What do you think of when you hear the word ‘Colorado’? The state’s newest tourism logo is “a world worth exploring.” From 8 ways to love Colorado in Summer including hiking, camping/backpacking, mountain biking/cycling, boating, golf, horseback riding, kayaking/whitewater rafting, and caving. Those are just the summer activities. We all know that Colorado is even bigger on ‘winter sports’, thank goodness though winter is over for about 9 months or so.
Colorado means ‘colored red’ but no matter where I look the state always is green from all the lush growth from plains to mountains, or white as in covered with snow. The other term that comes to mind is ‘majestic’, the Rocky Mountains are indeed as majestic as you can get. In fact the view from Pikes Peak is said to have inspired the song, “America the Beautiful.” Nicknamed the Centennial State, Colorado became the 38th state in 1876, by proclamation of President Ulysses S. Grant, one-hundred years after the signing of the Declaration of Independence.
Colorado is home to more than 5.4-million residents, and occupies 104,185 square miles, with an average population density of 52/sq mile (37th in the US). Colorado was actually named for the Colorado River which early travelers referred to as ‘running red’ due to the silt content carried down from the mountains.
It’s funny, when I think of Colorado, the 1964 movie with Debbie Reynolds and Harve Presnell, The Unsinkable Molly Brown always comes to my mind. I don’t know why, even though I have traveled more than 80% of Colorado, spent days on end in portions of that beautiful state, skied many a slope, and visited countless friends who live there, that darn movie of the fictionalized accounts of Molly Brown always pops into my mind. The real Molly Brown was quite a character, best known for surviving the sinking of the RMS Titanic, her real notoriety came from the social welfare work she accomplished on behalf of women and children, none of which appears in that movie. The movie portrays her and her husband as an ‘odd couple’ who enter Denver society only after striking it rich in a Leadville mine. In fact the movie depicts Molly’s husband burning up a million dollars not realizing Molly had put the money in the pot belly stove for safe keeping, he never did really burn up a million dollars. A thing like that gives a whole new meaning to the phrase "up in smoke", doesn't it?
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series. Yes, I said (50 parts), covering sales tax issues associated with each and every state tax jurisdiction in the United States. Intuitive Accountant is publishing one of these articles essentially every Tuesday, thus the series name "Sales Tax Tuesday" over the entire year of 2015. Who knows, by the end of this year there could be sufficient changes to just start the whole series over again with updated information.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
Sales Tax Facts
- The state sales tax rate is currently 2.9% but the total tax rate can be as high as 10.4% depending on local municipalities.
- Colorado is a home rule state, which means that cities, counties, local municipalities and special districts can collect their own taxes and make their own regulations concerning sales tax.
- Colorado has more than 300 taxing jurisdictions.
- Companies doing business in Colorado need to register with the Colorado Department of Revenue. Some municipalities also require registration for the purposes of collecting sales tax.
- Sales tax in Colorado is destination-based, meaning the rate is determined by the state rate of where the item is shipped to (the buyer’s location). This means sellers must know the exact current sales tax rate for every shipment they send to a purchaser.
- Colorado residents owe use tax when they purchase taxable goods for use or storage in Colorado without paying sales tax. This most frequently occurs when buying from a remote vendor not required to collect Colorado sales tax because of a lack of nexus with the state.
- Colorado is not a Streamlined Sales Tax (SST) state.
- Colorado has no sales tax holidays.
Did you know?
- VRBO’ers beware. In Colorado, short-term rental owners must collect state sales tax on rentals of less than 30 consecutive days. This applies to bed and breakfasts, campsites, condominiums, hotels, inns, motels and lodging time shares. Owners/managers of more than one short-term rental must complete a sales tax withholding application for each location.
- ‘High’ price to pay. Colorado collects tax revenue from marijuana sales through a 15% excise based tax on the average wholesale market rate; a 10% state tax on retail marijuana sales; a state sales tax of 2.9%; varied local sales taxes; and local marijuana taxes such as a 3.5% tax in Denver.
I'm glad Avalara included a reference to 'getting high' in their facts,because I kept trying to figure out a way to tie it into my Molly Brown 'up in smoke' story. But the reality is that when you simply do a search of the internet, there’s another kind of smoke that pops up in your Google search,‘Colorado Marijuana’. Right alongside the Colorado Tourism Guide is the Colorado Pot Guide.The official Colorado Vacation Guide is down the hit list from ‘A Practical Guide for the Marijuana Enthusiast visiting Colorado.’ While there were 8 ways to enjoy Colorado this summer, there are 10 was to ‘save on Marijuana’. But this article is about ‘Sales Tax’ so I wondered how much is Colorado collecting on Marijuana, well the latest monthly figures I could find come from March, 2015 and the Sales and Excise tax amounted to $7.8-million, no wonder the Colorado Department of Revenue is ‘high’ on Marijuana taxation.
Whether you are collecting sales tax on 'munchies' or 'marijuana' in Colorado, you still need to know all the details and requirements that are specific for what your are selling and where you are selling it. Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity so that your time and hard earned revenues don't simply 'go up in smoke.'.