Colorado Shipping Sales Tax Policy
Colorado applies sales tax to the sale of all non-exempt, tangible, personal property. Colorado business owners collect the sales tax on behalf of the state, and Colorado consumers pay the tax. Cities and counties in Colorado also levy additional local sales taxes, which vary by county. Certain services are also subject to Colorado sales tax. Shipping, however, is presumed to be exempt from Colorado sales tax.
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Rate
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The Colorado state sales tax is 2.9 percent. Cities and counties in Colorado levy additional local sales taxes, and those rates vary from 0 percent to about 2.5 percent.
Department of Revenue
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The Colorado Department of Revenue collects the state sales tax and also collects many Colorado cities' and counties local sales tax. Cities and counties subject to Department of Revenue jurisdiction are referred to as "state-collected." Denver and Broomfield counties, however, collect their own local sales taxes.
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Home Rule
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Certain cities in Colorado have enacted "home rule" charters, which provide for local administration of sales and use tax. These cities are referred to as "Home Rule Cities." Home Rule Cities are not subject to the Colorado state sales tax and generally have higher local sales tax rates then other Colorado cities. These cities collect their own local sales taxes and establish regulations with regard to taxation on goods and services.
Transactions
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Personal, tangible property is subject to Colorado sales tax. Depending on the location of the transaction, the goods may be subject to the state sales tax, the local sales tax or both. Local businesses collect sales tax on all transactions over 17 cents.
Shipping
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The exchange of money for tangible, personal property is subject to Colorado sales tax. However, while some services are taxable, the shipment cost of the product from a retailer to a buyer is presumed to be exempt from Colorado sales tax. To avoid sales tax, the shipment costs must meet two criteria. First, the charges from the transaction must separate the sales cost from the shipment costs. Second, the invoice must separately state these as different costs, sales and shipment. If the costs are comingled, then the shipping costs incur Colorado sales tax.
Warning
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Consult an attorney or tax professional to be sure of the obligations that you or your business is subject to in regard to Colorado sales taxes. Laws are subject to change.
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References
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