How to Register to Collect and Pay Sales Taxes in Colorado

If you have a business in Colorado and you sell, rent or lease items that are subject to sales tax, you need to register your business with the Colorado Department of Revenue to obtain a license. There are different types of licenses depending on how you conduct business.

If you have a permanent location where you make retail sales on a regular basis you need a retail sales license. To obtain this license you must file Form CR 0100, Colorado Sales Tax / Wage Withholding Account Application. This same form is used to apply for a wholesale license if your business sells to other licensed vendors for resale.

If you sell at a special event outside your regular place of business you need a special event license. This could be for a single event or multiple events. The special event license is valid for two years and is free if you have a standard sales tax license. To apply for a special event license you should file Form DR 0589, Sales Tax Special Event Application. You should note that according to the Colorado Department of Revenue, if you participate in the same event that occurs more than three times at the same location during a calendar year, you need a standard sales tax license.

For special events, you can also use the Special Event Fill-in Forms. To use this option you need to go to Revenue Online and select File Special Event Sales Tax. A list of all the special events opens up.

According to the Colorado Department of Revenue, if you have a small business you operate from your home and your gross sales are less than $1,000 a year, you do not need a sales tax license.

If your business is located outside Colorado and you make sales in Colorado, whether you have to apply for a license and collect sales tax depends on whether you are considered to be doing business in Colorado. According to the Colorado Department of Revenue, doing business in Colorado includes having an office, distributing house, salesroom, warehouse, or other place of business in Colorado, either directly or through a subsidiary.

You would also be considered to be doing business in Colorado if you solicit orders from people residing in Colorado through direct or indirect representatives or agents, or by distributing catalogues or other advertising media, or by using newspaper, radio, television, or other types of media advertising.

If your out-of-state business does not have any physical presence in Colorado and sells to Colorado residents only through mail-order catalogues, by telephone, or Internet, you are not required to have a Colorado sales tax license or collect sales tax.

The Colorado state sales tax rate is 2.9%. The state also collects local sales taxes on behalf of cities, counties and special districts. You can look up city and county sales tax rates on Revenue Online.

New businesses in Colorado must pay a one-time $50 tax deposit when they obtain their sales tax license. This deposit is automatically refunded when you remit a sales tax return with a state sales tax payment of over $50.

Some cities and counties in Colorado have a home rule charter and administer their own local sales taxes. These home rule cities and counties have their own requirements and you should contact them directly. To determine if you have sales in a home rule city or county you can follow the link to the document Colorado Sales/Use Tax Rates on the Tax Rates and Information page of the Colorado Department of Revenue website.

Sources:

Revenue Online, Colorado Department of Revenue

Colorado Sales and Use Tax General Information and Reference Guide, Colorado Department of Revenue

Form CR 0100, Colorado Sales Tax / Wage Withholding Account Application

Form DR 0589, Sales Tax Special Event Application

Sales Tax, Colorado Department of Revenue