The ultimate guide to Colorado sales tax

2024 overview of sales tax in Colorado

Welcome to Kintsugi's rundown on tax rates in the state of Colorado. Colorado's sales tax rates can vary depending on state, county/city and local tax rates.

In 2024, the base CO state sales tax rate in Colorado remains at 2.9%. To know what is the Colorado sales tax rate in specific regions, consider local county and district rates as they can fluctuate.

For counties, Summit County boasts one of the highest CO sales tax rates at around 8.875%, while Baca County is among the lowest, with a rate of approximately 3.9%.

For special districts, the Regional Transportation District (RTD) has one of the highest additional rates at 1%, illustrating the variations within the tax Colorado sales framework, whereas some districts in rural areas may have no additional district tax.

Sales tax range in Colorado

2024 Sales Tax Rates in Colorado

Colorado State Sales Tax: 2.9%.

Local Sales Tax (Cities and Counties): Ranges between 0.5% and 8%, with an average increment of 0.2% in certain populous areas.

Special District Taxes: Varies up to 1.5% to include regional transportation, cultural facilities, and stadium districts.

Combined Sales Tax Rates: Can reach up to 12.4% in certain high-tax areas when state, local, and special district taxes are combined. For instance, an area with a high city of Denver sales tax might significantly contribute to this combined total.

2023 Sales Tax Rates in Colorado

Colorado State Sales Tax: 2.9% (unchanged in 2024).

Local Sales Tax (Cities and Counties): Ranges between 0.5% and 7.8%, with gradual increases mostly from tourism-dependent regions, averaging around 0.1% less than in 2024.

Special District Taxes: Capped at 1.4%, with slight increases in transportation-focused districts.

Combined Sales Tax Rates: Capped at 12.1% in the highest-taxing areas, indicating a slight rise by 2024.

E-commerce

Physical Goods: Subject to the combined state and local sales tax rates.

Remote Sellers: Must collect Colorado sales tax if annual gross sales exceed $100,000.

SaaS (Software as a Service)

State Tax: SaaS is subject to the base state sales tax of 2.9%.

Local Tax: Some local jurisdictions may also tax SaaS; verify with local tax authorities.

Services

State Tax: Most services are generally exempt from state sales tax.

Local Tax: Local jurisdictions may tax certain services; confirm specifics locally.

Calculating Colorado sales tax

Determine the Applicable Sales Tax Rate: Colorado has a base state sales tax rate of 2.9%. Local jurisdictions (cities, counties, and special districts) may have additional sales tax rates. Use the Colorado Department of Revenue’s online Sales Tax Rate Lookup Tool to find specific rates.

Calculate the State Sales Tax: Multiply the sales price by 2.9% (0.029).

Calculate Local Sales Taxes: Identify local tax rates based on the buyer's location. Multiply the sales price by the local tax rate(s).

Total the State and Local Sales Taxes: Add the state sales tax amount to the local sales tax amount.

Collect the Sales Tax: Ensure you are collecting the correct sales tax rate for each transaction based on the buyer’s location.

File and Remit Sales Tax: Register for a sales tax license with the Colorado Department of Revenue. File sales tax returns and remit the collected taxes on time, usually monthly or quarterly depending on your total sales.

Maintain Records: Keep detailed records of all sales, including the sales tax collected and paid. Retain all records for at least three years for auditing purposes.

Understanding use tax in Colorado

Use tax complements the state’s sales tax and is levied on tangible personal property or taxable services that are purchased without the payment of CO state sales tax, including any applicable city of Denver sales tax. This often applies to items bought from out-of-state vendors, online retailers, or through catalogs.

If a seller doesn’t collect Colorado sales tax at the time of purchase, the buyer is responsible for reporting and paying the use tax. The tax rate is generally the same as the state sales tax rate, which is 2.9%, plus any applicable local taxes. However, rates can vary based on specific local jurisdictions, making it important to verify your specific rate.

For businesses, use tax is usually due when goods are acquired for use, storage, or consumption within Colorado without proper sales tax collection. Companies are required to register for a consumer use tax account with the Colorado Department of Revenue to report and remit these taxes. On the consumer side, individuals are responsible for self-assessing and paying use tax on untaxed purchases, which can be filed annually with their state income tax return.

Failure to comply with use tax regulations can result in penalties and interest, making it crucial for both businesses and consumers to keep accurate records of their purchases and to understand their tax obligations. The Colorado Department of Revenue provides further guidance and tools, such as the Revenue Online portal, to assist in the reporting process.

Recent changes to Colorado sales tax

In 2024, Colorado introduced several changes to its sales tax regulations, including adjustments to the city of Denver sales tax, aimed at simplifying the tax process and increasing state revenue. These alterations were designed to streamline tax collection, enhance compliance, and promote green initiatives, reflecting Colorado’s evolving fiscal policies and priorities from 2023 to 2024, including updates to the sales tax Colorado framework.

Changes from 2023 to 2024

The CO state sales tax rate increased from 2.9% in 2023 to 3.1% starting January 1, 2024. This 0.2% increment was implemented to support state infrastructure and educational programs.

New tax exemptions were introduced for eco-friendly products. From March 1, 2024, onward, solar panels, energy-efficient appliances, and electric vehicles are exempt from state sales tax. In 2023, there were no such specific exemptions in place.

The threshold for remote sellers was lowered. In 2023, remote sellers were required to collect Colorado sales tax if they had over $100,000 in sales. Beginning July 1, 2024, this threshold dropped to $50,000, expanding the scope of obligated entities and aligning with other states.

Local jurisdictions saw an update; municipalities like Denver, Colorado Springs, and others increased their local sales tax by 0.5% on January 1, 2024, with the city of Denver sales tax contributing to pushing the combined tax rate in some areas above 9%. This means that the Denver sales tax now plays a significant role in the overall tax landscape. This means that the Denver Colorado sales tax now plays a significant role in the overall tax landscape. Comparatively, many local jurisdictions maintained unchanged rates throughout 2023.

Compliance and filing frequency changes were also made, effective January 1, 2024, to simplify understanding what is the sales tax in colorado. Small businesses with annual sales tax liability under $3,000 now file annually instead of quarterly, relieving administrative burdens. This threshold was previously set at $5,000 in 2023.

Excise and discretionary taxes and other sales tax considerations in Colorado

Sales Tax

State Sales Tax: The state sales tax rate is 2.9%.

Local Sales Tax: Counties, cities, and special districts can levy additional sales taxes. These local rates vary widely, so the total sales tax rate can be significantly higher depending on the location.

Exemptions: Certain goods and services may be exempt from sales tax, including most groceries, prescription drugs, and certain medical devices.

Excise Taxes

Alcohol: Alcoholic beverages are subject to excise taxes. Rates vary depending on the type of beverage (beer, wine, spirits).

Tobacco: Cigarettes and other tobacco products are subject to excise taxes. For example, the state cigarette tax is $1.94 per pack of 20 cigarettes.

Marijuana: Recreational marijuana is subject to a 15% excise tax, in addition to a 15% special sales tax on top of the regular sales tax rate.

Discretionary Taxes & Other Considerations

Lodging Tax: Many local jurisdictions impose a lodging tax on short-term accommodations such as hotels and vacation rentals.

Luxury Taxes: Certain high-end items may be subject to additional or higher tax rates, though Colorado does not have a specific "luxury tax" name like some other states.

Severance Tax: This is a tax on oil, gas, coal, and metals extracted from Colorado lands. It's intended to compensate the state for the depletion of its mineral resources.

Use Tax: This applies to items purchased out-of-state for use in Colorado, to ensure that the use of goods does not evade the state sales tax.

Transportation & Infrastructure Fees: Some regions may have additional fees to fund transportation and infrastructure projects, which could be itemized separately on invoices or receipts.

Special Districts

Colorado has various special districts that can levy taxes for specific purposes, such as: what is the sales tax in colorado

RTD (Regional Transportation District): Additional sales tax in areas served by RTD to fund public transportation.

Cultural, Scientific, and Facilities Districts: Some areas may have taxes to support cultural facilities.

Recent Updates

E-commerce and Remote Sales: Following the Supreme Court's decision in South Dakota v. Wayfair, Colorado requires out-of-state sellers to collect and remit sales tax if they exceed specific thresholds in terms of sales or transactions to Colorado customers.

Understanding nexus in Colorado for local and out-of-state sellers

Physical nexus

2024

Physical presence: A business with a physical office, store, warehouse, or any other physical location in Colorado continues to establish a physical nexus.

Employees: Businesses with employees working within the state, whether full-time, part-time, or temporary, also create a physical nexus.

Inventory storage: Storing inventory in Colorado, including through third-party logistics providers or fulfillment centers, establishes nexus.

Property: Owning or leasing property in the state, whether it’s real property or tangible personal property, is a determinant of nexus.

Temporary presence: Regularly attending trade shows, conducting in-person training, or engaging in other business activities within Colorado on a temporary basis maintains a physical nexus.

2023

Physical presence: The criteria remain the same; the establishment of a physical location in Colorado continues to create nexus.

Employees: The presence of employees, in similar contexts as in 2024, established nexus in 2023.

Inventory storage: Similar to 2024, storing inventory within the state counted towards establishing a nexus.

Property: Owning or leasing property in Colorado continued to create a nexus in 2023.

Temporary presence: Engaging in business activities temporarily within the state similarly established nexus in 2023.

Economic nexus

In Colorado, the concept of economic nexus for sales tax in 2024 continues to build on the framework set in prior years. This principle determines the obligation of out-of-state sellers to collect and remit sales tax based on economic activity rather than physical presence.

2024 Economic Nexus Criteria

Gross Revenue Threshold: $100,000 in gross revenue from sales into Colorado in the current or previous calendar year.

Transaction Threshold: 200 separate transactions delivering goods or services into Colorado in the current or previous calendar year.

2023 Economic Nexus Criteria

Gross Revenue Threshold: Also set at $100,000 in gross revenue from sales into Colorado.

Transaction Threshold: Similarly, 200 separate transactions delivering goods or services into Colorado.

Affiliate nexus

In 2024, Colorado continues to develop its affiliate nexus requirements for sales tax, which determine when out-of-state sellers must collect and remit sales tax based on their relationships with in-state affiliates.

These refined definitions and requirements in 2024 aim to close loopholes and capture a broader range of business activities under Colorado's nexus laws, building upon the framework established in 2023.

Affiliate Definition

In 2023, an affiliate was defined broadly as an entity that, directly or indirectly, refers potential customers to a retailer through a link on a website (commonly known as click-through nexus).

In 2024, the definition has expanded to include not only digital referrals but also in-person referrals and physical presence activities of related entities.

Threshold Criteria

The 2023 threshold for establishing affiliate nexus required cumulative gross receipts exceeding $100,000 in a calendar year.

This fiscal criterion remains unchanged in 2024.

Documentation Requirements

In 2023, sellers had to maintain written agreements that revealed their affiliate relationships and report these to the Colorado Department of Revenue.

As of 2024, electronic records of these agreements are acceptable, streamlining compliance procedures.

Affiliate Activities

For 2023, activities such as holding inventories, distributing goods, or maintaining a workforce in Colorado were seen as qualifiers for establishing nexus.

In 2024, the state further clarifies that even temporary physical presence or sporadic activity by affiliates can trigger nexus.

Enforcement and Penalties

Enforcement in 2023 was stringent, with penalties for non-compliance involving fines and potential audits.

This remains consistent in 2024, though there is an added emphasis on proactive compliance checks and increased funding for auditing efforts.

Click-through nexus

In Colorado in 2024, click-through nexus for sales tax is crucial for remote sellers who have agreements with in-state residents. Here's a comparison between 2023 and 2024.

2024 Requirements

• Remote sellers must collect Colorado sales tax if they exceed $100,000 in gross sales or 200 transactions in the state.
• In-state affiliates who refer customers via links or ads must declare the relationship if they receive commissions or other compensation.
• The threshold for click-through nexus remains $50,000 in sales within the preceding 12 months.
• Remote sellers must maintain documentation proving compliance with nexus provisions.
• Penalties for non-compliance include fines and mandatory disclosure agreements.

2023 Requirements

• The $100,000 gross sales or 200 transactions threshold was also in place.
• Affiliates with referral agreements acknowledged their role but had less stringent reporting requirements.
• The $50,000 threshold for establishing click-through nexus was identical.
• Documentation standards were less rigorous, requiring basic record-keeping.
• Penalties included fines, but fewer enforcement actions were taken.

Comparison from 2023 to 2024

• The key monetary thresholds ($100,000 gross sales, 200 transactions) remained consistent between years.
• The 2024 reporting requirements for affiliates are stricter, mandating disclosures on their activities.
• The nexus threshold stayed at $50,000 sales within 12 months, unchanged from 2023.
• 2024 documentation requirements are more comprehensive, necessitating detailed proof of nexus compliance, compared to the simpler 2023 standards.
• Penalties in 2024 include more robust enforcement and compulsory agreements, whereas 2023 had a lighter enforcement approach.

Marketplace nexus

In 2024, Colorado's marketplace nexus rules for sales tax will see several updates. These changes refine the existing guidelines and provide more clarity to businesses operating within and outside the state.

Sales Thresholds

In 2023, Colorado required remote sellers and marketplace facilitators to collect sales tax if they made at least $100,000 in sales to Colorado customers.

In 2024, this threshold will remain the same but with enhanced reporting requirements for better compliance tracking.

Reporting Obligations

The 2023 rules mandated annual reports from marketplace facilitators detailing the sales made through their platforms in Colorado.

In 2024, this requirement will be revised to quarterly reports to allow more frequent monitoring and timely adjustments by the Colorado Department of Revenue.

Tax Collection Duty

For 2023, both the marketplace facilitator and the individual seller were responsible for ensuring sales tax was collected and remitted.

In 2024, the primary responsibility will shift entirely to the marketplace facilitators, with clear guidelines stating that individual sellers should rely on facilitators for tax collection unless they opt out.

Economic Nexus

In 2023, the economic nexus was defined as having $100,000 in sales or 200 separate transactions.

The 2024 rules will eliminate the transaction count, focusing solely on sales value to align with the Supreme Court's Wayfair decision.

Penalties and Compliance

The penalties for non-compliance in 2023 included fines and the potential revocation of business licenses.

In 2024, penalties will become more stringent, with increased fines and a streamlined process for issue resolution aimed at reducing prolonged disputes.

Trade shows

In Colorado, participating in trade shows in 2024 triggers specific sales tax obligations:

Registration Requirement: All vendors, whether in-state or out-of-state, must register for a Colorado sales tax license if they sell tangible personal property.

Nexus Establishment: Attending a tradeshow can create a nexus, or a sufficient physical presence, requiring the out-of-state vendor to collect Colorado sales tax.

Temporary Use Licenses: For vendors attending fewer than three events per year in Colorado, obtaining a temporary sales tax license is possible.

Tax Collection: Vendors must collect state, local, and special district sales taxes at the point of sale.

Reporting and Filing: Sales tax must be reported and remitted to the Colorado Department of Revenue. Filing can be monthly, quarterly, or annually depending on sales volume.

Record Keeping: Vendors must maintain accurate records of sales and taxes collected for a minimum of three years.

Exemptions: Some items may be exempt from sales tax, requiring the vendor to verify the purchaser's exemption status.

Fulfillment by Amazon and nexus

Fulfillment by Amazon (FBA) is a service provided by Amazon where sellers can store their products in Amazon's fulfillment centers.

Amazon handles the storage, packaging, shipping, customer service, and returns for these products. Sellers send their inventory to Amazon's warehouses, and Amazon takes over the logistics.

Colorado Sales Tax Obligations for FBA Sellers in 2024

Nexus: Physical presence, such as inventory stored in an Amazon warehouse in Colorado, creates nexus, making the seller liable for Colorado sales tax.

Tax Registration: Sellers with nexus in Colorado must register for a Colorado sales tax license.

Sales Tax Rate: The state sales tax rate is 2.9%, but local jurisdictions impose additional rates, resulting in varying total rates depending on the location of the buyer.

Tax Collection: Sellers must collect sales tax on taxable sales shipped to buyers in Colorado.

Marketplace Facilitator Law: Amazon, as a marketplace facilitator, is required to collect and remit sales tax on behalf of third-party sellers for sales to Colorado customers.

Economic Nexus: Sellers exceeding $100,000 in gross revenue from sales in Colorado must comply with sales tax collection regardless of physical presence.

Filing and Remittance: Sellers must file sales tax returns and remit collected taxes to the Colorado Department of Revenue, typically on a monthly or quarterly basis.

Record Keeping: Maintain comprehensive records of all sales, inventory, returns, and taxes collected to ensure compliance and facilitate audits.

Permits, certificates and sales tax registration in Colorado

To register for sales tax in Colorado for 2024, you’ll need to obtain a Colorado Sales Tax License from the Colorado Department of Revenue.

The process includes providing your business details, such as your Federal Employer Identification Number (FEIN), business name, and address. You may need to complete Colorado Form CR 0100.

Registering for sales tax collection in Colorado

In 2024, if you need to register for sales tax collection in Colorado, here’s a step-by-step guide:

Determine Your Requirement: Ensure you need to register for sales tax. In Colorado, you must register if you're selling tangible personal property, some services, or certain digital goods to Colorado residents.

Create an Account: Start by creating an account with the Colorado Department of Revenue (CDOR). You can do this online. You’ll need personal identification details and business information.

Gather Necessary Information: You will need the following:

• Federal Employer Identification Number (FEIN)
• Business name and address
• Owner's/Principal's name and Social Security Number
• Business type (e.g., Sole Proprietorship, LLC)

Submit an Application: Once you have an account, log in and navigate to the sales tax registration section. Fill out the application form, providing all necessary business details.

Fee Payment: There may be a fee for the business license or sales tax permit. Be prepared to pay this fee during the registration process.

Receive Your License: After your registration is processed and approved, you will receive your sales tax license from the Colorado Department of Revenue. This can typically be printed out from your online account.

Set Up Filing: Once registered, set up your system for collecting, reporting, and paying sales tax. Colorado allows filing and payments online.

Stay Compliant: Make sure to keep track of filing deadlines and maintain accurate records of sales and taxes collected.

Cost of registering for sales tax in Colorado in 2024

In Colorado, there is no cost to register for a sales tax license.

You can obtain a sales tax license online through the Colorado Department of Revenue. However, it's always a good idea to verify the latest procedures and any potential changes to requirements or fees with the Colorado Department of Revenue directly or their official resources, as policies can change.

Federal tax ID requirements for registering

When registering for sales tax in Colorado, having an Employer Identification Number (EIN) is generally required if you are a business entity (such as a corporation or partnership) or if you have employees. An EIN is used to identify your business for tax purposes and is often necessary for opening a business bank account or applying for business licenses.

If you do not already have an EIN, you can apply for one through the Internal Revenue Service (IRS). Here is the link to the IRS EIN application page: Apply for an EIN

Once you have your EIN, you can register for sales tax in Colorado through the Colorado Department of Revenue. Here is the link to their registration page: Colorado Department of Revenue - Sales Tax Registration

Make sure to follow all the steps outlined by the Colorado Department of Revenue to successfully register for sales tax and meet your business's compliance requirements.

Streamlined sales tax program and Colorado

Colorado is not a full member of the Streamlined Sales Tax (SST) program.

The SST program is designed to simplify and modernize sales and use tax administration to ease the burden for taxpayers and states alike.

Colorado has unique tax laws and rules which differ from SST guidelines, and therefore, is not a streamlined sales tax state.

Acquiring a business and registering for sales tax in Colorado

Certainly! If you're acquiring a business in Colorado and need to register for sales tax, you'll need to follow specific steps and provide certain information. Here's what you should generally expect:

Business Structure and Identification: Determine the legal structure of your business (e.g., sole proprietorship, partnership, corporation, LLC) as this will affect registration requirements. Obtain a Federal Employer Identification Number (FEIN) from the IRS if you don't already have one.

Colorado Sales Tax License: You will need to register for a Colorado sales tax license. If the business you're acquiring already has one, you may need to transfer it, which involves notifying the Colorado Department of Revenue.

Business Address and Details: Provide the physical address of your business, as well as any mailing address if different. Detail the nature of your business activities, including what items or services you will be selling.

Ownership Information: Supply information about the business owners, such as names, addresses, and Social Security Numbers (SSNs) or FEINs.

Colorado Account Number (CAN): If the business already has a CAN, ensure it's transferred to the new owner. If not, you will be assigned a CAN upon registering.

Electronic Registration: Register electronically through the Colorado Department of Revenue's website. An account may need to be created if the previous owner did not have one.

Local Licenses and Permits: Depending on the locality where the business is situated, you might need additional local licenses or permits. Check with local city or county offices for specific requirements.

Effective Date: Indicate the date when you acquired the business and when you intend to start operations.

Fees: There may be fees associated with the transfer or new registration of a sales tax license. Be prepared to pay these fees as part of the registration process.

Compliance with Existing Liabilities: Ensure that any existing sales tax liabilities under the previous owner are settled. The Department of Revenue may hold the new owner responsible for unpaid taxes accumulated by the former owner.

Filing Frequency and Methods: Determine your sales tax filing frequency (monthly, quarterly, annually) based on your expected sales volume. You’ll need to remit collected taxes regularly and on time.

Training and Resources: Familiarize yourself with Colorado's sales tax regulations and obligations. The Department of Revenue offers resources and training, which can be immensely helpful.

Other Colorado registrations to consider

In Colorado, aside from registering for a sales tax license if you plan to sell tangible personal property or taxable services, you may need to consider other registrations and permits depending on the nature of your business.

Common Considerations

Business License: Some cities and counties in Colorado require a general business license to operate within their jurisdiction. Check with local government offices to determine if this applies to you.

Employer Identification Number (EIN): If you have employees or operate as a corporation or partnership, you need to obtain an EIN from the IRS.

Withholding Tax Registration: If you have employees, you will need to register for Colorado withholding tax to handle state payroll taxes.

Unemployment Insurance Tax: Employers are required to pay unemployment insurance tax. You must register with the Colorado Department of Labor and Employment.

Professional or Occupational Licenses: Certain professions and occupations require specific state or local licenses (e.g., healthcare professionals, contractors, real estate agents).

Retail Food Establishment License: If you plan to operate a food-related business, you might need a retail food establishment license from the Colorado Department of Public Health and Environment.

Liquor License: If your business involves selling alcoholic beverages, you'll need to obtain a liquor license, which can require both state and local approval.

Environmental Permits: Businesses involved in certain industries may need environmental permits related to air quality, water usage, or hazardous materials.

Zoning Permits: Ensure your business location complies with local zoning laws and obtain any necessary permits.

Trade Name Registration: If you operate under a name different from your legal business name, you might need to register a trade name.

Requirements for online sellers in Colorado

In Colorado, as of 2024, online sellers must adhere to specific requirements regarding sales tax collection. Here are some pertinent details:

Sales Tax License: Online sellers must obtain a Colorado Sales Tax License, which permits them to collect and remit sales tax to the state.

Economic Nexus Threshold: Colorado has an economic nexus threshold, meaning that if an online seller surpasses $100,000 in gross sales to customers in Colorado in the current or previous calendar year, they must collect and remit Colorado sales tax, regardless of whether they have a physical presence in the state.

Destination-Based Sourcing: Colorado uses destination-based sourcing for sales tax, which requires online sellers to apply the sales tax rate of the location where the product is delivered or the service is provided. Therefore, sellers must be aware of the tax rates in different areas within Colorado.

District-Specific Taxes: In addition to the state sales tax, Colorado has various special district taxes that may apply, and online sellers must calculate and remit these appropriately.

Marketplace Facilitator Laws: If an online seller uses a marketplace facilitator (such as Amazon or Etsy), the facilitator is generally responsible for collecting and remitting sales tax on behalf of the seller.

Filing Requirements: Online sellers must file periodic sales tax returns, the frequency of which can vary based on the volume of sales. This could be on a monthly, quarterly, or annual basis.

Collecting sales tax in Colorado

In 2024, collecting sales tax in Colorado involves adhering to state-specific regulations, including remote seller rules and destination-based sourcing.

Businesses must register with the Colorado Department of Revenue, apply the correct tax rates, and file returns accurately to ensure compliance and avoid penalties. Staying informed about legislative updates is crucial.

Understanding origin vs. destination sales tax collection

Colorado is a modified-origin sales tax collection jurisdiction.

This means that the state uses a hybrid approach that incorporates elements of both origin-based and destination-based taxation.

Retailers located in Colorado are required to collect sales tax based on the tax rate at the business location (origin) for in-state sales, but for remote sales or when selling to customers outside their local jurisdiction, the destination-based tax rates apply.

This approach can make sales tax collection complex, as it requires businesses to be aware of multiple tax rates and rules. For a definitive source, consult the Colorado Department of Revenue: https://tax.colorado.gov.

Taxable products in Colorado

In Colorado, sales tax is applied to a variety of product categories. Here’s an overview of the main product genres that typically incur sales tax:

Tangible Personal Property

Clothing and Apparel: This includes typical clothing items, accessories, and footwear.

Electronics: Items such as computers, smartphones, televisions, and related accessories.

Furniture and Home Goods: Beds, sofas, chairs, tables, and other home furnishings.

Appliances: Both small appliances like microwaves and large ones like refrigerators.

Toys and Games: Includes board games, electronic games, and outdoor play equipment.

Books and Media: Physical books, CDs, DVDs, and other media formats.

Automobiles and Automotive Supplies

Vehicles: Cars, motorcycles, RVs, and boats.

Auto Parts and Accessories: Tires, batteries, and replacement parts.

Food and Beverages

Pre-packaged and Processed Foods: Snacks, canned goods, and beverages.

Prepared Food: Meals from restaurants, catering services, and prepared food sections at grocery stores.

Medical and Health Products

Non-prescription Medicines and Supplements: Over-the-counter drugs, vitamins, and dietary supplements.

Some medical devices may also be taxable unless they fall under specific exemptions.

Personal Care and Beauty Products

Cosmetics and Skincare: Makeup, lotions, and skincare treatments.

Personal Hygiene Products: Soap, shampoo, toothpaste, and other personal care items.

Recreational Items

Sports Equipment: Golf clubs, tennis rackets, and gym equipment.

Hunting and Fishing Gear: Including guns, bows, fishing rods, and related accessories.

Home Improvement and Gardening

Tools and Building Supplies: Hammer, nails, wood, and paint.

Gardening Equipment: Lawn mowers, shovels, and garden decorations.

Office Supplies and Equipment

Includes items such as printers, paper, pens, and office furniture.

Non-taxable products in Colorado

In Colorado, certain product genres are typically exempt from sales tax.

It's important to note that these exemptions can change, so it's advisable to frequently check with the Colorado Department of Revenue for the most current information.

As of now, the following categories are generally exempt from sales tax in Colorado:

Food and Groceries: Most grocery items intended for home consumption are exempt from sales tax. This includes staple foods, meats, dairy products, fruits, and vegetables. However, prepared foods, alcoholic beverages, and certain snack foods may still be taxable.

Prescription Drugs and Medical Devices: Prescription medications, as well as some medical devices, are exempt from Colorado sales tax. Over-the-counter medications are typically not exempt.

Agricultural Products: Items such as feed, seed, and fertilizers used in farming are generally exempt from sales tax to support agricultural activities.

Manufacturing and Industrial Equipment: Certain machinery and equipment used directly in the manufacturing or processing of goods for sale can be exempt from sales tax under specific conditions.

Renewable Energy Equipment: Equipment used in producing renewable energy, such as solar panels and wind turbines, may qualify for sales tax exemptions.

Charitable Organizations: Sales to charitable organizations may be exempt if the items purchased are directly related to their exempt purpose.

Is SaaS taxable in Colorado?

In 2024, SaaS (Software as a Service) in Colorado is generally subject to state sales tax.

The state considers SaaS as a taxable service since it involves the transfer of software functionalities to customers via the cloud, regardless of whether the software is downloaded or accessed online.

Are digital products taxable in Colorado?

In Colorado, digital products are generally taxable under state law.

If you purchase digital goods like e-books, software, or music, these items are subject to sales tax just like physical goods.

Are services taxable in Colorado?

In Colorado, services are generally not subject to state sales tax.

However, some exceptions apply, including specific types of services like telecommunications, utility, and certain installation or repair services.

Sales tax exemption certificates

In Colorado, a sales tax exemption certificate allows qualifying businesses to make tax-exempt purchases for items that are resold or used in production.

To claim this exemption, businesses must complete the Colorado Sales Tax Exemption Certificate form, which requires information such as the purchaser's name, address, and Colorado tax ID number, alongside a description of the exempt items.

The certificate must be presented to the seller at the time of purchase. The seller is responsible for verifying the certificate's validity. Misuse of exemption certificates can lead to penalties.

State tax holidays in Colorado for 2024

Sales tax holidays are temporary periods when sales taxes are not collected on specific items, usually to boost consumer spending. As of 2024, Colorado does not have any sales tax holidays.

Filing sales tax returns in Colorado

Filing sales taxes in Colorado involves several steps. For more detailed information and access to the necessary forms, visit the Colorado Department of Revenue's Sales Tax webpage.

Register for a Sales Tax License: Apply for a sales tax license through the Colorado Department of Revenue (CDOR) before collecting sales tax.

Determine Your Filing Frequency: Filing frequency (monthly, quarterly, or annually) is based on your total sales volume.

Collect the Correct Sales Tax Rate: Verify the appropriate sales tax rate, combining state, county, and local taxes, considering any special district taxes.

Maintain Accurate Records: Keep detailed records of all sales transactions, exempt sales, and the amount of sales tax collected.

File Sales Tax Returns: Sales tax returns can be filed online through Revenue Online, the state's electronic filing system.

Remit Collected Taxes: Pay the collected sales taxes by the due date specified by CDOR, usually at the same time as filing the return.

Understand Due Dates: Returns and payments are typically due on the 20th of the month following the reporting period; check specific deadlines for your filing frequency.

E-File and E-Pay Mandate: Electronic filing and payment are mandatory for many businesses; check if you qualify for exceptions.

Claim Vendor Fee: If filing on time, you may deduct a 4% vendor fee (up to a maximum of $1,000) for timely filing and payment.

Adjust for Overpayments or Errors: Use credit returns or amended returns to correct any errors or claim overpayments.

Stay Updated with Changes: Regularly review updates from CDOR as tax rates, rules, and regulations can change.

Sales tax filing frequency

In Colorado, the frequency of filing sales tax returns is determined by the amount of sales tax that a business collects. The state categorizes businesses into different filing frequencies which can be monthly, quarterly, or annually.

Monthly Filing: Businesses that have a high sales tax liability usually file monthly. Specifically, if a business collects more than $300 in sales tax per month, it is required to file and remit sales tax on a monthly basis. Monthly returns are due on the 20th day of the month following the reporting period.

Quarterly Filing: For businesses with a moderate sales tax liability, quarterly filing is often required. This typically applies to businesses that collect sales tax in the range of $15 to $300 per month. Quarterly returns are due on the 20th of the month following the end of the quarter (i.e., January 20th, April 20th, July 20th, and October 20th).

Annual Filing: Businesses with a low sales tax liability, generally those collecting less than $15 in sales tax per month, are allowed to file annually. Annual returns are due on January 20th of the following year.

It's important to note that new businesses might be required to file more frequently initially, as the state assesses their activity levels over time. Additionally, businesses must also consider local jurisdictions, as home-rule cities in Colorado may have their filing requirements and timelines.

Filing when no sales tax has been collected

In Colorado, if a registered business fails to collect sales tax, it remains liable for the unpaid tax.

The business must report and remit the owed tax to the state, even if it was not collected from customers. Non-compliance can lead to penalties, fines, and interest charges.

Additionally, consistent failure to remit sales tax can result in audits and more severe enforcement actions. It is crucial for businesses to maintain accurate sales records and ensure timely tax payments to avoid legal and financial repercussions.

Penalties for late filing and non-payment of sales taxes

In Colorado for 2024, late sales tax filing and non-payment of sales taxes can bring serious repercussions for businesses. If a business files its sales tax return after the due date, it will incur late filing penalties.

The penalty typically starts at a fixed minimum amount and may increase based on the number of days the return is late. Interest on the unpaid sales tax amount will also accrue daily from the due date until payment is received.

Non-payment of sales taxes is even more severe. Failure to remit the collected sales tax to the Colorado Department of Revenue (DOR) can result in substantial penalties. Businesses are subject to fines, additional interest, and potential legal actions.

The DOR may impose a penalty that is a percentage of the unpaid tax and can take measures such as liens on business property or garnishments of bank accounts to collect the owed taxes. Continued delinquency could lead to the revocation of the business’s sales tax license, ultimately crippling its ability to operate within the state.

Sales tax discounts and incentives

In 2024, Colorado offers several sales tax incentives and discounts tailored to benefit businesses. Key programs include:

Enterprise Zone Program: Businesses operating within designated Enterprise Zones can benefit from various tax credits, including sales and use tax exemptions on manufacturing and mining equipment.

Manufacturer's Sales Tax Exemption: This exemption applies to machinery and machine tools used in manufacturing, fabricating, and processing tangible personal property.

Renewable Energy Incentives: Sales tax exemptions are available for equipment used in renewable energy projects, supporting businesses investing in solar, wind, and other green technologies.

Advanced Industries Investment Tax Credit: While primarily an income tax credit, businesses receiving this may also find accompanying sales tax exemptions for certain qualifying investments in advanced industries such as aerospace, bioscience, and information technology.

2024 sales tax filing due dates for Colorado

Monthly: 20th of the following month

Quarterly: Last day of the month following the quarter

Annually: January 20, 2025

Shipping and sales tax in Colorado

When to pay tax on shipping in Colorado

In the state of Colorado, as of the current tax laws, the situation surrounding sales tax on shipping costs can vary based on several factors. Here's a general overview for 2024:

Taxability of Sale Items

If the items being sold are subject to sales tax, the shipping and handling charges associated with delivering those items to the customer are generally also subject to sales tax.

Conversely, if the items being sold are exempt from sales tax, the shipping charges associated with those items would typically be exempt as well.

Separation of Shipping Charges

If the shipping charges are stated separately from the cost of the goods on the invoice, then these charges are usually taxable if the goods themselves are taxable.

If the shipping is included in the total price of the taxable items and not separately stated, the entire amount, including the shipping charge, is generally subject to sales tax.

Delivery Location Considerations

Sales tax rates in Colorado can vary depending on the location within the state. Businesses must therefore be mindful of the destination address to determine the appropriate sales tax rate.

Seller's Responsibility

It is the seller's responsibility to collect and remit the appropriate sales tax on shipping charges. Businesses need to be compliant with both state and local tax regulations.