Colorado Sales Tax Credit card surcharges

The Colorado Department of Revenue has issued guidance on whether the purchase price for sales tax purposes includes surcharges on credit transactions and, thus, whether such surcharges are subject to sales tax. Under Colorado law, sales tax is imposed on retail sales of tangible personal property, and the taxable purchase price is the price to the consumer, including the entire amount of money received or due in cash and credits. Effective July 1, 2022, Colorado law will permit a seller or lessor to impose a surcharge on a buyer or lessee who elects to use a credit or charge card to make payment. A surcharge may not be imposed if another method of payment is used, and the surcharge amount must be listed as a separate line item on the customer’s receipt. Similarly separately stated charges, such as transportation charges, are generally not part of the taxable purchase price if they are also separable from the sales transaction and the retailer did not shift part of the actual sales price to the separately stated charge in order to avoid sales tax. Therefore, credit card surcharges that comply with the statutory requirements, and are not used to shift part of the actual sales price, are likewise not part of the taxable purchase price. (Colorado General Letter Information Letter No. GIL-22-004, 05/05/2022.)