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Colorado Sales Tax Guide for Businesses

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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?

The good news is, you only have to begin thinking about Colorado sales tax if you have sales tax nexus in Colorado. However, Colorado enacted a “Notice & Report” law in 2017 that affects ALL retailers who make more than $100,000 in gross sales in a calendar year to Colorado. We’ll get into that in just a minute, but first let’s focus on nexus.

“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.

Do I have sales tax nexus in Colorado if I sell on Amazon FBA?

Online retailers are increasingly using Fulfillment by Amazon to sell their products. According to Colorado’s rules of nexus, a seller who stores items in a physical location in the state – including an Amazon Fulfillment Center – has sales tax nexus there and must collect sales tax from Colorado buyers.

To determine whether or not you have items stored in an FBA warehouse in Colorado, you can do one of two things:

  1. Login to Amazon Seller Central and pull your inventory report
  2. Try a 30-day free trial of TaxJar and we’ll show you the states from where your items are shipping with our Amazon badge feature

You may find that your inventory is stored in one of Colorado’s Amazon fulfillment centers in this list:

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the United States.

Do you have economic nexus in Colorado?

Effective December 1, 2018, Colorado considers vendors who make more than $100,000 in sales in the previous or current calendar year in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Colorado’s economic nexus guidance for sellers here and you can read more about economic nexus in every state here.

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.

Are you required to follow Colorado’s “Notice & Report” law?

After a prolonged court battle, Colorado’s “Notice and Report” law went into effect for eCommerce sellers on July 1, 2017. This law states that ANY online seller who is not already required to collect sales tax in Colorado, but who grosses more than $100,000 in sales from buyers in Colorado is required to do the following:

  1. Along with every transaction to a Colorado buyer, provide a notice that “use tax” is due on the sale
  2. Every year, provide customers who purchased more than $500 from you with an annual summary of their purchases to help them pay use tax due AND provide this information to the Colorado Department of Revenue

You can read more about how to handle Colorado’s Notice & Report requirements here.

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.

How to Collect Colorado Sales Tax If You Have a Location in Colorado

Colorado is a little different than other states when it comes to how retailers collect sales tax. Colorado is divided into districts. If you make a sale to someone in your district, you collect the full combined sales tax rate at your buyer’s ship to address.

You can look up your combined local sales tax rate with TaxJar’s Sales Tax Calculator.

If you have a location in Colorado and make a sale to someone outside your district, you collect the “retailer’s use tax.” Retailer’s use tax is made up of the Colorado state tax (2.9% as of July 2017) AND any local district taxes. These district taxes are often: Regional Transportation District (RTD), Scientific and Cultural Facilities District (CD) or Regional Transportation Authority (RTA) taxes.

Retailer’s use tax does not include any local city or county taxes that may be applicable.

You can read more about Colorado sales tax and retailer’s use tax at the Colorado Department of Revenue website.

How to Collect Colorado Sales Tax If You Do NOT Have a Location in Colorado

If you are not based in Colorado, but have sales tax nexus in Colorado you are considered a Colorado “remote seller.” As a remote seller, you are also required to collect “retailer’s use tax” from Colorado buyers. (See above for more on retailer’s use tax.)

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 cities starting on page 8 in this publication.

Confused? We don’t blame you. Colorado makes sales tax collection complicated. Fortunately, your TaxJar Colorado State Report will help you figure out just how much sales tax to file in Colorado. Sign up for a 30-day free trial of TaxJar and put a lid on Colorado sales tax!

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.

When are Colorado Sales Tax Returns Due?

When you file and pay Colorado sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Colorado?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Colorado, you will be required to file and remit sales tax either monthly, quarterly or annually.

How often you are required to file sales tax in Colorado follows this general rule:

Colorado sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.

2019 Colorado Monthly Sales Tax Filing Due Dates

2019 Colorado Quarterly Sales Tax Filing Due Dates

2019 Colorado Annual Sales Tax Filing Due Dates

How to File Sales Tax in Colorado

When it comes time to file sales tax in Colorado you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. 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.

“Zero returns”:

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.

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