TR 43: Use Tax
"Use tax is levied upon the privilege of persons in the city to use, store, or consume tangible personal property located in the city and taxable services purchased or leased at retail and furnished within the city, whether purchased or leased inside or outside the city limits, and not subject to the sales tax imposed by this chapter. The use tax is remitted to the city by the person using, storing, or consuming the tangible personal property or taxable services. The use tax is a complement to the sales tax, and its purposes are to equalize competition between in-city and out-of-city vendors and lessors of tangible personal property and services and to eliminate incentives for city residents to leave the city to purchase or lease tangible personal property and taxable services"( 3-2-1(b), BRC, 1981).
Use tax is paid by the purchaser when sales tax has not been charged and collected by the seller. There are various reasons why sales tax would not have been collected.
Use tax due to the City of Boulder shall be reduced by the amount of sales or use tax legally paid to another Colorado municipality. This credit is not to exceed the amount of Boulder's sales/use tax as set forth in Section 3-2-5, "Rate of Tax," B.R.C. 1981.
When a Boulder business picks up a purchase in another city and pays the other city's sales tax, a credit is given for the amount of tax paid to the other city up to an amount equal to the Boulder use tax amount (see 3-2-5(a), BRC, 1981 for tax rate). If the Boulder tax rate is higher than the other city's tax rate, use tax is due on the difference. This is true for all legally imposed city tax collected on all purchases, with the exception of construction materials (see TR13: "Construction and Contractors" for more detail).
Use tax due to the City of Boulder shall also be reduced by the amount of sales or use tax legally paid to other states based on the following formula. The tax rate legally paid to another state is first reduced by the State of Colorado tax rate, then by RTD and any additional state collected taxes subject to use tax and then by the City of Boulder tax rate. Any remaining tax due is due to the City of Boulder not to exceed the rate set forth in Section 3-2-5, "Rate of Tax", B.R.C. 1981. This is true for all legally imposed tax collected on all purchases, with the exception of construction materials (see TR13: "Construction and Contractors" for more detail).
If a Boulder vendor picks up a purchase in another state and pays a legally imposed sales or use tax in that state in the amount of 5%, the credit is applied as follows:
The Boulder Revised Municipal Code states at Section 3-2-9(b): "The city's use tax shall not apply to tangible personal property that was previously subjected to a sales or use tax of another municipality, organized and existing under the authority of the Constitution or laws of the State of Colorado, lawfully imposed on the purchaser or user, equal to or in excess of the rate set forth in Section 3-2-5, "Rate of Tax", B.R.C. 1981. A credit shall be granted against the city's use tax equal to the tax paid by reason of the imposition of a sales or use tax of the other municipality on the purchase or use of the property. The amount of the credit shall not exceed the rate set forth in Section 3-2-5, "Rate of Tax", B.R.C. 1981. The use tax credit set forth in this subsection shall not apply to a sales tax paid on construction materials."
Use tax would not apply as specified in B.R.C. section 3-2-6(u), which states: "All property and services whose sale, purchase, or use the city is prohibited from taxation by the laws or Constitution of the United States or the Constitution of the State of Colorado."
If a vendor located outside the City of Boulder ships purchased items into Boulder and charges another city's sales tax, the Boulder business should not pay the other city's sales tax. The Boulder business should pay the invoice less the illegally charged city sales tax and remit use tax to the City of Boulder. It is the responsibility of the Boulder business to make sure that the proper tax is being paid and that the vendor collecting any Boulder sales tax is properly licensed with the City.
Any leased equipment or materials being used in the City of Boulder are subject to Boulder's sales/use tax. If the leased item is picked up outside the City of Boulder, the first month's sales tax is due to the City where the item was picked up. All the remaining months sales/use tax would be paid to Boulder (See TR24: "Leases & Rentals" for more detail).
Last Updated on Thursday, 14 March 2013 11:50