Colorado Sales Tax Rates

Total Range for 2024

 2.9%-11.2%

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Why do you need to collect sales tax in Colorado?

If you’re selling goods and services in Colorado then sales tax might apply! To determine your obligation, you must understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Colorado, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within Colorado exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

Is what you’re selling taxable in Colorado?

Now that you’ve grasped the basics of Colorado’s sales tax and nexus thresholds, let’s delve into whether your specific products or services are taxable.

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How to register for sales tax in Colorado

In Colorado, registering for sales tax involves acquiring a retail sales tax license. Here’s a breakdown of the process:

Online Registration (Recommended):

This is the quickest and most convenient method:

  1. Visit the Colorado Department of Revenue (CDOR) website: https://www.colorado.gov/revenueonline/
  2. Click on “Sign Up” and follow the prompts to create an online account (if you don’t have one already).
  3. Navigate to the section for “Sales & Use Tax.”
  4. Locate the option for “Register for a Sales Tax License.”
  5. Provide the required information during the registration process.

Mail-in Registration:

If online registration isn’t feasible, you can use the mail-in method:

  1. Download the “Business Registration” form (Form CR 0100) from the CDOR website (https://www.colorado.gov/revenueonline/). 
  2. Search for “Business Registration” or Form CR 0100.
  3. Complete the application form carefully and accurately.
  4. Mail the completed form with any required documentation (mentioned on the form) to the address provided by the CDOR.

How to collect sales tax in Colorado

Here’s how to collect sales tax in Colorado

  1. Get a Sales Tax License: Register online or by mail with the Colorado Department of Revenue (CDOR).
  2. Find Your Sales Tax Rate: Check the CDOR website or your local government for the combined state and local rate.
  3. Charge the Correct Rate: Apply the combined rate to the taxable sales price at checkout.
  4. Collect the Sales Tax: Show the sales tax amount on the receipt and collect it from the customer.
  5. Keep Good Records: Track your sales, tax collected, and any exemptions applied.

Example:

Let’s say you run a clothing store in Denver, Colorado. A customer purchases a jacket for $50.00.

  • Denver has a combined sales tax rate of 8.81% (2.9% state + 5.91% local).
  • Sales tax = Item price x Sales tax rate = $50.00 x 8.81% = $4.40
  • Total item price = $50.00 (item price) + $4.40 (sales tax) = $54.40

FAQs

Do you have a physical nexus in Colorado?

In Colorado, having a physical nexus determines your obligation to collect and remit sales tax on sales to Colorado residents. Here’s a quick guide to understand if you have a physical nexus in Colorado:

  • Physical Presence: Owning or leasing office space, retail space, a warehouse, or any other real property in Colorado establishes a physical nexus.
  • Inventory Storage: Storing products within Colorado, even through a fulfillment service like Amazon FBA, can create a physical nexus.
  • Employees or Representatives: Having employees or sales representatives who regularly solicit sales in Colorado (even if they don’t live there) might trigger physical nexus.
Do you have an economic nexus in Colorado?

Colorado, like many states, also has economic nexus laws. This means exceeding a certain sales threshold within the state (currently $100,000) can create nexus, even without a physical presence.

What is use tax in Colorado?

The use tax rate in Colorado is the same as the combined state and local sales tax rate for your location.

In Colorado, use tax applies to purchases you make where you don’t pay sales tax at the time of purchase, but you’re still obligated to pay the tax because you’ll be using the item in Colorado. It applies when:

  • You buy something online or by mail from an out-of-state retailer who doesn’t collect Colorado sales tax.
  • You purchase an item in another state and bring it back to Colorado for use.
Do you need a seller/reseller permit?

In Colorado, a seller’s permit, also known as a retail sales tax license, is required for most businesses that sell taxable goods or services within the state.

How to get a sales tax permit/license in Colorado?

Acquiring a sales tax permit, also known as a retail sales tax license, in Colorado involves a straightforward process. Here’s how you can get one:

  1. Online registration (recommended) via the Colorado Department of Revenue (CDOR) website
  2. Mail-in registration using the “Business Registration” form (Form CR 0100) from the CDOR website
When are Colorado's Returns Due?

Colorado’s sales tax returns are due on the 20th day of the month following the reporting period. For instance, if your reporting period is for the month of February 2024, the sales tax return for that period would be due on March 20, 2024.

If the due date falls on a weekend or holiday, the return is considered due on the next business day.

How to file sales tax in Colorado?

Before you file:

  1. Obtain a Sales Tax Permit: You’ll need a permit before you can collect and file sales tax. You can register online through the Colorado Revenue Online portal (https://www.colorado.gov/revenueonline/).
  2. Gather your Sales Information:  Compile your sales data for the tax period (monthly, quarterly, or annually). This should include:
    • Gross sales
    • Taxable sales by type (certain items may be exempt)
    • Nontaxable sales by type
    • Deductions (e.g., shipping charges)
    • Total collected sales taxes

Filing your return:

  1. Colorado offers two options for filing methods:
    • Online Filing: This is the preferred method. You’ll need to access the Revenue Online portal again and log in using your existing credentials. The portal will guide you through filing the electronic return (Form DR 0100).
    • Paper Filing: If online filing isn’t an option, you can download Form DR 0100 (Colorado Retail Sales Tax Return) and mail it with your payment to the Colorado Department of Revenue.
Is anyone exempt from sales tax in Colorado?

In Colorado, there are no exemptions for people themselves, but there are exemptions for certain types of purchases.  Here’s a breakdown of who typically qualifies for sales tax exemptions:

  • Charitable organizations:  Qualifying charitable organizations are exempt from sales tax on purchases made for their regular charitable functions. This  does not apply to all their sales, however, there are exemptions for occasional sales, sales where part of the purchase price is a donation, and sales by certain school-related entities.
  • Government agencies:  Purchases by government agencies are generally exempt from sales tax.
  • Specific goods and services:  Colorado exempts the sale of certain goods and services from sales tax. These include:
    • Food for home consumption
    • Prescription drugs and medical devices
    • Farm equipment
    • Certain types of machinery
    • Services (unless specifically taxed, like repairs)

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