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1. Is Aspen a home rule city?

Yes, the City of Aspen is a home rule city.  Neither the Colorado Department of Revenue nor any other taxing authority may collect taxes on behalf of the City.  Any person who is engaged in business in the City of Aspen must obtain a City license and collect and remit Aspen taxes on all taxable transactions. Tax returns and remittances must be sent to the City of Aspen and not to the Colorado Department of Revenue.  Payment to the wrong jurisdiction does not relieve a retailer of its liability to the City.  

2. What is the purpose of the vendor’s fee deduction?

The vendor’s fee deduction is a credit to taxpayers who remit their sales tax return by the due date. This deduction is provided since the taxpayer is acting as an agent for the City by collecting and remitting sales tax on taxable sales. The deduction is 3.3% of total tax collected up to a maximum of $50.

3. When preparing my sales tax return, what supporting documents for my deductions should I retain?

While there are a variety of deductions allowed on the sales tax return, common deductions include the following: 

• Non-taxable service sales: Invoice should clearly denote the type of service performed. 
• Sales to other licensed dealers for purposes of taxable resale: Certificate from buyer’s  home state documenting buyer is a wholesaler. 
• Sales shipped out of city: Shipping documents that can be traced to invoice.  Shipping receipts should include individual/company where item was shipped, address and invoice number.  Invoice should include purchaser’s name and shipping address. 
• Sales to governmental, religious and/or charitable organizations: Valid exemption certificate from  buyer’s home state or a letter from IRS indicating exempt status, including name of organization and employer identification number (“EIN”).  Note: In order for purchases to be tax exempt, the organization must be conducting regular religious, charitable, scientific, literary, or educational business.  For example, a church that has tax exempt status would have to pay applicable sales and lodging taxes to a hotel if church members are on a ski vacation, even if the lodging services were paid with a church check.  

4. I over collected sales tax on several transactions. How do I account for this excess tax on my return?

Excess tax is accounted for on line 6 of the sales tax return.  No retailer may retain any tax collected in excess of the tax computed, and should report the excess collections on the return for the period in which it was collected and include it in the calculation of tax due.  

5. Should sales tax be collected on transactions for deliveries to customers in Aspen city limits?

Yes, Aspen sales tax must be collected on all deliveries.

6. I am a subcontractor working on a project within Aspen city limits. Do I need to charge sales (or use) tax on construction materials purchased for the project by the general contractor?

The general contractor is responsible for paying use tax on all construction materials brought into the City unless the subcontractor already paid sales tax on those items. The general contractor should provide each subcontractor with a use tax exemption certificate. If this is provided, the subcontractor does not need to charge Aspen sales tax.

7. What do I do if a purchaser insists they are exempt from tax but cannot produce the appropriate documentation?

If a dispute arises between a retailer and a purchaser who claims a sale is exempt from tax, the retailer must collect and the purchaser should pay the tax. The purchaser can submit a claim for refund to the City within 60 days from the date of purchase. Any refund will be issued directly to the purchaser.  

8. Will I ever get audited?

Possibly. Since 2009, the Finance Department has a sales and use tax audit program. The audit period includes all reporting periods with due dates which fall within the 36 month period preceding the date of the notice of audit.   

9. Are direct sales to charitable organizations exempt from sales and lodging tax?

Yes, all direct sales to charitable organizations in the conduct of their regular religious or charitable organizational functions and activities, when billed to and paid for by the organization, are exempt from sales and lodging tax.

10. Are direct sales to governmental entities exempt from sales and lodging tax?

Yes, all direct sales to the United States Government, the State, its departments or institutions and its political subdivisions (counts and local governments, school districts and special districts), when acting in their governmental capacity only, and when billed to and paid for by the governmental entity are exempt from sales and lodging tax.

11. What do I need to keep on file when I make a sale to one of these entities?

For charitable organizations, the Colorado's Department of Revenue issues a "Certificate of Exemption" that authorizes it to purchase items and services used in the conduct of their regular charitable functions and activities without paying Colorado sales tax. This is sufficient documentation for the City of Aspen. 

For governmental entities, some will have a Colorado issued tax exemption number, although they are not required to have one (tax exemption numbers begin with a "98"). In order for a governmental entity to take advantage of the tax exemption, the purchase must be made with a prescribed government form or purchase order, and paid directly by funds from the governmental entity. A credit card in the name of the exempt entity is acceptable. Some local governments issue credit cards in both the employee's name and agency's name. In many instances the bill is paid directly by the governmental entity and are tax exempt. It is not necessary for governmental entities to present a tax exemption number in order to make a tax exempt purchase. 

A purchase by a governmental agent who is making the purchase out of personal funds, even if the employee presents a tax exemption number and plans to be reimbursed, is not tax exempt. 

In cases where the seller invoices on a delayed basis for a purchase, the billing must be made directly to the governmental entity and not the person making the purchase.

12. How do I obtain a wholesale license for the State of Colorado?

Wholesalers must obtain a standard sales tax license and pay the $16 license fee, but are not required to pay the $50 deposit. More information can be found on the Colorado website.

13. If my business is service oriented, would I ever need to collect sales tax?

Service oriented businesses generally do not need to collect sales tax. Persons engaged in the business of rendering  service  are  consumers,  not  retailers,  of  the  tangible  personal  property  which they use incidentally in rendering the service. If, in addition to rendering service they regularly sell tangible personal property to consumers, they are retailers with respect to such sales and they must obtain a license, file returns, and remit tax on such sales.

14. When would I deduct bad debts or returned goods on my sales tax return?

Bad debts and returned goods previously reported as taxable sales are deductible.

15. I rent out my home but only on a long term basis. Do I need to collect sales tax?

Any rental over 30 days is considered a long term rental and sales and lodging taxes are not due. This  applies  to  all  lodging  establishments,  including  condominiums  and  single  family  homes. If you rent your home less than 30 days, it is considered a short term rental and sales and lodging taxes must be collected and remitted to the City on a quarterly basis. Please contact the Finance Department for more information.