colorado sales tax rules

As a result, the retailer is not considered to be doing business in Colorado and is not required to collect sales tax as the current year begins. This list is not, and is not intended to be, an exhaustive list of authorities that govern the tax treatment of every situation. A sale is any transaction whereby a person, in exchange for any consideration either: Whether a transaction is absolute or conditional, it is considered a sale if it transfers from a seller to a buyer the title or possession of any tangible personal property or service. Alternately, a retailer may inspect a physical copy of the purchaser’s license or certificate, issued by the Department or the comparable tax administration agency of another state, to verify that it is current and valid and retain a copy for their records. Sales Tax Exemptions Certain products and services are exempt form Colorado state sales tax. If a retailer fails to obtain a sales tax license and begin collecting sales tax within the prescribed period of time, the retailer is nonetheless liable for all applicable state and state-administered sales taxes for any subsequent sale made into Colorado. Rankings by Average State + Local Sales Tax: Ranked 30th highest by combined state + local sales tax, Ranked 18th highest by per capita revenue from state + local sales taxes ($1,054 per capita), Ranked 22nd highest by state sales tax rate, Ranked 45th highest by per capita revenue from the statewide sales tax ($446 per capita). All sums of money paid by the purchaser to the retailer as sales taxes are and remain public money and the property of the State of Colorado, or the appropriate local jurisdiction, in the hands of such retailer. For example, if delivery is optional and the purchaser may elect to pick up the property at the seller’s store, without paying the delivery charge, the delivery charge is separable. Colorado first adopted a general state sales tax in 1935, and … This requirement is satisfied if payment is made with a credit card or check in the name of the tax-exempt organization or governmental entity claiming exemption. This Part 11 provides additional information regarding the responsibilities of the buyer and the seller related to the sale of a retail business. Colorado has a general sales tax rate of 2.9 percent. If a retailer neglects or refuses to file a return, the Department may estimate the tax due, based upon the information that may be available. Individuals and businesses with specific questions should consult their tax advisors. See Department publication, A retailer is required to obtain a sales tax license and collect sales tax on any retail sale of tangible personal property or taxable service made in Colorado if the retailer is “doing business in Colorado,” as defined below. While Colorado's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. The following examples demonstrate the application of the small retailer exception for retailers who maintain no physical location in Colorado. The seller can request a tax status letter by submitting a completed form DR 0096 to the Department. Additional information regarding exemptions can be found at the end of this, Colorado has specific rules regarding the taxability of computer software. will be refunded to the purchaser, in full or in part. The total service fee a retailer may retain for any filing period may not exceed $1,000, even if the retailer has multiple business locations or makes sales at different locations in the state. The Colorado sales tax rate is currently %. Additionally, otherwise nontaxable services may be subject to sales tax if they are provided as part of a transaction involving the sale of tangible personal property. Sales Tax Calculator | State law allows municipalities to collect a sales or use tax if approved by their residents at an election. You can lookup Colorado city and county sales tax rates here. Under certain circumstances, motor vehicles and building materials are subject to local use taxes, rather than sales taxes. Usage is subject to our Terms and Privacy Policy. As a result, the retailer is not considered to be doing business in Colorado and is not required to collect sales tax on sales made in Colorado as the current year begins. The following examples demonstrate the application of the small retailer threshold for determining whether origin or destination sourcing rules apply. Signature and filing alternatives. Any retailer that is required to collect sales tax, as discussed in Part 4: Retailers Who Must Collect, must apply for and obtain a sales tax license prior to making any sales. Any tax a retailer fails to pay by the applicable due date is subject to penalties and interest. solicits business on behalf of the retailer. Any such adjustment will be made effective January 1. A retailer must produce all such books, accounts, invoices, and records upon request from the Department. The organizer must submit such list to the Department within ten days of the last day of the event. Beginning with the first day of the first month commencing at least 90 days after the retailer’s aggregate Colorado sales in the current year exceed $100,000, the retailer’s sales will be sourced using the general destination sourcing rules. A retailer who makes sales only through a marketplace may be exempt from sales tax licensing, collection, and filing requirements if the marketplace facilitator collects all applicable state and state-administered local sales taxes on the retailer’s behalf. State-administered local jurisdictions may also allow retailers to retain a service fee from the collected local taxes, although service fee percentages vary by jurisdiction. The tax applies to any charge paid for the use, possession, or the right to use or possess any room in a hotel, apartment hotel, lodging house, motor hotel, guesthouse, guest ranch, trailer coach, or mobile home and to any space in any camp ground, auto camp, or trailer court and park, under any concession, permit, right of access, license to use, or other agreement, or otherwise. If a retailer maintains multiple business locations in Colorado, a separate license is required for each business location. The retailer must disclose the sales tax as a separate and distinct item. Special event organizers bear various responsibilities in relation to the special event. Colorado has recent rate changes (Wed Jan 01 2020). A purchaser who holds a direct payment permit (a “qualified purchaser”) assumes responsibility for remitting all applicable sales taxes directly to the Department and not to the retailer. If the retailer’s average or estimated monthly sales tax collection is $15 or less, the Department may grant the retailer permission to file on an annual basis. On November 15th of the current year, the retailer’s cumulative retail sales in Colorado for the current year exceed $100,000. All retail sales are considered for the purpose of the $100,000 threshold, regardless of whether those sales would be subject to Colorado tax. The Colorado Department of Revenue does not administer use taxes for any city or county. See Department publication FYI Sales 86: Sales Tax Exemption on School-Related Items for information about sales made by schools and school organizations. Sales tax licensing and collection requirements apply not only to for-profit businesses, but also to charitable organizations and state and local governmental entities that make retail sales of tangible personal property or taxable services. In general, the tax does not apply to sales of services, except for those services specifically taxed by law. The following is a list of statutes, regulations, forms, and guidance relevant in evaluating a retailer’s obligation to collect Colorado sales tax. However, the allowable percentage for local service fees varies by jurisdiction. Colorado state sales tax is imposed at a rate of 2.9%. Colorado sales tax applies to the sale of food and drink served or furnished in or by dining establishments and other like places of business at which prepared food or drink is regularly sold. This temporary exception will expire 90 days after the Department has made a geographic information system (GIS) available to the public on the Department’s website. Visit the How to Look Up Sales & Use Tax Rates web page for more sales and use tax rate information. Regardless of the retailer’s filing frequency (monthly, quarterly, or annually), the retailer must file its sales tax return and remit all applicable tax by the 20th day of the month following the close of the tax period. Any claim for refund or credit must be made using the applicable Department form(s) and submitted to the Department within three years from the due date of the return on which the overpayment was made or within one year of the date of overpayment, whichever is later. See Part 1: Retail Sales for rules for determining the location of a sale. However, the Department does not administer and collect sales taxes imposed by certain home-rule cities that instead administer their own sales taxes. This list is not, and is not intended to be, an exhaustive list of authorities that govern the tax treatment of every situation. See Part 3: Calculation of Tax and Part 4: Retailers Who Must Collect for additional information about service enterprises. Denver Ordinance, Rules, and Tax Guide information. The retailer must collect the tax if the retailer has reason to doubt that a purchase is: In the case of a sale to a tax-exempt organization or governmental entity, the retailer must also verify that the purchase is made directly from the funds of the organization or entity claiming the exemption. Businesses with nexus in Colorado are required to register with the Colorado Department of Revenue and to charge, collect, and remit the appropriate tax. The following is a list of statutes, regulations, forms, and guidance pertaining to the calculation of tax on sales of tangible personal property. The bill, an updated, baked-into-the-Colorado Revised Statutes version of rules originally rolled out by the Department of Revenue last year, makes destination-based sales tax the law in the state. The sales tax is based on the full purchase price of all tangible personal property included in the sale. See Part 7: Filing and Remittance and the Colorado Retail Sales Tax Return (DR 0100) for additional information. Special event licenses apply only to retail sales made at the special sales event by the seller to whom the license is issued. If the event organizer has obtained a license, the organizer must file a return and remit payment for all sellers that have elected to remit taxes to the organizer. Colorado imposes a sales tax on retail sales of tangible personal property except when such sales qualify for an exemption specifically authorized by law. With respect to any tax-exempt sale, the retailer must obtain and retain sufficient information and documentation from the purchaser to verify the eligibility of the sale for exemption. See Department publication, Colorado does not generally impose sales tax on services. Information about license applications and renewals is available online at Colorado.gov/Tax. Payments made by EFT must be made on or before 4:00 P.M. Mountain Time on the due date of the tax payment in order to be treated as paid on that day. The state sales tax rate in Colorado is 2.900%. A retailer may be required to collect tax even if it has no physical presence in Colorado. A temporary exception from destination sourcing is allowed for retailers whose retail sales fall below the small retailer threshold described below. The requirement to collect tax applies whether the sale is made at a retailer location in Colorado or delivered to the customer at a location in Colorado. Any person or entity that will engage in the business of selling at retail must first obtain a sales tax license, unless that person or entity is specifically exempted from licensing requirements. The records must include, for each participating seller that has remitted taxes to the organizer: Any retailer who makes sales as a participant in a special event and also maintains a regular business location cannot simply include their special event sales in their sales tax return for their regular business location. A retailer who qualifies for origin sourcing based on prior year sales will nonetheless transition to destination sourcing if the retailer’s total retail sales in Colorado in the current year exceed $100,000. The retailer’s return must properly account not only for all state sales tax, but also for all sales tax collected and due for each applicable state-administered local jurisdiction. Retailers who fail to collect the required tax are nonetheless liable for the full amount of tax due on all sales, except for any sale that is tax-exempt. If the charge for the maintenance agreement or warranty is both separately stated and separable, the charge is not subject to tax. The statute further permits the extension of such time by written agreement between the Department and the retailer. If the retailer’s total retail sales in Colorado in the previous calendar year exceeded $100,000, then all of the retailer’s sales in the current calendar year must be sourced in accordance with the general destination sourcing rules. Retailers bear the burden of proof for the proper exemption of any sale upon which the retailer did not collect sales tax. The following is a list of statutes, regulations, forms, and guidance pertaining to taxable sales. Individuals and businesses with specific questions should consult their tax advisors. Retailers must remit a license fee of $16, prorated depending on the date of issuance, and a deposit of $50 at the time of application. A statement of the tax rate only is not sufficient. Because of this, all 45 states (and don’t forget D.C.!) Retailers may claim either a refund or credit for an overpayment of tax made with a previously filed return and the Department may assess any additional tax due, but not previously reported and paid. The following is a list of statutes, regulations, forms, and guidance pertaining to sales tax collection. See Department publication. Solicitation may be done by: Any retailer who does not maintain a physical location in Colorado is exempted from state sales tax licensing and collection requirements if the retail sales of tangible personal property, commodities, and/or services made annually by the retailer into Colorado in both the current and previous calendar years are less than $100,000. Taxation of vehicle purchases in particular are discussed in the page about Colorado's sales tax on cars. See Department publication Sales & Use Tax Topics: Motor Vehicles for additional information. Retailers must add the state sales tax, along with any state-administered local sales taxes, to the sale price or charge for any taxable sale. If the property or service is delivered to the purchaser at a location other than seller’s business location, the sale is sourced to the location the purchaser receives the purchased property or first uses the purchased service. This hearing will be conducted entirely by … Some of these exemptions apply automatically to state-administered local sales taxes and are generally reported on Schedule A. The sale of a motor vehicle is exempt from state-administered local sales tax if both of the following conditions are met: If the sale of a motor vehicle is exempt from any state-administered local sales tax, based upon these conditions, the purchaser may be required to pay use tax to the county clerk at the time of registration for the city, county, and/or special district in which the vehicle is registered. However, sales tax is imposed specifically on intrastate telephone and telegraph services, as well as gas and electric service for commercial consumption. The service provider must charge and collect state and any applicable local sales taxes. for information about recordkeeping requirements related to the use of the GIS database or certified electronic address databases. If you are a business owner and need to learn more about things like getting a sales tax permit, filing a sales tax return, or making tax-exempt purchases for resale see the Colorado Sales Tax Handbook's Table of Contents above. Otherwise, the charge for the maintenance agreement or warranty is included in the taxable purchase price. The information in the following sections does not apply to the calculation of sales tax imposed on the following sales: For sales of tangible personal property, the sales tax is calculated on the full purchase price. This can significantly increase the complication of filing your sales tax return, because different sales tax rates must be charged to different buyers based on their location. Additional details of Colorado's personal income tax laws are listed in the following table: A temporary exception from destination sourcing is permitted for small retailers whose sales fall below certain thresholds (“origin sourcing”). A transaction involving taxable property is a sale whether the seller acts on her own behalf or as the agent for another party. On November 15th of the current year, the retailer’s cumulative retail sales in Colorado for the current year exceed $100,000. Tax rate information for state-administered local sales taxes is available online at Colorado.gov/Tax. Tax rate information for state-administered local sales taxes is available online at, The taxability of maintenance agreements and warranties sold along with tangible personal property is generally determined under the same rules as other associated service charges. If no return is filed you’ll receive notices and Colorado may even revoke your sales tax permit. See Part 4: Retailers Who Must Collect and Part 8: Local Sales Tax for additional information regarding state and local sales tax collection requirements. Individuals and businesses with specific questions should consult their tax advisors. Any claim for credit must be made with the, A retailer submitting a refund claim bears the burden of proving the appropriate exemption of any sales that are the subject of the claim. The Department may treat any salesperson or representative as a retailer’s agent and hold that person jointly liable with the retailer for the collection and payment of sales tax if he or she: Anyone engaged in the business of rendering services to customers is generally considered the consumer, and not the retailer, of any tangible personal property that they use incidentally in rendering the service. Otherwise, the charge for the maintenance agreement or warranty is included in the taxable purchase price. Retailers may accept coupons from their customers for a reduction in the amount paid by the customer. With a subscription, you automatically receive updates without having to return to the website and check for changes. Short-term rentals of rooms and accommodations are also subject to Colorado sales tax. A retailer maintains no physical location in Colorado. If the retailer issues the buyer a receipt, invoice, or other document setting forth the purchase price, the retailer must separately state the tax on such document. The following is a list of statutes, regulations, forms, and guidance pertaining to the sale of a retail business. Under this exception, all of a small retailer’s sales will be sourced to the retailer’s business location, except that any sale delivered to a location outside of Colorado will not be sourced to Colorado. Sales Tax Nexus in Colorado Colorado defines tax nexus as any activity that is connected to the "selling, leading, or delivering" of tangible personal property to the end-consumer for use, storage, or consumption within the borders of the state. If a purchaser asserts that the sale qualified for exemption and the tax was collected by the retailer in error, the retailer may claim a refund or credit on behalf of the purchaser, but is not required to do so. The consideration exchanged in a sale may include money in any form, property, the rendering of a service, or the promise of any of these things. See Department publication FYI Sales 80: Telephone and Telecommunications for additional information regarding sales tax on telephone and telegraph service. Unless a retailer is delinquent in remitting the tax due, the retailer may deduct and retain a service fee from the collected tax to cover the retailer’s expenses in the collection and remittance of the tax. Failure to remit such taxes to the Department is punishable as provided by law. Tangible personal property subject to sales tax includes all goods, wares, merchandise, products and commodities, and all tangible or corporeal things and substances that are dealt in and capable of being possessed and exchanged. It provides information for collecting and filing sales, use, lodger’s, occupational privilege, facilities development, telecommunications, and property taxes. If the retailer’s Colorado sales in the previous year exceed $100,000, the retailer is subject to Colorado sales tax licensing and collection requirements for the entire calendar year. However, Colorado law exempts several types of tangible personal property from sales tax. For others, reported on Schedule B, each local jurisdiction may generally choose whether to adopt the exemption. The list must include the names, addresses, and special sales event license number, if any, of each seller participating in the event. Any seller participating in a special event must file a return and remit payment of sales taxes for the event, unless the seller has remitted the taxes to the event organizer who has obtained a license as described above. Do you have a comment or correction concerning this page? A retailer submitting a refund claim bears the burden of proving the appropriate exemption of any sales that are the subject of the claim. Sales made by a charitable organization are exempt from sales tax if all three of the following conditions are met: See Department publication Sales & Use Tax Topics: Charitable Organizations for additional information regarding sales made by charitable organizations. Individuals and businesses with specific questions should consult their tax advisors. Please visit colorado.gov/pacific/tax/sales-tax-GIS for additional information about the Department’s GIS. Individuals and businesses with specific questions should consult their tax advisors. 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