Marketplace Tax Collection for Colorado FAQ

What is a Marketplace Facilitator?

A Marketplace Facilitator is defined as a marketplace that contracts with third party sellers to promote their sale of physical property, digital goods, and services through the marketplace. As a result, Amazon is deemed to be a marketplace facilitator for third party sales facilitated through amazon.com.

What is Marketplace Tax Collection?

Marketplace Tax Collection is a common term Amazon uses for marketplace facilitator tax legislations. Marketplace facilitator rules are state-specific and identify the party responsible to collect and remit sales and use tax for orders shipped to a state where marketplace facilitator laws have been enacted.

What is unique about Colorado’s marketplace facilitator legislation?

Colorado’s marketplace tax collection rules apply to sales and use tax in state-administered jurisdictions. The state’s legislation does not include home rule jurisdiction taxes (which remain the responsibility of the seller, such as the city of Denver). As a result, orders destined to a home rule jurisdiction could have multiple parties (“the seller” and Amazon) responsible for individual jurisdictions that a total tax rate consists of.

For example, an order shipping to Denver will have applicable state-administered tax (state, county, district) calculated by Amazon, but Denver (city) tax cannot be calculated by Amazon, as this tax is home rule and remains the seller’s responsibility.

Home rule jurisdictions must enact their own marketplace tax collection rules for Amazon to calculate, collect, and remit home rule jurisdiction tax on third-party seller orders. Otherwise, Amazon cannot collect home rule jurisdiction taxes and the tax obligation remains the responsibility of the sellers to remit.

For a complete list of home rule jurisdictions, see page 9 of the Colorado Department of Revenue form DR1002, available on their sales and use tax website.

Do any home rule jurisdictions have Marketplace Tax Collection?

Please contact your local home rule jurisdiction for information. However, taxes will move to Marketplace Tax Collection as Amazon implements local ordinance changes. Taxes collected by Amazon will be reflected in your order reports, available in Seller Central.

For more information, see Sales tax information in seller reports.

What taxes will be calculated on third-party orders shipped to Colorado?

Amazon will calculate and remit (as the taxpayer) state administered and participating home rule sales and use taxes on your orders, but will not calculate and remit taxes for home rule jurisdictions if they have not enacted Marketplace Tax Collection legislation.

What tax am I as a seller responsible for on orders shipped to Colorado?

You may potentially still have an obligation to remit home rule sales and use taxes that Amazon cannot collect, even though you also cannot collect the home rule tax on orders using Amazon's Tax Calculation Services. Your responsibility depends on your business obligations. Please consult your professional tax advisor to determine the impacts of Colorado’s marketplace facilitator legislation on your business.

What is Amazon doing to support home rule tax calculations?

We are prioritizing enhancements to our Tax Calculation Services to support Colorado home rule jurisdictions that have not enacted marketplace tax collection legislation. In the meantime, we encourage you to work with your tax professional to determine any impact to your business.

How do I find orders shipped to Colorado to determine home rule city taxes?

Your Payments Date Range Report is the best option to locate orders shipped to a Colorado home rule jurisdiction.

1. Go to your Date Range Reports and click Generate Report. In the Genrate date range report pop-up window select the following:
   
   1. Select Transaction.
   2. Select your desired Reporting Range.
   3. Click Generate a report.
2. When the report is ready, the Download button will appear under Action. You can open the report in Excel, Google Sheets, or a similar spreadsheet program.
3. Apply filters in your report starting on row 8 (headers for the columns):
   
   1. Filter column "order state" for Colorado and CO to capture all Colorado orders.
   2. Filter column "order city" for cities within Colorado that are home rule jurisdictions. For a complete list of home rule jurisdictions, see page 9 of the Colorado Department of Revenue form DR1002, available on their sales and use tax website.
4. Product sales (amounts) are located in column M.

Additional resources

For more information, please visit Colorado's Department of Revenue website or read through the legislation HB19-1240.