Business Owners: Big Changes Coming to Colorado State Sales Tax

Business owners: in case you haven’t heard: there are major changes coming to the Colorado state sales tax system. Effective December 1, 2018, all businesses located in the state of Colorado, or those selling goods to those living within Colorado, must adhere to the changes. These rules will affect how you collect sales tax and are expected to have a major impact on how you collect said taxes.

Colorado State Retailers
The new rules state that, starting on December 1, 2018,  for retailers inside the state, “sales tax must be collected and remitted based on the jurisdiction’s tax rate at the point of delivery for the taxable good when taxable goods are delivered to a Colorado address outside the retailer’s jurisdiction. This includes any applicable state-administered local and special district taxes. For example, if a retailer delivers taxable goods to a customer’s address, sales tax must now be collected at the rate effective for the customer’s address, not the taxes that are in common between the customer’s address and the seller’s location.”

For sales that take place at the seller’s place of business, the customer will continue to be charged the at the rate in effect for the location of the business. To learn more about your tax jurisdiction, click here to see the full list. Click here for a list of FAQs for Colorado state retailers.

Out-of-State Retailers
For businesses located outside the state of Colorado, “the state of Colorado will now collect state sales tax and state-collected local and special district sales tax from out-of-state retailers. Out-of-state retailers are considered those that do not have a physical presence in Colorado. Out-of-state retailers must get a state of Colorado Sales Tax license in order to collect and remit sales tax. The first day to start collecting and remitting sales tax is December 1, 2018, for those retailers who have received their license prior to that date. Out-of-state retailers are not required to collect sales tax on sales before the first day of the month following the issuance of their sales tax license.” Click here for a list of FAQs for out-of-state retailers.

If you own a business in the state of Colorado or sell goods to Colorado residents, here’s what you need to do next:

• Click here to read the full update from the Department of Revenue detailing the new changes to Colorado state sales tax laws.
• Check out the Colorado.gov/tax website to learn more about the sales tax changes and keep up to date with the news regarding the change.
• Update your computer system or point-of-sale system to ensure the new sales taxes are being properly collected, reported, and thus paid.
• Consult with your tax professional or accountant to make sure your business is properly collecting and reporting the new sales tax by December 1, 2018.

To learn more about what the sales tax changes will mean for you and your business, check out these free Colorado Department of Revenue webinars and check out the Colorado.gov/tax website for more FAQs and resources.

If you have questions or need help in light of the new changes, please contact Tally Services. We are here to help you understand the changes, how to collect sales tax under the new rules and implement systems that will help you stay organized. Tally Services, an accounting firm in Fort Collins, Colorado, partners with businesses and organizations of all sizes to provide bookkeeping and accounting services to help your business adapt in light of the changes. Click here to learn more about our services, and don’t hesitate to contact us if you need help.