Use Tax and Business Tangible Property Tax
- Basics – Use tax is due on purchases for which you have not paid the local sales tax rate (not including inventory). This can happen when item is purchased online or in person in a low-tax jurisdiction. Many online retailers are already collecting sales tax, but smaller out-of-state businesses may not be required to collect it. If sales tax is not collected when you purchase the item, it needs to be reported.
- 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.
- Filing– Use tax returns for Colorado can be filed at https://www.colorado.gov/revenueonline/_/ No account registration or login needed. Choose “File a Consumer Use Tax Return” under the Sales and Use Tax section. Use tax cannot be included on the sales tax form for the state, nor is it included on the income tax return for businesses the way it is on individual returns. (Exception – if your business is filed on Schedule C of your personal return and does not have a separate income tax return, then it can be included on your personal return).
- City Use tax – If your city collects its own sales tax (home rule city), then a separate city return will be needed. Go to your city’s website and check the sales tax page for use tax information. Some cities have combined sales/use tax forms.
Personal Property Tax (paid to your Colorado county):
- Basics – In this context, personal property refers to tangible items that are not real estate and not vehicles. Office furniture, computers, machinery, equipment, leasehold improvements, software, and leased equipment are all included. Items that are registered with the DMV (such as trailers) are not included since tax is paid with registration. Only items used in a business are included. It is paid to your local county.
- Exemption for businesses with few assets – If the value of your assets above (when purchased) was less than $50,000, your business was exempt.
- Limits — All items costing over $350 that are expected to last more than a year are included. This includes items on your depreciation schedule, but also items that cost less than the $2,500 de minimis amount used on most depreciation schedules. For instance, a $900 computer not included on the depreciation schedule but still in use would be included.
- Payment Due Date – In January, a bill is sent for the tax due. It may be paid by April 30 or in two payments: one due February 28th and the second June 30th.
- Filing – A report is due April 15th showing changes to assets. The first filing will list all your assets. Following years will include only changes. The report is based on the assets as of the prior December 31st. The report due 4/15/2024 will list your assets as of 12/31/2023 and will be used to determine the tax paid in early 2025. The county adjusts the value of the property over time to reflect its diminishing value.
- Tax Credit for amounts paid in 2023 – The amount of personal property tax paid on the first $18,000 of tangible personal property is eligible for a credit on your Colorado income tax return. For example, if your business’s personal property is valued at $36,000 by the county and you paid $1,000 in personal property tax in 2023, the business would get a $500 tax credit on the 2023 Colorado income tax return. If your business is a pass-through entity (e.g. partnership or S-corp), the owners/partners will share the credit on their personal returns.