DOR Taxation web site

Common Filing Errors on Sales Tax Returns

General 

 

  • Be mindful of your new tax account number. The Colorado Department of Revenue has moved sales tax into its new tax accounting system. The improved system allows the department to process and distribute taxes more efficiently and assist businesses better than the current system. As part of this change, tax account numbers went to eight digits.

    This number is known as the “Colorado Account Number.” For account numbers obtained prior to October 2010, a zero (0) is at the front of the original seven digits. For example, if your account number was L12-34567-0000, your new number is 01234567.  Businesses should use the new number format as soon as possible to increase the accuracy of their tax records.

    New businesses to receive eight-digit tax account number. Beginning in October 2010, businesses applying for sales and withholding tax accounts with the Colorado Department of Revenue will automatically receive an eight-digit account number.

     
  • File Online.  Single location filers may use this service as long as they have filed at least one paper return with the department in the past.  Multiple location filers may file online as long as they have tested their electronic file (in XML format) with the department and received department approval to use the file.   Many taxpayers are taking advantage of this new option to help minimize calculation errors and make filing easier. Visit the Online Sales Tax Filing Web site for instructions.
  • Filing returns with incorrect filing dates. For example, when filing a return for the first quarter (January through March) of 2009, the dates on the return for this period should be 0109-0309. The format is MMYY-MMYY. If using the pre-printed coupon return booklet received from the department, be sure to use the form with the correct dates when filing for that period. Do not make copies of any of the forms in the booklet with pre-printed periods/dates and use those forms to file taxes for another period. A return with June dates should not be used to report taxes for September.
  • File returns on time. Multiple location filers who file Colorado Retail Sales Tax (DR 0100) returns need to make sure all the returns are mailed/post marked by the 20th of the month, even if a payment was made before that date. For example, if paying by Electronic Funds Transfer (EFT) on the 15th of the month, the return is still due or must be postmarked by the 20th of the month
  • Taxpayers with questions should use the Taxation Web site. Often, taxpayers can find answers to their questions by looking at the sales/use tax FYI publications. In addition, the Web site, www.TaxColorado.com has a list of all sales tax forms needed to remit taxes and details about various record retention requirements.
  • FEIN and SSN Numbers. The new accounting system is going to actively verify Federal Employer Identification Numbers (FEIN) and Social Security Numbers (SSN) used on business accounts. The system will verify the numbers through the Internal Revenue Service. If your account does not have a valid FEIN/SSN number, you will receive a notice from us to correct this number as soon as possible. Often times, this number may have been transposed on the original CR 0100 application. New business applications should have their FEIN or SSN ready when applying for a license.
  • Use the correct county and city jurisdiction codes for your businesss location(s).  If you are not using a form printed by the Department of Revenue such as the sales tax coupon booklet or preprinted forms that are mailed to you, be sure to check the publication "Jurisdiction Codes for Sales Tax Filing" (DR 0800) for your six-digit (NN-NNNN format) code.

 

Calculation Errors 

 

  • Incorrect tax rates and mathematical errors. When filling out a blank, generic sales tax return that has no pre-printed sales tax rates, list the rate correctly and multiply as follows: If the sales tax rate = .25 percent, this percent should be calculated as .0025 on the return. If the total net taxable sales collected for a jurisdiction is $500.00, the calculation would be $500.00 x .0025 = $1.25. All tax amounts should be reported on the return using standard rounding rules where cents below 50 cents get rounded to “0” and 50 cents and higher get rounded up to the next dollar. For example, a $1.25 should round down to $1.00. Calculate the tax by using either a percentage key on a calculator or by using the decimal method, do not mix these calculation methods. Finally, always double check math calculations
  • Do not submit a return with negative numbers. Credits for one jurisdictional tax cannot be offset against another jurisdictional tax. Credits cannot be moved from one column to another. After calculating a return, if any column falls below zero, the credit can be carried forward to a future return and applied to the same jurisdiction/column. A credit can only be subtracted within the same column up to the amount of what is reported for that jurisdiction for the current period. If the credit cannot be recaptured within three future tax periods, the Claim for Refund (DR 0137) should be filed for the full amount of the credit. The smallest amount of tax reported in any column is zero. Negative numbers should never be used anywhere on the return.

 

Incorrect Use of Columns on the DR 0100 

 

  • Do not list taxes in columns on the sales tax return that are NOT designated for that tax. The sales tax return has a column designated for each jurisdiction (County, City, Special Districts, State, etc.). Therefore, be sure to correctly list each tax in the appropriate column. 
  • Fill out the sales tax return completely. 
    • Do not leave columns/lines blank.  Use NA if a column on the DR 0100 return does not apply to a business location. Put NA or Not Applicable on the TAX RATE line for that column. The TAX RATE line is right under line 4 of the DR 0100. DO NOT write 0.00 or leave it blank. Zeros or leaving it blank will cause an error in our accounting system.  If a “0” is listed on any line or column, the department will assume that the business is still responsible for remitting that jurisdiction’s tax but that the amount due for that period is “0."
    • Use “0” if there is no tax to report but the tax DOES apply to the location.  
    • Every line on a tax return needs to be filled out correctly in order to be processed timely. When filing a DR 0100 (paper copy of a return) complete each line and each applicable column.  Do not leave a column blank or incomplete, even if filing a “zero” return with no tax due.
    • Do not change pre-printed sales tax forms you receive by mail.  Do not enter new sales tax jurisdictions that have not been set up on an existing account. Additional locations must be set up before filing the return.
    • Do not create customized or independent forms to remit taxes for additional jurisdictions. For example, if the current sales tax return states that taxes will be remitted for Boulder County in the county column, do not cross out Boulder County and replace it with Jefferson County.

      To add a physical location, the Department of Revenue (DOR) must receive notification of the new branch/location by submitting the  Sales Tax /  Withholding Account Application (CR 0100)) to the DOR. Send the form with the appropriate fees to: 1375 Sherman Street, Denver, CO, 80261. For a branch with NO physical location in Colorado, send an email request to add the branch/location to: dor_multilocations@state.co.us  Refer to publication FYI Sales 58 for more information. 
       
  • If all sales for a specific jurisdiction are out of the taxing area, post the amount on line 3A in the applicable column and then follow through the 0.00 on line 14 to complete column.
  • Total amount remitted on line 15 of the return does not balance with the subtotal columns on line 14 of the return. For example, if the total for all columns of the sales tax return is $500.00, then the remittance should also be $500.00.
  • Line 10 of the Retail Sales Tax Return (DR 0100) is used for tax on goods removed from inventory for personal or business use. Line 10 should not be used to file consumer use tax.

    Instead, businesses should report consumer use tax on the Consumer Use Tax Return (DR 0252) and the RTA Consumer Use Tax Return (DR 0251) for the RTA branches. If you file paper return(s) you will need to send a check in payment of the tax or pay by Electronic Funds Transfer (EFT).  If paying consumer use tax by Electronic Funds Transfer (EFT), you must have the consumer use tax EFT code (code 045) added to your EFT account. For more information on EFT, please review the document Electronic Funds Transfer (EFT) Program for Tax Payments (DR 5782), then complete the Authorization for Electronic Funds Transfer (DR 5785).  Individuals reporting use tax can file and pay online using the Revenue Online Consumer Use Tax Return.  For more information on use tax, please see the Consumer Use Tax Web page and FYI General 10.
     

 

Failure to Correctly Report Local Taxes 

 

  • Multiple jurisdictional filers cannot combine the county tax collected for all branches on one form. For example, if there are five branches/locations in Summit County, each branch/location must report the tax on a separate branch return. All taxes collected for any jurisdiction can’t be combined and reported on one of the Summit County branch/location forms, while leaving the tax amounts off the other branch returns. The same rule applies to all of the local taxes collected for companies with multiple locations in any jurisdiction.
  • Do not write “Various” on any tax rate line and combine all the jurisdictional taxes together in one column. Returns will not be processed correctly and there will be delays in processing. Each jurisdiction has one tax rate and taxes collected for that jurisdiction must be reported in its own column. For example, the state sales tax return has one column designated for city tax and only one sales tax rate applies to that city.
  • Do not subtract a credit from a previous period and carry it forward to a future period and deduct that credit from all jurisdictions listed or columns on the current period tax return. For example, if a credit is carried forward for city taxes, only take the credit in the city column; do not take the credit from the county, state, or special district columns, too. Example:  Tax overpaid by $50.00 needs to be converted into net taxable sales credit. $50 divided by tax rate will result in net taxable sales credit to be posted on Line 3C for the applicable liability.

 

Multiple Location/Jurisdiction Filers Errors

 

  • Multiple Location/Jurisdiction Filers (formerly known as Spreadsheet Filers) who currently use spreadsheets to file their sales tax will NOT be able to use their current spreadsheet filing methods for the September 2010 filing period returns due October 20 and any periods after. The Department of Revenue has developed a new computer system to manage Colorado sales, use and wage withholding taxes. As part of this change, Spreadsheet Filing will cease for all filers including current approved filers. They must either file electronically OR file a paper return for each location beginning October 1, 2010. For more information, please see the Multiple Location/Jurisdiction Filers Web page.

  • Keep contact information current with the Department of Revenue. Please be sure to notify us if there is a change in personnel, mailing addresses, phone numbers and most importantly, email address. We send communication and acknowledgements through email often. Please be sure we have the most up-to-date contact information. Send your contact information to dor_locationfilers@state.co.us

  • Verify "Branch Numbers" early. It’s recommended that you verify all of your branch numbers before you submit your return electronically. You can confirm the branch numbers online. Search by account number. The verification system will show all open locations for your account number and the current, applicable tax rates for each location.

 

Payment Errors

 
  • Taxpayers may continue to make a single payment to remit the tax for all locations. Pay through Revenue Online.

  • Taxpayer’s Electronic Funds Transfer (EFT) payment does not match the total amount filed on either the XML return or on the DR 0100 return. Double check for mathematical and transposition errors. Both the amount on the return and the amount of the EFT must match.
  • Taxpayers who make a tax payment using Electronic Funds Transfer (EFT) need to file a return. Single location taxpayers can file a DR 0100 online or a paper return. Paper returns can be filed by mail, private carrier, or in person at any walk-in service center. Filing a return late, not filing a return, incomplete returns, and non-payment or incomplete payment of the tax due will all result in an assessment of penalties and interest.