Use Tax

Colorado adopted a Use Tax in 1937, which requires individuals and businesses to pay use tax on 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. Consumer use tax must be paid by Colorado residents and businesses on purchases used for personal or business purposes (not to be resold) when sales tax has not been paid.
 
In 2010, the Colorado General Assembly passed HB 10-1193, which established notice and reporting requirements for retailers that make sales into Colorado but do not collect Colorado state sales tax. For seven years, litigation has prevented the Colorado Department of Revenue (CDOR) from implementing this law. A state court injunction preventing enforcement of this law was dissolved on February 28, 2017. The parties in DMA v. Brohl have entered into a settlement. As a result, the injunction has been dismissed.
 
CDOR will begin enforcement of the reporting and notification requirements on July 1, 2017. The Department has agreed to waive any penalties for failure to follow the law’s notice and reporting requirements for transactions occurring prior to the effective date of July 1, 2017. CDOR promulgated Regulation 39-21-112(3.5)(6)(a) and (b), which was adopted on June 30, 2017, to provide guidance to retailers that do not collect Colorado sales or use tax and are subject to the notice and reporting requirements of this law.
 
Read publication FYI General 10: Consumer Use Tax for more information about this tax type.