Amazon Sales Tax Collection in Colorado
According to an article, “Colorado Department of Revenue officials confirmed Amazon’s plan to charge and remit collections from Colorado’s 2.9 percent sales tax.” The amount of tax charged on your order depends on factors such as the identity of the seller, the type of item purchased, the time of fulfillment, and the shipment address of your order. These factors can change, resulting in the tax calculated on your order also changing.
Storing goods in Colorado creates a nexus, including Amazon fulfillment centers. The move to collect sales tax in Colorado was prompted by a law requiring out-of-state retailers to collect and remit sales tax. Known as the “Amazon tax” law, it doesn’t change anything for Amazon since they have been collecting sales tax in the state since February 2016.
Amazon Sales Tax Policies
If you make sales through other outlets besides Amazon and eBay, you may need to continue to collect sales tax in Colorado. Arizona would also begin collecting sales tax on digital products or services. Colorado levies a 2.9% sales tax on goods purchased for resale, excluding services and food items except for soda and candy.
Amazon Tax Collection in Colorado Details
Colorado has a 2.9% state sales tax rate, and Amazon collects Colorado’s state sales tax on items shipped to locations in Colorado. The law was amended following the Supreme Court’s Wayfair decision, establishing economic nexus for collecting sales tax. Amazon began collecting sales tax in Colorado on February 1, 2016, and started charging taxes on shipping, which is legal according to Colorado’s Department of Revenue.
Tax Collection Challenges and Consumer Responsibility
Consumers are required to self-report and remit use tax if an out-of-state retailer does not assess Colorado sales tax on online purchases. The collection of sales tax by online retailers, particularly the so-called “Amazon-tax law,” has been a contentious issue in Colorado, with challenges to its constitutionality.