City of Commerce City, CO
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Sales & Use Tax Frequently Asked Questions
Important Note: The information in the following FAQ’s is provided as a general guide and interpretation of the City of Commerce City’s Sales and Use Tax Code and is not intended to replace or supersede the information contained in the Commerce City Revised Municipal Code.
Click each question below to expand for details and answers.
Use Tax
Use tax and sales tax are synonymous. The only difference is that sales tax is collected by the seller and then paid to the City, whereas use tax is paid directly to the City by the purchaser when the sales tax is not collected by the seller. Use tax is charged on the storage, use, lease or consumption of tangible personal property or taxable services when the corresponding sales tax was not paid at the time of the sale. For example, if your business purchases office supplies or equipment from an online retailer that ships these items to your Commerce City location, and no city sales tax is charged, your business is required to pay the unpaid sales tax as use tax directly to the City.
2- If my company in Commerce City purchases items in another city in Colorado and pays sales tax at the time of purchase and then brings these items into the City for use or storage, do I still owe use tax?
The City Code gives credit for al lawfully imposed sales taxes, so no use tax is owed if the City sales tax paid at the time of purchase was lawfully imposed and is equal to or greater than the Commerce City tax rate of 4.50%. If the tax paid to the other city is less than 4.50%, then the difference between the two tax rates is due as use tax.
Example: Your business purchases a computer to use in your Commerce City location from a store located in Denver. You pick up the computer in Denver and the seller charges Denver sales tax of 4.81% (total tax rate of 8.81%). The sale took place in Denver, so the seller lawfully imposed the Denver sales tax. Because the city tax rate of 4.81% is greater than Commerce City’s rate of 4.50%, no Commerce City use tax is due. However if your business purchases and picks up a computer from a store located in Thornton (for use in Commerce City) and Thornton city sales tax of 3.75% (total tax rate of 8.50%) is paid, Commerce City use tax is due because the tax rate of 3.75% is less than Commerce City’s rate of 4.50%. The use tax owed is only the difference between the two rates which is 0.75%. You do not have to pay the full 4.50% because credit is allowed for the 3.75% city tax already paid.
3- If my company in Commerce City purchases items in another State and pays sales tax at the time of sale and then brings these items into the City for use or storage, do I still owe use tax?
The City Code gives credit for all lawfully imposed sales tax, so no use tax is owed if the total sales tax paid is equal to or greater than the total Commerce City tax rate of 8.50%. If the tax paid to the other State is less than 8.50%, then the difference between the two tax rates is due as use tax.
Specific Items and Services Subject to Sales/Use Tax
- No, food for home consumption, as defined in the City’s tax code, is tax exempt. There are some exceptions to the grocery exemption. The following food purchases ARE TAXABLE: carbonated water marketed in containers, isotonic products, drinks marketed primarily to boost energy, chewing gum, seeds and plants to grow food, prepared salads and salad bars, cold sandwiches, deli trays, snack foods marketed for immediate consumption, hot or warm prepared foods, and food or drink vended by or through machines or non-coin operated coin collecting food and snack devices.
2- Does the City tax food and drinks sold at restaurants, delis, food trucks and concession stands in the City?
Yes, all prepared food and food for immediate consumption is subject to the City’s 4.50% sales tax, including food catered into the City.3- Does the City have a separate additional tax for food sold at restaurants, delis, food trucks and concession stands in the City?
No, only the City’s 4.50% standard sales tax applies.Candy and soft drinks are not taxable if purchased at a grocery store (or other store that is qualified to accept SNAP or WIC vouchers) in a quantity that is designed and marketed for home consumption and not for immediate consumption. However, if sold in single quantity that is designed and marketed for immediate consumption, candy and soft drinks are taxable. Chewing gum is always taxable. Candy, soft drinks and any other food item sold through any type of vending machine are always taxable.
- All prepared meals, food and food products consumed on the premises of a vendor, all snack foods and drinks sold in a single or small volume quantity for immediate consumption and all food products sold from any type of vending device.
- Yes, all types of telecommunications services, including wireless and land based telephone service, and teleconferencing, whether intrastate or interstate, are all taxable.
- Yes, cable and all pay television services are taxable. The one exception is satellite service, which is tax-exempt because of Federal law.
8- Are gas and electrical services used for commercial, industrial and manufacturing purposes taxable?
Yes, all gas and electrical utility services are taxable, including both commercial and residential use.- Yes, all manufacturing equipment is taxable.
10- Is electronically delivered software (by download) taxable? Is cloud based or hosted software taxable?
Yes, all software used in the City is subject to tax regardless of the manner it is provided or delivered to the end user.
Yes, custom software, as specifically delineated in Regulation 20-S.I.17 (Pages 150-151) is tax-exempt.
- Yes, dyed diesel, unlike regular diesel fuel, is strictly for off-road use and is taxable.
- Yes, if these charges are included on an invoice involving the sale of taxable goods or services, they are part of the taxable purchase price, so are taxable.
14- Are freight, shipping, delivery charges taxable if the items being sold are inventory sold at wholesale?
No, since the goods being sold are not sold at retail, they are not taxable, and therefore the related shipping charges are not taxable.- No, generally separately stated labor charges are not taxable. Installation and contractor construction labor, when separately stated are not taxable. However, fabrication and manufacturing labor are taxable regardless if they are called something else and regardless that these charges are separately stated.
Licensing, Tax Returns and Filing
Businesses not located within the City can complete a License Application online. Once the business license application is approved, a letter will be sent via mail or email with a copy of registration instructions as well as instructions for filing future tax returns.
Businesses located within the City can apply using the online licensing portal at c3gov.com/eTRAKiT.
2- How does my business remit sales or use tax if I’ve applied for but not yet received a business license?
Complete and submit the City’s Sales/Use Tax Return (Excel Download) along with the corresponding payment. In the account number space, please write in the words “Applied For” to indicate that the application has been submitted.- Yes, the City does have an online filing option through MuniRevs.
The City’s required filing frequencies are based on the total amount of tax owed. When total taxes owed are $300 or more per month, monthly filing is required. If total taxes owed are less than $15 per month, annual filing is allowed. When monthly total taxes owed are at least $15 but less than $300, you would file quarterly. Your filing frequency can change if the amount of average tax owed increases or decreases over time. All frequency changes must be approved by the City in writing.
5- Does the City allow for occasional filing and/or allow businesses not to file for months in which there is no tax liability?
No – all entities engaged in business in the City must obtain a city tax business license and report on a regular reporting cycle, even for months when no tax is owed.6- We are a service company so don’t collect sales tax. Why do we have to be licensed and file City tax returns?
All businesses located in the City and conducting business are required to have a Sales and Use Tax Business License (Code Section 9-2000). All entities or persons that are engaged in business in the City are required to report use tax on purchases of tangible property and taxable services that are used, stored or consumed within the City.
If an error is discovered on a previously filed return, an amended Tax Return (Excel Download) can be completed and submitted. Please indicate the account number and the filing period for which you are amending. Fill out the return and email it to salestax@c3gov.com. If additional tax is owed, please submit payment along with the amended return. If the amendment results in a credit, please submit an explanation for the amendment along with copies of supporting documentation. If a credit is determined to be due, this will be added to the account. However, if the credit amount is too large to apply to future tax returns your business will need to file a Claim for Refund to obtain a refund payment.
8- Our business received a notice from the City indicating we have a credit and that credit has an expiration date. Does the City issue a refund check if the credit is not used by the expiration date?
Once a company has been given notice with an expiration date attached, the credit will be removed from the account after the expiration date has passed. You must submit a Claim for Refund prior to the expiration date to obtain a refund.
- If your business is located in the city address changes must be made per a Change of Location Application. Businesses located outside of the city can make the change in MuniRevs or by emailing salestax@c3gov.com.
- Report the closure to MUNIRevs (support@munirevs.com) or the City salestax@c3gov.com. Please include the business license number and date the business was either sold or closed.
Tax-Exempt Transactions and Refunds
- Both resellers that are purchasing goods or services at wholesale and tax-exempt entities should use this form for the purposes of purchasing tangible property and services tax-free and documenting the reason for the exemption. The completed Affidavit of Exempt Sale form must be provided to the seller at time of purchase in order to purchase city tax-free. Examples of tax-exempt entities include religious or charitable organizations, federal, state and local governments. Sellers accepting the Affidavit of Exempt Sale must make a reasonable determination whether a purchaser claiming a wholesale exemption is truly a reseller of the products sold before honoring the exemption. Sellers must also maintain copies of signed Affidavits to prove the sale was legitimately tax-exempt.
- Commerce City does not honor State certificates on their own. The City has its own Affidavit of Exempt Sale that buyers are required to complete and submit to their vendor in order to purchase tax free. Resale business licenses are also required to be submitted to vendors along with the Affidavit.
Complete and submit Claim for Refund form to salestax@c3gov.com. Documentation supporting the claim must also be submitted along with the claim.
Collections and Delinquencies
1- I received a Failure to File Notice, but I filed a tax return. How do I get this matter resolved?
Call the Collection Agent at 303-227-8795 or contact her at hhamilton@c3gov.com.- The amount is estimated based either on the average tax filed in the previous 12 months or is a set amount of tax based on either the business industry or filing frequency.
- If you do not respond within the timeframe stated on the Notice, a summons can be issued for tax evasion and a court date will be set. The property owned by the business is also subject to a lien and ultimately the property can be seized by the City
- The options include filing a return and paying the actual amount due or paying the estimated amount due as indicated in the Failure to File Notice.
- Receipt of this letter indicates that there was either a mathematical error on the return, the amount paid was over or under the actual amount due, or the return was filed late, causing penalty and interest to be assessed. To pay this type of Notice, please mail a copy of the Notice along with payment of the amount indicated due to the Commerce City Finance Department, 7887 E. 60th Ave., Commerce City, CO 80022. If the Notice indicates a credit owed to your business, please apply the credit to the next return filed or submit a Claim for Refund.