What is the Colorado Retailer Retention of Sales Tax?
Colorado Retailer Retention of Sales Tax, bill HB22-1406, applies to Colorado sales taxes collected in July, August, and September of 2022. This bill allows a temporary deduction from state net taxable sales for restaurants, bars, and other eating places (food trucks), or catering services in the state. The temporary deduction from state taxable sales for qualifying retailers is equal to the lesser of state net taxable sales or $70,000 each month.
What are the Details of the Colorado Retailer Retention of Sales Tax?
- Retailers will be able to keep the state sales tax collected on up to $70,000 of sales.
- If your sales for July, August, or September are $70,000 or less, you will be able to retain 100% of the state sales tax collected for those three months.
- Please do not forget that the business collects state and local sales taxes.
- Colorado state sales tax rate is 2.9%; on $70,000 of restaurant sales each month, the sales tax collected equates to $2,030.
- The restaurant would be able to retain this amount each month, for a grand total of $6,090—if the business had at least $70,000 in sales each month.
Applicable Resource: https://leg.colorado.gov/bills/hb22-1406
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How Does the Colorado Retailer Retention of Sales Tax Work?
- Colorado state and local sales taxes will continue to be debited from your bank account throughout the month according to the existing schedule.
- When the sales tax return is completed the following month, and the amount of sales tax due is calculated, a refund for sales tax you can retain will be credited back to your bank account.
- The amount refunded should be coded to your State COVID Grant GL, this amount is taxable income to the business.
- If you do not have a State COVID Grant GL, let your accountant know, and request the GL.
How Can Restaurant Technology Assist With the Colorado Retailer Retention of Sales Tax?
When you work with a team of restaurant industry experts, like the RASI Compliance Team, we will ensure that the credit will automatically be taken for all restaurants to ensure our clients take advantage of this opportunity!
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Request your free demo today to learn more about gaining the benefits from working with a restaurant technology software and service to help your restaurant gain more profits!