SALT Report 1397 – The Colorado Department of revenue updated their guidance regarding the sales tax laws that requires that sales or use tax be paid on all tangible personal property sold, leased or delivered in Colorado for use, storage, distribution or consumption in the state. Generally, it is the responsibility of the vendor to collect and remit sales taxes.
However, for out-of-state vendors, the responsibility for collecting and remitting either Colorado state sales tax or retailer’s use tax depends on the extent in which they are doing business in the state. Colorado law defines doing business in the state to mean “selling, leasing, or delivering in the state, or any activity in the state in connection with the selling, leasing, or delivering in the state, of tangible personal property by a retail sale…for use, storage, distribution, or consumption within the state.”
Therefore, if it is determined that an out of state taxpayer is “doing business in the state” then a Colorado sales tax account or a retailer’s use tax account must be opened.
Sales by Remote Sellers
Out-of-state businesses (remote sellers) that sell to Colorado residents solely through the Internet, telephone, or mail-order catalogs and that have no physical presence in Colorado are protected by National Bellas Hess, Inc. v. Department of Revenue Illinois, 386 U.S. 753. This Supreme Court ruling protects mail-order catalog sales businesses from having to collect state sales taxes from purchasers in states where the remote-seller has no physical presence itself or through an agent.
Colorado Sales Tax Account
Out of state businesses may apply for a state sales tax license online and receive your Colorado Account Number immediately. If you cannot apply online, you may complete and mail in the Colorado Sales Tax/Withholding Account Application (CR 0100). You will receive your license and account number by mail. Allow four to six weeks for processing. The cost of a standard sales tax license is $16 for a two-year period. Sales tax licenses are renewable in January of every even-numbered year.
After opening a sales tax account, Colorado state sales tax and any state-administered local sales taxes must be collected and remitted under the same laws and regulations that apply to Colorado vendors. In addition, for items delivered into the special taxing districts, the special district sales taxes are due as well.
Retailer’s Use Tax Account
You may open a Colorado retailer’s use tax account online and receive your Colorado Account Number immediately. Or, you may complete a Sales Tax/Wage Withholding Account Application (CR 0100). Allow four to six weeks to receive the retailer’s use tax license in the mail. There is no fee for this option.
After opening the account, Colorado state retailer’s use tax must be collected and remitted. Colorado state retailer’s use tax is the same rate as the 2.9% state sales tax and applies to the same types of transactions as state sales tax. Special district sales taxes must be collected on items delivered into that district.
Special Taxing Districts
Special district sales taxes are filed on the Retail Sales Tax Return (DR 0100). In Colorado, there are varying special district taxes and rates which are applicable to specific jurisdictions within the state. The current special district taxes include:
- Regional Transportation District
- Scientific and Cultural Facilities District
- Local Improvement District
- Local Marketing District
- Mass Transit District
- Rural Transportation Authority taxes
- Short-Term Rental Tax
- County Lodging Tax
- Metropolitan District Tax
- Multi-Jurisdictional Housing Authority, and
- Public Safety Improvements Tax
For Further Information: