If my business isn't 'doing business' in Colorado — no location here and not soliciting sales — do I still have to send Colorado's noncollecting-retailer use tax notices to my customers?

Plain-English summary

A business wrote to the Colorado Department of Revenue about Colorado's "noncollecting retailer" notice and reporting rules. These rules (in § 39-21-112(3.5), C.R.S.) require a retailer that doesn't collect Colorado sales tax to notify its Colorado customers that they probably owe use tax and must file a return. The business's situation: it had once held a Colorado sales tax license, closed it because its sales were below the economic-nexus thresholds, and in 2023 made some Colorado sales without collecting tax — because it wasn't "doing business" in the state. Did it still have to send those customer notices?

The Department's reasoning leads to no. The notice-and-reporting duty falls on a "retailer." Colorado defines a retailer (§ 39-26-102(8), C.R.S.) as a person "doing business in this state." You're "doing business in this state" only if you either (a) maintain some kind of place of business in Colorado, or (b) solicit business in Colorado and make retail sales that meet or exceed the economic-nexus thresholds. A person who does neither is not a retailer — and a rule that applies to retailers doesn't reach someone who isn't one.

The honest catch the letter is careful to flag: even when the seller has no duty to collect tax or send notices, the buyer still owes use tax. Colorado use tax is a separate, self-assessed obligation on the person who stores, uses, or consumes property in the state when sufficient Colorado sales or use tax hasn't already been paid. So the tax doesn't disappear; responsibility for it simply sits with the purchaser.

Because this is a General Information Letter, it's the Department's good-faith general guidance — not a binding determination and not specific to one taxpayer's facts.

What this means for you

Remote and small out-of-state sellers

If you don't maintain any place of business in Colorado and you don't both solicit business here and cross the economic-nexus thresholds, you generally aren't a Colorado "retailer." That means no duty to collect Colorado sales tax — and, per this letter's reasoning, no duty to send the noncollecting-retailer use tax notices either. If you previously held a license and closed it because your sales dropped below the thresholds, falling out of "retailer" status is consistent with that.

Sellers who keep a license voluntarily

Note the flip side the letter mentions: a seller who is not doing business in Colorado but chooses to keep a sales tax license to collect for customers' convenience is then liable for collecting all applicable Colorado sales taxes. Keeping the license is a choice with consequences.

Buyers and accountants

Don't read "the seller didn't have to send a notice" as "no tax is due." If Colorado sales tax wasn't collected on something you store, use, or consume in Colorado, you are liable for use tax and may need to file a return. Track untaxed purchases for use tax self-assessment.

Common questions

Q: Do I have to send Colorado's noncollecting-retailer use tax notices?
A: Only if you're a "retailer" — that is, doing business in Colorado. A seller who neither maintains a place of business in Colorado nor solicits business and meets the economic-nexus thresholds isn't a retailer, so by the letter's reasoning the notice and reporting rules don't apply.

Q: What counts as "doing business in this state"?
A: Either maintaining (directly, indirectly, or through a subsidiary) a place of business in Colorado, regardless of sales volume; or soliciting business in Colorado and making retail sales that meet or exceed the economic-nexus thresholds.

Q: I closed my license because my sales were low. Am I off the hook?
A: If you're no longer doing business in Colorado, you're not a retailer and don't carry the retailer duties. But your customers can still owe use tax on what they buy from you and use in Colorado.

Q: So nobody owes tax?
A: Not quite. The use tax obligation shifts to the purchaser, who must self-assess and pay use tax on taxable property used in Colorado when sufficient Colorado tax hasn't been paid.

Q: Can I rely on this letter?
A: Treat it as guidance, not a guarantee. A General Information Letter is not binding on the Department and makes no determination for any specific taxpayer.

Q: Does this cover home-rule city taxes?
A: No. The Department administers state and state-administered local sales and use taxes only. Self-collected home-rule cities set their own rules — check with each city.

Citations and references

Statutes and rules:
- § 39-21-112(3.5), C.R.S. (notice and reporting requirements for retailers that do not collect Colorado sales tax)
- § 39-26-102(8), C.R.S. (definition of "retailer" — a person doing business in this state)
- § 39-26-102(3), C.R.S. (what it means to be "doing business in this state")
- § 39-26-102(3)(c), C.R.S. (economic nexus thresholds)
- § 39-26-103, C.R.S. (sales tax license requirement)
- § 39-26-202(1)(b), C.R.S. (purchaser's duty to self-assess and pay use tax)
- § 39-26-204, C.R.S. (use tax return)
- 1 CCR 201-4, Rule 39-26-102(3) (doing business in this state)
- 1 CCR 201-1, Rule 24-35-103.5 (general information letter and private letter ruling procedure)

Case law referenced in the letter:
- Howard Elec. & Mech., Inc. v. Dept. of Revenue, 771 P.2d 475 (Colo. 1989) (use tax is supplementary to the sales tax)

Source

• Landing page: Colorado Sales & Use Tax Letter Rulings
• Original PDF: GIL-24-002.pdf

Original ruling text

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

GIL 24-002
March 4, 2024
XXXXXXXXXX
XXXXXXXXXX
Via Electronic Mail: XXXXXXXXXX
Re: Noncollecting Retailer Use Tax Information Reporting
Dear XXXXXXXXXX:
You submitted a request for a general information letter regarding sales and use tax notice and
reporting requirements for noncollecting retailers under section 39-21-112(3.5), C.R.S. 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 person who neither maintains any place of business in Colorado nor solicits business
in Colorado making sales in Colorado at or exceeding the economic nexus thresholds is
required to comply with the sales and use tax notice and reporting requirements for
noncollecting retailers.
Discussion
Your request indicated the following: (1) your business was once a licensed retailer in Colorado;
(2) you closed the license because your business’s retail sales were less than the economic
nexus thresholds set forth in section 39-26-102(3)(c), C.R.S.; and (3) in 2023, your business
made some retail sales in Colorado but did not collect Colorado sales tax because you were not
doing business in the state. Nevertheless, you want to know if you are required to comply with
the sales and use tax notice and reporting requirements for noncollecting retailers under section
39-21-112(3.5), C.R.S.
Colorado imposes a sales tax on most sales of tangible personal property at retail, as well as
certain services.1 Every person who meets the definition of a “retailer” under section 39-26102(8), C.R.S. is required to obtain a sales tax license from the Department prior to making any
retail sales in Colorado.2 Indeed, retailers have several duties with respect to taxable sales
1
2

See Section 39-26-104, C.R.S.
Section 39-26-103, C.R.S.; Paragraph (1) of 1 CCR 201-4, Rule 39-26-103.

GIL 24-002
March 4, 2024
Page 2
made in this state. Principally, every retailer must add the sales tax imposed to the sale price.3
And as the state’s collecting agent, every retailer must collect the tax from the purchaser.4
However, irrespective of the amount collected each retailer is liable and responsible to the state
for the payment of an amount equal to the tax imposed upon all taxable sales made by the
retailer in the state, less certain allowances for the costs of remittance and collection.5
Every person storing, using, or consuming tangible personal property in Colorado has a
separate duty to self-assess and pay a use tax on such property.6 The use tax is
supplementary to the sales tax,7 and it is due only when a sufficient Colorado sales or use tax
has not been paid.8 To aid persons subject to the use tax in this duty, section 39-21-112(3.5),
C.R.S., requires each retailer that does not collect Colorado sales tax to notify Colorado
purchasers that sales or use tax is due on certain purchases made from the retailer and that the
state of Colorado requires the purchaser to file a sales or use tax return.
For purposes of the sales tax obligations discussed above, and the notice and reporting statute,
a “retailer” is defined by reference to section 39-26-102(8), C.R.S. That section defines a
retailer, in relevant part, as “a person doing business in this state known to the trade and public
as such, and selling to the user or consumer, and not for resale.”9 A person is doing business in
this state if that person:
(a)

maintains directly, indirectly, or by a subsidiary any place of business in Colorado
listed in section 39-26-102(3)(a), C.R.S., regardless of the amount of that
person’s retail sales in Colorado; or

(b)

solicits business in Colorado in the manner described in section 39-26-102(3)(b),
C.R.S., and makes retail sales in Colorado at or exceeding the economic nexus
thresholds prescribed by section 39-26-102(3)(c), C.R.S.10

If a person is not doing business in this state, that person is not a “retailer.”11 Nevertheless, a
person who is making sales in Colorado, but whose business activities do not meet the
definition of doing business in this state under section 39-26-102(3), C.R.S., may voluntarily
obtain a sales tax license and collect all applicable state and state-administered local sales
taxes for the convenience of their customers.12 Such a person who maintains a sales tax
license but does not do business in the state, as described in section 39-26-102(3), C.R.S., is
liable for collecting all applicable Colorado sales taxes.13 Otherwise, if the sales tax is not
collected—regardless of whether the seller provides the notices described in 1 CCR 201-1, Rule

3

Section 39-26-106(2), C.R.S.
Id,
Section 39-26-105(1)(a)(I)(A), C.R.S.
6
Section 39-26-202(1)(b), C.R.S.
7
Howard Elec. & Mech., Inc. v. Dept. of Revenue, 771 P.2d 475, 477 (Colo. 1989)
8
See section 39-26-204(2)(a) and (b) (requiring a return only if a person storing, using, or consuming property “has not paid the
sales or use tax imposed by this article [26]”); section 39-26-713(2)(a) (exempting property from the use tax if the sale of the
property was already subjected to the sales tax).
9
Section 39-26-102(8), C.R.S. (emphasis added).
10
Paragraph (1) of 1 CCR 201-4, Rule 39-26-102(3).
11
Section 39-26-102(8), C.R.S.
12
Paragraph (4) of 1 CCR 201-4, Rule 39-26-103.
13
Id.
4
5

GIL 24-002
March 4, 2024
Page 3
39-21-112(3.5)—the purchaser is liable for the payment of use tax on any tangible personal
property purchased at retail that the purchaser stores, uses, or consumes in Colorado.14
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

14

Section 39-26-202(1)(b), C.R.S.; Section 39-26-204(1)(b), C.R.S.