The Colorado Department of Revenue (CDOR) welcomed Cyber Monday with a use tax reminder. Use tax is owed whenever a vendor doesn’t collect tax on the sale of a taxable good or service. Colorado residents are most typically liable for use tax when they purchase taxable goods (for use or storage in Colorado) online or from a catalog from non-collecting, out-of-state vendors.
Customers should always keep a record (i.e., invoice, receipt) of non-taxed purchases. They’ll know sales tax wasn’t collected because they’ll receive a Transactional Notice from the non-collecting retailer, who is required to inform Colorado customers that state sales tax wasn’t collected and that they “may have a tax obligation to the state.”
The state use tax (2.9 percent) should be paid directly to CDOR. However, although CDOR does administer use tax for “certain special districts,” it doesn’t administer use tax for any city or county. Therefore, in most cases, local use tax should be remitted directly to the local government (e.g., Boulder County or the City of Loveland).
Colorado use tax must be remitted annually by the April income tax deadline, and it can be included in the Colorado income tax return. Alternatively, it can be reported and paid directly via a Consumer Use Tax Return, either electronically or by paper. See the Colorado Department of Revenue for more details.
Although individuals can be audited for use tax, businesses are more likely to be targeted for use tax noncompliance. Tax automation software facilitates sales and use tax compliance for businesses in all states, including Colorado. Learn more.