Separately Stated Sales Tax / Excess Tax

Separately Stated Sales Tax / Excess Tax

39-26-106

(1) General Rule. A retailer must separately state the sales tax or retailer’s use tax charged to the buyer. If the retailer issues buyer a receipt, invoice, or other document setting forth the purchase price, the retailer must separately state the tax on such document. If the retailer does not issue a document that sets forth the purchase price, then the retailer must disclose the tax of each item on signage clearly visible to the buyer.

(a) Separately Stated. Tax is separately stated if the amount of tax is disclosed on the customer’s invoice, contract, or on signage clearly visible to buyer at the time of purchase. The amount of tax for each item must be separately stated as a dollar amount. It is not sufficient to state the tax rate on such invoice or other document. If more than one state-administered tax is charged to the buyer, retailer may either separately state each tax amount or state the total tax amount.

(b) This rule applies only to state-administered local jurisdictions, and does not apply to home rule cities and counties.

(i) A retailer charges buyer state sales tax (2.9%), state-administered city sales tax (1%), state-administered county sales tax (.5%), and special district sales taxes sales tax (1%). The retailer lists the purchase price of the taxable good as $10. The retailer, as a business practice, does not generally provide an invoice to buyers, and, thus, must separately state on clearly visible signage to the buyer at the point of sale that the total dollar amount of the sale includes sales tax of $.51. The retailer must show the applicable tax for each specific item. Retailer cannot state the tax amount as a percentage. For example, a retailer cannot state on signage or on the invoice that the tax paid is a stated percentage (e.g., 5.4%).

(ii) A retailer that generally provides an invoice to buyers must separately state on the invoice each individual or the total sales tax due.

(2) Exceptions. The general rule does not apply to retailers who sell malt, vinous, or spirituous liquor by the drink and elect to include the tax in the price or retailers selling goods by coin-operated vending machines. Retailers who sell goods by vending machines that are not coin-operated (such as vending machines that exclusively accept credit card payments) are not exempted from the general rule and must provide an invoice separately stating the applicable sales tax. See, §39-26-106(2)(b), C.R.S.

(3) Excess Tax. Tax collected on sales of more than the minimum taxable amount will usually result in the collection of tax in excess of the tax rate. For example, the state sales tax on a purchase of $3.00 is $.087, but the retailer will collect $.09. Any excess tax collected during the month must be included in the total amount of the sales tax for which the retailer is required to account. If a retailer operates more than one store within Colorado, the retailer cannot offset any under collection of sales tax at a store against an over collection of sales tax at another store. In addition, a retailer cannot offset any under collection of sales tax in one month against an over collection of sales tax in another month. However, this excess tax collected as a result of rounding may offset the under collection of tax due to the sale of individual items priced at less than seventeen cents.

Cross Reference(s):

1. A retailer cannot directly or indirectly state that the tax, or part of the tax, will be assumed, absorbed, or refunded or that it will not be added to the purchase price. See, §39-26-108, C.R.S.

2. For additional information on the requirement of the vendor to pay sales tax on purchases of less than seventeen cents see Department Rule 39-26-105.