Colorado Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Revenue
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Colorado, and if so, how best to tackle the sales tax situation in the Centennial State.
After reading this, you’ll know:
- Do you or don’t you need to collect Colorado sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Colorado sales tax!
Do you have sales tax nexus in Colorado?
Good news! You only have to begin thinking about Colorado sales tax if you have sales tax nexus in Colorado.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Colorado considers a seller to have sales tax nexus in the state if you have any of the following in the state:
- An office, distributing house, sales room or house, warehouse, or other place of business
- Independent contractors or other representatives in Colorado soliciting business
You can click here to read exactly what the Colorado Department of Revenue (Colorado’s taxing authority) has to say about what constitutes sales tax nexus in Colorado, under Regulation 39- 26-102.3.
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Colorado. Your next step is to determine if what you’re selling is even taxable.
Services in Colorado are generally not taxable. So if you’re a painter or an independent research consultant, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product for sale, you may have to deal with the sales tax on products.
Tangible products are taxable in Colorado , with a few exceptions, such as some medical related items and medical devices.
So if you sell jewelry, then charge sales tax to your Colorado customers.
But if you’re a web developer, don’t charge sales tax to your Colorado customers.
If you have sales tax nexus in Colorado and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Colorado
Sellers with sales tax nexus in Colorado must apply for a Colorado sales tax permit.
Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Colorado.
How to Collect Sales Tax in Colorado
So you’ve determined that you have sales tax nexus in Colorado and what you’re selling is taxable. And you’re all set and registered for your Colorado sales tax permit.
The next step is to determine how much sales tax to collect.
Colorado is a “destination-based” sales tax state. That means if you live and run your business in Colorado, you always charge sales tax based on your buyer’s location.
Example: You live and run your business in Longmont, Colorado, in the 80501 zip code. The sales tax rate if you were to make a purchase from a store in your city is 8.26%. But say you sell an item online to a customer in Leadville and ship it to the Leadville 80461 zip code. Leadville’s sales tax rate is only 6.90%. Since Colorado is a destination-based state, you would charge the 6.90% sales tax rate at your buyer’s address.
If you are not based in Colorado, but have sales tax nexus in Colorado you are considered a Colorado “remote seller.” This is where things get tricker, since remote sellers are required to collect “use tax,” which is similar to sales tax, but can vary slightly from Colorado sales tax rates. If you’re running into this problem as an online seller, no worries! Taxjar SmartCalcs will make sure you collect the right rate every time. (And if you sell on a platform like Amazon, their sales tax engine ensures you collect the right rate, too!)
Also, if you live in or your business is based in a location in Colorado you may find that you live in a home rule city. The Colorado Department of Revenue doesn’t collect local sales tax for these cities, so you’ll need to contact your local taxing authority if you live in a home-rule city. See a list of Colorado’s home rule citiesstarting on page 8 in this publication.
Should you collect sales tax on shipping charges in Colorado?
As an online seller, you will most likely be required to charge sales tax on shipping charges in Colorado.
Read a full explanation of sales tax on shipping in Colorado here.
|2||Colorado Springs||439,886||El Paso||7.63%|
|3||Aurora||345,803||Arapahoe, Adams and Douglas||7.00%|
|6||Thornton||127,359||Adams & Weld||8.50%|
|8||Westminster||110,945||Adams & Jefferson||8.6% & 8.35%|
|9||Pueblo||108,249||Adams & Jefferson||7.40%|
|13||Longmont||89,919||Boulder & Weld||8.26%|
|20||Littleton||44,275||Arapahoe, Jefferson & Douglas||7.50%|
Caption: Top 20 Most Populous Cities in Colorado and their Sales Tax Rates
When are Colorado Sales Tax Returns Due?
Colorado sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Colorado sales tax permit.
To break it down:
2016 Colorado Monthly Sales Tax Filing Due Dates
If you routinely collect more than $300 per month in sales tax then you’ll likely be put on a monthly filing schedule.
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
2016 Colorado Quarterly Sales Tax Filing Due Dates
If you routinely collect more than $15 but less than $300 per month in sales tax then you will most likely file quarterly.
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
* indicates a due date pushed back due to a weekend or holiday
2016 Colorado Annual Sales Tax Filing Due Date
If you routinely collect less than $15 per month in sales tax then you will likely file sales tax annually in Colorado.
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
How to File Sales Tax in Colorado
When it comes time to file sales tax in Colorado you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
How to Calculate How Much Sales Tax You Owe in Colorado
Calculating how much sales tax you should remit to the state of Colorado is easy with TaxJar’s Colorado sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Colorado sales tax return will be waiting for you in TaxJar. Once your TaxJar account is set up, all you have to do is login!
How to File and Pay Sales Tax in Colorado
File online - File online at the Colorado Department of Revenue. You can remit your payment through their online system. File by mail - you can also fill out form DR-0100 and mail it in to the Colorado Department of Revenue.
Colorado has also provided a list of common sales tax filing errors you may want to be on the lookout for!
Other Facts You Should Know about Colorado Sales Tax Filing
There are a few more things you should know about sales tax in Colorado:
- Late Filing/Failure to File Penalty The greater of 10% of tax due plus 0.5% of tax due per month (maximum 18%) or $15.
- Late Payment Penalty The greater of 10% of tax due plus 0.5% of tax due per month (maximum 18%) or $15
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Colorado requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. If no return is filed you’ll receive notices and Colorado may even revoke your sales tax permit. Click here for a list of states that require zero sales tax returns.
And that’s it. You’ve mastered Colorado sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Colorado Sales Tax Resources
For more about Colorado sales tax, check out the Colorado section of the TaxJar blog.