Special sales tax deductions may be available to restaurants

Colo. Dept. of Revenue

On Nov. 25, 2020, Governor Polis announced that certain restaurants, bars, and mobile food vendors may be eligible for state sales tax relief. 

In special session, the General Assembly enacted House Bill 20B-1004, which permitted a limited special deduction from state taxable sales and allowed retailers to retain and spend the resulting state sales tax. 

This page provides instructions for restaurants and bars to properly claim the special deduction allowed in section 39-26-105(1.3), C.R.S., which was added by House Bill 20B-1004. 

Separate instructions are available for mobile food vendors at: Tax.Colorado.gov/Mobile-Food-Vendor-Special-Sales-Tax-Deduction.

This special deduction applies only to a limited amount of state taxable sales. Eligible retailers are required to collect all applicable state and state-administered local sales taxes, file returns on time, and pay all local sales taxes (in addition to state sales taxes in excess of the amount related to the special deduction). The special deduction does not apply to any taxes imposed by any state-administered city, county, or special district.  Retailers should contact self-collecting home-rule cities regarding any similar programs they may offer.

Additional relief may be available for businesses that do not qualify for this program. For more information, visit the Colorado Office of Economic Development & International Trade’s COVID-19 Business Resource Center https://ChooseColorado.com/covid19/.

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