City and County of Denver
2012 Business Tax Symposium
Douglas W. Schellinger, CPA
Tax Audit Supervisor
201 W. Colfax Avenue, MC 1001
Dept. 1009
Denver, CO 80202
Phone:
720-913-9393
Fax:
720-913-9460
Email:
[email protected]
www.denvergov.org
Goals
 Increase Compliance With Denver’s Tax Laws And
Procedures.
 Provide Sources Of Information & Guidance.
 Ensure Taxes Are Filed Correctly The First Time.
 Allow Taxpayers To Spend Less Time And Effort
On Tax Issues, More Time Managing
Their Business.
www.denvergov.org
Home Rule City
Denver has its own laws, rules and regulations.
Denver is its own county.
Any taxes owed to Denver must be paid to
Denver.
This presentation addresses only Denver’s
Laws and Rules.
www.denvergov.org
www.denvergov.org
Overview of Taxes Collected by the
City and County of Denver
Sales Tax
Retailer’s Use Tax
Consumer Use Tax
Occupational Privilege Tax (OPT)
Lodger’s Tax
Business Personal Property Tax
Facilities Development Admission Tax (FDA)
Telecommunications Business Tax (TBT)
www.denvergov.org
www.denvergov.org
Resources
www.denvergov.org/treasury
Colorado Dept of Revenue – Current Tax Rates,
by Jurisdiction. Website address:
www.colorado.gov/revenue/tax
www.denvergov.org
CITY WEBSITE
www.denvergov.org
Sales Tax
Overview
 The Denver Revised Municipal Code (DRMC)
Chapter 53, Article II imposes tax on the
purchase price paid on retail sales, leases and
rentals of tangible personal property and certain
services.
 The sales tax collected by retailers for the City
and County of Denver is public money. The
retailer must hold and pay the tax to Denver on
the sales tax returns when due. Sales tax is also
known as a “trust” tax.
Section 53-76 & 53-98
www.denvergov.org
8
Sales Tax
Am I required to collect sales tax?
Yes, if you are engaged in business in Denver
(performing any activity in connection with
selling, leasing or delivering).
o Sales Tax License – for businesses located
inside Denver making taxable retail sales in
Denver.
o Retailers Use Tax License – for businesses
located outside of Denver but engaged in
business in Denver.
Tax Guide # 22
Section 53-76 & 53-98
www.denvergov.org
9
Tax Rates
General Rate
3.62%
4.00%
7.62%
Special Rates
Food & Beverage
Rate
4.00%
4.00%
8.00%
Lodger’s Rate
10.75%
4.00%
14.75%
Short-Term Vehicle
Rental Rate
7.25%
4.00%
11.25%
Aviation and Rail
Fuel Rate
$.04/gallon
Section 53-27
www.denvergov.org
10
Sales Tax
Imposition of Tax
1. Tangible Personal Property (TPP)
2. Telephone & Telecommunications Services
3. Coal, Petroleum, Electricity, Gas, etc.
4. Food & Drink
5. Information and Entertainment
6. Data Processing Equipment and Programs
Section 53-25
www.denvergov.org
11
Sales Tax
Tangible personal property
corporeal personal property
Section 53-24(23)
www.denvergov.org
12
Tangible Personal Property
Correctly
taxed at
7.62%
combined
rate
Non-taxable
service
www.denvergov.org
Sales Tax
Imposition of Tax
1. Tangible Personal Property (TPP)
2. Telephone & Telecommunications Services
3. Coal, Petroleum, Electricity, Gas, etc.
4. Food & Drink
5. Information and Entertainment Services
6. Data Processing Equipment and Programs
Section 53-25
www.denvergov.org
14
Sales Tax
Telecommunications service
any two-way interactive electromagnetic communications
including, but not limited to, voice, image, data and any
other information, by the use of any means but not limited to
wire, cable, fiber optical cable, microwave, radio wave or
any combinations of such media. ..
Section 53-24(28)
www.denvergov.org
15
Sales Tax
Imposition of Tax
1. Tangible Personal Property (TPP)
2. Telephone & Telecommunications Services
3. Coal, Petroleum, Electricity, Gas, etc.
4. Food & Drink
5. Information and Entertainment
6. Data Processing Equipment and Programs
Section 53-25
www.denvergov.org
16
Sales Tax
Coal, Petroleum, Electricity, Gas etc.
Upon the purchase price or charge for coal, petroleum, liquid
petroleum, electric, steam and natural gas services, and any
other products used for energy-producing purposes, whether
furnished by municipal, public or private corporations or associations,
furnished and sold for domestic, commercial or industrial
consumption and not for resale.
Section 53-25(4)
www.denvergov.org
17
Sales Tax
Imposition of Tax
1. Tangible Personal Property (TPP)
2. Telephone & Telecommunications Services
3. Coal, Petroleum, Electricity, Gas, etc.
4. Food & Drink
5. Information and Entertainment
6. Data Processing Equipment and Programs
Section 53-25
www.denvergov.org
18
Sales Tax
Food & Drink
• Prepared Food &
Beverage is Taxable
Food & Beverage Rate
• Restaurants,
4.00%
Cafes, Lunch
4.00%
Counters, etc.
8.00%
• Prepared food
purchased at a
grocery store
• Food purchased
for domestic home
consumption is
Non-Taxable
• Grocery Store
Section 53-25(5)
www.denvergov.org
19
Sales Tax
Miscellaneous items subject to F&B tax
Employee Meals
Mandatory Gratuity
Cover Charge
Section 53-25(5)
www.denvergov.org
20
Sales Tax
Imposition of Tax
1. Tangible Personal Property (TPP)
2. Telephone & Telecommunications Services
3. Coal, Petroleum, Electricity, Gas, etc.
4. Food & Drink
5. Information and Entertainment
6. Data Processing Equipment and Programs
Section 53-25
www.denvergov.org
21
Sales Tax
Information & Entertainment Services
• tangible or intangible
• through any medium
Online Information subscription
Section 53-25(6)
www.denvergov.org
22
Information
Delivered
online and
still
taxable.
www.denvergov.org
Sales Tax
Imposition of Tax
1. Tangible Personal Property (TPP)
2. Telephone & Telecommunications Services
3. Coal, Petroleum, Electricity, Gas, etc.
4. Food & Drink
5. Information and Entertainment
6. Data Processing Equipment and Programs
Section 53-25
www.denvergov.org
24
Sales Tax
Data processing equipment and
data processing programs
Section 53-25(7)
www.denvergov.org
25
Sales Tax
Data Processing Programs (Software)
• Custom Programming
• Canned Software
• Hire a company to write or
modify custom software
• Typically can’t be purchased
at a store or online.
• Implementation charges are
taxable
• “Off-the-shelf” or “ShrinkWrapped”
• Typically purchased at a
store or downloaded online
• Annual License Renewal
•
Maintenance Agreement
• Periodic Fee after initial purchase.
• Taxable if it includes upgrades
• Taxable if it is optional or
mandatory
• Non-Taxable tech support must be
separately stated
Section 53-25(7)
www.denvergov.org
26
Data Processing
Separately
stated tech
support is a
service and is
non-taxable
Initial Software
Purchase
Annual
maintenance
agreement is
taxable.
www.denvergov.org
Sales Tax
Purchase Price
 The gross value of all materials, labor and
services, inclusive of profit
o Manufacturing labor
 Transportation and delivery charges
o Freight
o Fuel surcharge
o Shipping and handling
 Without any discount from the price
 Any other expense whatsoever
Section 53-24(18)
www.denvergov.org
28
Sales Tax
Manufacturing is the performance as a business, of an
integrated series of operations which places personal
property in a form, composition or character different
from that in which it was acquired whether for sale or
for use by the manufacturer. The change in form,
composition or character must result in a different
product having a distinctive name, character and use.
Section 53-24(12)
www.denvergov.org
29
Manufacturing Labor
Purchase Price
includes
fabrication labor.
Even if the
fabrication labor is
separately stated,
it is still taxable.
www.denvergov.org
Sales Tax
Purchase Price
 The gross value of all materials, labor and
services, inclusive of profit
o Manufacturing labor
 Transportation and delivery charges
o Freight
o Fuel surcharge
o Shipping and handling
 Without any discount from the price
 Any other expense whatsoever
Section 53-24(18)
www.denvergov.org
31
Freight
Freight & fuel charges are
taxable by Denver
www.denvergov.org
Sales Tax
Purchase Price
 The gross value of all materials, labor and
services, inclusive of profit
o Manufacturing labor
 Transportation and delivery charges
o Freight
o Fuel surcharge
o Shipping and handling
 Without any discount from the price
 Any other expense whatsoever
Section 53-24(18)
www.denvergov.org
33
Cash Discount
Cash Discounts
don’t reduce the
taxable purchase
price.
www.denvergov.org
Trade Discount
Trade or
Quantity
Discounts do
reduce the
taxable purchase
price.
www.denvergov.org
Sales Tax
Purchase Price
 The gross value of all materials, labor and
services, inclusive of profit
o Manufacturing labor
 Transportation and delivery charges
o Freight
o Fuel surcharge
o Shipping and handling
 Without any discount from the price
 Any other expense whatsoever
Section 53-24(18)
www.denvergov.org
36
Sales Tax
Not included in the Purchase Price
Exempt Labor
The consideration received for labor or services
used in installing, applying, remodeling or
repairing the property sold if the consideration for
such services is separately stated from the
consideration received for the tangible personal
property in the retail sale.
Section 53-24(18)
www.denvergov.org
37
Exempt Labor
The separately
stated
installation
labor is nontaxable
www.denvergov.org
Sales Tax
Not included in the Purchase Price
 Interest
 Finance charges
 Must be separately stated on the invoice
Section 53-24(18)
www.denvergov.org
39
Finance Charges
The separately
stated finance
charge is nontaxable
www.denvergov.org
Sales Tax
Not included in the Purchase Price
 Applies to sales to contractors and public utilities.
 Materials delivered into Denver for storage that are
intended for use outside Denver.
 Contractors
• Only if you are provided a copy of a permit
showing use tax paid to another jurisdiction.
 Public Utilities
• Check with Denver or PUC.
Section 53-26 (13) - (14)
www.denvergov.org
41
Sales Tax
Which jurisdiction’s sales tax should I charge?
Delivery
If the item was
delivered to the
customer, the tax is
due where the
delivery took place.
Pick-Up
If the item was picked-up
at the vendors
location, the tax is
due where the item
was picked-up.
www.denvergov.org
42
Customer Pick Up
These items
were pickedup by the
customer. Tax
is due in the
jurisdiction
where the
items were
picked-up.
www.denvergov.org
Delivered to purchaser’s location
These items
were
delivered to
the customer.
Tax is due in
the
jurisdiction
where
delivery will
take place.
www.denvergov.org
Sales Tax
If the item is delivered, it is extremely important to
verify the correct jurisdiction in which the delivery
will take place.
Sheridan Blvd and 26th Ave.
City of Wheat
Ridge
Jefferson
County
City and
County of
Denver
City of
Edgewater
Jefferson
County
www.denvergov.org
45
Sales Tax
Hold Harmless Address Database
(Tax Guide #94)
 The Proxix Solutions, Inc. website can be accessed at
• http://www.proxixnetwork.com
(Limited use acct - 25 lookups per day at no cost)
 The Pitney Bowes Group 1 Software website can be
accessed at
• http://taxco.g1.com/CentrusRegistration/RegPanels.a
spx?Redirect=CentrusDemo
(No charge to CO businesses, but registration required)
Tax Guide 94
www.denvergov.org
46
Sales Tax
EXCEPTION!
Sales Tax on Business Vehicles
Sales tax should be assessed based upon
where the vehicle is principally operated and maintained.
CRS 42-6-139
www.denvergov.org
47
Sales Tax
Exempt
Exemptions
Sale
Taxable
Non-Taxable
Government/Religious
• Proof of Direct
Payment
Resale
• Sales Tax Certificate
• Verify Line of Business
www.denvergov.org
Section 53-26
48
Sales Tax
Proof of Direct Payment
Check
Cash
•
•
Copy of Check
Copy of
Purchase
Order
Credit Card
•
Gov. Affidavit
OR
•
Charitable/Religious
Affidavit
Section 53-26
www.denvergov.org
49
www.denvergov.org
Sales Tax
Exempt
Exemptions
Sale
Taxable
Non-Taxable
Government/Religious
• Proof of Direct
Payment
Resale
• Sales Tax Certificate
• Verify Line of Business
Charitable Organizations
• Proof of Direct Payment
• Exemption Letter on City
and County of Denver
letterhead.
www.denvergov.org
Section 53-26
51
CITY AND COUNTY OF DENVER
DEPARTMENT OF FINANCE
JOHN W. HICKENLOOPER
Mayor
TREASURY DIVISION
WELLINGTON WEBB MUNICIPAL OFFICE
BUILDING
201 WEST COLFAX AVENUE
DENVER, COLORADO 80202
FAX: (720) 913-9455
September 4, 2010
Sample Charity, Inc.
500 Name St.
Denver, CO 80299
Exemption Expiration Date: September 4, 2015
Ladies /Gentlemen:
Based upon the information submitted, we are granting you an exemption from payment of the Denver
sales, use, and lodger’s tax upon purchases made in the conduct of your regular charitable or religious
functions and activities.
The exemption does not apply to: the collection and remittance of sales tax on retail sales that the
organization may make; purchases by employees or members of the organization for their own personal
use; or food, beverage or lodging purchased in connection with any event where the recipient reimburses
the organization in any way, such as by purchase of a ticket, payment of a registration fee, membership fee,
or making an involuntary contribution to attend such event.
The exemption does not extend to materials used by construction contractors who may perform contracts
for you; they are a taxable consumer of all personal property purchased and used in the performance of
contracts for others.
To qualify for the exemption, purchases must be billed directly to the organization, and payment made
from organization funds. In the absence of purchase orders, you are required to furnish the vendor with an
“authorization to purchase” on your letterhead. The vendor must retain same in his file to support the
exempt sale.
This exemption is based upon the assumption that your operations will continue as stated in the information
submitted. Any change in your purpose, character, or method of operation, must be reported to this
Department for consideration of its effect on your status. This exemption will expire on the expiration
date listed above unless a new application is made to the City and County of Denver.
You may reproduce this letter to furnish to suppliers as needed.
Sincerely,
Scott Sprague, Audit Manager
Tax Compliance/Audit Section
720-913-9334
www.denvergov.org
Sales Tax
Exempt
Exemptions
Sale
Taxable
Hospitals
• Non-Profit Only
• Proof of Direct
Payment
Non-Taxable
Government/Religious
• Proof of Direct
Payment
Resale
• Sales Tax Certificate
• Verify Line of Business
Charitable Organizations
• Proof of Direct Payment
• Exemption Letter on City
and County of Denver
letterhead.
www.denvergov.org
Section 53-26
53
USE TAX
USE TAX
www.denvergov.org
Consumer Use Tax
Overview
 Use tax is due on all taxable purchases (including
purchases made over the Internet) on which
sufficient sales or use tax has not been paid.
 Accrue and remit use tax directly to Denver.
 Use tax rate = sales tax rate that a licensed vendor
would have charged on the invoice.
 If you have a sales tax license, remit use tax on line
8 of your sales tax return.
 If no sales tax license, apply for a Use Tax account.
www.denvergov.org
Section 53-96
55
Consumer Use Tax
Purpose
 To protect their local vendors, Denver, like most
cities in the metro area, has a sales tax and a
complementary use tax.
 This prevents purchasers from benefiting from
making purchases in a jurisdiction with a lower
tax rate.
 It also removes the incentive to buy from
vendors that deliver into Denver but do not have
Denver resale licenses.
www.denvergov.org
Section 53-96
56
Consumer Use Tax
When am I required to remit use tax?
 If the tax liability has not been previously
satisfied use tax is due on
 All taxable purchases used, consumed,
stored or distributed in Denver.
 Items originally shipped into Denver, then redistributed to locations out of Denver.
 Items delivered out of Denver and then
transferred into Denver.
www.denvergov.org
Section 53-96
57
Consumer Use Tax
Calculation of Use Tax
 Invoice has no municipal sales tax – accrue at the
Denver rate.
 Invoice has municipal sales tax but at a lower rate
than Denver’s rate – accrue the difference.
 Invoice has municipal sales tax at a higher rate than
Denver’s rate – no use tax or credit due.
 Valid use tax paid to another jurisdiction – treat the
use tax as if it were sales tax.
www.denvergov.org
Section 53-24(18)
58
No municipal Sales Tax
INVOICE
Dogtags, Inc.
We get them back to you
Denver use
tax due
3.62%
$640.00
$23.17
5320 Broadway
Denver, CO 80216
Phone (303) 555-0190 Fax (303) 555-0191
DATE:
INVOICE #
Bill To: TAxCO
1438 Bob St.
Denver, CO 80842
Ship To:
SALESPERSON
P.O. NUMBER
SHIP DATE
SHIP VIA
Arthur
7558
04/07/2009
Yellow
QUANTITY
March 6, 2012
100
F.O.B. POINT
Gold bone-shaped tags (Box of 100)
5
TERMS
Due on receipt
DESCRIPTION
5
Same
UNIT PRICE
$
AMOUNT
60.00
T
Red heart shaped tags (Box of 100)
60.00
T
300.00
1
1/4 inch tag rings (Box of 1,000)
20.00
T
20.00
1
Delivery
20.00
T
20.00
SUBTOTAL
State, RTD, CD tax.
No municipal tax
$
300.00
640.00
TAX RATE
4.00%
4.00%
SALES TAX
25.60
TOTAL
Make all checks payable to Dogtags, Inc.
$
$
665.60
Consumer Use Tax
Calculation of Use Tax
 Invoice has no municipal sales tax – accrue at the
Denver rate.
 Invoice has municipal sales tax but at a lower rate
than Denver’s rate – accrue the difference.
 Invoice has municipal sales tax at a higher rate than
Denver’s rate – no use tax or credit due.
 Valid use tax paid to another jurisdiction – treat the
use tax as if it were sales tax.
www.denvergov.org
Section 53-24(18)
60
Sales tax at a lower rate
INVOICE
Dogtags, Inc.
We get them back to you
Denver use
tax due
3.62%
0.75%
2.87%
$120.00
Physically located in
Adams County
5320 Broadway
Denver, CO 80216
Phone (303) 555-0190 Fax (303) 555-0191
DATE:
INVOICE #
Bill To: TAxCO
1438 Bob St.
Denver, CO 80842
Ship To:
SALESPERSON
P.O. NUMBER
SHIP DATE
SHIP VIA
Arthur
7558
02/07/2012
WC
QUANTITY
March 6, 2012
100
F.O.B. POINT
Gold bone-shaped tags (Box of 100)
1
Blue rectangular tags (Box of 100)
TERMS
Due on receipt
DESCRIPTION
1
Will Call
UNIT PRICE
$
AMOUNT
60.00
T
60.00
T
$
60.00
60.00
$3.44
SUBTOTAL
Properly imposed
Municipal Tax at 0.75%
120.00
TAX RATE (CO 4.0%, Adams Co 0.75%)
4.75%
4.75%
SALES TAX
5.70
TOTAL
Make all checks payable to Dogtags, Inc.
$
$
125.70
Consumer Use Tax
Calculation of Use Tax
 Invoice has no municipal sales tax – accrue at the
Denver rate.
 Invoice has municipal sales tax but at a lower rate
than Denver’s rate – accrue the difference.
 Invoice has municipal sales tax at a higher rate than
Denver’s rate – no use tax or credit due.
 Valid use tax paid to another jurisdiction – treat the
use tax as if it were sales tax.
www.denvergov.org
Section 53-24(18)
62
Sales tax at a higher rate
INVOICE
Dogtags, Inc.
We get them back to you
5320 Broadway
Denver, CO 80216
Phone (303) 555-0190 Fax (303) 555-0191
No use tax due.
No deduction
allowed for tax
paid in excess
of Denver’s rate.
Bill To: TAxCO, Inc.
1438 Bob St.
Denver, CO 80842
DATE:
INVOICE #
Ship To: Gillian Wood
92 Lima St.
Aurora, CO 80010
SALESPERSON
P.O. NUMBER
SHIP DATE
SHIP VIA
Arthur
7680
03/06/2012
Yellow
QUANTITY
March 6, 2012
300
F.O.B. POINT
Due on receipt
DESCRIPTION
2
Blue rectangular tags (Box of 100)
1
1/4 inch tag rings (Box of 1,000)
TERMS
UNIT PRICE
$
AMOUNT
60.00
T
20.00
T
SUBTOTAL
$
20.00
$
SALES TAX
TOTAL
Make all checks payable to Dogtags, Inc.
140.00
8.00%
8.00%
TAX RATE
Valid Aurora tax rate
120.00
11.20
$
151.20
Consumer Use Tax
Calculation of Use Tax
 Invoice has no municipal sales tax – accrue at the
Denver rate.
 Invoice has municipal sales tax but at a lower rate
than Denver’s rate – accrue the difference.
 Invoice has municipal sales tax at a higher rate than
Denver’s rate – no use tax or credit due.
 Valid use tax paid to another jurisdiction – treat the
use tax as if it were sales tax paid on the invoice.
www.denvergov.org
Section 53-24(18)
64
Use Tax Paid to Another Jurisdiction
INVOICE
Dallas Computer Hardware, Inc.
Denver use
tax due
3.62%
3.00%
0.62%
$2,250.00
24775 Texas Blvd.
Dallas, TX 75211
Phone (832) 555-0190 Fax (832) 555-0191
Bill To: Taxco, IT Division
546 Hot Alley St.
Greenwood Village, CO 80657
SALESPERSON P.O. NUMBER
David
IT-53
QUANTITY
3
DATE:
INVOICE #
January 11, 2012
544869
Ship To: Taxco, IT Division
546 Hot Alley St.
Greenwood Village, Co 80657
SHIP DATE
SHIP VIA
01/08/2012
Yellow
DESCRIPTION
Laptops
F.O.B. POINT
TERMS
Due on receipt
UNIT PRICE
$
750.00
AMOUNT
T
$
2,250.00
$
2,250.00
$13.95
SUBTOTAL
TAX RATE
4.00%
SALES TAX
90.00
TOTAL
Make all checks payable to Dallas Computer Hardware, Inc.
$
2,340.00
Consumer Use Tax
Credit CANNOT be taken for
IMPROPERLY
imposed tax
www.denvergov.org
66
Consumer Use Tax
Improperly Imposed Tax
 Denver sales tax collected by a vendor which is
not licensed to collect Denver tax.
 Sales tax collected for another jurisdiction on
goods and services delivered into Denver.
Never change the tax on an invoice. Instead
 obtain a corrected invoice from the vendor
or
 pay the incorrect tax, claim a refund &
accrue the correct use tax.
www.denvergov.org
Section 53-92
67
Improperly imposed Sales Tax
INVOICE
Dogtags, Inc.
We get them back to you
5320 Broadway
Denver, CO 80216
Phone (303) 555-0190 Fax (303) 555-0191
Improperly
imposed Adams
County tax on
Denver delivery.
Bill To: TAxCO, Inc.
1438 Bob St.
Denver, CO 80842
February 15, 2012
300
Ship To: TAxCO, Inc.
1438 Bob St.
Denver, CO 80842
SALESPERSON
P.O. NUMBER
SHIP DATE
SHIP VIA
Arthur
7654
02/15/2012
Yellow
QUANTITY
3.62% Denver
use tax due
DATE:
INVOICE #
F.O.B. POINT
Due on receipt
DESCRIPTION
1
Gold bone-shaped tags (Box of 100)
1
Blue rectangular tags (Box of 100)
UNIT PRICE
$
AMOUNT
60.00
T
60.00
T
SUBTOTAL
$
60.00
60.00
$
120.00
TAX RATE (CO 4.0%, Adams Co 0.75%)
4.75%
4.75%
SALES TAX
5.70
TOTAL
Make all checks payable to Dogtags, Inc.
TERMS
$
125.70
Consumer Use Tax
Prior Use of Property
 Property may be transferred into Denver tax free if
 It has been owned by the same business
and
 used for its intended business purpose
at a location out of Denver for more than a year.
 Special (different) rules apply to construction
equipment, tools, machinery, construction and
building materials, and automotive vehicles.
www.denvergov.org
Section 53-97
69
Consumer Use Tax
Other Items Subject to Use Tax
Use tax is due on the cost of
 Items initially purchased tax free for resale and
then pulled out of inventory for your own use
 Samples and promotional give-aways,
 Complimentary meals to customers,
employees etc. – use the 4% F&B rate
 Donations to the government or 501(c)(3)
organizations are no longer subject to use tax
www.denvergov.org
Section 53-96
70
Own use of inventory
Denver use
tax due
Invoice
Primary Dog Food, Inc.
Date:
01/14/2012
Invoic e #:
500
Customer ID:
EFD5000
PO Box 1684, S outh Fork, IL 60065
$30.00
Bill to:
3.62%
$1.09
Ship to:
Gillian Wood
TAxCO
1436 Bob St.
Denver, CO 80842
SalespersonPO#
Shipping Method
Ship date
Terms
Due Date
John
01/14/2012
30 days
2/14/12
54478
Item #
UPS
Description
20
PD006
20lb primary beef kibble
20
PD002
30
Qty
Removed 2 bags
from inventory for
use in promotional
event
Gillian Wood
TAxCO
1436 Bob St.
Denver, CO 80842
Unit Price
Line Total
23.00 $
460.00
20 lb primary lamb kibble
23.00 $
460.00
PD009
10 lb primary salmon kibble
15.00 $
450.00
5
PD015
40lb primary beef kibble - large breeds
31.00 $
155.00
10
PD103
2lb bags regular biscuits
6.99 $
69.90
10
PD101
2lb bags beef flavor biscuits
10
PD107
1lb savory treats
10
PD728
1lb rawhide - regular
Originally purchased as
inventory for resale
$
6.99 $
69.90
11.59 $
115.90
6.00 $
60.00
Subtotal $
1,840.70
Sales Tax
Resale
Total $ 1,840.70
OCCUPATIONAL PRIVILEGE TAX
www.denvergov.org
Occupational Privilege Tax (OPT)
Overview
 OPT was enacted in 1969 and provides funds for
the maintenance of City facilities and the provision
of municipal services to Denver residents and
businesses.
 OPT is imposed each calendar month on taxable
employees and on businesses that operate (or
have a physical or transitory presence) in the City.
Section 53-237 & 292
www.denvergov.org
73
Occupational Privilege Tax (OPT)
Imposition of Tax
OPT has 2 parts:
 EOPT – Employee OPT imposed on taxable
employees
 $5.75 per taxable employee, withheld from
employees’ paychecks.
 BOPT – Business OPT imposed on the
business/employer.
 $4.00 per taxable employee, owner, partner
and/or business with no employees.
Section 53-241 & 296
www.denvergov.org
74
Occupational Privilege Tax (OPT)
Who is an Employee?
Not all workers are considered employees.
 Corporations & LLCs: everybody is considered an
employee.
 Other business entities (sole proprietors, partnerships
etc.): owners, partners, sole proprietors are not
employees.
www.denvergov.org
75
Occupational Privilege Tax (OPT)
Who is a Taxable Employee?
To be considered taxable, an employee:
 Must perform services in Denver sufficient to earn at
least $500 in a calendar month.
 If an employee works exclusively in Denver, look at
gross pay (include bonuses/other compensation).
 If an employee works at locations in Denver and
out of Denver, use an acceptable method to
allocate earnings between jurisdictions.
• Multiply hours worked in Denver by hourly rate.
• Allocate hours by revenues generated.
• Other supportable method.
www.denvergov.org
76
OPT for Partnerships
Colorado Groomers, LP
Employees earning at least
$500/month
Partners
$4.00 BOPT each
$5.75 EOPT + $4.00 BOPT each
www.denvergov.org
Occupational Privilege Tax (OPT)
Taxable Employees
 May live in or out of Denver.
 May work for an employer located in or out of Denver.
 Employees who telecommute work where they live
 Review payroll each month to determine the number of
taxable employees. Remit a total of $9.75 per taxable
employee.
www.denvergov.org
78
Occupational Privilege Tax (OPT)
No Taxable Employees
You must still obtain an OPT license and remit the
minimum monthly payment of $4.00 if:
 You are engaged in business in Denver and only
have leased employees
OR
 You are located out of Denver but have a physical
or transitory presence in Denver.
Section 53-295 (1)
www.denvergov.org
79
No Denver Employees
Arvada
Denver
Forklifts, Inc
Leased equipment, no
employees come into Denver.
$4.00 minimum BOPT due
each month.
www.denvergov.org
MISCELLANEOUS TOPICS
www.denvergov.org
Sale/Purchase of a Business
Stock Sale/Purchase
(Non-Taxable)
Bulk Asset Sale/Purchase
(Taxable)
Section 53-38
www.denvergov.org
82
Sale/Purchase of a Business
Taxable as
Tangible Personal
Property
Taxable as a Data
Processing
Program
www.denvergov.org
Sale/Purchase of a Business
 When a Denver business is sold, all outstanding
sales/use taxes, including those collected on
the purchase price of the assets, are due within
10 days of sale.
 The liability attaches to the assets.
 Seller may request a Certificate of Taxes Due.
 Purchaser may withhold payment of taxes to
seller until seller provides proof that taxes
have been remitted to Denver.
Section 53-38
www.denvergov.org
84
Sales to Construction Contractors
 Contractors are considered to be the end user
of all construction materials and should be
charged sales tax (unless use tax has been
paid to another jurisdiction on a building
permit) .
 Contractors could also make retail sales but
must have a valid resale license to do so.
Section 53-24 (7)
Denver Treasury Tax Rule 005
www.denvergov.org
85
Sales to Construction Contractors
Denver contractors should always be charged sales
tax on purchases of:
 all office supplies,
 tools,
 equipment.
Section 53-25 (1)
Denver Treasury Tax Rule 005
www.denvergov.org
86
Statute of Limitations
• Denver’s Statute of Limitations is 36 months.
• If a business is not licensed as required, the
statute of limitations does not apply to sales or
use taxes.
• The DRMC requires that all properly licensed
taxpayers retain records for a minimum of 4
years.
Section 53-30 and 175
www.denvergov.org
87
Duty to Keep Records









DETAILED GENERAL LEDGER
DEPRECIATION SCHEDULE
PURCHASE INVOICES AND RECEIPTS
SALES INVOICES AND RECEIPTS
BANK STATEMENTS AND CANCELLED CHECKS
BUSINESS CREDIT CARD STATEMENT DETAIL
DELIVERY DOCUMENTS
PAYROLL RECORDS
DENVER TAX RETURNS
Section 53-30
www.denvergov.org
88
Duty to Keep Records








MAINTENANCE CONTRACTS
LEASE DOCUMENTS
SCHEDULES FOR USE TAX REMITTANCES
TAX INVOICE COPIES FOR EXPENSE REPORTS
• Credit card receipts are not sufficient
RESALE LICENSES
EXEMPTION LETTERS
WIRE TRANSFERS AND ACH PAYMENT
DOCUMENTATION
ALL OTHER BUSINESS ACTIVITY DOCUMENTS
Section 53-30
www.denvergov.org
89
Lodger’s Tax
The cost of overnight lodging is taxable at the
rate of 10.75%
 Exemptions:
• Occupancy for more than 30 consecutive days.
• Sales to governmental, religious, or otherwise
exempt organizations.
DRMC 53, Article IV
Tax Guide # 52
www.denvergov.org
90
Other Hotel Sales
 4.0% F&B Rate applies to
 Banquet Services (including service charges)
 Restaurant Sales
 Room Service, etc.
 3.62% General Tax Rate applies to





In-Room Charges
Phone Calls
Movie Rentals, etc.
Non-Food Gift Shop Sales
Audio/Visual Rentals, etc.
DRMC 53, Article IV
Tax Guide # 52
www.denvergov.org
91
Facilities Development Admission
Overview
 The FDA tax rate is 10%.
 Imposed on the ticket price for admission to
certain events held at facilities owned or leased
by the City.
 There is an exemption for events that have
unpaid participants/performers.
 Tax collected is due to the City by the 15th of
the following month.
DRMC 53, Article VII
Tax Guide # 26
www.denvergov.org
92
QUESTIONS
www.denvergov.org
INSTRUCTIONS
FOR FILLING OUT RETURNS
www.denvergov.org
City Website
www.denvergov.org
95
City Website
www.denvergov.org
96
Sales Tax Return
www.denvergov.org
www.denvergov.org
Sales Tax Return
www.denvergov.org
Sales Tax Return (Schedule B)
www.denvergov.org
www.denvergov.org
99
Sales Tax and Use Tax Due Dates
Monthly Returns:
 Payment must be postmarked by the 20th of
the month following the taxable month.
Quarterly Returns:
 Payment must be postmarked by April 20th,
July 20th, October 20th and January 20th.
Annual Returns:
 Payment must be postmarked by January 20th,
following the taxable year.
www.denvergov.org
www.denvergov.org
Consumer’s Use Tax Monthly Return
www.denvergov.org
OPT (Head Tax) Quarterly Return
www.denvergov.org
www.denvergov.org
OPT (Head Tax) Due Dates
Monthly Returns:
Payment must be postmarked by the last day of
the month following the taxable month.
Quarterly Returns:
Payment must be postmarked by April 30th, July
31st, October 31st, and January 31st.
www.denvergov.org
www.denvergov.org
QUESTIONS
www.denvergov.org
BUSINESS PERSONAL PROPERTY TAX
www.denvergov.org
105
Business Personal Property Tax
Denver Assessment Division
201 W. Colfax Avenue
Department 406
Denver, CO 80202
Phone (720)913-4067
Fax (720)913-4103
www.denvergov.org/assessor
www.denvergov.org
106
Business Personal Property Tax
REAL PROPERTY
PERSONAL PROPERTY
www.denvergov.org
107
Business Personal Property Tax
Legal Basis

Constitution of the State of Colorado

Title 39, Colorado Revised Statutes (CRS)

Division of Property Taxation Guidelines
www.denvergov.org
108
Business Personal Property Tax
Assessor’s
Responsibilities
www.denvergov.org
109
Business Personal Property Tax

Discovery

Listing

Classification
● Voluntary Taxpayer Disclosure, Street Survey or
Canvassing.
● Declaration Schedule, General Ledger,
Depreciation Schedule, Physical Inspections,
Lessee Reporting.
● Mandated by CO Dept. of Property Taxation (DPT)
● DPT establishes classification tables, valuation
factors and depreciation rates.
www.denvergov.org
110
Business Personal Property Tax
Types of Valuation
 Income Approach
 Market Approach
 Cost Approach
www.denvergov.org
111
Business Personal Property Tax
Taxpayer’s
Responsibilities
www.denvergov.org
112
Business Personal Property Tax
 Submitting the Personal Property
Declaration Schedule



hand delivered or mailed
on line at www.denvergov.org/efile
as an email attachment sent to :
[email protected]
(preferred method)
www.denvergov.org
113
Business Personal Property Tax
Declaration
Form (front)
Due
by
April 15th
www.denvergov.org
Business Personal Property Tax
Declaration
Form (back)
www.denvergov.org
Business Personal Property Tax
Message to Small Businesses
 Actual Value of property in Denver County =
$5,500 or less: Exempt. (1st time filer must still
file to avoid an estimated value being applied)
 If property additions bring the actual value to an
amount greater than $5,500, you should contact
the Business Personal Property office at
720-913-4067.
www.denvergov.org
116
Business Personal Property Tax
Personal Property Common Exemptions




Inventory
Software
Consumables (<$250)
Several other items per CRS
www.denvergov.org
117
Business Personal Property Tax
Non-Profits not automatically exempt
Organizations that have non-profit status
for federal “IRS” purposes such as 501-c(3)
are not automatically exempt from personal
property taxes.
Exemption can only be granted after
application to the State Division of Property
Taxation (303) 866-2371,
www.dola.state.co.us/PropertyTax
www.denvergov.org
118
Business Personal Property Tax
Assessment Calendar
 January 1st, 12 Noon: Assessment Date
 Soon after January 1st the Assessor mails two
Personal Property Declaration Schedules to each
Taxpayer.
 Not Later than April 15th Taxpayers must return
Personal Property Declaration Schedules to Assessor.
 Assessor determines personal property values and
sends values and protest instructions to each taxpayer
by June 15th
www.denvergov.org
119
Business Personal Property Tax
Payment Options
If making two payments:

February 28th: First half tax due (February
29th in leap year).

June 15th: Second half tax due.
If making one payment:

April 30th: Full tax amount due.
www.denvergov.org
120
Business Personal Property Tax
Protest Process
Assessor mails Notice of Valuation
on or before June 15th
Taxpayer protest due to the Assessor
postmarked by June 30th
Taxpayer may appeal to the County Board of
Equalization (CBOE) no later than July 20th
No later than 30 days after CBOE mailing
Board of Assessment Appeals
(de novo hearing)
District Court
(trial de novo)
CO Court of Appeals
www.denvergov.org
Binding Arbitration
(no further appeals)
CO Supreme Court
121
Business Personal Property Tax
Petition Process
A “Petition for Abatement or Refund of Taxes”, may be filed on or before
the first working day in January of the second year after the taxes were
due.
The Board of County Commissioners (BoCC) or the Assessor must act on
the petition within six months.
Decision may be appealed to the Board of Assessment Appeals (BAA)
within 30 days of the BoCC mailing.
Colorado Court of Appeals
Colorado Supreme Court
www.denvergov.org
122
Business Personal Property Tax
Cost Valuation Method
Sample Calculation:
Property Type Year Acquired Original Cost
Office Furniture
1997
$1,625
Replacement Cost New Factor
Replacement Cost New
Level of Value Adjustment Factor
Level of Value
Percent Good Factor (depreciation allowance)
Actual Value
Calculation
$1,625
104%
$1,690
99%
$1,673
61%
$1,021
The calculation of value would be the same in any CO
county. The actual tax will vary by the mill levy for your area.
www.denvergov.org
123
QUESTIONS
www.denvergov.org
124