January 2019: Tips for filing a Colorado Sales Tax Return

Due to the Colorado collection requirements that went into effect on December 1, 2018, you may notice some changes to the filing process for returns due in January 2019.

We've heard varying stories from sellers who are trying to file this month that their current license types that don't match the type of return the state has displayed in their accounts. A few members of our team were able to contact the state directly to get tips for filing during this transition period and here's what we learned:

  • The state has not automatically converted sellers with a Use Tax license over to a Sales Tax license.
  • However, the state did mail potential remote sellers information letting those sellers know they should set up a Sales Tax license if the state thought the sellers met the volume threshold.
  1. If you are a remote seller with a Use Tax license and you are able to submit a Use Tax return, you should:
    • Submit a Use Tax return like normal.
    • If you have a Sales Tax license, you must add at least one non-physical location to your Sales Tax account and file a $0 Sales Tax return, or else you may get a notification about failure to submit your return.
    • The state has strongly advised that sellers who do not have sales in each jurisdiction should NOT add all 683 jurisdictions as non-physical locations as you would then be required to report sales for each of those 683 jurisdictions in each return you file moving forward. (The state says that it is acceptable to back date new physical locations when those new jurisdictions have sales.)
    • Please note that once a non-physical location is added to your account, there is no way to remove a location without contacting Colorado's DOR, which means a return will need to be filed for that location indefinitely moving forward. We'd recommend that you make an informed decision regarding which non-physical location to add using a location from your December 2018 transactions in the state as a guide. (You can find a list of Location Jurisdiction Codes here.)
  2. If you are a remote seller with a Use Tax license but you are unable to submit a Use Tax return, you should:
    • Call the state DOR or send them a "web message" and ask them to fix it, as the DOR is currently having an "unrelated" issue blocking some active Use Tax accounts from having returns filed. 
    • Go to #1 above and file the correct return(s).
  3. If you are a remote seller who previously had a Use Tax license and your account is showing as inactive or "no active locations," you should:
    • Call the state DOR or send them a "web message" and ask them to reactivate it because you haven't started collecting destination based taxes yet. The state is able to reactivate these accounts on their end.
    • Go to #1 above and file the correct return(s).

More detail regarding the license type changes in Colorado:

Remember that as of December 1, 2018, all sellers with nexus in Colorado (physical, economic, or otherwise) are required to have a Sales Tax account and collect sales tax on ALL taxable sales.

  • Retailer's Use Tax accounts will only be applicable to sellers who do not have nexus in Colorado (physical, economic, or otherwise) who wish to collect and remit tax in this state despite having no obligation to do so.

How is my TaxJar Report for Colorado affected by these changes?

We discuss this in full detail here.

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