Figuring out how much sales tax a customer owes is about to get easier for Colorado retailers, thanks to a new electronic system developed by the state Department of Revenue.
The problem for retailers has been that Colorado is home to about 270 cities, counties and special improvement districts, all of which levy sales taxes. Some cities are part of more than one county, and there are often layers of special districts within a city's or county's boundaries that can assess a sales tax to pay for things such as stadiums and shopping malls.
Working out who owes what has been convoluted at best. This month, though, retailers who collect taxes from their customers will have access by telephone or the Internet to a database that can retrieve exact information about how much tax to charge. All retailers need to do is give their location and key in the name of the relevant city or county and the system will supply the correct sales tax. Furniture dealers in Denver, say, will find it easier to figure out what taxes they need to collect for a delivery in Parker.
The system will also be able to pinpoint the application of different taxes, and that should make it less difficult for municipalities to plan changes in tax rates, says DOR tax specialist Neil Tillquist, who helped put the system in place. A city thinking about allowing an exemption for farm equipment, for instance, will be able to figure out how many dollars are currently being collected by supply stores, letting council members plan more accurately for any revenue loss from the tax break.