Colorado Sales Tax Nexus

What “Sales Tax Nexus” Means in Colorado

Sales tax nexus is the connection between your business and Colorado that can require you to collect and remit sales tax on taxable sales shipped or delivered into the state.

Colorado’s Department of Revenue administers the state sales tax and also collects sales tax for many cities, counties, and special districts. However, some home-rule cities administer and collect their own sales taxes, separately from the state. (Colorado Department of Revenue)

Economic Nexus in Colorado (Remote Sellers)

If you do not have a physical location in Colorado, Colorado provides a “small retailer” exception.

• If your annual retail sales into Colorado are under $100,000 in both the current and previous calendar year, you are generally not required to hold a Colorado sales tax license and collect Colorado sales tax. (Colorado Department of Revenue)
• Once your retail sales into Colorado exceed $100,000, you must generally get licensed and begin collecting Colorado sales tax. (Colorado Department of Revenue)

Timing note (important): Colorado’s guidance explains that after you exceed $100,000 during the year, you begin collecting by the first day of the first month that starts at least 90 days after you crossed the threshold. (Colorado Department of Revenue)

What counts toward the $100,000 threshold: Colorado’s guidance treats all retail sales as included for the threshold, even if some sales would not be taxable. (Colorado Department of Revenue)

Physical Nexus in Colorado

Even if you do not hit the $100,000 threshold, you can still have Colorado sales tax obligations if you have physical presence, such as:

• An office, store, warehouse, or other place of business in Colorado.
• Employees or representatives working in Colorado.
• Inventory stored in Colorado (including inventory stored at a fulfillment provider).

If you have physical nexus, you generally must obtain and maintain a sales tax license and collect the appropriate taxes on taxable sales delivered into Colorado. (Colorado Department of Revenue)

Marketplace Facilitators and Marketplace Sellers (Amazon, Etsy, Walmart, etc.)

Colorado has specific rules for marketplace sales.

Marketplace facilitators

In general, a marketplace facilitator must collect and remit applicable Colorado state and state-administered local sales taxes for sales made through the marketplace. (Colorado Department of Revenue)

Marketplace sellers

If you only sell through a marketplace facilitator, Colorado explains that marketplace sellers are generally not required to collect and remit state sales tax on those marketplace sales (because the facilitator handles it). (Colorado Department of Revenue)

Multichannel sellers

If you sell through a marketplace and you also sell through your own website, store, or other channels, you may still need to register and collect tax on the sales you make outside the marketplace. (Colorado Department of Revenue)

Home-Rule Cities and Local Colorado Sales Taxes

Colorado is known for having many local jurisdictions.

• The Department of Revenue collects sales tax for many local jurisdictions that are “state collected.” (Colorado Department of Revenue)
• Some home-rule cities administer their own sales tax systems separately from the state. (Colorado Department of Revenue)

This is where businesses often get tripped up. You can be doing the “state side” correctly and still miss a home-rule requirement depending on where your customers are located.

What to Do If You Have Colorado Nexus

If you have nexus in Colorado, the usual compliance steps are:

1. Register for a Colorado sales tax license.
2. Start collecting the correct tax based on the delivery location (state plus any applicable local taxes).
3. File returns and remit the tax on the required schedule.

Need Help Getting Colorado Set Up?

Colorado can be straightforward at the state level, but the local and home-rule layer can make it messy fast. If you want help confirming whether you have nexus and getting registered the right way, call us at 720.878.2280 for a free consultation.