Colorado has enacted H.B. 26-1223, a law that significantly expands the state’s sales and use tax base beginning January 1, 2027.
The legislation broadly treats downloaded and remotely accessed computer software as tangible personal property subject to Colorado sales and use tax.
Under the new law, certain software-as-a-service offerings and mobile applications will also fall within the expanded taxable scope.
To prepare for implementation, the Colorado Department of Revenue announced it will hold a virtual work group meeting on August 6, 2026.
The session is designed to solicit stakeholder input before the department begins drafting administrative rules to support the new law.
According to the department, the meeting is intended to identify issues that taxpayers expect the rules to address and to help inform guidance efforts.
The rulemaking process is expected to be especially significant because H.B. 26-1223 leaves several important implementation questions unanswered.
Most notably, the legislation does not appear to establish software-specific sourcing provisions or a multiple-points-of-use framework for software accessed across state lines.
Department guidance will therefore be critical in determining how taxpayers should source receipts from enterprise software, SaaS subscriptions, and other remotely accessed products.
Further clarification may also be needed around key statutory exclusions, including exemptions for custom software and software transferred under a “negotiable license agreement.”
The interpretation of these exclusions carries substantial implications for software vendors, SaaS providers, and enterprise purchasers evaluating their exposure before the effective date.
Attorneys at Greenberg Traurig, LLP plan to participate in the August 6 work group meeting and will continue monitoring developments as the rulemaking process moves forward.
Taxpayers affected by H.B. 26-1223 are advised to closely follow the department’s guidance efforts in the months ahead.
Businesses should also consider participating in the work group process or submitting comments as the department develops rules implementing the new law.