Colorado Tax Exempt Lodging Form

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					Colorado Department
     of Revenue


 Hospitality Class
   Taxpayer Service Division
  publiceducation@spike.dor.state.co.us
                   Agenda
        Introduction
        Service Providers
        Food and Beverage
        Meetings & Events
        Lodging
        Exemptions/Deductions

                                         Miscellaneous
                                         Tax Remittance
                                         Deliveries
                                         Resources

February 2008     Colorado Department of Revenue           Slide 2
                Introduction
       Class Time
       Breaks
       Food and Beverage
       Rest Rooms
       Cell Phones
       Questions
       Handouts and Forms
       Businesses in Attendance

February 2008    Colorado Department of Revenue   Slide 3
 Service
Providers
 Caterers
 Linen Services
                   Caterers
       Liable for sales tax on
        the total selling price of
        items sold and/or
        charges for service
        essential to providing
        meals and beverages.

       FYI Sales 24


February 2008      Colorado Department of Revenue   Slide 5
                 Linen Services
   Sales tax can be collected from customers on the following items when separated
    on invoices and that are a part of the service agreement: Hand soaps, paper
    towels, toilet tissue, etc.
   If linen company does not separate charges on delivery ticket, sales/use tax is
    payable by the linen service company.
   Laundered linens/uniforms, etc. is generally considered a service and is exempt
    from sales tax. The service provider must pay tax on the purchase of all
    equipment, linens, uniforms, etc. used in the performance of the service.
   A service provider who owns the linens, uniforms, etc. and did not pay sales tax
    on these items may choose to treat as rentals and collect sales tax on each rental
    payment.
   Soap, starch, cleaners, water, and other similar items consumed by the service
    provider are not exempt from tax because these are used and consumed by the
    service provider, not the customer.
   FYI Sales 39
February 2008             Colorado Department of Revenue                       Slide 6
       Food &
      Beverage
 Food & Beverage Establishments
 Exempt Food/Beverage
 Coupons
 Tips
                Food & Beverage
    All food/beverage sold by the following establishments are
     taxable to customers:
       A. Restaurants
       B. Snack shops
       C. Carryout shops
       D. Pushcarts
       E. Any other sellers of food/beverage specified by statute
    However, food or beverage used by a business or
     commercial entity, such as coffee served as a courtesy to
     customers or employees, is also subject to state sales
     taxable to the business/entity.
    FYI Sales 4
February 2008       Colorado Department of Revenue            Slide 8
           Taxable Food/Beverage
     Colorado’s principal sales tax exemption guideline is based upon what
      can be purchased for home consumption with food stamps and WIC
      vouchers.
     The Department of Agriculture guidelines prohibit the use of food
      stamps or WIC vouchers for the purchase of the following items - these
      items are sales taxable:
         1. Non-food items such as pet foods, soaps, paper products and
         household supplies, grooming items and cosmetics.
         2. Alcoholic beverages. (Cooking wine and wine vinegar are
         exempt.)
         3. Tobacco and tobacco products. (Cigarettes are sales tax exempt
         under Reg. 39-26-706.1)
         4. Food to be eaten in the store, hot foods ready to eat and any food
         marketed to be heated in the store.
         5. Food preservation equipment and items.
         6. Vitamins and medicines. (Prescription drugs are exempt under
         Reg. 39-26-717.1)
February 2008           Colorado Department of Revenue                     Slide 9
       Taxable Food/Beverage cont.
   The following items, if purchased with food stamps, are exempt from the
    2.9% state sales tax, but are taxable if purchased with cash:
         1. Carbonated water marketed in containers
         2. Chewing gum
         3. Seeds and plants to produce food for human consumption
         4. Prepared salads and salad bar items
         5. Cold sandwiches
         6. Deli trays

   Special Regulation 39-26-102.4.5 - Water in containers for human
    consumption is exempt from state sales tax. Sparkling or seltzer water is
    taxable. Tonic water and soft drinks are exempt from state sales tax.

   FYI Sales 4


February 2008           Colorado Department of Revenue                    Slide 10
        Mfg. & Store Coupons
    Manufacturer Coupons
        1. If the coupon is issued by a manufacturer of an article that
           allows the customer a reduction in the sales price of the
           product, the article purchased is subject to sales tax on the
           full selling price before the deduction of the manufacturer’s
           coupon.

    Store Coupons
         1. If a store coupon is issued directly by the retailer for a
            reduction in the price of an article when the coupon is
            presented, sales tax applies to the reduced selling price of
            the article.

    Special Regulation: Coupons – FYI Sales 22

February 2008         Colorado Department of Revenue                 Slide 11
          Buy One Get One Free
      Buy one get one FREE!

       -Tax applies only to the actual price charged for the meal if
       deal/coupon is offered by the restaurant directly.

       -Tax applies to the full price of both meals if the coupon/chit
       is given by an entity other than the restaurant.

      Coupons – FYI Sales 24


February 2008         Colorado Department of Revenue             Slide 12
            Tips and Gratuities
      Tips and gratuities are payments that are separately paid to
       persons providing a service. e.g., servers, waiters or waitresses.

      Tips are NOT taxable:
           1. When they are left on the table of location where the service
              took place.
           2. When they are added to the charge receipt after the price and
              tax are calculated.
           3. When separately stated on the bill and are optional for the
              customer.
           4. When no portion is retained by or for the profit of the business.
           5. For a large group, if the tip is separately stated, and the
              customer has the option not to pay the tip.

      FYI Sales 72
February 2008            Colorado Department of Revenue                    Slide 13
    Meetings &
     Events
   Fund Raising Events
   Private Clubs
   Meeting Rooms
          Fund-Raising Events
     Meals priced in excess of the regular selling price
      are subject to sales tax on the actual/regular
      selling price not the mark up price.

     FYI Sales 24




February 2008        Colorado Department of Revenue    Slide 15
                Private Clubs
      Private clubs such as country clubs, athletic clubs,
       fraternal organizations are subject to the collection
       of tax when they sell tangible personal property at
       retail.

      True, even though all transactions are with the
       members.

      FYI Sales 48 – Special Regulation: Private Clubs

February 2008       Colorado Department of Revenue       Slide 16
        Meeting/Event Rooms
        A room used exclusively for a banquet, meeting
         or sales/display room is not subject to state
         sales tax on charges for these uses.

        A room or suite with beds cannot qualify as
         exclusively used for any of the above exempt
         purposes.

        FYI Sales 33


February 2008      Colorado Department of Revenue       Slide 17
     Lodging

   Boarding House
   Bed and Breakfast
   Rentals
   Deposits
                Boarding House
   If meals are served only to persons regularly
    boarding there and not to the public, sales tax
    is not charged for the meal.

   Boarding houses are exempt from paying
    sales tax on their food purchases.

   However, sales tax must be paid on all non-
    food items.

   FYI Sales 24

February 2008          Colorado Department of Revenue   Slide 19
        Bed & Breakfast Inns
     Bed and breakfast inns are engaged in
      selling meals, snacks and
      accommodations and the entire charge is
      subject to sales tax.

     Therefore, bed and breakfast inns will
      purchase food served to paying guests
      and guestroom supplies, such as tissue,
      soaps, lotions, or shoeshine cloths, free
      of sales tax.

     FYI Sales 24

February 2008          Colorado Department of Revenue   Slide 20
                          Rentals
      Sales tax is collected and remitted for all units rented for less than
       30 days, including hotels, motels, bed-and-breakfast inns,
       condominiums, campsites, etc.
      The 30-day rental rule applies to any customer who pays for the
       room.
      The Department of Revenue policy is not to restrict the 30-day
       rental to an individual or the same room, but to adhere to the 30
       consecutive days of paid use by any single payor/customer.
      Example: If a company rents a room for 30 consecutive days, but
       four different people from that company stay in the room, each at
       different times within the 30 days, the room charges are non-
       taxable because one entity rented the room.
      FYI Sales 11

February 2008           Colorado Department of Revenue                    Slide 21
                      Deposits
     When a charge is greater than 50% of the daily
      reservation room rate, the charge is fully taxable.

     When the charge is 50% or less of the daily
      reservation room rate, the charge is not subject to
      sales tax.

     FYI Sales 33

February 2008        Colorado Department of Revenue    Slide 22
     Exemptions


   Paper and Plastic Products
   Ice
   Government Purchases
                Exemptions
      The purchase of plastic and paper
       products are specifically exempt
       from sales tax.
      Examples: napkins, soda straws,
       plates, knives, forks, spoons,
       cups.
      39-26-707 (1) (c) (d) C.R.S.



February 2008     Colorado Department of Revenue   Slide 24
                 Sales of Ice
     The sale of ice to manufacturers,
      carriers, or any other consumer for
      the purpose of cooling or keeping
      perishable, items of property, for
      other uses, is TAXABLE.

     FYI Sales 34 - Special Regulation:
      Ice. 39-26-102(20)(b)(II), C.R.S.



February 2008      Colorado Department of Revenue   Slide 25
           Government Purchases
   Colorado statute exempts from state and state-collected sales tax all sales
    to the United States government and the State of Colorado, its departments
    and institutions, and its political subdivisions (county and local governments,
    school districts and special districts) in their governmental capacities only.
    39-26-704.1 C.R.S.
   In order for a government entity to take advantage of the tax exemption, the
    purchase must be made with a prescribed government form or purchase
    order, and paid for directly to the seller by warrant or check drawn on
    governmental funds, or via credit card in the name of the exempt
    governmental agency.
   State government and federal government use a variety of credit cards to
    facilitate government purchases and travel by their employees. Credit card
    companies now prohibit retailers from making copies of the card, so exempt
    purchases paid by credit card must be documented with the DR 1367,
    “Affidavit of Sales Paid by Government Credit Card.”

February 2008            Colorado Department of Revenue                    Slide 26
    Government Purchases cont.
     If a vendor and a purchaser disagree on the application of a
      tax, the vendor must collect the tax. C.R.S. 39-26-102(22).
     The vendor should give the purchaser a receipt for the
      purchase showing how much sales tax was collected and
      advise the purchaser to file a Form DR 0137 “Claim For
      Refund.”
     The vendor is ultimately responsible for the collection of
      sales taxes.
     FYI Sales 63 – “Government Purchases Exemptions.”



February 2008        Colorado Department of Revenue           Slide 27
Deductions

    Utilities
    Telephone
       Gas and Electricity
   Restaurants that prepare food for meals can take a credit for electricity
    used to produce the meals.

   These credits/reductions only apply if a Colorado sales tax is charged
    against all the utility bills of the establishment or their landlord, and the
    utilities are used to process food that when sold is subject to Colorado
    sales tax.

   DR 1465 “Retail Food Establishment Sales Tax Deduction for Gas
    and/or Electricity.”

   FYI Sales 30 - Special Regulation: “Gas and Electric Services.”


February 2008            Colorado Department of Revenue                     Slide 29
          Taxable Utilities
       Electricity, and any gas and firewood are
        subject to Colorado sales tax for heating or
        lighting rooms, hallways, service areas and
        parking lots.

       Consumption of these services or goods is
        commercial, not residential.

       No portion of the usage is exempt.
February 2008      Colorado Department of Revenue      Slide 30
                Telephone Charges
   Hotels/motels may take a sales tax deduction for monthly line charges.
   Deduction is limited to the lines dedicated for calls made by customers
    from their rooms and does not include lines used for calls by sales or
    administrative staff.
   If it cannot be determined which lines are dedicated or if lines are not
    dedicated to a particular use, the deduction can be determined by
    applying the following formula:
              1.   Divide the number of local calls billed to patrons by the
                   total number of local calls made from the hotel/motel.
              2.   Then, multiply the result by the total line charges paid to
                   the telephone company for local service.
   Either deduction may be taken on the Form DR 0100 as an "Other
    Deduction.“
   FYI Sales 61

February 2008            Colorado Department of Revenue                     Slide 31
         Telephone Charges cont.
   Hotels and motels that charge their patrons for local and
    intrastate (within Colorado) long distance telephone calls are
    obliged to collect state and state–collected local sales tax on the
    markup.
   Tax is in addition to any taxes the hotel/motel remits to the
    telephone utility.
   There is no state sales tax on interstate (outside Colorado) phone
    calls.
   If you are not charging guests for local calls and are only being
    reimbursed for the cost of intrastate long distance calls, you do
    not have to report these charges to the Department of Revenue.


February 2008        Colorado Department of Revenue              Slide 32
    Miscellaneous


 Purchases For Business Use
 Supplies
 Meals for Employees/Public
 Vending Machines
       Purchases For Own Use
 The vendor of meals and drinks must pay the
  tax on purchases of most products used or
  consumed in the operation of the business.
  e.g., fixtures, linens, silverware and glassware,
  etc.
 FYI Sales 24 - Special Regulation: “Eating &
  Drinking Establishments.”


February 2008   Colorado Department of Revenue   Slide 34
                      Supplies
     Supplies made available for guest usage are not subject to sales/use tax
      at the time of purchase.
     Supplies include:
           1.   toilet tissue
           2.   soap
           3.   shoeshine cloths
           4.   clothes bags
           5.   matches
           6.   facial tissues
           7.   Coffee
     The tax exemption for supplies is based on the resale of consumables in
      a taxable transaction, and does not apply to rooms rented continuously
      for more than 30 days that are not subject to tax.

     FYI Sales 33
February 2008           Colorado Department of Revenue                  Slide 35
                       Meals
   If regularly serving and charging employees or the public
    for meals and beverages, you are liable for charging sales
    tax based upon the selling price of the meals and
    beverages. FYI Sales 24.

   However, meals provided at no cost or reduced cost to
    employees of restaurants and other such establishments
    are exempt if the meal is considered part of the
    employee’s income. FYI Sales 4.

February 2008       Colorado Department of Revenue       Slide 36
                  Vending Machines
     All sales and purchases of “food” as defined by statute, by and through
      vending machines shall be exempt from Colorado State sales tax.
     This means canned soda or any other canned drinks sold through a vending
      machine are exempt, but fountain style coffee, soda or any other drinks sold
      in cups are taxable.
     This exemption applies to state sales tax only. Cities, counties, RTD/CD/FD,
      and RTA have the option of taxing food sold through vending machines.
      Refer to the DR 1002 “Colorado Sales/Use Taxes.”
     You are required to file returns each month except when your total sales tax
      liability is under $300 a month AND you have made a prior arrangement with
      the Department to file quarterly. If your sales tax liability is under $15 per
      month AND you have prior approval from the Department of Revenue, you
      may file annually.
     FYI Sales 59


February 2008            Colorado Department of Revenue                      Slide 37
       Taxes

   County Lodging Tax
   Local Marketing Tax
   Tax Remittance
         County Lodging Tax Rates

  County Lodging Tax
  The following counties have a tax on lodging services including hotels, motels,
  condominiums, and camping spaces effective 1/1/08:

  Tax is remitted quarterly on Form DR 1485, "County Lodging Tax Return.“

  2.0%    Clear Creek, Custer, Fremont, Huerfano, Prowers, San Juan and
          San Miguel (Mountain Village omitted)
  1.9%    Alamosa, Archuleta (Pagosa Springs omitted), Chaffee,
          Conejos, Costilla, Delta, Hinsdale, Lake, La Plata (Durango
          omitted), Logan, Mineral, Moffat, Montezuma (Cortez
          omitted), Morgan, Rio Blanco, Rio Grande and Saguache.
  1.8%    Grand (Winter Park omitted)
  0.9%    Bent

February 2008            Colorado Department of Revenue                      Slide 39
          Local Marketing Tax Rates

      The Local Marketing District levies a tax of 1.4% on
       lodging services including hotels, motels, condominiums
       and camping spaces inside the Town of Vail.
      Gunnison County and Alamosa County levy a 4% Local
       Marketing Tax on hotel and motel rooms.
      Steamboat Springs levies a 2% Local Marketing Tax.
      Tax is remitted quarterly to the Department of Revenue
       on Form DR 1490 “Local Marketing District Tax Return.”


February 2008        Colorado Department of Revenue           Slide 40
                Tax Remittance
     Sales tax collected is remitted on DR 0100 unless
      otherwise stated.

     Online tutorial available for sales tax return
        1.   www.TaxColorado.com
        2.   Businesses
        3.   Business taxes
        4.   Retail Sales Tax Return (DR 0100) Online Tutorial

     Returns must be filed even if NO TAX DUE.

February 2008           Colorado Department of Revenue           Slide 41
  Deliveries

Point of Taxation
   Examples
           Point of Taxation
     Point of Delivery/possession is point of taxation. The
      destination is regarded as the point of sale and sales tax is
      collected for the taxing jurisdictions that the seller and
      buyer share in common.

     Because the RTD/CD/FD districts have a USE TAX,
      businesses not located in the RTD/CD/FD, but make
      regular shipments into the district, or have otherwise
      established nexus (a sales presence) in the district should
      collect the RTD/CD/FD tax and remit it.


February 2008        Colorado Department of Revenue             Slide 43
      Delivery Example #1

     State of Colorado
                                                          City of Foxfield
                                                          Company A

       Special Districts Area
           (RTD/FD/CD)

                                City of Centennial
                                Company B
     Scenario: Company A
     is located in Foxfield
                                    Arapahoe County
     and is delivering to
     Company B located in
     Centennial
February 2008            Colorado Department of Revenue               Slide 44
    Delivery Example #1 cont.
Company A (seller) is in:
   State of Colorado
   City of Foxfield (not a “home-rule” city)
   Arapahoe County
   Special Dist Area (RTD/FD/CD)
Company B (purchaser) is in:
   State of Colorado
   City of Centennial (not a “home-rule” city)
   Arapahoe County
   Special Dist Area (RTD/FD/CD)
Common jurisdictions:
State of Colorado                 2.9%
Arapahoe County                   .25%
Special Dist Area (RTD/FD/CD)     1%, .1%, .1%

Total Sales Tax Rate =            4.35%

What taxes are collected and where are they remitted? Company A will collect
state, county and special district taxes and remit to Revenue, as these are the
only taxing jurisdictions in common.
      Delivery Example #2
  State of Colorado
                                                           City/County of Denver
                                                           - Company B
     Special Districts Area
          (RTD/FD/CD)



                                                           City of Colorado
                                                           Springs - Company A

 Scenario: Company A
 is located in Colorado       El Paso, County
 Springs and is
 delivering to Company
 B located in Denver
February 2008             Colorado Department of Revenue                    Slide 46
 Delivery Example #2 cont.
Company A (seller) is in:
   State of Colorado
   City of Colorado Springs (“home-rule” city)
   El Paso County
   Special Dist Area (RTA)
Company B (purchaser) is in:
   State of Colorado
   City of Denver (“home-rule” city)
   Denver County
   Special Dist Area (RTD/FD/CD)
Common jurisdictions:
State of Colorado                 2.9%

Total Sales Tax Rate =            2.9%

What taxes are collected and where are they remitted? Company A will collect
state and county taxes and remit to Revenue, as this is the only taxing jurisdiction
in common. However, if company A begins delivering frequently into the special
district area, company A should collect the taxes and remit and contact Denver for
details regarding sales tax requirements when doing business in the city/county.
Resources

      Forms
 FYI Publications
 CDOR Contacts
         Miscellaneous Forms
     CR 0100 – Sales Tax Registration
     DR 0173 – Retailers’ Use Tax Return
     DR 0137 – Claim for Refund Form
     DR 0252 – Consumer Use Tax Return
     DR 0251 – RTA Consumer Use Tax
     DR 1002 – Sales Tax Rate Information
     DR 1102 – Account Changes or Closure
     DR 1480 – Short-Term Rental Tax Return
     DR 1485 – County Lodging Tax Return
     DR 1490 – Local Marketing District Return

     Forms are available on the Web
         www.TaxColorado.com
         Forms
         Businesses
         Sales and Use tax

February 2008         Colorado Department of Revenue   Slide 49
                        FYI List
     Containers – Sales 21
     Coupons – Sales 22
     Eating & Drinking Establishments – Sales 24
     Food Items, Guidelines For Determining Sales Tax Rates – Sales 4
     Gas and Electric Services – Sales 30
     Gift Certificates – Sales 31
     Gifts, Premiums and Prizes – Sales 32
     Government Purchases Exemptions – Sales 63
     Hotels and Motels – Sales 33
     How to document sales – Sales 1
     Ice – Sales 34
     Janitorial Services – Sales 37
     Leases of Motor Vehicles and Other TPP – Sales 56
     Linen Services – Sales 39
     Newspapers, Magazines and Other Publications – Sales 44
     Penalties and Interest – General 11
     Private Clubs – Sales 48
     Tax Due Dates – General 15

February 2008           Colorado Department of Revenue                   Slide 50
                     FYIs cont.
  19.   Tips and Gratuities – Sales 72
  20.   Telephone Charges by Hotels/Motels – Sales 61
  21.   Rentals of Hotels, Motels, Condominiums, etc. – Sales 11
  22.   Vending Machines – Sales 59

  Web site:
        1. www.TaxColorado.com
        2. FYIs
        3. Sales Tax
        4. Food Service, Hotel, Motel




February 2008           Colorado Department of Revenue             Slide 51
                    CDOR Contacts
Colorado Department of Revenue

     www.TaxColorado.com
        –       Forms, FYI publications, Online Customer Support, Statutes &
                Regulations, Links to other government agencies, Tax Alerts
     Call Center, Hours: M-F, 8:00a.m. - 4:30p.m.
        –       303-238-7378 (SERV) - General Information
        –       303-238-3278 (FAST) - Specific Account Information
     Walk-in Service Centers, Hours: M-F, 8:00a.m. - 4:30p.m.
        –       Denver, 1375 Sherman Street (14th & Sherman)
        –       Colo. Springs, Ft. Collins, Grand Junction, Pueblo



February 2008              Colorado Department of Revenue                 Slide 52
                  Tax Classes
Free Tax Classes offered by the Department of Revenue
   1.  Sales/Use Tax for Beginners – Content online
   2.  Advanced Sales/Use Tax – Content online
   3.  Employer/Employee Basics 101 (federal and state wage
       withholding, unemployment tax and workers’ compensation) –
       Content online
   4.  Contractor/Manufacturing – Content online
   5.  Hospitality – Content online
   6.  Printing/Advertising – Content online
   7.  Application of Use Tax in Colorado – Content online


February 2008       Colorado Department of Revenue          Slide 53
       Questions?


Thank you for attending!

				
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Description: Colorado Tax Exempt Lodging Form document sample