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Colorado Home Rule and Sales Tax

  • Oct 7, 2015 | Gail Cole

 Home rule can make filing sales tax more challenging.

The constitution of Colorado grants registered electors of each county and municipality the power to adopt or repeal home rule. Among other perks, home rule counties and municipalities impose and administer local taxes. Special taxing districts may be created with the approval of the general assembly.

Although it is more work to adopt a home rule charter, many feel it pays off. According to John Clark, mayor of the home rule town Ridgway, local collection of sales tax was a Colorado Department of Revenue). Home rule municipalities can also impose admissions, entertainment, tourism and lodging taxes catered to their communities' needs, in addition to local sales taxes. This could be why they are so popular in Colorado, which has approximately 100 home rule municipalities. Learn more about Colorado home rule.

Special considerations

Charitable exemptions: Charitable organizations are eligible for an exemption from state-collected sales tax “for purchases made in conducting their regular charitable functions and activities.” However, this exemption does not apply to local sales taxes imposed by home rule municipalities and counties. Charitable organizations making purchases in home rule jurisdictions should contact local governments to learn whether or not they are eligible for an exemption from local sales tax in the home rule locality. Additional information.

Sales tax refunds: When in doubt, sellers should collect sales tax. Sales tax can always be refunded or credited if a transaction was eligible for a sales tax exemption. However, bear in mind that the Colorado Department of Revenue does not make refunds for sales taxes paid in home rule cities. Taxpayers must seek the refund from the home rule city or county itself. Additional information.

Contact information for home rule cities is available on Form DR 1002, published twice annually (January and July) by the Department of Revenue.

Filing sales tax: Since the Colorado Department of Revenue does not administer local taxes for home rule municipalities and counties, businesses must file separate sales tax returns in each home rule locality where they do business. When returns need to be amended, each return must be amended.

Automated sales tax software facilities sales tax compliance in all states, especially those, like Colorado, that allow home rule. Learn how it works.

photo credit: 02a.HomeRule.1807.14thStreet.NW.WDC.7February2012 via photopin (license)

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.