Small Business Exception
Businesses Located Within Colorado
HB19-1240 provides a temporary exception to destination sourcing for small businesses physically located in the state of Colorado that have less than $100,000 in retail sales during the previous calendar year. Such sellers may source their sales to the business location of the seller and collect all applicable state-administered and special district taxes for their business's jurisdiction. This is called origin sourcing.
Should the small business exceed $100,000 in retail sales during a calendar year, the business must transition to using destination sourcing. Businesses will have until the first of the month, 90 days following the date they exceed the $100,000 threshold to begin using destination sourcing.
The temporary small business exception is effective until a new Global Information System (GIS) from the Department of Revenue is available online. After the launch of the GIS, all businesses will have 90 days to transition to destination sourcing. To be alerted by email when the GIS goes live sign up here.
Businesses Located Outside of Colorado
If a business does not have more than $100,000 of retail sales into the state of Colorado in the past calendar year they are not required to collect and remit state sales tax. They must still notify customers of their obligation to remit use tax.
How to Calculate Sales Tax
If a retailer’s retail sales fall below the small retailer threshold described below, the retailer’s sales will not be sourced using the general destination sourcing rules. Instead, the retailer can use origin sourcing to determine the sales tax rate. The retailer should collect and remit sales tax based on the retailer’s business location, regardless of whether the taxable property sold by the retailer is delivered to the purchaser at another location.
However, Colorado sales tax does not apply to any sale delivered to a location outside of Colorado, regardless of whether the retailer qualifies for origin sourcing. For more information, review the Colorado Sales Tax Guide.