Colorado Sales Tax 2022 for Businesses: A Complete Guide

“Businesses pay sales tax rates in Colorado that vary from 2.9% to 11.2%.”

What does sales tax in Colorado mean?

The State of Colorado accepted a General State Sales Tax for the first time in 1935. 

All businesses selling taxable goods and services are responsible for collecting sales tax in Colorado.

Why are you responsible for this? 

Many business owners struggle to understand the concept behind it. We have the answer you need to this million-dollar question. 

You are responsible for it for three reasons mentioned below: 

  • First, a business owner selling taxable goods or services is an agent of the State of Colorado. 
  • You collect sales tax from your customers on behalf of the State of Colorado. 
  • You submit the entire amount of the sales tax to the concerned authority of the State of Colorado. 

Read More: Connecticut Sales Tax 2022 for Businesses: A Complete Guide

How much is the sales tax in Colorado?

Businesses are obliged to pay a minimum sales tax of 2.9% in Colorado. 

The amount does not include any local sales tax and special district taxes. 

The amount of these taxes can be up to 8.3 percent. 

It can increase by up to 11.3% according to the location of sale. 

There are nearly 276 local jurisdictions in Colorado. These local tax jurisdictions collect sales tax of up to 6.97% from businesses throughout Colorado. 

The Department of Revenue (DOR) administers sales and use tax throughout the state. 

  • Are you a business selling taxable goods and services in Colorado? 
  • Are you a business collecting sales tax from your customers? 

Businesses selling taxable goods, and services and collecting sales and use tax in Colorado must understand the value of some more things. For example 

  • Tax rates.
  • Threshold limit.
  • The registration process. 

The list does not end here. 

Sales TaxMinimum Threshold Limit

Do you have to collect sales tax in Colorado in 2022 for your e-Commerce business? 

Businesses selling products and services online through a marketplace facilitator need not collect sales tax in Colorado as of 2022. 

Businesses selling products and services online directly will have to collect and pay sales tax. 

What Types Of Goods And Services Are Taxable Under Sales Tax Colorado 2022?

This tax is levied on the sale of many things throughout the state. For example:

  • All products sold through Amazon.
  • General clothing.
  • Foods and meals.
  • Leases and rentals.
  • Medicines.
  • Periodicals.
  • Occasional sales.
  • Equipment used for controlling pollution.
  • Parts to carry-out services as a part of the optional maintenance contract. 
  • Digital products and canned software.
  • Merchandise sales of vending machines. 

Some things are exempt from this tax. For example:

  • Grocery food.
  • Machinery.
  • Raw materials
  • Utilities and fuel.
  • Medical devices and services
  • Newspapers.
  • Contracts related to General Optional Maintenance Contracts.
  • Customization of all downloadable software.
  • Custom and canned software. downloaded and delivered on digital media. 
  • Foods for vending machine sales. 

The Registration Process:

Do you want to register for the sales tax submission? Follow the steps mentioned below:

Visit the Colorado state government’s official website. 

Click the menu and choose sales and tax system from the Online Services dropdown list. 

  • Click the New User option.
  • Enter your email address.
  • Verify your email address.
  • Setup your user profile. 
  • Finally, locate and complete the verification process for your corporate profile. 
  • Do you have a Colorado account system? Confirm it. 
  • Don’t you have your Colorado account number? No problem! Complete your necessary application for it via the SUTS (Sales and Use Tax System). 

Once you pay the fee, you get your Colorado account number. 

How often do you need to file a sales tax return in Colorado?

You are expected to file your returns by the 20th of every month. However, you have the luxury of reporting taxes and filing returns monthly, quarterly, and annually. 

You should report taxes and file returns on the next business day if the due date falls on a weekend or a government holiday. 

The frequency depends on the amount of sales tax a business collects from its customers. 

The process of filing sales tax online in Colorado:

You can accomplish the feat using one of the methods mentioned below:

  • Through Revenue Online.
  • Through government-approved sales tax software.
  • Using multiple location filters that do not need approved software.
  • Through the help of software developers familiar with sales tax XML. 

Alternatively, you can download the form required for this purpose. 

Fill out the form and submit it online or mail it to the Department of Revenue, Colorado. 

What happens if you do not file sales tax by the due date?

Do not make this mistake. It could be the costliest mistake of your life. 

Always file sales Colorado 2022 before the due date. 

Failure to do so is considered a class 5 felony in this state and results in a fine of $100,000 to $500,00. You could be jailed. 

Do you know the worst thing? Failure to file a penalty in this state is a crime.

Those who fail to file a penalty pay a fine of $50,000 to $100,000. You could be sent to jail for nearly one year. 

Do you want some help? 

Let us know right now. 

We are always ready to help you file your sales tax on time and the right way. 

Talk to our team now!

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