Form Dr 0099 - Colorado Sales And Use Tax Guide (Page 2 of 12) in pdf

The Colorado Department of Revenue, Taxation Division, offers many ways for businesses to learn more about their tax obligation.

If you plan to open a business in Colorado, prepare sales and use tax returns, or if you’re interested in learning more

about Colorado tax laws then this booklet is for you.

Learn more about taxes, download forms, take a sales tax class and sign up for tax news on our Taxation Information

website Colorado.gov/tax

Manage your account, file and pay online and view sales tax rates online at Colorado.gov/RevenueOnline

Colorado imposes a sales and use tax of 2.9%. Many

Doing business in this state – means selling, leasing,

cities, counties and special districts impose their own local

or delivering in this state, or any activity in this state in

sales/use tax on purchases and transactions within their

connection with the selling, leasing, or delivering in this state,

boundaries. The Colorado Department of Revenue, in

of tangible personal property by a retail sales as defined in

addition to collecting state sales and use tax, collects sales

this section, for use, storage, distribution, or consumption

tax on behalf of several cities, counties and special districts.

within this state.

These jurisdictions are referred to as “state collected.” All

Purchase Price – the full charge to acquire the item, including

Colorado counties that impose a sales tax are state collected,

labor and overhead, exclusive of any sales tax. In the case

except Denver County and Broomfield County.

of retail sales involving the exchange of tangible personal

Cities which have enacted a “home-rule” charter, and which

property, the purchase price would exclude the fair market

have elected to administer their own local sales and use taxes

value of the property exchanged if such exchanged property

are referred to as “self-collected”. Self-collected jurisdictions

is to be subsequently sold in the usual course of the retailer’s

have the right to establish their own regulations regarding

business. Example: When a new automobile purchase

those goods and services upon which to impose their local

transaction includes the trade-in of another automobile, the

sales and use taxes. Self-collected cities must be contacted

fair market value of the trade-in may be subtracted from the

directly for that information.

purchase price of the new car before sales tax on the new

car is calculated if the car traded in is to be resold by a dealer

Definitions

holding a sales tax license.

Sale – any transaction whereby a person in exchange for

*The law requires that you list sales tax separately from

any consideration (such as money or its equivalent, property,

the purchase price of the items you sell on all invoices,

the rendering of a service or promise of any of these things)

billings and business records.

transfers or agrees to transfer tangible personal property or

Exceptions to this are sales of liquor by drink and vending

performs a taxable service.

machine sales. It is also illegal to advertise that you will make

Retail sale – any sale of tangible personal property made

sales “tax-free” or “absorb the sales tax”. Violation of these

within Colorado that is not a wholesale sale.

guidelines could subject you to penalties.

Retailer or Vendor - is a person doing business in this state,

Wholesale sale – a sale by wholesalers to retail merchants,

including a remote seller, known to the trade and public as

jobbers, dealers or other wholesalers for resale, that is not

such, and selling to the user or consumer, and not for resale.

subject to sales tax; it does not include a sale by wholesalers

to users or consumers not for resale. These transactions are

Tangible

Personal

Property

–

all

goods,

wares,

retail sales and subject to sales tax.

merchandise, products and commodities, and all tangible or

corporeal things and substances which are dealt in, capable

Wholesaler – a person doing regularly organized wholesale

of being possessed and exchanged, except newspapers

or jobbing business, known to the trade as such and selling

excluded by law.

to retail merchants, jobbers, dealers or other wholesalers, for

the purpose of resale.

The term does not include real property, such as land and

buildings, nor tangible personal property that loses its

Goods and Services

identity when it becomes an integral and inseparable part

For state-collected jurisdictions, most goods are subject

of the realty, and is removable only with substantial damage

to sales tax, but some goods are exempt from sales tax.

to the premises. Property severed from real estate becomes

An example of goods exempt by law from state and state-

tangible personal property.

collected local sales taxes include prescription drugs, insulin

Nexus – In general, a seller has sales tax nexus in Colorado

and insulin supplies and medical supplies prescribed by a

if it has employees or independent contractors in this state,

doctor.

even if their activities are completely unrelated to the sales

Some items (such as food for home consumption and farm

transactions. A contract carrier, unlike a common carrier,

equipment) may be exempt from state and special district

can also create substantial nexus with Colorado (and the

sales and use tax but may not be exempt from city, county

local jurisdictions into which it delivers goods) if Company

and/or special district taxes.

regularly ships goods via a contract carrier into Colorado.

For more information on allowed deductions and exemptions,

Colorado levies sales and use tax on the sale, use, storage,

refer to form DR 1002: Colorado Sales/Use Tax Rates.

or consumption of tangible personal property in Colorado.

Additional information about some of the more common

A retailer has an obligation to collect sales and use taxes if

exemptions can be found in our FYI Publications for Sales

the retailer is doing business (i.e., has nexus) in Colorado.

Tax on our website, Colorado.gov/Tax.

“Doing business in this state” is defined to include the

following activities:

Colorado Sales and Use Tax Guide: Colorado.gov/Tax

Page 2

Form Dr 0099 - Colorado Sales And Use Tax Guide Page 2

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