Tag Archive for Colorado

Odd Tax Holiday In Colorado

Annette Nellen5

Several states have “sales tax holidays” where for a day or a few days specified during the year, there is no sales tax on specified items.  For example, it might be on children’s clothes or school supplies close to the time when school begins. Some states have them for guns and emergency preparedness items. The Federation of Tax Administrators maintains a list of these holidays in the states.

September 16, 2015, Colorado had a holiday on marijuana – but just the special 10% and 15% taxes (there are a lot of taxes on marijuana in Colorado). The reason is complicated and ties to the fact that when recreational sales became legal in Colorado and new taxes added, they raised more than allowed. HB15-1367 explains some of this (in 33 pages!). Read more

Colorado Shocked With Pot Tax Revenue

TaxConnections Picture - Pot Leaf 2 - square

One of the main goals accomplished by legalizing marijuana in Colorado was the perceived increased revenue stream from state tax. Lawmakers strongly believed Colorado would benefit financially from the legalization of marijuana in its state. To their shock and dismay, the legalization has not been as profitable as lawmakers had hoped.

By way of brief background, Colorado enacted a pot tax in 2013. Specifically, on November 5, 2013, Colorado voters passed the pot tax. The tax operated similar to other sin taxes in that it came at a hefty rate. Recreational marijuana sales were subjected to a 25% tax which went into effect on January 1, 2014. Of the 25%, 15% will be tagged for public school construction projects and 10% was earmarked to funding enforcement regulation on the retail pot sales. This excise tax, which is similar to tobacco and cigarette taxes, is in Read more

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 Read more

Marijuana And The Tax Law

TaxConnections Picture - Pot Leaf

It’s unlikely anyone missed the news stories about marijuana sales becoming legal on January 1, 2014 in Colorado. The Huffington Post reported on January 8, 2014 that sales in the first week were about $5 million. That also generated a lot of tax revenue for the state because Proposition AA* that Colorado voters passed in November 2013 allows for a 15% excise tax when unprocessed retail marijuana is sold by a cultivation facility to a retailer AND a 10% sales tax (on top of the normal Colorado sales tax of 2.9%) when the retailer sells the marijuana. That proposition suggested that $70 million would be generated annually with the first $40 million to be used for public school capital construction. Additional revenues would be used to enforce regulations on the retail marijuana industry and the balance for other needs (apparently at the discretion of the Read more

Colorado Individual and Business Taxpayers Impacted by Storms Receive IRS Relief

TaxConnections Storm ReliefAccording to the IRS:

“certain taxpayers in the counties of Adams, Boulder, Larimer and Weld will receive tax relief, and other locations may be added in coming days following additional damage assessments by the Federal Emergency Management Agency (FEMA).“

The tax relief postpones some tax filing and payment deadlines to Dec. 2, 2013.

Additionally the IRS states:

“Corporations and Businesses that previously filed an automatic an extension until Sept. 16, 2013, to file their 2012 returns and individuals and businesses that received a similar extension until Oct. 15 will now have until December 2nd 2013 to both file and pay.”

This deadline also applies to estimated tax payments for the third quarter of 2013 due September 16th. Read more