There are two types of use tax: Consumer’s and Retailer’s.
Consumer’s use tax is a complement to sales tax that is due when Denver sales tax was not collected on a retail purchase of taxable personal property and certain services that are used, stored, distributed, or consumed in Denver . Its purpose is to provide an even playing field between Denver businesses, which must collect Denver sales tax, and their out-of-Denver competitors.
Example 1: Tangible property that is used, stored, distributed, or consumed in Denver that was purchased from an out-of-Denver vendor that collected Colorado State sales tax but no city sales tax is subject to Denver use tax at the full Denver tax rate.
Example 2: Tangible property that is picked up in another Colorado city, which collects both the State and that city’s sales tax, which is subsequently used, stored, distributed, or consumed in Denver, is subject to Denver use tax unless the tax rate charged by the vendor is equal to or greater than the full tax rate in Denver (generally 7.65% effective 01/01/2015).
Example 3: Tangible property originally purchased for resale by a business in Denver that subsequently uses, stores, distributes, or consumes that property in Denver, instead of reselling it, is subject to Denver use tax.
Consumer’s use tax is reported on schedule B of the combined Denver sales/use tax return and on line 5.
Retailer’s use tax
is the equivalent of sales tax that is collected and remitted by a business located outside Denver that engages in business in Denver. It follows sales tax rules, is collected as sales tax, and uses sales tax returns to report and remit the tax.
Retail vendors located outside Denver that do business in Denver are required to collect and remit retailer’s use tax. Some out-of-Denver vendors, that are not required to collect Denver tax, voluntarily license to collect Denver tax as a service to their Denver customers. (By collecting retailer’s use tax on taxable sales, they relieve their customers from having to accrue and remit consumer’s use tax on those purchases).