Sales and use taxes

Taxable goods

What goods are subject to sales and use tax in your state (at both state and local level)?

All tangible personal property sold or used in Colorado is subject to Colorado sales and use tax unless a specific exemption applies (C.R.S. § 39-26-104(1)(a)). Colorado imposes a state sales tax on the purchase price of tangible personal property and a use tax on the acquisition cost for the privilege of storing, using or consuming any article of tangible personal property purchased at retail price (C.R.S. § 39-26-106(1)(a)(II), -26-202). Colorado defines “tangible personal property” as all goods, wares, merchandise, products and commodities, and all tangible or corporeal things and substances which are dealt in, capable of being processed and exchanged, except newspapers. Colorado provides that “intangible personal property,” which constitutes mere rights or action having no intrinsic value, such as contracts, deeds, mortgages, is excluded from the definition of “tangible personal property” (39 Colo. Code Regs. § 26-102.15).

State rate

What is the state sales tax rate?

Colorado imposes a uniform state sales and use tax across the state at a rate of 2.9% (C.R.S. § 39-26-106(1)(a)(II)). In 2018, localities imposed sales and use tax at rates ranging from 0% to 7.25% (see Colorado Dept. of Rev., Colorado Sales/Use Tax Rates).

Local rates

What is the range of local sales tax rates levied in your state?

Colorado permits local jurisdictions to impose local sales and use taxes, the rate of which varies by jurisdiction. Cities, counties, and special districts may levy sales and use taxes on approval by a majority of the registered electors of the county voting on such a proposal (C.R.S. § 29-2-102 (for municipalities); C.R.S. § 29-2-103 (for counties)).

There are two types of local taxing jurisdictions:

  • state-administered jurisdictions; and
  • home rule jurisdictions.

If a jurisdiction—including a county, city, or special taxing district—is state-administered, the Colorado legislature has authorized by statute the imposition of a sales and use tax which is administered by the Colorado Department of Revenue (see Colorado FYI General 5; Colorado Dept. of Rev., Form DR 1002). Home rule jurisdictions, on the other hand, are municipalities organized under Article XX of the Colorado state constitution. Home rule jurisdictions are permitted by the Colorado constitution to impose, administer, or enforce any local sales and use tax without being affected or limited by acts of the Colorado state legislature (except for those acts specifically dealing with home rule jurisdictions) (C.R.S. § 29-2-107(1)). The Colorado Department of Revenue publishes the sales and use tax rates twice a year for state-administered and home rule jurisdictions in DR 1002.

Exemptions

What goods are exempt from sales and use tax?

All retail sales of tangible personal property are subject to tax unless specifically exempted.  Sections 701 to 729 of Article 26 of Title 39 of the Colorado Revised Statutes lists the various goods, services, and transactions that are exempt from sales and use taxes. For example, prescription drugs, insulin and insulin supplies, and medical supplies prescribed by a doctor are exempt from state and state-collected local sales taxes (see DR 0099: Colorado Sales and Use Tax General Information and Reference Guide). The seller has the burden of proving that a transaction is properly exempted (see Instructions for State of Colorado Affidavit of Exempt Sale).

Services

Are any services taxed?

Unlike sales of tangible personal property that are generally presumed taxable, sales of services are exempted unless specifically designated as taxable (C.R.S. § 39-26-104(1)(a); C.R.S. § 39-26-202(1); 39 Colo. Code Regs. § 26-102.9). Those services specifically designated as taxable include:

  • telephone and telegraph services;
  • gas and electric service sold for commercial consumption and not for resale;
  • food and drink services; and
  • rooms or accommodation.

The main factor in determining whether a particular transaction involves selling or transferring tangible personal property incidental to performing a service is the true object of the contract (Colo. Code Regs. § 1 CCR 201-5:SR-40; Colorado FYI Tax Publication No. Sales 52, 12/01/1993).

Filing requirements

What filing requirements and procedures apply?

Any taxpayer required to pay or collect and remit sales and use taxes must file a return and accompanying payment with the Colorado Department of Revenue’s executive director.  Generally, returns must be filed online or postmarked on or before the 20th day of the month following the reporting period. How often a taxpayer is required to file a sales tax return depends on the sales volume:

  • If the sales tax collected is $15 or less per month, an annual filing requirement applies;
  • If the sales tax collected is less than $300 per month, a quarterly filing requirement applies; and
  • If the sales tax collected is $300 per month or more, a monthly filing requirement applies (see DR 0099: Colorado Sales and Use Tax General Information and Reference Guide, Page 5).

Unless an exception applies, every retailer, for example, must file a monthly return to the Colorado Department of Revenue before the 20th day of each month for the preceding calendar month in which the tax accrued (C.R.S. § 39-26-105(1); C.R.S. § 39-26-204(3); 39 Colo. Code Regs. § 26-105.1). Sales tax returns can be filed online or by filing form DR 0100: Colorado Retail Sales Tax Return. A sales tax return is due for every period, even if no tax has been collected or is due.

The consumer use tax is a complement to the sales tax. It is payable to the state when sales tax is due but has not been collected on purchases that did not include sales tax, such as those made over the Internet, by mail order or by telephone or from out-of-state vendors if the item is sold, leased or delivered in Colorado for use, storage, distribution or consumption in the state (see FYI General 10: Consumer Use Tax). Use taxes are reported in the state column of form DR 0252: Consumer Use Tax Return. Business consumer use tax is paid annually if the total use tax owed is less than $300 per year. If the total use tax owed exceeds $300 at the end of any month, the return is due monthly (see DR 0099: Colorado Sales and Use Tax General Information and Reference Guide, Page 7).

State retailer’s use taxes are reported in the state column of form DR 0173: Retailer’s Use Tax Return. A retailer’s use tax return is due every period, even if no tax has been collected or no tax is due. How often a retailer must file a use return depends on the sales volume, which mirrors the thresholds for filing a sales tax return.  

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