Sales Tax Complexity Example – Colorado

2-4-2014 9-13-47 AM

Many local governments have sales tax in addition to the state’s sales tax. Tax rates likely vary among local entities. Thus, it is necessary to define that local jurisdiction. We might assume that should be easy because it would be based on the name of the city or the zip code – something easily known. But, that is not true, there are many areas where zip codes do not tie to the local sales tax rate.

Thanks to Karen Davis of T.M. Byxbee Company, P.C. in Connecticut for pointing out to me an example of the complexity that can exist in trying to determine the proper sales tax rate to charge. The Colorado Department of Revenue has a web tool where you can determine the local sales tax. For some of the jurisdictions though, you’ll also need a map to determine the rate. For example, here is the description provided for the city of Aurora (emphasis added). Also note that unlike other states, such as California, there might be separate filing obligations for the cities (rather than reporting everything on one sales tax return).


The city sales tax rate is 3.75%. Please note that this is a Home Rule City. The Colorado Department of Revenue does NOT collect sales tax for home rule cities. Aurora is located in three counties: Arapahoe, Adams and Douglas.


The county sales tax rate is 0.75%. The Regional Transportation District sales and use tax of 1.0% applies in Adams County West of Box Elder Creek. The Scientific and Cultural Facilities District sales and use tax of .1% applies to all of Adams County.


The county sales tax rate is .25%. The Regional Transportation District sales and use tax of 1.0% applies to that portion of Arapahoe county which is south of Interstate 70 and west of Picadilly Road to Jewell, and west of Gun Club Road to Quincy, and generally west of Monaghan Road, including Arapahoe Park and Aurora Reservoir. The Scientific and Cultural Facilities District sales and use tax of 0.1% applies to all of Arapahoe County.


The county sales tax rate is 1.0%. The Lincoln Station Local Improvement District near Interstate 25 on Park Meadows Drive has a sales tax of .5%. The northeast portion of Douglas County, Highlands Ranch, the Park Meadows Mall area, Lone Tree, Acres Green, and Lincoln Station LID are located in the Regional Transportation District, which has a sales and use tax of 1.0%. The Scientific and Cultural Facilities District sales and use tax of .1% applies to all of Douglas County except in the towns of Castle Rock and Larkspur.”

To see others, go to the Department’s website and click on “View Local Sales Tax Rates.”

Can it be easier? YES. One easy approach would be to have just one rate per state with some portion of that going to cities. That might not be politically easy as each local jurisdiction might have varying needs for sales tax revenues depending on other sources of revenues and spending their needs. I think though, that cities and counties would be well-served by working to get to one-rate-per-state because it would then be easier for vendors to collect and remit sales tax. And perhaps Congress would be more willing to enact the Marketplace Fairness Act if sales tax collection were easier. There would still be a need to identify the location of the buyer to get the sales tax to the correct place, unless there is reliable data on spending among local jurisdictions so that the total local portion could be apportioned among local jurisdictions using that data.

In accordance with Circular 230 Disclosure

Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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One comment

  1. Anthony says:

    I’m a co-founder of Taxnologi Solutions, LLC ( where we specialize in state and local tax consulting. Our firm is located in Colorado and we are extremely experienced with the state and local home rule cities registration and taxing requirements. If you have any questions, please feel free to reach out to us.

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