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TC Ord. No. 20-09 Amending Section 3.08 of the Avon Municipal Code to Provide for the Collection of Taxes on Remote SalesAvon C O L O R A D O ORDINANCE NO. 20-09 AMENDING SECTION 3.08 OF THE AVON MUNICIPAL CODE TO PROVIDE FOR THE COLLECTION OF TAXES ON REMOTE SALES WHEREAS, the Town of Avon, Colorado, (the "Town"), is a home rule municipality, organized and existing under Article XX, Section 6 of the Colorado Constitution; and WHEREAS, pursuant to Article XX, Section 6 of the Colorado Constitution, the right to enact, administer and enforce sales taxes is clearly within the constitutional grant of power to the Town and is necessary to raise revenue with which to conduct the affairs and render the services performed by the Town; and WHEREAS, pursuant to such authority, the Town has adopted and enacted a Sales Tax Code (the "Code"), under which Town sales tax is levied on all sales and purchases of tangible personal property or taxable services at retail unless prohibited, as applicable to the provision of this Ordinance, under the Constitution or laws of the United States; and WHEREAS, the United States Supreme Court in South Dakota v. Wayfair, 138 S.Ct. 2080 (2018), overturned prior precedent and held that a State is not prohibited by the Commerce Clause of the United States Constitution from requiring a retailer to collect sales tax based solely on the fact that such retailer does not have a physical presence in the State ("Remote Sales"); and WHEREAS, based upon such decision, the retailer's obligation to collect Remote Sales is no longer based on the retailer's physical presence in the jurisdiction by the Constitution or law of the United States, and the Code needs to be amended to clearly reflect such obligation consistent with said decision; and WHEREAS, the delivery of tangible personal property, products, or services into the Town relies on and burdens local transportation systems, emergency and police services, waste disposal, utilities and other infrastructure and services; and WHEREAS, the failure to tax remote sales creates incentives for businesses to avoid a physical presence in the State and its respective communities, resulting in fewer jobs and increasing the share of taxes to those consumers who buy from competitors with a physical presence in the State and its municipalities; and WHEREAS, it is appropriate for Colorado municipalities to adopt uniform definitions within their sales tax codes to encompass marketplace facilitators, marketplace sellers, and multichannel sellers that do not have a physical presence in the Town, but that still have a taxable connection with the Town; WHEREAS, the goal of adopting this ordinance is to join in on the simplification efforts of all the self -collecting home rule municipalities in Colorado; and Ord 20-09 AMENDING CODE SECTION 3.08 — August 11, 2020 Page 1 of 6 WHEREAS, this ordinance provides a safe harbor to those who transact limited sales within the Town; and WHEREAS, absent such amendment, the continued failure of retailers to voluntarily apply and remit sales tax owed on remote sales exposes the municipality to unremitted taxes and permits an inequitable exception that prevents market participants from competing on an even playing field; and WHEREAS, the Town adopts this ordinance with the intent to address tax administration, and, in connection with, establish economic nexus for retailers or vendors without physical presence in the State and require the retailer or vendor to collect and remit sales tax for all sales made within the marketplace. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF AVON, COLORADO the following: Section 1. Recitals Incorporated. The above and foregoing recitals are incorporated by reference and adopted as findings and determinations of the Town Council. Section 2. Amendment to Section 3.08.010 - Words and phrases defined. The following definitions contained in Section 3.08.010 are hereby amended to read as follows with strike R indicating language to be deleted and underline indicating language to be adopted: Economic Nexus means the connection between the Town and a person not having a physical nexus with the State of Colorado, which connection is established when the person or marketplace facilitator makes retail sales into the Town, and: a. In the previous calendar year, the person, which includes a marketplace facilitator, has made retail sales into the state exceeding the amount specified in C.R.S. § 39-26-102(3)(c); or b. In the current calendar year, 90 days has passed following the month in which the person which includes a marketplace facilitator, has made retail sales into the state exceeding the amount specified in C.R.S. § 39-26-102(3)(c). This definition does not apply to any person who is doing business in this state but otherwise qp lip es to any otherep rson. Engaged in Business in the Town means performing or providing services or selling, leasing, renting, delivering or installing tangible personal property, products, or services for storage, use or consumption, within the Town. Engaged in Business in the Town includes, but is not limited to, any one (1) of the following activities by a person: a. Directly, indirectly, or by a subsidiary maintains a building, store, office, salesroom, warehouse, or other place of business within the taxing jurisdiction; b. Sends one (D or more employees, agents or commissioned salespersons into the taxing Ord 20-09 AMENDING CODE SECTION 3.08 — August 11, 2020 Page 2 of 6 jurisdiction to solicit business or to install, assemble, repair, service, or assist in the use of its products, or for demonstration or other reasons; c. Maintains one (1) or more employees, agents or commissioned sales persons on duty at a location within the taxing jurisdiction; d. Owns, leases, rents or otherwise exercises control over real or personal property within the taxing jurisdiction; e. Makes more than one delivery into the taxing jurisdiction within a twelve-month period; or f By any means other- than a eewmen eaFrier Makes retail sales sufficient to meet the definitional requirements of economic nexus as set forth in this section Marketplace means 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. Means a person who: (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; and (3) Either directly or indirectly, through agreements or arrangements with third parties collects payment from the purchaser on behalf of the seller. b. Marketplace Facilitator does not include a person that exclusively provides internet advertising services or lists products for sale, and that does not otherwise meet this definition. Marketplace Seller means a person, regardless of whether or not the person is engaged in business in the Town, which has an agreement with a marketplace facilitator and offers for sale tangible personal property, products, or services through a marketplace owned, operated, or controlled by a marketplace facilitator. Multichannel Seller means a retailer that offers for sale tangible personal property, commodities, or services through a marketplace owned, operated, or controlled by a marketplace facilitator, and through other means. Retailer or Vendor means any person selling, leasing, renting, or granting a license to use tangible personal property or services at retail. Retailer shall include, but is not limited to, any: Ord 20-09 AMENDING CODE SECTION 3.08 — August 11, 2020 Page 3 of 6 a. Auctioneer; b. Salesperson, representative, peddler or canvasser, who makes sales as a direct or indirect agent of or obtains such property or services sold from a dealer, distributor, supervisor or employer; c. Charitable organization or governmental entity which makes sales of tangible personal property to the public, notwithstanding the fact that the merchandise sold may have been acquired by gift or donation or that the proceeds are to be used for charitable or governmental purposes; d. Retailer -contractor, when acting in the capacity of a seller of building supplies, construction materials, and other tangible personal property... e. Marketplace facilitator, marketplace seller, or multichannel seller. Section 3. Amendment to Section 3.08.020 — Sales tax levy. Section 3.08.020 is hereby amended by the addition of the following new subsection (5): (5) Upon the purchase price paid or charged upon all marketplace sales (a) (1) A marketplace facilitator engaged in business in the Townis required to collect and remit sales tax on all taxable sales made by the marketplace facilitator, or facilitated by it for marketplace sellers or multichannel sellers to customers in the Town, whether or not the marketplace seller for whom sales are facilitated would have been required to collect sales tax had the sale not been facilitated by the marketplace facilitator. (2) A marketplace facilitator shall assume all the duties, responsibilities, and liabilities of a retailer or vendor as defined by Section 3.08.010. Marketplace facilitators shall be liable for the taxes collected from marketplace sellers or multichannel sellers. The Town may recover any unpaid taxes, penalties, and interest from the marketplace facilitator that is responsible for collecting on behalf of marketplace sellers or multichannel sellers. (3) The liabilities, obligations, and rights set forth under this article are in addition to any duties and responsibilities of the marketplace facilitator has under this article if it also offers for sale tangible personal property, products, or services through other means. (4) A marketplace seller, with respect to sales of tangible personal property, products, or services made in or through a marketplace facilitator's marketplace, does not have the liabilities, obligations, or rights of a retailer under this article if the marketplace seller can show that such sale was facilitated by a marketplace facilitator: a. With whom the marketplace seller has a contract that explicitly provides that the marketplace facilitator will collect and remit sales tax on all sales subject to tax under this article; or b. From whom the marketplace seller requested and received in good faith a certification that the marketplace facilitator is registered to collect sales tax and will collect sales tax on all sales subject to tax under this article made in or through the marketplace facilitator's marketplace. (5) If a marketplace seller makes a sale that is not facilitated by a licensed marketplace facilitator in a marketplace, the marketplace seller is subject to all of the same licensing, collection, remittance, filing and recordkeeping requirements as any other retailer.. Ord 20-09 AMENDING CODE SECTION 3.08 — August 11, 2020 Page 4 of 6 (b) Auditing. With respect to any sale, the Town shall solely audit the marketplace facilitator for sales made by marketplace sellers or multichannel sellers but facilitated by the marketplace. The Town will not audit or otherwise assess tax against marketplace sellers or multichannel sellers for sales facilitated by a marketplace facilitator. Section 4. No retroactive application. No obligation to collect the sales and use tax required by this article may be applied retroactively. Responsibilities, duties and liabilities described in Section 5(a) of a marketplace facilitator, marketplace seller, or multichannel seller begin upon licensure or when the municipal sales taxes were first collected from taxable sales made to retail customers prior to licensure. Section 5. Severability. If any provision of this ordinance, or the application of such provision to any person or circumstance, is for any reason held to be invalid, such invalidity shall not affect other provisions or applications of this Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are declared to be severable. The Town Council hereby declares that it would have passed this Ordinance and each provision thereof, even though any one of the provisions might be declared unconstitutional or invalid. As used in this Section, the term "provision" means and includes any part, division, subdivision, section, subsection, sentence, clause or phrase; the term "application" means and includes an application of an ordinance or any part thereof, whether considered or construed alone or together with another ordinance or ordinances, or part thereof, of the Town. Section 6. Effective Date. This ordinance shall become effective on the first day of the month that is at least thirty (30) days after date of its adoption. Section 7. Codification of Amendments. The codifier of the Town's Municipal Code, Colorado Code Publishing, is hereby authorized to make such numerical and formattin changes as may be necessary to incorporate the provisions of this Ordinance within the Avon Municipal Code. The Town Clerk is authorized to correct, or approve the correction by the codifier, of any typographical error in the enacted regulations, provided that such correction shall not substantively change any provision of the regulations adopted in this Ordinance. Such corrections may include spelling, reference, citation, enumeration, and grammatical errors. Section 8. Publication. The Town Clerk is ordered to publish this Ordinance in accordance with Chapter 1.16 of the Avon Municipal Code. [SIGNATURE PAGE FOLLOWS] Ord 20-09 AMENDING CODE SECTION 3.08 — August 11, 2020 Page 5 of 6 INTRODUCED AND ADOPTED ON FIRST READING AND REFERRED TO PUBLIC HEARING on July 28, 2020 and setting such public hearing for August 11, 2020 at the Council Chambers of the Avon Municipal Building, located at One Hundred Mikaela Way, Avon, Colorado. am &&�� av L -w Sarah Smith Hymes, Mayo ATTEST: �pWN 0,6 Brenda Torres, Town Cl �, „.4 ADOPTED ON SECOND AND FINAL READING on August 11, 2020. BY: (-�AA JJA AIA Sarah Smith Hymes, Ma(0) p D AS TO FORM: Town Attorney ATTEST: Brenda Torres, Town Ord 20-09 AMENDING CODE SECTION 3.08 — August 11, 2020 Page 6 of 6