(303) 499-7445 info@tandemcpas.com

Year-end Reminders

Sales Tax

Colorado Sales Tax Changes: 

  • Renew your license – All Colorado sales tax licenses need to be renewed by 12/31. Check on any licenses you may have with home rule cities like Louisville, Boulder, Denver, Longmont, etc.  Many have the same renewal date
  • Colorado now expects all in-state businesses, regardless of size, to collect sales tax based on where the goods are delivered (destination sourcing), not the location of your business. The exception for businesses with retail sales under $100,000 has expired.
  • Rates for every location in the state are available from the Department of Revenue’s website. See instructions here: https://tax.colorado.gov/how-to-look-up-sales-use-tax-rates.  For businesses that sell online, using the website for each sale is not feasible. In that case, we suggesting using sales tax software compatible with your point-of-sale software.  Note that rates regularly change so it’s important to stay up to date.
  • Home Rule cities: Many home rule cities are now expecting tax to be collected on your sales delivered within city limits. The good news is many of them have made a combined website to assist with paying these taxes: https://colorado.munirevs.com/.  Colorado has recently changed the law to forbid cities from requiring a separate license if you have no physical presence. (You still need to collect the tax, but can use your state sales tax license.)
  • Due Date – Typically January 20th for the year. However, if your total use tax exceeds $300 at any point in the year, it is due the 20th of the following month.

Sales to Other States: 

  • All but a handful of states have adopted some form of economic nexus standard. Economic nexus means you could owe sales tax in a state even if your business does not operate there, based solely on your remote sales in that state.  No longer do you actually need to have any physical presence in a state to be “present” for nexus purposes.
  • Some states tax services as well as goods (e.g. New Mexico).
  • Many states have set sales and/or transaction thresholds. If you have sales exceeding $100,000 or have more than 200 transactions within the state, you likely have economic nexus. Of course, these thresholds vary state-to-state. A chart of state thresholds is here: https://www.avalara.com/us/en/learn/guides/sales-tax-nexus-laws-by-state.html

 

Please see this linked attachment on more resources regarding sales tax.

(303) 499-7445

info@tandemcpas.com

287 Century Circle, Suite 200, Louisville, CO 80027

Tandem CPAs LLC  (Colorado firm license #FRM.5000548).

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