42 min read
New York Sales Tax Guide
In running any business, collecting and paying sales tax in the state of New York can become overwhelming. We have put together this guide so that...
Choosing to run a business in Colorado is a no-brainer! Known for being one of the healthiest states🎿, having abundant natural resources🌄, and being rather business-friendly🤑, Colorado is home to many happily growing small and medium-sized businesses, including Accountingprose!
One thing many Colorado business owners will need to get in order in the course of doing business is the collection and remittance of sales tax. We have the privilege of helping our customers clarify these matters among others and we’re happy to now pass this information on to you!
After reading this guide, you will know:
Our Colorado Sales Tax Guide will give you the confidence to effectively manage your Colorado sales tax from beginning to end.
If you have any other questions to help you navigate your way through Colorado sales tax, we are always here for you.
☐ Have you wanted to contact the Colorado Department of Revenue?
☐ Are you unsure if you should call them, or email them through their website?
☐ Have you ever wondered what information you should have ready before you contact them?
If you answered “Yes” to any of these questions, we have just the answers you need!
You may contact the Colorado Department of Revenue by calling 303-238-7378. If you are a glutton for punishment, you can visit a Taxpayer Service Location. You will have to take a ticket and wait. And wait. And wait...
But who has time for that?! Calling is often the easiest option.
There are three pieces of information that you should have on hand before you call the Colorado Department of Revenue. They are:
If you are calling on behalf of someone else or another business, you need to have one more piece of information:
If you do not have this, they will not be able to talk to you. This document authorizes the tax authorities in Colorado to discuss someone else’s or a business’ taxes with you.
If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.
Do you have to register for a sales tax license in the state of Colorado?
To know the answer to this question, you need to ask yourself another question first.
Do you sell tangible items?
If you replied “Yes,” congratulations! :) You get to register for a Colorado sales tax account.
Though it may sound like an arduous undertaking, it’s really not too big a deal, and you only need to do it once. Though it is worth keeping in mind: you will have to renew your registration every two years.
The fee to renew is a whopping $16, but the state makes it very simple. You can simply log in to your Revenue Online account, click on License Renewal, and follow the prompts to make the payment. Easy peasy.
If you prefer printing and mailing the renewal, you need to send in form DR 0594 before the due date. Remember to write “sales tax renewal” on the check or money order so that the funds are applied correctly.
The registration process is quite simple so long as you are prepared.
We will walk you through what you need to know:
As our clients frequently ask about these topics, we will give you all the information you'll need to get started.
So, let’s get to it!
Before you get started, there are six sales tax licenses available. Let’s review each one so you can see which one you need to apply for.
Are you a small home businesses and wondering if you need a sales tax license?
We have some good news for you! You do not have to obtain the sales tax license for sales made from your home if you meet all of the following criteria:
Even though you do not need to apply for a sales tax license, you still need to collect sales taxes.
This includes, if applicable, special district taxes, including Regional Transportation District (RTD), Cultural Facilities District (CD), and state-collected local tax on the gross sales price of each product you sell. Your total annual sales tax collection must be submitted to the Department of Revenue by April 15th of the following year.
Now that you know what sales tax license you need, it’s time to look at where you apply for it. This depends on the physical location of your business.
Is your business Inside Colorado?
Is your business located outside Colorado?
Using MyBizColorado is the fastest way
to set up your license.
No need to worry!
If you are changing the mailing address, all you have to do is:
Whichever option you choose, the state will take care of the change for you.
Protip: You cannot change the address of the physical location address of your business in Revenue Online. Why? This is a safety measure. When you change the physical location of a business, there may be tax implications. For instance, it may change your tax jurisdiction. As such, the tax authorities in Colorado want you to contact them in writing via snail mail or email to ensure the proper jurisdictions are included for the business location or site.
Before we give you the contact information, we want to emphasize one more thing.
When you send a letter or email to the Colorado Department of Revenue, be sure to include the Colorado Account Number (CAN) and business contact information with the location address change.
Colorado Department of Revenue
Sales Tax Section #208
PO Box 17087
Denver, CO 80217-0087
Definitely a good thing to understand before beginning this process! You get a gold star! ⭐
Have this information handy before you sign up for Colorado Sales Tax Account:
Once you have this information accessible, you can go online and register for your sales tax license at the MyBizColorado website.
This depends on the type of license.
First, let’s talk about the most common licenses.
Wholesale and Retail Licenses
This is dependent on whether the first day of sales occurs in an even or odd numbered year.
For more information, refer to the Fee Schedule.
In addition, there are some other fees associated with retail sales licenses.
What about any fees associated with the other examples of sales tax licenses?
There is no charge for a single or multiple event license if a business has a current wholesale or retail sales licenses. Huzzah!
There is one more fee you should be aware of...
The renewal fee!
Don’t forget that your license will need to be renewed every 2 years. This renewal fee is $16.
Yes, you definitely will need an EIN.
No need to worry if you don’t have one yet! We’ve got you.
You can register for a Federal EIN here.
Because each business is different, you have to contact the Colorado Department of Revenue to verify which government agencies you are required to register with.
Some potential agencies include:
But this is a non-exhaustive list and it’s important to make sure your business meets all the regulatory requirements for its industry.
You’re now ready to go!
You are now prepared to register for your sales tax license:
Registering for your sales tax license will be smooth as long as you are prepared. I suggest keeping all the necessary information organized in one place. You should have it saved in hard-copy and soft-copy. And do take advantage of the resources available online and through your tax professional.
By now, you have probably contacted the Colorado Department of Revenue and possibly even registered for a sales tax license. Now that you have finished the application process, you want to know when you are required to collect sales taxes. It is quite common for new business owners to have questions about this.
To know that, we should discuss the basics of taxable goods in the state of Colorado by looking at some frequently asked questions from our clients. I believe these will help me illustrate the nuances of when a business needs to charge sales taxes in Colorado, and when a business doesn’t need to.
Let’s start with the first question...
In addition to knowing what kinds of goods or services are taxable, you also need to keep in mind some other factors that trigger a sales tax in the state of Colorado.
So, Let's go over the following frequently asked questions:
Why? Businesses are required to collect and remit sales taxes based on a variety of factors. While they must consider whether the good is taxable, they must also consider other criteria such as whether they established a taxing connection with the state. By going over these common questions that our clients have asked regarding Colorado sales tax, you will be able to better assess whether you have established such a connection with Colorado.
First things first.
Let’s talk about what kind of sales tax state Colorado is…
Colorado is Destination Based Sales Tax State.
This means that you charge the local sales tax rates according to the buyer’s shipping address (where the product is received by the buyer).
For your reference, if a state has Origin Based Sales Tax, a business would collect and remit sales taxes based on the business’ location - much easier. However Colorado is not one of those origin based sales tax states.
Protip: Charge Colorado sales tax based on the location of the buyer.
To make managing your tax responsibilities easier, you can use an eCommerce or point of sale software to appropriately charge sales tax by customer location. If you do not collect sales tax when you were supposed to, you risk under or over collecting sales tax- both scenarios can result in fines and fees imposed on your business by the state.
Destination nexus may seem like a simple concept until you realize that Colorado has many hundreds of sales tax jurisdictions and sellers are responsible for collecting and remitting sales tax for any jurisdiction in which they have made a sale.
The Colorado Department of Revenue’s online portal will allow businesses to remit to most sales tax jurisdictions but not all. Colorado has 61 cities and 35 towns that are “home rule” which means that they do not allow the state to collect sales taxes on their behalf. This means sellers are responsible for applying for sales tax permits in any of the 96 home rule areas in which they make a sale (usually with paper), collecting the correct amount of sales tax from their customers, and remitting directly to the home rule area (usually with a check in the mail).
Now that we know that Colorado is a destination sales tax state, we need to also consider other criteria that could trigger a sales tax requirement at the point of sale.
Colorado recognizes several thresholds to trigger sales tax requirements.
We will use four commonly asked questions by our clients that can help explain these thresholds more efficiently:
Fear not! After we discuss these four questions in more detail, you will feel more confident in recognizing if your business meets any of the criteria triggering a tax connection with Colorado. You will also learn about the tools and resources available to manage your sales tax.
Before answering this question, I want to stress one thing: if your business establishes nexus within Colorado, you are subject to sales tax even if your business is based out of state.
What is a sales tax nexus again?
Sales Tax Nexus is also known as "sufficient business presence.” If you have established this type of presence, you have created a taxing connection with the state. What does that mean? It means you are required to collect and remit sales tax in Colorado.
What if your main headquarters are in another state and you have no physical presence in Colorado? It is still possible to create sales tax nexus in Colorado even if you never step foot in Colorado. Businesses located in Colorado are not the only ones capable of creating a sales tax nexus with Colorado. Out of state businesses are capable of the same.
So, how do you create a Sales Tax Nexus in Colorado?
There are three ways a business can create nexus in Colorado.
Yes, Amazon has two fulfillment centers in Colorado.
For your convenience, here are the addresses of the Amazon fulfillment centers in Colorado:
19799 E 36th Dr
Aurora, CO 80011
24006 E 19th Ave
Aurora, CO 80019
If you sell your products on Amazon or are recognized as an Amazon FBA (Fulfillment by Amazon), you want to know where Amazon has its fulfillment centers in any state including Colorado because this may trigger a sales tax requirement. If Amazon is storing your products in a warehouse in Colorado, you have created a taxing connection, or nexus, with the state of Colorado.
Protip: You create sales tax nexus by holding your goods in a warehouse (including one of Amazon’s) in the State of Colorado.
Considering Amazon has many fulfillment centers throughout the United States, you may feel overwhelmed with determining your tax obligations in Colorado as well as in other states.
We can help you with this process of identifying where your products are stored and what are the resulting tax implications.
We often use A2X + Wherestock to find out where our clients’ inventory is currently being held by Amazon across the country. This helps us determine what our clients need to do to be in compliance with all applicable state tax laws.
Yes, but only starting December 1st, 2018. As of December 1st, 2018, a retailer with no physical presence in Colorado must collect and remit Colorado state and local sales tax if it has:
Meeting one of these two standards establishes an economic nexus in the state of Colorado.
No, Colorado doesn’t have any extra requirements for affiliate marketers.
Some states have implemented this program in attempts to simplify sales tax law and make it easier for businesses to navigate regulations across multiple states lines... but Colorado is not one of them. At least not yet!
It’s time to wrap it up.
Knowing if your products are considered taxable goods and knowing if you reached any thresholds to establish a sales tax nexus with the state of Colorado is essential to effectively managing your business’ tax obligations.
Keep this guide handy to help you determine when to charge a buyer sales tax, so you and your business can be better-equipped to prevent negative tax implications such as paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Colorado.
Once you recognize your business has established a sales tax nexus with the state, you may have some questions about how to go about collecting sales taxes.
Many clients ask the following four questions:
After reading this, you will be better equipped to collect Colorado sales taxes.
Because Colorado is a Destination-Based Sales Tax State, you collect Colorado sales taxes if the buyer’s address is within the state of Colorado.
What happens if you sell your products within a store you own? You collect the sales tax for your location directly via your POS system.
What happens if you sell your products online? If the buyer is located outside your district, you collect the tax for the buyer’s districts: state use tax (2.9%) + city + county + any local district taxes (such as Regional Transportation District (RTD), Scientific and Cultural Facilities District (CD) or Regional Transportation Authority (RTA) taxes).
Sales Tax Rates change all of the time- and vary by what is being sold! It's best to check out the Colorado Department of Revenue site here.
The following goods and services are generally exempt from sales taxes in Colorado:
How you report your exemptions depends on the method of filing.
Protip: Exemptions may vary by state, county, city or special district.
Now that you know what is exempt, you will also want to learn who is exempt from sales taxes. This depends on the buyer: (1) what kind of buyer they are, and (2) how they intend on using the goods. A common example is the wholesale buyer who buys goods with the intention of reselling them.
Other common examples of an exempt buyer may include:
Altogether, to determine who is exempt, you have to consider the type of buyer and the buyer’s intention for purchasing the goods.
When you do business with buyer who is exempt from paying sales taxes, you do not have to worry about filling out any paperwork because that is the buyer’s responsibility. However, you as the retailer must collect a Colorado Transaction Privilege Tax exemption certificate at the time you sell the buyer your products. Be sure to keep this on file so you can justify any tax-exempt sales in the case of an audit. If you lose the certificate or fail to obtain a copy, you risk having to pay the outstanding taxes yourself.
On the other hand, you will want to read the information I provide in the next question.
This is a really great question. For retailers, it is crucially important that you keep a copy of the certificate on file. Otherwise, you will be unable to verify that the buyer was exempt from paying sales tax in the event of an audit. In that case, the tax authorities will put the burden of paying the sales tax on you, the retailer.
However, you may want to know that the Department of Revenue provides a service where you can verify a business or organization’s tax exempt status through the “Additional Services” tab on Revenue Online. You would need to have the sales tax account number or exemption certificate number the buyer was provided with. You may want to make a note of this information as a backup in the instance you do lose a copy of the certificate.
There is no reason to worry if you are working with us. We will be sure to keep your sales tax exemption certificates safe and sound in our shared Box.com account.
No, Colorado does not have a sales tax holiday. Boo. :(
Now you know more than you probably wanted to about Colorado Sales Tax! :) Hopefully you should feel prepared to collect the required sales taxes from who you need to and for what you need to. Once again, remember to document anytime you do business with a buyer who has a certificate of exemption. Being prepared and organized makes collecting and sales tax and filing a return in Colorado easy, as well as answering to any potential audits.
It is time to talk about filing and paying your sales taxes in Colorado. In this section, we are going to cover the following frequently asked questions from our clients:
By the time you finish reading this, you will feel confident enough to file and pay your Colorado sales tax.
Monthly returns are due the 20th day of the month following the reporting period.
There are three thresholds you need to know about.
Keep in mind that businesses that pay more than $75,000 annually in state sales tax must pay by Electronic Funds Transfer (EFT). Payment via EFT is due the 20th day of the month following the reporting period.
For wholesale businesses with a sales tax liability of $180 per year or less, you can file annually.
Not sure how to determine your tax filing frequency?
You can review your eCommerce or Point of Sale Software to see the volume of sales you have generated.
Don't worry though! The state will let you know when your due dates change. :)
Watch your mail for a letter from the State of Colorado so that you don't miss any deadlines.
You can file and pay your taxes on the next business day, typically the Monday following the weekend or the day after the holiday. But remember, filing early is always better than risk being late.
By Paper: Download and complete form DR-0100
Enclose payment and mail to:
Colorado Department of Revenue
Denver, CO 80261-0013
Electronic: File form by using Colorado Revenue Online; remit return and payment online
You must correct a return through paper applications in certain situations.
Situation 1: An overpayment of sales tax due a credit resulting from a mistake, error, or canceled sale, credit for the amount of overpayment may be taken on a subsequent sales tax form (DR 0100).
Situation 2: If you under report, a separate form for the same period must be filed. If you are filing an amended return, you are required to mark the Amended Return Box.
Situation 3: If you are no longer engaged in business and you have an overpayment or made a mistake on a prior return, you should apply for a refund using the Claim for Refund (DR 0137).
If sales tax was not collected but should have been, the business is still responsible for the tax due. To prevent having to pay yourself for taxes due by the customer, you should ensure that all sales tax collection information is set up in each Point of Sale system. Attempting to contact customers after the point of sale is often not possible.
Protip: You still owe The Colorado Department Of Revenue for sales taxes if you did not collect them from the buyer.
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.
Yes, as it happens, a tax return must be filed even when the tax due is zero. If no return is filed, the department considers that to be a "nonfiler" situation, which is not good: When you don't file a return, you will receive nonfiler billing notices by mail and may even suffer automatic account/license closure.
**Watch this quick animated one-minute video for more information.**
When a business or a location (site) closes, you want to ensure the business closes in good standing with the Colorado Department of Revenue and does not receive nonfiler notices.
How can a business close in good standing?
Protip: If you decide to close your business or even just one of the multiple locations of your business, you must immediately notify the department no later than 30 days after closing your business. One reason to do this is to avoid receiving nonfiler notices.
Yes, as it happens! For filing early, the state of Colorado offers a .0333 discount on the amount of tax due .
For example: If $100 of tax is due, a $3.33 discount will be given.
Now that we covered all our bases for filing and paying sales taxes in the state of Colorado, you should feel more at ease about the process.
Some things to remember:
Let’s leave the good news for last (even though I know you will remember this).
Now, you are ready to file and pay your sales tax in Colorado. If you have any more questions, feel free to contact us.
Please note: This blog is for informational purposes only and the information is accurate as of 04/16/2019. If you want legal advice on sales tax law for your business, please contact a Sales and Use Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog may be out date by the time you review it.
Last Updated: 04.16.19
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