Colorado’s Unique Sales Tax Could Cut off Consumers

Colorado’s Orwellian Consumer Use Tax Statutes. (Out-of-state retailers have to collect Colorado sales tax if they have a Colorado presence, such as a retail outlet or warehouse, but this isn’t relevant to the consumer use tax.) So let’s explore what the rules are.

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In September, the Colorado Office of the state auditor (osa). osa evaluated whether the Farm Close-Out Sales Tax Exemption cuts the cost of. that sell directly to consumers because a sales tax would be applied at.. Sign up for exclusive state-policy research, infographics, and stats every two weeks.

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Sales tax laws are just as confusing for consumers, many of whom assume they won’t need to pay tax on used items. To make their experience better, you might want to let them know before the sale that you’ll be charging tax, and explain why you’re required to do so.

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The state sales tax rate in Colorado is 2.900%. With local taxes, the total sales tax rate is between 2.900% and 11.200%. With local taxes, the total sales tax rate is between 2.900% and 11.200%. Colorado has recent rate changes (Tue Jan 01 2019).

Use taxes are levied by states in lieu of sales taxes. Representatives from the Colorado Department of Revenue did not return multiple requests for comment on when or how the department intends to enforce the law and what retailers will have to do to comply with it.

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Consumer use tax is a tax a consumer is supposed to pay on items purchased for use or consumption in a state, but on which they didn’t pay a sales tax. Educating ordinary online shoppers on the need to pay use tax is difficult, and actually getting them to comply is nearly impossible.

Colorado’s home-rule provision in a post-Wayfair world means that each jurisdiction in the state could technically administer its own sales tax rate and collection requirements, creating confusion for companies trying to sell into the state.

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