Consumer Use Tax
Consumer use tax must be paid by Colorado residents and businesses on purchases that did not include Colorado sales tax, such as those made over the Internet, by mail order, or by telephone.
What is the Consumer Use Tax?
Consumer use tax is payable to the state by individuals and businesses when sales tax is due but has not been collected. Individuals and businesses have always been required to pay sales or use tax on taxable purchases from out-of-state vendors if the item is sold, leased, or delivered in Colorado for use, storage, distribution, or consumption in the state.
Colorado state use tax is the same rate as the sales tax, 2.9 percent. With proof of payment, sales tax paid to another state may be credited against state use tax due in Colorado for a particular item. Use tax is also collected by some special districts.
How has the Law Changed?
There has been no change in law for consumers. Because most individuals have been unaware of their use tax liability, recent legislation created new requirements for retailers to help consumers follow existing law. These notifications are intended to help Colorado residents pay their use tax obligation.
Retailers that do not collect Colorado sales tax are now required to notify Colorado purchasers that the State of Colorado requires the purchaser to file a use tax return. Retailers must send notification to all Colorado purchasers by January 31 of each year showing the total amount purchased from the retailer in the previous calendar year if their purchases were more than $500.
Retailers must report all purchase information annually to the Department of Revenue (including purchases of under $500). The new law exempts retailers from these requirements if their annual gross sales in Colorado are less than $100,000.
Enforcement of this law is currently suspended pursuant to a preliminary injunction issued by the federal district court for the District of Colorado.
The court's decision does not affect a Colorado customer's liability for the use tax on any purchase on which sales tax was not collected. Although non-collecting vendors are temporarily not required to give customers summaries of their purchases, customers are still required to file a Consumer Use Tax Return and pay the tax due. Please see below for more information and instructions on how to file.
How do Individuals Pay the Tax?
Individual use tax is due by April 15 for the prior calendar year. For example, state and special district taxes owed on items purchased during 2011 must be remitted to the Department of Revenue on or before April 16, 2012.
You can use our online filing and payment option: Revenue Online Consumer Use Tax Return.
If filing by paper, the state and special district use taxes are filed using the DR 0252, “Consumer Use Tax Return”. The Rural Transportation Authority uses tax is filed using form DR 0251 "RTA Consumer Use Tax Return". For more information about state and special district taxes please see the DR 1002, Sales and Use Tax Rates.
How do Businesses Pay the Tax?
If your total use tax owed is less than $300 per year, the return is filed on an annual basis, due on January 20 of the following year. If total tax owed exceeds $300 at the end of any month, the return is due by the 20th of the following month.
You can use our online filing and payment option:Revenue Online Consumer Use Tax Return.
If filing by paper, the state and special district use taxes are filed using the DR 0252, “Consumer Use Tax Return”. The Rural Transportation Authority uses tax is filed using form DR 0251 "RTA Consumer Use Tax Return". For more information about state and special district taxes please see the DR 1002, Sales and Use Tax Rates.
Information about Online Consumer Use Tax Filing
The online system has built-in tax rates for the location of your business or residence address. The easy to use system calculates the amount of tax owed based on the purchase total and will help you avoid errors. You can pay your tax using an e-check or credit card to avoid mailing a check. File use tax online using the Revenue Online Consumer Use Tax Return.
Local City and County Use Tax
All other state-collected cities and counties in Colorado collect their own use tax, when applicable, on building material and/or motor vehicle purchases. Home-rule cities that collect their own local sales taxes should be contacted directly for their tax laws and regulations. For more information on state-collected local jurisdictions and/or which cities administer their own taxes and how they may be contacted, please see the DR 1002, “Sales/Use Tax Rates”.
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