How to Navigate The Colorado Sales Tax Forgiveness Program For Food & Beverage Industries

Colorado recently enacted legislation allowing retailers in the restaurant, bar, mobile food service, and catering industries to receive sales tax forgiveness for the period of July through September 2022. 

As a result of the COVID-19 pandemic, the Colorado Department of Revenue introduced House Bill 1004, Covid-19 Sales Tax Relief in December 2020. The measures of this bill have been reinstated for the summer months of 2022 for Colorado business owners, “allowing qualifying bars and restaurants to deduct the lesser of state net taxable sales or up to $70,000 in net taxable sales from their monthly state sales tax return,” according to the Sales Tax Institute. The State of Colorado permits one deduction each month for no more than five fixed physical premises per business owner. 

The Colorado State Capitol in Denver, CO.

Specifically, retailers in the following industries are eligible for these tax deductions:

  • Alcoholic Beverages
  • Catering
  • Food Services Contractors
  • Restaurant & Other Eating Places
  • Hotel-Operated Restaurants, Bars, & Catering

These special deductions are not available to city, county, or special district sales taxes — they are only available at the state level. In order to effectively get your tax deductions, our tax relief consultants suggest that you file your taxes as you normally would and include the special deduction in the state column of your form. 

How to file for the Colorado Sales Tax Deduction, or Refund.

Filing for a special deduction can be complicated, and Denver’s best accountants are here to help you navigate the Colorado tax system. Boxelder Consulting will guide you through the process of receiving the sales tax forgiveness you deserve. Our Denver accountants will not only simplify the task of filing your taxes, but they’ll also make sure that you understand your tax situation in detail.

In order to qualify for the special sales tax deduction, you must still report sales on your sales tax return. Otherwise, it isn’t possible to claim a Colorado tax deduction. This is the best way to claim your sales tax relief, rather than filing for a refund after you’ve already submitted your tax forms. Overall, using the special sales tax deduction will speed up the total processing time.

But, in the event that you have already filed your Denver sales tax return for the month of July without applying for the deduction, you can apply to the Colorado Department of Revenue for your refund online, or by mail. Completing a Colorado Claim for Refund Form (DR 0137) online is your simplest option, but make sure to note in the refund form that your business qualifies for special deduction allowed by House Bill 22-1406, and that you filed your return and paid it early. You can find more information online about filing by mail here 

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About the Author

A company founder standing by Colorado's Front Range

Tom Conradt

Co-Founder, IRS Collections Defense Attorney

Tom Conradt is the co-founder of Boxelder Consulting & Tax Relief, and has been practicing IRS Collections defense law for the past ten years. Graduating from the University of North Carolina at Chapel Hill, Tom is the lead IRS Collections Defense Attorney and heads the tax resolution department. Tom’s favorite part about working at Boxelder Consulting is hearing about the relief that clients experience after they sign up and start seeing immediate results on their case. Tom enjoys all the outdoor activities Colorado has to offer, including skiing, hiking and climbing. He is also looking forward to the return of indoor pickup basketball.

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