SALT Report 2889 – The Colorado Department of Revenue updated a publication that discusses the requirements for filing a sales and use tax claim for refund. In Colorado, sales and use tax refund claims are categorized as either being a purchaser’s claim or a seller’s claim for refund, the procedures for both follow.
Purchaser’s Claim for Refund
The purchaser can submit a purchaser’s claim for refund, when sales or use tax was collected in error by the vendor and remitted to the Department of Revenue. If the purchaser is unable to obtain a refund directly from the vendor, they should submit a Claim for Refund of Tax Paid to Vendors – Form DR 0137B, along with any documentation to support the refund claim. In addition, the purchaser should include a brief summary of why they are requesting the refund in the reason box on the form.
If the purchaser is applying for a refund from several vendors, all supporting invoices and related documentation must be separated and totaled by vendor. Any spreadsheets that are submitted must be in a readable form. All invoices submitted with the spreadsheet should be numbered and correspond to the spreadsheet. Also, the invoices must represent each filing period in which a refund is being requested.
Seller’s Claim for Refund
A seller’s claim for refund can be submitted when the vendor paid sales tax to the Department of Revenue on their sales or retailers use tax return in error. When filing a claim, the vendor can request either a tax credit or a refund.
If a seller has overpaid sales tax on a previous return, they may deduct the overpayment amount on Form DR 0100, line 3C. However, the seller may only do this if they do not already have a credit on their account due to another overpayment. If there is credit from a previous period or a question regarding an overpayment calculation, the seller should file Form DR 0137 Claim for Refund along with an amended return for the applicable period and site.
The Claim for Refund Form DR 0137 should be used if the seller’s overpayment cannot be taken on its next tax return. If the seller is requesting a refund for more than one tax type, they must file a separate form for each. For example, the seller should submit one claim for sales tax and a separate claim for retailer’s use tax.
Also, the seller must submit an amended return for the applicable periods and include a separate return for each site included in the refund claim. The Department requires that the sites identified in the refund request match the sites that are set up on the seller’s account; otherwise the request will not be processed.
Interest will be included in the sales and use tax refund if the following conditions are met:
- The payment was made incident to a bona fide and orderly discharge of an actual liability, and
- The refund is not issued within 90 days from due date of the return, and
- The refund claim was made in a timely manner after discovery of the overpayment
To claim interest on an overpayment of sales tax, you must indicate on the Claim for Refund Form DR 0137 that interest is being requested. You must also include an explanation and documentation as to why the refund meets the criteria above.
The Department’s publication also includes the procedures for requesting a refund of consumer’s use tax as well as a list of the supporting documents that should be included with any claim for refund.
For Further Information