Every US state creates their own sales tax laws and regulations, and some states have more complex regulations than others. For example, Colorado’s sales tax regulations can be challenging due to its abundance of home rule cities. Home rule city regulations allow certain cities and jurisdictions to set their own sales tax rules and laws in addition to state laws, further complicating sales tax returns for companies in these cities.

Completing a Colorado sales tax return is a three-step process. Businesses must start by identifying their filing frequency and due dates. They must then prepare the return, before finally filing and remitting the sales tax. Following this process will help you to prepare for and complete your return smoothly and accurately.

What's in this article?

• How to find your Colorado return due date
  
• How to prepare your Colorado sales tax return
  
• How to complete and file a Colorado sales tax return
  
• How Stripe Tax can help
  

How to find your Colorado return due date

The timing for filing a Colorado return depends on your sales tax liability. You'll be required to file and remit sales tax either monthly, quarterly or annually. Once you register for a Colorado sales tax permit, you'll be assigned a filing frequency. In general, here's how filing frequency is determined in Colorado:

Colorado sales tax returns are always due the 20th day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day. Quarterly filing due dates can be seen below:

For monthly sales tax filers, payments are always due on the 20th of the month following the close of the reporting period. Additionally, for annual sales tax, returns and payment must be submitted by January 20 the following calendar year. If the day falls on a weekend or holiday, the deadline will shift to the next business day.

Once you begin filing returns, your filing frequency may change if your average monthly sales tax liability changes. Failure to file and remit by these deadlines could result in the following penalties:

• Late filing penalty: Greater of 10% of tax due plus 0.5% of tax due per month (maximum 18%) or $15
  
• Late payment penalty: Greater of 10% of tax due plus 0.5% of tax due per month (maximum 18%) or $15
  

In addition, Colorado requires any business with a sales tax permit to file a sales tax return on their due date, even if there isn't any sales tax to report or pay. If you fail to file, Colorado will levy a late filing penalty – even if you don't owe any sales tax.

How to prepare your Colorado sales tax return

The first step in preparing a return is to collect the sales information for the tax period, which could be a month, a year, or a quarter. Filing a sales tax return generally requires the following sales transaction information per jurisdiction:

• Gross sales
  
• Taxable sales by type
  
• Non-taxable sales by type
  
• Deductions such as shipping charges
  
• Total collected sales taxes
  

Note that if the amount of taxable sales does not reach economic nexus thresholds in Colorado, then a sales tax return might not be required. Out-of-state ecommerce businesses must register for a Colorado sales tax license if their gross sales into the state exceed $100,000 in the previous or current calendar year. Marketplace sales do not count toward that threshold.

In addition to meeting economic nexus thresholds, if a business has employees, an office, or a warehouse located in Colorado and is selling taxable goods and/or services, the business must collect sales taxes on all taxable transactions, file returns, and pay the appropriate amount to the state. If no sales were made during a filing period, the business must still file a return for $0.

Understanding Colorado home rule city sales tax rules

Colorado has over 70 home rule cities. This means that when making a sale to a buyer in a Colorado home rule city, you are required to collect Colorado's statewide rate, any county or special taxing district rates, and the home rule city's rate. This is the same process you would follow if you were collecting sales tax from a buyer whose ship-to destination was not in a home rule city.

The difference comes when it's time to file Colorado sales tax. Colorado's home rule cities require that you individually file and remit the sales tax collected from buyers in those cities to each home rule city.

Thankfully, the state released the Colorado Sales and Use Tax System (SUTS), an online portal through which sales tax filers can file and pay collected sales tax to approximately 40 of Colorado’s 70+ home rule cities. While SUTS makes it easier for sellers to file in home rule cities, sellers will still have to file in the remaining home rule cities not enrolled in the SUTS programme. Sellers will also have to register separately for SUTS in addition to registering for a Colorado sales tax permit.

How to complete and file a Colorado sales tax return

The final step to completing a sales tax return in Colorado is to file and remit tax. The Colorado Department of Revenue website outlines the multiple ways businesses can file and remit sales tax, including online and physical mail options.

At a minimum, businesses that are required to pay sales tax must use Form DR 0100, which can be found along with filing instructions on the DOR website. Additional forms might be required depending on the nature of your business. For example, Form DR 0098 is used for reporting sales made at temporary sales events, while form DR 0154 is used for one-off or occasional sales.

How quickly your sales tax return is processed depends on whether you filed online or by mail. Filing online is generally faster, more convenient, and provides immediate confirmation that the return has been submitted and payment received. Filing by mail requires printing and mailing paper forms, takes longer to process, and can result in delays due to postal delivery times.

Colorado requires any business with a sales tax permit to file a sales tax return on its due date, even if it doesn’t have any sales tax to report or pay. If a business fails to file, Colorado will levy a late filing penalty, even if the business doesn’t owe any sales tax.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard or using our powerful API.

Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US, automate US filings in the Dashboard, and manage global filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, VAT, and GST on:

• Digital goods and services in all US states and over 100 countries
  
• Physical goods in all US states and 42 countries
  

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If you need to register for a sales tax in the US, let Stripe manage your tax registrations. You'll benefit from a simplified process that prefills application details – saving you time and simplifying compliance with local regulations. If you need help registering outside of the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe automates US filings in the Dashboard, powered by TaxJar. For global filings, Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax or get started today.