Form Dr 0002 - Colorado Direct Pay Permit Application (Page 2 of 2) in pdf

INFORMATION REGARDING DIRECT

collected the local tax on the sale, or would have collected the

PAYMENT OF SALES TAXES

local tax except for the presentation of the direct pay permit.

The direct pay permit allows the holder to claim purchase point

Holders are liable for the tax avoided, even through unapproved

exemption from payment of Department administered sales

actions of their employees and suppliers. Where a valid local

taxes from the vendor. See form DR-1002 (available on the

sales tax is avoided by a direct pay permit holder, the local tax

internet ). All taxes avoided at the

must be remitted as direct pay sales tax [C.R.S. §§29-2-

point of purchase must be remitted within twenty days of the

106(3)(c)(II)]. Unpaid local sales taxes must be individually

close of the accounting period of the purchase, using a direct

identified by local entity and amount per local entity on the spread

pay sales tax return on the direct pay account number assigned.

sheet return. [C.R.S. §§39-26-103.5(l)(c) and related provisions,

HB99-1005.] Timely payment of the tax is not a substitute for filing

The direct pay permit issued by the Colorado Department of

a timely detailed spreadsheet return reporting the local distribu-

Revenue does not apply to sales taxes of any self collected

tion of the tax remitted. Failure to inform the Department of the

Colorado home rule municipality. Contact those municipal

correct distribution of state and local tax dollars through the

governments directly for their rules and requirements. The

required spreadsheet return will be grounds for revocation of the

direct pay permit is not applicable to short term rental and local

permit and imposition of penalties and vendors fee denial.

lodging taxes.

REQUIREMENT TO QUALIFY FOR DIRECT

Permit holders may only claim vendors allowances on direct

PAYMENT OF SALES TAXES

pay sales tax remitted and reported timely on the appropriate

Applicant, for the preceding 12 month period must have

direct pay sales tax return format. No taxpayer may report

purchased at least $7,000,000 of goods which would be subject

normal consumers use tax as direct pay sales tax and thereby

to Colorado Sales or Use taxes, excluding purchases of resale

claim a vendors fee on use tax remittance. Tax shall be deemed

inventory and commodities or tangible personal property to be

consumers use tax if:

erected upon or affixed to real property. [C.R.S. 39-26-103.5(a)]

(1) before direct pay permission was granted, the tax-

payer had properly avoided sales tax on purchases

For the past three years, or for the time in business in Colorado

from a particular vendor due to another exemption,

if less, applicant must have timely reported and remitted all

taxes fees as required under Colorado tax statutes (C.R.S. title

(2) it was not necessary for the taxpayer to present the

39: sales, use, income, withholding, etc.).

direct pay permit or number to avoid sales tax charged

by the vendor, OR

Applicant has in place an accounting system that will enable the

(3) the vendor is not licensed to collect Colorado sales tax.

remittance and proper individual reporting of state, municipal,

county or other local entity sales taxes the Department of

STEPS NECESSARY TO COMPLY WITH REMITTANCE

Revenue collects. [C.R.S. 39-26-10(c)]

REQUIREMENTS:

Permit holders must file direct pay state, city, county or district

You must attach a brief explanation of how your accounting

sales taxes in the manner and as frequently as specified by the

system will comply with and meet these state and local tax

Department, subject to periodic updates. Initial requirement will

identification and remittance requirements. Explain any provi-

be for monthly returns on a computer spreadsheet (paper)

sions you will make to limit the use of the direct pay permit to

return, based on an outline supplied by the Department. This

certain facilities or divisions and list the facilities and their

direct payment of sales tax permit status may be canceled or

locations. Explain how vendors who supply other facilities or

revoked at any time based on any delinquency of complete

divisions will be informed of limitations you apply to use of the

return information. Delinquent returns, payments or returns

direct pay permit, and how you will audit the vendors compli-

which provide incomplete information for any direct pay sales

ance to avoid municipal or county sales tax underpayment.

tax may be assessed penalties, interest or denial of vendors fee

by the Department. Any underpayments are subject to discov-

Permit holders must remit direct pay taxes for any local sales

ery on audit, assessment and collection.

tax administered by the Department, if the seller should have

Form Dr 0002 - Colorado Direct Pay Permit Application Page 2

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