What You Need to Know About Colorado's 'Amazon Tax'

Coloradans who have unpaid 2017 sales tax on internet purchases may start receiving notices about those taxes this month and some don't even realize they owe them.

What Is the Tax?

Also referred to as a use tax, Coloradans have always been responsible for paying sales tax on items they purchase if the business didn't charge it, but many didn't. The new law provides the state with information to help better track and collect unpaid sales/use tax.

Why is it Referred to as the 'Amazon Tax?'

A Colorado law went into effect in July 2017 requiring out-of-state businesses with stores that allow customers to purchase items via the internet, telephone or catalog to charge their customers the appropriate sales tax. Amazon is the largest retailer in this category, so tax on internet purchases is often referred to as the 'Amazon Tax.'

Who Does This Affect?

If you purchased any tangible item in 2017 from an out-of-state business and didn't pay sales tax, you are affected by this.

Businesses in Colorado are required to charge sales and use tax, but there are exceptions. Just because you weren't charged tax, it's possible you still owe it. Check with the Colorado Department of Revenue to determine your sales tax liability.

What is the Retailer's Responsibility?

Many large online stores have started charging shoppers the sales tax, but smaller businesses, including those who sell through companies like Amazon, may not have charged the tax, making it the shopper's responsibility to pay sales tax directly to the state.

If a business doesn't charge the customer at the time of purchase, the retailer is required to provide a notice that sales tax was not added to the purchase amount. They are also required to report it to the Colorado Department of Revenue.

Previously, it was common to leave the complete responsibility of calculating and paying sales tax to the customer themselves.

What You are Legally Obligated to Do

Coloradans who receive a notice for unpaid sales (use) taxes can pay the state directly, but the easiest way is to simply add them to your Colorado Tax Return.

The law requires a company to provide an annual report of unpaid taxes if a person purchases more than $500 worth of goods without being charged sales tax. Those notices are being mailed to customers to report on their tax return.

If those purchases totaled less than $500, you are responsible for reviewing your online orders from 2017 and report all purchases that weren't taxed on your 2017 Colorado Tax Return.