Bag full of changes in Colorado
State of Colorado residents started January 1, 2023, with the Plastic Pollution Reduction Act. Many shoppers were caught off guard by the lack of bags at retailers or the charge for bags they encountered on New Year’s Day. Certain retail stores are required to charge $0.10 fee for every single-use carryout paper or plastic bag used by the customer. The retailer must include the type of bag provided and quantity on customer receipts. This fee may be higher in different municipalities. Customers who provide proof of enrollment in State or Federal food assistant programs are exempt from the fee.
This applies to all large grocery stores, convenience and retail stores with 3 or more locations in the State of Colorado or associated with a Franchise, Corporation, or Partnership with physical locations outside of Colorado.
Eventually 60% of this fee will be paid to municipalities to implement and enforce this law in addition to provide recycling programs in their communities. 40% will be kept by the retailer but won’t be considered revenue or subject to sales tax. Fee remittance will occur in April 2024 or when your City/County has developed a system for remittance. Check with your municipality for remittance dates.
If you are a small retailer or restaurant in Colorado, (less than 3 locations, and not associated with a Franchise, Corporation, or Partnership with physical locations outside of Colorado) you are in the clear for now. You do have the option to charge for bag use, but it is subject to sales tax and considered income to your business. Any bag fee you collect as a small retailer does not get remitted to your municipalities.
This is all phase 1 of 4 phases in this act.
Phase 2: January 1, 2024, will see a ban on plastic bags for these retailers as well as a ban on polystyrene (Styrofoam) food and drink containers at Colorado restaurants and schools.
Phase 3: April 1, 2024, Retailers must remit quarterly 60% of the fees collected in addition to all the fees collected in 2023.
Phase 4: July 1, 2024, Municipalities can enact more stringent bag and polystyrene laws. These could include the restriction or banning of use or sale of plastic materials, containers, packaging, or labeling.
The entirety of the law can be found at, 2021a_1162_signed.pdf (colorado.gov)
1099s in 2023
In the 2021 American Rescue Plan there was a 2022 rule introduced requiring 3rd party payment/settlement companies like PayPal, Venmo, etc. to issue 1099s to everyone who received over $600 in deposits in a year. The idea was that the IRS could then ensure taxes were paid on this money. On December 26, 2022, the IRS postponed this requirement, so it was not applicable to the 2022 tax year.
As we start 2023 if your business uses any of these platforms to receive payments from customers be aware that as it currently stands these transactions will be reported to the IRS. The continued use of platforms like these should be something you evaluate as the rules in this space are likely to continue to see change.
One of the pieces that seemed to be missing from many news reports in 2022 was that this applied only to business accounts. So, if you have a personal account with these companies those payments between friends, family, etc will not be reported to the IRS, yet.