Colorado Sales Tax and Use Tax
What is the Colorado sales tax?
Taxes in Colorado are destination-based, meaning the Colorado sales tax rate is based, or determined from, the destination location an item is shipped to. This complicates business for retailers who need to have the exact and up-to-date sales tax rate for every shipment they make.
To see a full breakout of Colorado sales tax rates by state, county, city and special district, use our easy Colorado sales tax calculator. After putting in any ZIP code, you can enter a retail price to calculate Colorado sales tax totals.
What is the Colorado use tax?
The Colorado state use tax rate is not the same as the state, county, city and special district sales tax rates.
If you reside in CO, use tax is due to the state on any and all transactions where sales tax has not been paid, even out-of-state internet sales.
Who has to pay Colorado sales tax or use tax?
In general, a business must collect and remit all applicable Colorado sales taxes if that business has nexus, a physical presence such as a brick-and-mortar location, within a given state. The presence of an employee or salesperson, delivery by the seller's vehicle, and storage of materials usually establishes nexus as well.
Colorado says that an out-of-state seller is required to collect tax if they can be defined as a "seller doing business". Colorado has certain additional laws establishing nexus for other reasons such as out-of-state businesses using in-state affiliates, advertisers or vendors, or businesses that make internet sales or mail catalogs.
If you are not sure if you have established nexus in Colorado, you can usually get free help by contacting the Colorado Department of Revenue. Click here for an updated listing of direct phone numbers. You could also contact a qualified certified public accountant or lawyer who specializes in tax law in Colorado. Click here for listing of recommended resources.
Special rules applying to Colorado sales tax and use taxes
- Shipping is not taxable if separately stated and other specific terms are met.
- Finance charges are exempt from sales tax, when stated separately.
- Clothing is taxed at the same rate as the general sales tax.
- Colorado Sales tax holidays have been held in the past, but have not been authorized yet this year.
Since Colorado legislators can vote to change the Colorado sales tax and use tax rates at any time, it is very difficult for individuals to keep track of the changes. The population of CO state is also rapidly changing, which can cause frequent updates to the ZIP codes and local municipality names and complicates the job of keeping track of Colorado sales tax jurisdictions.