Contact UsWhat are the common mistakes when handling sales and use tax in Colorado?
It seems most audits result in assessments, even when the businesses are trying to handle it correctly.
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Tax Professional Answers
Alan Smith
Here are some very common sales & use tax mistakes made when doing business in Colorado:
1) Failing to license with applicable home-rule cities
2) Not collecting Colorado State-collected jurisdictions' sales tax or retailer's use tax
4) Using a customer's mailing address to determine the taxing jurisdictions and rates instead of verifying the address.
3) Not remitting use tax on fixed assets and expense items purchased for company use
Avoid these costly pitfalls!
If you deliver goods into home-rule cities in company vehicles, you'll likely need to license and collect the cities' sales tax.
If you deliver AND install goods, you'll also need to collect all applicable Colorado State-collected jurisdictions' sales tax. (This means obtaining one or more nonphysical location branch ids to be able to report and remit the taxes for jurisdictions outside of your local physical location 's jurisdictions.)
Use the State-certified address database or other appropriate databases to determine the true jurisdictions and the applicable rates. Mailing addresses cannot be relied upon to determine your customers' actual city location and other applicable county or special districts taxes.
Review your fixed asset and expense purchases invoices to see if all applicable State and local sales tax was charged. (It often isn't!) This is a heavily audit area for the State and home-rule cities.
Use tax is to be self-assessed and remitted to the State for State and some state-collected jurisdictions for shortages and even rate differences between jurisdictions.) Other State-collected jurisdictions may have you remit directly to them. Use tax is also to be remitted directly to home-rule cities.
Handling sales and use tax properly in Colorado is very complex. There's a lot more to it than addressed in the highlights above.
We're here to help. It's what we do day in and day out.
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340 weeks ago
1) Failing to license with applicable home-rule cities
2) Not collecting Colorado State-collected jurisdictions' sales tax or retailer's use tax
4) Using a customer's mailing address to determine the taxing jurisdictions and rates instead of verifying the address.
3) Not remitting use tax on fixed assets and expense items purchased for company use
Avoid these costly pitfalls!
If you deliver goods into home-rule cities in company vehicles, you'll likely need to license and collect the cities' sales tax.
If you deliver AND install goods, you'll also need to collect all applicable Colorado State-collected jurisdictions' sales tax. (This means obtaining one or more nonphysical location branch ids to be able to report and remit the taxes for jurisdictions outside of your local physical location 's jurisdictions.)
Use the State-certified address database or other appropriate databases to determine the true jurisdictions and the applicable rates. Mailing addresses cannot be relied upon to determine your customers' actual city location and other applicable county or special districts taxes.
Review your fixed asset and expense purchases invoices to see if all applicable State and local sales tax was charged. (It often isn't!) This is a heavily audit area for the State and home-rule cities.
Use tax is to be self-assessed and remitted to the State for State and some state-collected jurisdictions for shortages and even rate differences between jurisdictions.) Other State-collected jurisdictions may have you remit directly to them. Use tax is also to be remitted directly to home-rule cities.
Handling sales and use tax properly in Colorado is very complex. There's a lot more to it than addressed in the highlights above.
We're here to help. It's what we do day in and day out.