Can a Colorado retailer advertise or post total 'out-the-door' prices that already include the sales tax, as long as the receipt breaks out the price and the tax separately?

Plain-English summary

A retailer asked whether it could advertise and post total "out-the-door" prices that already include the sales tax — for example, a flat "$20 out the door" shelf sign — as long as the customer's receipt still shows the pre-tax price and the tax separately. The Department's general guidance is that this is permissible, but only if the retailer satisfies two distinct obligations at the same time.

In Colorado, the consumer pays the sales tax and the retailer collects it and is liable to the state for it. On top of that, the law puts two duties on retailers when they communicate about tax — one affirmative, one negative:

1. Affirmative duty — separately state the tax. The retailer must add the tax to the purchase price and show it as a separate and distinct item. If the retailer gives the customer a receipt, invoice, or other document with the purchase price, that document must separately state the sales (or retailer's use) tax. If no such document is issued, the retailer must disclose the tax on signage clearly visible to the purchaser. Just stating the tax rate on a document is not enough.

2. Negative duty — don't advertise absorbing the tax. A retailer may not, directly or indirectly, advertise to the public or a customer that it will assume or absorb the sales tax, that it won't add sales tax to the price, or that, if added, it will refund the tax.

The Department stressed that both obligations must be met, and meeting one doesn't excuse the other. So a posted tax-included price is fine as long as the actual receipt still breaks out the tax as a separate line and the retailer's advertising never crosses into "we pay the tax for you" territory. The Department declined to judge any specific sign or ad, noting that whether particular marketing violates the no-absorption rule depends on all the facts — something a GIL can't resolve.

What this means for you

Retailers using tax-included or "out-the-door" pricing

You can show customers a single all-in price on shelf tags, menus, or ads — convenient for vending, events, food trucks, and quick-service settings. But keep two things true: every receipt or invoice must still separately state the sales tax as its own line (and if you don't hand out a receipt, post the tax on clearly visible signage), and your marketing must never imply you're absorbing or eating the tax. Phrases like "no sales tax," "tax included, we cover it," or "we'll refund your tax" can run afoul of the no-absorption rule even when your price math is correct. When in doubt, frame it as a tax-included total, not as a tax giveaway.

Accountants and tax professionals

The two duties live in § 39-26-106(2)(a) (separate statement) and § 39-26-108 (no advertising absorption), implemented by 1 CCR 201-4, Rule 39-26-106-1. Tax-inclusive display pricing is compatible with both, provided the transaction document still itemizes the tax (or signage does, absent a receipt) and the advertising doesn't signal absorption. Because this is a GIL, it's non-binding guidance, and the Department expressly won't pre-clear specific creative — that's a facts-and-circumstances call. Note the home-rule-city caveat below.

Common questions

Q: Can I advertise prices with sales tax already included in Colorado?
A: Yes, you can post total tax-included "out-the-door" prices. You just have to keep separately stating the tax as a distinct item on each receipt or invoice (or on visible signage if you issue no receipt), and you can't advertise that you're absorbing or not charging the tax.

Q: Is it enough to just print the tax rate on the receipt?
A: No. The Department says merely stating the tax rate is not sufficient — the tax itself must be shown as a separate and distinct item on the document.

Q: What's the line I can't cross in advertising?
A: You may not say, directly or indirectly, that you'll assume or absorb the sales tax, that you won't add it to the price, or that you'll refund it. A tax-included total is fine; telling customers you're paying their tax is not.

Q: Can I rely on this letter for my own signage or ads?
A: Not as binding authority, and not for a specific ad. A General Information Letter is general guidance only, isn't binding on the Department, and the Department won't judge whether a particular sign or ad complies — that depends on all the facts.

Citations and references

Statutes and rules:
- § 39-26-104(1), C.R.S. (imposition of sales tax)
- § 39-26-106(2)(a), C.R.S. (retailer must add the tax and show it as a separate and distinct item)
- § 39-26-108, C.R.S. (no advertising that the retailer absorbs, won't add, or will refund the tax)
- § 39-26-703(2)(c.5), C.R.S. (refund of tax collected in error)
- 1 CCR 201-4, Rule 39-26-106-1 (separate statement of tax on receipts, or on signage if no receipt)
- 1 CCR 201-1, Rule 24-35-103.5 (general information letter and private letter ruling procedure)

Case law:
- J.A. Tobin Constr. Co. v. Weed, 407 P.2d 350 (Colo. 1965) (consumer pays, retailer collects the tax)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-22-002.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL 22-002
April 14, 2022
XXXXXXXXXXXX
Via Electronic Mail: XXXXXXXXXXXX
Re: Posting total, “out-the-door” prices that include sales tax
Dear XXXXXXXXXXXX:
You submitted a request for a general information letter regarding whether a vendor is allowed
to post total, “out-the-door” prices that include sales tax in a store or on marketing materials.
The Colorado Department of Revenue (“Department”) issues general information letters and
private letter rulings. A general information letter provides a general overview of the relevant tax
issues, but is not binding on the Department. A private letter ruling provides a specific
determination for a specific set of facts, is binding on the Department, and requires payment of
a fee. For more information about general information letters and private letter rulings, please
see 1 CCR 201-1, Rule 24-35-103.5.
Issue
Whether a retailer is allowed to post total, “out-the-door” prices that include the sales tax on
marketing materials or on signage in the store, if the retailer provides a receipt with each sale
that shows the purchase price and the applicable tax imposed as separate and distinct items.
Discussion
Colorado imposes a sales tax on retail sales of tangible personal property and certain services.1
The consumer is required to pay the sales tax, and the retailer is required to collect it.2 The retailer
is liable to the Department for all sales tax collected and for any tax not collected.3 If sales tax is
collected in error, the consumer has a right to claim a refund from the Department.4
With respect to statements made by retailers to consumers regarding sales tax, Colorado imposes
two obligations on retailers, one affirmative and one negative. First, statute provides that the
retailer is required to add the tax imposed to the purchase price, showing the tax as a separate
and distinct item.5 The Department’s rule clarifies that if the retailer issues the consumer a receipt,
invoice, or other document setting forth the purchase price, the retailer must separately state the
sales tax or retailer’s use tax on the document.6 If the retailer does not issue such a document,
1 Section 39-26-104(1), C.R.S.
2 Section 39-26-106(2)(a), C.R.S. and J.A. Tobin Constr. Co. v. Weed, 407 P.2d 350 (Colo. 1965).
3 Sections 39-26-105(1)(a)(I)(A), 39-26-115, 39-26-118, C.R.S.
4 Section 39-26-703(2)(c.5), C.R.S.
5 Section 39-26-106(2)(a), C.R.S..
6 1 CCR 201-4, Rule 39-26-106-1 (1).

GIL 22-002
April 14, 2022
Page 2
then the retailer must disclose the tax of each item on signage clearly visible to the purchaser.7
Merely stating the tax rate on a document is not sufficient.8
Second, a retailer may not, directly or indirectly, advertise to the public or to a consumer that the
retailer will assume or absorb sales tax, that the retailer will not add sales tax to the purchase
price, or, if added, that the retailer will refund the sales tax.9 Both obligations must be met, and
meeting one obligation does not permit a retailer to avoid the second.
Miscellaneous
This letter represents the good faith opinion of Department personnel who are knowledgeable
on state taxes issues. However, the Department does not make a specific determination on any
of the issues raised and the Department is not bound by this general information letter.
The Department administers state and state-administered local sales and use taxes. This letter
does not address sales and use taxes administered by self-collected home-rule cities. You may
wish to consult with those local governments that administer their own sales or use taxes about
the applicability of those taxes. Visit our website at tax.colorado.gov for more information about
state and local sales taxes.
Thank you for your request.
Sincerely,
Office of Tax Policy
Colorado Department of Revenue

7 1 CCR 201-4, Rule 39-26-106-1 (1).
8 1 CCR 201-4, Rule 39-26-106-1 (1).
9 Section 39-26-108, C.R.S. Whether any particular marketing material or signage violates this requirement would

require the analysis of all relevant facts. which cannot be done in a general information letter.