Do you need to collect and remit sales tax in Colorado?
Businesses operating within Colorado, as well as those outside the state, may need to collect and remit sales tax if they have nexus in the state. What is nexus? Simply, nexus refers to a connection or presence in a state that triggers a sales tax obligation, such as having a physical location or meeting a threshold of sales. For recent startups or businesses which sell to very few locations, determining nexus can be manageable. For larger businesses or those primarily selling online, nexus determination gets complicated. If you are concerned about keeping track of your nexus obligations or are expanding your business to sell in multiple locations, we provide al-a-carte Nexus Reviews to ensure you stay compliant and avoid costly errors.
Do you have sales tax nexus in Colorado?
There are two types of nexuses: physical and economic. Physical nexus refers to a business having a physical presence in-state, such as a retail store, warehouse, or employees working within Colorado. Economic nexus refers to a connection to Colorado based on economic activity, i.e., exceeding a retail sales threshold into the state.
Physical sales tax nexus in Colorado
Colorado describes businesses with physical nexus as, “maintaining any place of business in Colorado directly, indirectly, or by a subsidiary.” Examples of this include:
- Distribution Facilities
- Storage places
- And home offices of Colorado resident employees
Economic sales tax nexus in Colorado
For out-of-state businesses, economic nexus is triggered when that business’s current annual retail sales into Colorado exceed $100,000.
Are marketplace facilitators required to collect and remit sales tax in Colorado?
As of October 1, 2019, marketplace facilitators (not marketplace sellers) were made responsible for collecting and remitting Colorado state sales tax for products sold through their site. However, it is important to ensure that the facilitator you are using is registered with Colorado before assuming relief of liability. To do this, you can request a DR 1290 Form of Certification from the marketplace you wish to sell through.
What platforms are marketplace facilitators?
Not sure what defines a marketplace facilitator? In short, marketplace facilitators are companies that provide a platform or service for third-party sellers (you) to sell their products or services to customers. The facilitator collects payment from the customer, processes the transaction, and may also manage shipping and returns.
Filing Colorado Sales Tax
After determining that you have nexus in Colorado and need to collect and remit sales tax to the state, you will need to apply for a Colorado Sales Tax License. It is important to note that some counties and cities in Colorado have their own licenses. These areas are called home-rule cities, and you can find a list of these cities here. There are also different Colorado licenses for different businesses. Typically, in-state businesses can apply for a license at MyBizColorado or using form CR 0100, and out-of-state retailers will apply online at Revenue Online. Most Colorado sales tax licenses are valid for a two-year period, after which they will need to be renewed.
After receiving your license, you can file your sales tax returns a few ways:
- Via Paper Form DR 0100
- Online at Revenue Online
- Using Spreadsheet Filing (with the Department’s approval)
If you do business in one of Colorado’s home-rule cities and have acquired a license through them, you can either file your returns on that city/county’s website, or via approved spreadsheet filing uploaded through Revenue Online.
Let us file for you!
If filing sales tax returns is too overwhelming or time-consuming, you’re not alone. Running a business is demanding work and filing tax returns is a nuisance. We at SalesTaxSolutions are here to make things easier! As a company, we help businesses like yours deal with the many state-by-state regulations and file your sales tax returns for you. We’ve got 20 plus years of knowledge and experience to help you get back to saving time and making money as soon as possible. Message, email or call us at 888-544-7730 for a free quote today!
When are sales tax returns due in Colorado?
A business’s filing frequency is determined when the retailer’s license is issued. Most retailers must file monthly. Frequencies can be adjusted by request or will be adjusted as necessary by the Colorado Department of Revenue following their annual review. It is important to remember that, even if you have no sales tax due for your filing period, you must still file a zero return. Check out the graphic below for more information on due dates and frequencies.
Note: If the 20th day falls on a weekend or holiday, the due date is the next business day.