Colorado has 72 self collecting home rule cities, and each one sets its own rates and taxability. That means a separate return per city on top of your state filing. Stacy Walker explains how the Sales and Use Tax System consolidates 66 of those cities into a single return, which six still demand their own, and why one seller shipping into Denver and Broomfield counties can end up filing nine returns in a single month.
Sales Tax
Colorado Sales and Use Tax System (SUTS) Explained for Online Sellers
3 min
Transcript
0:00 How Colorado sales tax is structured
Hi, I'm Stacy with LedgerGurus. With the recent changes in Colorado's sales tax system, you might feel like you're trying to dissect a million piece puzzle, but today I want to break it down into smaller pieces so that it's easier for you to understand.
The Colorado Department of Revenue is considered the tax headquarters for sales and use tax for the state. They also collect sales tax for some cities, counties and special districts. These are called state collected areas.
But here's the catch. Almost all of Colorado's counties and cities go through the state for their sales tax, except for Denver and Broomfield counties. They like to do things a little bit differently there. These cities, with their special home rule charter, decide to handle their own local sales and use tax. And guess what that means? They get to make their own rules and decide for themselves what items they're going to tax, and at what rate they're going to do it.
0:51 The 72 home rule cities and SUTS
If you have crossed a nexus threshold, it's really important that you realize that these changes will undoubtedly affect your business.
There are 72 self collecting home rule cities, and each one requires a separate sales tax return to be filed directly to their city. These filings, I should mention, are also in addition to the Colorado state sales tax filing you still have to fill out.
But never fear, there is a workaround for most of those 72 self collecting cities. All but six of these cities have agreed to accept one sales tax filing, called the Colorado Sales and Use Tax System return, or SUTS. Wow, that's a mouthful. This filing allows you to record all of the information for those 66 cities in one return, and file it with each city.
It's important to note that those six cities that have chosen not to participate in the SUTS program will each require their own separate sales tax filing.
In a nutshell, you've got the state collected return for those Colorado state filings, and you have the self collected returns that use the SUTS filing and individual city filings, each with their own set of rules.
2:02 A worked example
So let's break this down into a scenario that's easy to follow.
Let's imagine that Sahara's Igloos has crossed nexus thresholds in the state of Colorado, and needs to file sales tax returns. Over half of their sales ship to cities in Denver and Broomfield counties. It's the end of the month and time to do those pesky sales tax filings.
Sahara's Igloos owner Sam needs to do his Colorado state tax filing. If his sales are over $500,000 in the state of Colorado, he'll also need to do the Colorado retail delivery fee filing. Because he sold into Denver and Broomfield counties, he needs to do his SUTS filing for those 66 cities, as well as six additional filings for those cities that do not participate in the SUTS program. In total, Sam could potentially be filling out nine sales tax filings for the state of Colorado for this month.
If you need help with all this Colorado chaos, please contact us through the link in the description below. We have a whole team that manages US sales tax and can help you with the confusion around Colorado home rules.
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