revised version.

TECHNICAL

Added three additional Senate sponsors (Coleman, Cutter, Gonzales J., Michaelson Jenet, Sullivan, Weissman) to the Senate Sponsorship section.

Updated the reading status dates to reflect the most recent legislative actions, including Senate 3rd Reading on August 25, 2025 and House 3rd Reading on August 23, 2025.

Changed the bill title from 'Revised' to 'REREVISED' to indicate this is the most current version with all amendments incorporated.

Reengrossed → Revised · 3 edits · Aug 24, 2025

MINOR

The bill was revised to reflect Senate amendments that adjust the timeline for eliminating the sales tax vendor fee and modify how certain revenue is credited to the housing development grant fund. These changes clarify the effective date for the vendor fee elimination and alter the calculation of incremental revenue for tourism purposes.

Scope change

The bill's scope remains focused on eliminating the sales tax vendor fee for retailers, but the timeline for implementation and the treatment of certain revenue streams were modified by Senate amendments.

TIMELINE

The effective date for eliminating the sales tax vendor fee was changed from January 1, 2026 to January 1, 2024 for certain provisions, and additional language was added specifying that the vendor fee elimination applies to sales made on and after January 1, 2023 but before January 1, 2024.

FISCAL

The amount credited to the housing development grant fund was changed from a fixed percentage increase to a specific calculation based on one and six hundred fifty-five thousandths percent of net revenue, excluding revenue from part 2 of article 26.

TECHNICAL

Formatting and markup conventions were updated to reflect Senate amendments with double underlining and revised header information indicating the bill is now in its revised version with all amendments adopted on second reading in the second house.

Engrossed → Reengrossed · 2 edits · Aug 23, 2025

MINOR

This bill was reengrossed to include additional co-sponsors and updated the bill summary to reflect that it is now at the third reading stage. The changes are primarily administrative updates to the bill's metadata rather than substantive policy modifications.

TECHNICAL

Added seven new co-sponsors (Bacon, Brown, Camacho, Froelich, Garcia, Lindsay, Mabrey, Sirota, Smith, Story, Willford, Zokaie) to the House sponsorship list.

Updated the bill summary header to indicate this is the 'Reengrossed' version and added a '3rd Reading Unamended' stamp dated August 23, 2025.

Introduced → Engrossed · 5 edits · Aug 22, 2025

MODERATE

This bill eliminates the sales tax vendor fee that retailers could keep to cover expenses for collecting and remitting state sales tax. The change simplifies tax collection, promotes fairness between retailers, and prevents additional sales tax revenue from being counted in tourism-related calculations.

Scope change

The bill now applies to all retailers regardless of their total taxable sales, removing previous thresholds that allowed smaller retailers to retain vendor fees.

ELIGIBILITY

Removed the vendor fee that retailers were authorized to retain for collecting and remitting state sales tax, effective January 1, 2026.

TIMELINE

Established January 1, 2026 as the effective date when retailers can no longer retain any money to cover their expenses in collecting and remitting state tax.

FISCAL

Appropriated $156,219 to the Department of Revenue and $36,383 to the Department of Personnel for the 2025-26 fiscal year to implement the act.

DEFINITION

Updated the definition of 'State sales tax increment revenue' to exclude additional revenue derived from vendor fee changes, ensuring tourism-related calculations remain accurate.

REQUIREMENT

Modified the Colorado Revised Statutes to remove provisions allowing retailers to retain vendor fees and updated related tax credit calculations for the housing development grant fund.

Eliminate State Sales Tax Vendor Fee

What changed between versions

How they voted

Actions timeline

Sponsors