How do you handle it when Colorado clients receive an Annual Purchase Summary regarding Use Tax in the mail?

Colorado has some use tax notification and reporting requirements.
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Tax Professional Answers

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Alan Smith
If an annual summary was received from an out-of-state retailer, they didn't collected sales tax. The notice is letting your clients know Use Tax is due and the amount of untaxed purchases to include on their consumer use tax return.

Here's the latest Tax Update about it from the Colorado Department of Revenue:

Colorado Department of Revenue, Taxation Division
Tax Update

Did some of your Colorado clients receive an Annual Purchase Summary and owe consumer use tax on online purchases? Learn how to file, calculate and pay.

How to Calculate Consumer Use Tax
Colorado use tax is calculated at 2.9%. Some cities, counties and special districts in Colorado also impose a use tax. The Department collects use tax for certain special districts, but does not collect use tax for any city or county. Please contact them directly concerning their tax rates, exemptions, fees and procedures.

How to Report and Pay Consumer Use Tax for Individuals
Consumer use tax for individuals is due by the April income tax return deadline. Individuals can report and pay consumer use tax in one of two ways, either of which can be filed electronically at
• With the Consumer Use Tax Reporting Schedule (DR 0104US) as an attachment to their Colorado individual income tax return (DR 0104), or
• With the Consumer Use Tax Return

The schedule or return must include tax for any tangible property the individual stored, used, or consumed during the income tax year and for which sales or use tax was not previously paid. If an individual files his or her income tax return under extension, penalty and interest will be due for any consumer use tax not paid prior to the April income tax deadline. Taxpayers may use the Department’s free e-file service, Revenue Online, to file and pay their consumer use tax. They do not need to log in to file a return. When filing in Revenue Online, the system will calculate the state use tax due. In some cases, the system may also be able to calculate Department collected city and county rates. Taxpayers can double check the applicable rates in the DR 1002 publication.

How to Report and Pay Consumer Use Tax for Businesses
The due date for businesses and other legal entities that owe consumer use tax depends upon the amount of use tax owed. If the business or other legal entity accrues less than $300 of total consumer use tax over the course of a year, the business or other legal entity must file an annual use tax return, due January 20th of the following year, to report and pay the tax due. If the cumulative tax due at the end of any month is in excess of $300, the business or legal entity must file a return by the 20th day of the following month. The business or legal entity can either file electronically at or by completing and submitting a Consumer Use Tax Return.

For more on the specifics, see their webpage about reporting requirements and remitting use tax:

It's a complicated issue. I'm happy to help if you still have questions.

Alan Smith Sales Tax Colorado, LLC
Leave a Comment 49 weeks ago

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