Internet Sales Tax in Home Rule, Colorado
- Oct 15, 2015 | Gail Cole
Because Colorado is a home rule state, localities that have adopted a home rule charter may impose local taxes as they see fit (provided they are legal under the state constitution). One such home rule municipality, the City of Louisville in Boulder County, has imposed tax on Internet sales when the purchases “are delivered to persons within the jurisdiction of the City of Louisville.”
In explaining the tax on Internet sales and purchases, the city reminds that only retailers that are “engaged in business” in Louisville are required to collect and remit the tax: “Sales and purchases made via the Internet are subject to tax in the same manner as those made by local retailers.” Sellers with nexus in Colorado (a connection that triggers a sales tax obligation) are required to register with the City of Louisville, obtain a sales tax license, and collect and remit tax on sales delivered to Louisville addresses. Businesses uncertain of their tax obligation in Louisville are invited to peruse the City's Tax Guide, specifically the section entitled, Engaged in Business in the City - Nexus.
The City stresses that Internet sales are not exempt from sales tax under the Internet Tax Freedom Act (recently extended through December 11, 2015). In addition, state and local sales taxes do not apply to Internet access service charges.
As a courtesy to customers, retailers not required to collect and remit Louisville sales tax may register with the city and collect use tax on sales transactions. If sales tax is not collected at the point of sale, Louisville residents are required to remit use tax to the City of Louisville on the purchase price paid. Businesses may do that in their stead.
To help taxpayers understand, the City provides several examples:
- Business A has a brick-and-mortar store in Louisville and also sells over the Internet. Customer X purchases an item on the Internet and either picks it up at the store or has it delivered to a Louisville address. Either way, Business A should collect and remit sales tax on the transaction.
- Customer Y lives in Superior (not Louisville) and orders a taxable item from Business A’s (located in Louisville) website. It is delivered to the customer’s address in Superior. Business A should not charge Louisville sales tax on the order, but should charge State, RTD/CD, and Boulder County sales tax.