1. What local sales tax do I need to collect in addition to state sales tax?
Local and special district sales tax due is generally based on the rates that apply for the destination address of the taxable good or service purchased. The Colorado Sales/Use Tax Rates Form (DR 1002) lists taxation jurisdictions that are collected by the state and the jurisdictions that are self-collecting, along with their contact information. Please contact self-collecting jurisdictions directly for more information about their sales and use tax policies and procedures.
There are also certified address database providers that have taxing information by address. These provider services have been certified by the Department as accurate. Taxpayers who use these certified databases will not be liable for sales and use tax otherwise owed to the State of Colorado and state-collected municipalities, counties and special districts if the database incorrectly designates the jurisdictions to which tax is owed on the sale, storage, use or consumption of taxable tangible personal property or services. This is the "hold harmless" provision in Colorado statute.
2. What is the difference between self-collected and state-collected jurisdictions?
The Colorado Department of Revenue collects sales taxes for the State, all statutory jurisdictions (those that have not elected to go to home rule and to self collect), plus the sales taxes for all special districts that assess a sales tax. State-collected jurisdictions include all special districts, 50 counties and approximately 150 municipalities, including 24 home-rule municipalities. There are two counties that self-collect and 72 municipalities that self-collect. Any self-collecting jurisdiction may opt-in to have the Colorado Department of Revenue administer, collect and audit sales tax for it.
In order to be state-collected the jurisdiction must conform to a prescribed list of exemption elections and conform to the State's tax base. There may be local ordinance changes required, or other conforming actions necessary before the self-collected jurisdiction can qualify for the Colorado Department of Revenue to administer, collect and audit as a state-collected jurisdiction.
3. What is the difference between home-rule and self-collecting Jurisdictions?
Some municipalities have elected a home rule designation which, among other features, gives them greater autonomy and control over the taxes within their jurisdictions. Home rule jurisdictions, however, may choose to have the Department collect their taxes under certain conditions. The home rule jurisdictions that make this election are considered state-administered jurisdictions.
Home rule jurisdictions that do not make this election are considered self-collecting jurisdictions. A list of self-collecting jurisdictions can be found in DR1002.
4. Do I need to individually register with any state-collected local jurisdictions for a sales tax license?
The Colorado Department of Revenue is the single state authority to administer (register, collect, distribute and audit) sales taxes for all state-collected jurisdictions in the state of Colorado. The Colorado Department of Revenue does not require retailers to register separately with state-collected local jurisdictions to collect local sales taxes.
Some local jurisdictions may have a separate requirement for retailers doing business in their jurisdictions to register with them for a business license, but that has no impact on the administration of sales tax. The Colorado Department of Revenue does not require any local registration to collect state-collected local jurisdiction sales taxes.
5. What if the marketplace facilitator requires sellers to have a sales tax license?
If the marketplace facilitator requires marketplace sellers to have a state sales tax license, please direct license requirement questions to the marketplace facilitator. The Department does not require marketplace sellers who sell exclusively through a marketplace facilitator to have a state sales tax license. However, if you sell directly to consumers in a store and/or your own website, in addition to using a marketplace facilitator, you are required to have a sales tax license.
6. What if a small out-of-state retailer grows and is no longer eligible for the small business exception?
A retailer that did not make retail sales in excess of $100,000 during the previous calendar year must begin collecting once their retail sales into Colorado exceed $100,000 during the current calendar year. The retailer has 90 days after the current-year threshold is met to register for a license. Collection will begin on the first of the month following registration.
7. Will out-of-state retailers be subject to audits by the Department?
Out-of-state retailers may be subject to audit, just as any other individual or organization.
8. How do you add non-physical locations?
- Identify the jurisdictions you need to add.
- Log in to Revenue Online. Go to your sales tax account. Under "I Want To," click on "Add Non-Physical Locations."
- Follow the steps to add non-physical locations to your sales tax account. (Need help? Watch this video walkthrough.)
- Once you have completed your request, you will receive an email confirmation.
9. What if I already have a Retailers Use Tax Account but do not have a Sales Tax Account?
How to Add a Sales Tax Account
- Log into your Revenue Online account.
- Under "I Want To" click on "Add Sales Tax Account"
- Follow the steps to add the sales tax account to your existing Revenue Online Account.
- Once you have submitted your request, you will receive an email confirming the registration. Your Colorado Account Number for sales tax will be the same as the one you currently have.
- Once your sales tax account is set up, you may begin adding non-physical locations to your account.
How to Close Your Retailer's Use Tax Account
NOTE: Do not close your Retailers Use tax account until all required filings have been submitted
- Log into your Revenue Online Account.
- Click on "Retailer's Use" and under "I Want to" click on "Close Account."
If you do not have a Revenue Online account, but would like to close your account, please fill out our Business Closure Form.
10. Should taxpayers who are registered for both sales tax and retailer's use tax close their retailer's use tax account?
Retailer's use tax accounts that exceed the de minimis threshold should keep the retailer's use tax account open until they have remitted all of their retailers use tax collections. Businesses should do this while beginning to collect and remit sales tax moving forward. Retailer's use tax accounts will need to close their retailer's use tax accounts after they have submitted their final return.
11. Are labor charges subject to sales tax?
Generally, labor and services are not subject to sales tax. Colorado taxes retail sales of tangible personal property and select services including telephone services, rooms and accommodations, food for immediate consumption, and certain utility services. Labor and service charges that are separable from the property being sold and that are separately stated on an invoice are not subject to state sales tax. If the items of tangible property and the labor and service charges are lumped into one purchase price, the entire transaction is subject to sales tax.
12. Are delivery and freight charges subject to sales tax?
Delivery and freight charges are generally not subject to sales tax, so long as the charges are both separable from the purchase and separately stated on the customer invoice. The charges are considered separable from the purchase if they are for service performed after the property is offered for sale and the seller allows the buyer to use the seller's transportation service or to use alternative transportation service, including but not limited to the buyer picking up or taking the property from the seller's location. Taxable delivery and freight charges related to tax exempt sales (tax exempt item, sale to tax exempt charity, shipping out of state, etc.) are not subject to sales tax because the delivery charges are considered part of the exempt sales.