Colorado currently has a state sales tax of 2.9 percent and 51 county sales taxes, 153 city sales taxes and a number of transportation, lodging and other special districts that are collected by the state. In addition, 71 home rule cities collect their own sales taxes with separate sales tax returns.
The state-collected counties and cities also have use taxes which are the same rates as the sales taxes, but by statute they are only permitted to levy the use taxes on the “use, storage or consumption” of motor vehicles and building materials. As a result of this limitation, the state seems to be slowly moving toward a more restrictive definition of nexus for the state-collected cities (or “statutory” cities as they are commonly called) in order to force businesses to collect sales taxes, which cover far more types of tangible personal property than do the use taxes.
Currently the regulations require a business to collect sales taxes only if the business sells, leases or delivers tangible personal property to a buyer in a statutory city, and maintains an office, salesroom or similar place of business in the city. The second half of the test is also met by having employees present in the city for more than a temporary or infrequent period of time. However the interpretation of this second half appears to be changing so that any presence of an employee in a statutory city will create nexus and a tax collection obligation. Historically that has been the position taken by the home rule cities.
If you have any questions, comments or suggestions of topics for future entries in this Colorado Sales Tax column, I invite you to enter them in the "Comments" box below.
Other recent “Colorado (CO)” posts by Keith Crichton, CPA:
- Colorado DOR's FYI Publications: Don't Rely on Them Alone
- A Snapshot of Colorado Sales Taxes – to Open This Discussion
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