Colorado Sales/Use tax exemptions eliminated/suspended - John R. Dundon II, Enrolled Agent
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Colorado Sales/Use tax exemptions eliminated/suspended

Colorado Sales/Use tax exemptions eliminated/suspended

Recent legislative changes have eliminated the state sales and use tax exemption for certain items. These changes were developed by state lawmakers to help balance Colorado’s budget. The legislation has no effect on items that are either currently taxable or exempt from sales/use tax by local governments and local districts. All businesses that have Colorado sales/use tax accounts with the Colorado Department of Revenue will receive a letter in the mail advising them of the state tax changes.

Effective on the dates shown below, sales or purchases of any of the items listed will be subject to the 2.9% Colorado state sales tax. Retailers will be required to collect and remit the state sales tax, in addition to any local sales taxes already in effect on the items. See the publication Colorado Sales and Use Tax Rates (DR 1002) at c=Document_C&cid=1185353127906&pagename=Revenue%2FDocument_C%2FREVXAddLink to determine if these items are subject to or exempt from state-collected city, county and special district taxes. Retailers will use the “Colorado Sales Tax Return” (form DR 0100) or Online Sales Tax Filing (if the business has only one location) to report the state tax collected or remitted.

Effective May 1, 2010, candy and soft drinks, including candy and soft drinks sold in vending machines, are no longer exempt from Colorado sales tax.

Effective March 1, 2010, the following items are no longer exempt from Colorado sales tax.
· Nonessential items related to sales of food and beverages
· Energy used for industrial and other related purposes
· Standardized computer software
· Agricultural compounds and pesticides
· Materials used in direct mail advertising

Refer to the Colorado Taxation Web site, under “News and Announcements” or see the “Sales Tax” page for more details.