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How to prepare for the December 1, 2018 Colorado sales tax changes

Overview

The Colorado Department of Revenue (CO DOR) adopted new sales tax rules December 1, 2018. The new rules state “sales tax must be collected and remitted based on the jurisdiction’s tax rate at the point of delivery for the taxable good when taxable goods are delivered to a Colorado address outside the retailer’s jurisdiction.  This includes any applicable state-administered local and special district taxes” (CO DOR).  

Changes to the tax rules can be found here:
•    In-state or out-of-state retailers
 

If your AvaTax nexus settings reflect that you're calculating tax in Colorado, as of December 1, 2018, Avalara makes an adjustment in AvaTax to include all state-administered local jurisdictions in this nexus setting. 

You may also be subject to location reporting requirements.  We highly recommend you review the CO DOR website to learn more about the requirements.  

Environment

Returns, AvaTax

What to do

Registration and AvaTax location setup is required for state-administered locations. Before filing your December, 2018 return, Avalara will register and set up all non-physical state administered locations on your behalf.

You must register all physical locations with the CO DOR. Physical locations must then be set up as locations within the AvaTax system and location codes must be passed with all applicable transactions.

Existing customers

  • Change your registration with the state.

    • If you're registered for Sales Tax, no change is needed with the state.
    • If you're registered for Retailer’s Use Tax, you may need to change your registration with the state.  Contact your Avalara Account Manager to ask about our professional tax advisory services. Or, contact your tax advisor or the CO DOR to determine if you need to update your registration.
  • Change your filing form within AvaTax Returns.

    • If you're filing the DR100 form for a single location, but you're selling into two or more state-administered locations, you need to update your form in AvaTax to the DR0100 For Outlets.
    • If your registration changed from Retailer’s Use tax to Sales Tax, you need to update the DR0173 form to the DR0100 For Outlets form.  

Note: If you need to change your filing form, you must expire your existing form and create a new filing calendar for the DR100 For Outlets. Start the process on the Returns tab in AvaTax.

  • Confirm or change your Tax Type setting in AvaTax

    • In your AvaTax Setting labeled Where you Collect Tax, confirm the Tax Type setting is correct (sales tax or sales and sellers use tax), based on your registration with Colorado.  If you are expecting to collect Sales Tax only, the setting would be Sales Tax only.  If you are expecting to collect Seller’s or Retailer’s use, then the setting would be Sales and Seller’s use
  • Changing filing forms from the DR 0173 to the DR 0100 and frequency.

    • If you are changing from the quarterly DR 0173 to the monthly DR 0100 (sales tax) or DR 0100 for Outlets (sales tax for two or more locations) - please do the following:
      • Submit online filing calendar request for DR 0100 or DR 0100 for Outlets with effective date of 12/1/2018 and Monthly filing frequency.
      • Submit expiration request for DR 0173 with an expiration date of 12/31/2018.
      • Update Nexus settings to Sales tax only to calculate Sales tax as of 12/1/2018.
    • Compliance will approve the filing calendar request. 
      • The DR 0173 (Retailers Use Tax Form) will be filed in January for the quarterly period  from October 1st to December 31st 2018 with Retailers Use Tax only.
      • Sales tax that is calculated will be filed on the Monthly December 2018 DR 0100 (Sales Tax Form) or the DR 0100 for Outlets (Sales Tax Form for two or more locations). This avoids any duplicate calculation or reporting of the same tax.

Note: If you are unsure as to what your setting should be, please contact your tax advisor. 

Returns Customer adding Colorado after December 1, 2018

If you are adding Colorado to your tax settings, all state administered locations will be included when selecting Colorado.

Please follow these steps to add Colorado to AvaTax:

  1. Register with the Colorado Department of Revenue (DOR).
  2. Register all physical locations with the Colorado Department of Revenue (DOR).
  3. Select Colorado and home-ruled jurisdictions within AvaTax settings.
  4. Confirm tax type in AvaTax.
  5. Create a filing calendar for Colorado based on registration. *
  6. Create all physical locations within the AvaTax system and pass location codes for applicable transactions.
  7. Register for home ruled jurisdiction(s) (non-state administered).
  8. Create filing calendar(s) for home rule jurisdiction(s)
     

We highly recommend you review the CO DOR website to review and understand the requirements.  

* NOTE: As a part of the process of selecting the DR 100 for Outlets filing calendar, Avalara will register all non-physical state administered locations prior to the first filing. All registered locations will be set up in AvaTax for all state administered locations.

Non-Returns Customer adding Colorado after December 1, 2018

If you are adding Colorado to your tax settings, all state administered locations will be included when selecting Colorado. Please follow these steps to add Colorado to AvaTax:
  1. Register with the Colorado Department of Revenue (DOR).
  2. Register for home ruled jurisdiction(s) (non-state administered), if applicable.
  3. Select Colorado and home-ruled jurisdictions within AvaTax settings.
  4. Confirm the tax type in AvaTax.
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