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Sales Tax

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1. What is Windsor's sales tax rate?

Windsor's Sales and Use Tax rate is 3.2% of net sales and service in Windsor.

In Windsor, all food, beverages, machinery, and tools are taxable. The State of Colorado sales tax exemption does not apply.

2. Leases of motor vehicles and othr tangible personal property

Windsor Municipal Code Sec. 4-3-480. Tax on credit sales. “Whenever tangible personal property is sold… under a conditional sales contract or rental purchase contract, whereby the seller retains title as security for all or part of the purchase price, the total tax, based on the total selling price, shall become immediately due and payable.”

Leases are subject to the same sales taxes as if an outright sale of property has taken place. If the lessor retains title to a vehicle or equipment in the Town, the lessor meets the definition of “engaged in business”, Windsor Municipal Code, Sec. 4-3-30, and the vendor must obtain a Windsor sales tax license, and must collect and remit the Windsor sales tax due.

COLLECTION REQUIREMENT ON LEASES
Leases more than 36 months: When the right to continuous possession or use for more than three (3) years of any article of tangible personal property is granted under a lease or contract and such transfer of possession would be taxable if outright sale were made, such lease or contract shall be considered the sale of such article, and the tax shall be computed, collected and remitted by the vendor upon the rentals paid.

Leases 36 months or less: In the event the lease is less than 36 months – the Town may allow the vendor to opt to collect the sales tax on (1) the entire value of the lease, or (2) each individual lease payment. However, once the vendor establishes how the tax is collected, they are not allowed to deviate from the selected approach.

Location of the “lessor” - The lessor location is a factor in determining how the tax is imposed. If a dealer prepares the lease papers and the lessee obtains the vehicle from the dealer, then the location of the dealer is used as the lessor’s location. If a leasing company prepares the lease papers, but the vehicle is obtained from a dealer, the location of the dealer is used as the location of the lessor. If a broker prepares the lease papers, the location of the broker is used as the location of the lessor.

Location of the “lessee” – The lessee location must also be considered. The address where the vehicle is to be garaged should be used as the lessee location. If the vehicle is garaged in Windsor (see the town of Windsor Street/Address Locator found on the website) then Windsor sales tax is applicable.

If the locations of both the lessor and the lessee are in the same jurisdiction, then sales tax is calculated based on the regulations in that local jurisdiction. However, if the locations of the lessor and lessee are in different jurisdictions, the lessor must calculate, collect and remit all applicable city, county, and state sales tax based on the jurisdiction of the lessee.

3. What are the sales tax regulations for a retail business in Windsor?

In Windsor, a Sales Tax License is MANDATORY when any person is engaged in the business of selling retail tangible personal property, including food and taxable services, to the general public regardless of local presence, prior to the first day of conducting business.

A sales tax license assigns you the right and the obligation to collect taxes for the Town of Windsor. These monies are a public trust and must be remitted directly to the Town of Windsor’s Director of Finance.

Approval of your sales tax license is not “all inclusive” and does not give permission to do business in Windsor. It does not guarantee approval of other ordinances, codes, or regulations in the Town, County or State.

Contact other Windsor Municipal offices, Weld County offices or Larimer County offices, and the State of Colorado for information concerning zoning, signage, health, safety, liquor licensing, and etcetera as they may pertain to your business.

4. What kind of Sales Tax License do I need?

NEW BUSINESS = $10.00 First time applicants with no prior history of conducting sales in Windsor. A new business license issued after November 15 of each year shall be valid for the remainder of the current year and all of the next calendar year.

SPECIAL EVENT = $10.00 Per Event Per Calendar Year – The license applies to the Event Organizer only when three or more vendors sell goods at fairs, festivals, bazaars, etc. A Special Event Sales Tax License is not the same as a Special Event License. (See FYI 09 – Organizing a Special Event – for more information)

RENEWALS = $10.00 Per calendar year. The RENEWAL PERIOD is between October and December annually and applies to the next calendar year. Failure to obtain a renewal license by the December 31st expiration date shall result in payment of increased fees according to the following schedule: After January 1 = $15.00; After February 1 = $20.00; After March 1 = $25.00

5. What are the sales tax requirements to host a Special Event in Windsor?

Definition of “Special Event” means any sales event taking place at a single location for a limited period of time not to exceed seven (7) consecutive days, which includes three (3) or more vendors.

Some popular annual Special Events held in Windsor include: Pelican Fest, 4th of July Celebration, Roar of the Rockies, Harvest Festival, October Fest; and Christmas in Windsor.

During the planning of any special event in Windsor, you should anticipate meeting with the departments listed in this FAQ to obtain approval of all the required license(s) and permit(s) of the Town Code and State Statutes.

For your financial benefit, it is highly recommended that before you start your advertising campaign, you allow enough time for these departments to properly review and prepare the licenses and/or permits necessary for your successful event.

v Sales Tax Department – 970-674-2486 – special event Sales Tax License for Windsor.
v Recreation/Parks Department – 970-674-3500 – Facility reservations or Parks permits. You must complete the Town’s facility permits and have prior approval before conducting any event at a Windsor park or City building. Fees vary.
v Town Clerk Department – 970-674-2404 – Liquor License (if distributing alcohol is part of your event). Fees vary.
v Windsor Harvest Festival Event Organizer – 970-674-3512 – A city-wide festival celebrated annually during Labor Day weekend. The Town is the event organizer. Contact this office if you are interested in participating or volunteering in this festival.
v Police Department – 970-674-2429 – Special Event License. This is an event license and is not the same as the sales tax license.
v State of Colorado Department of Revenue – 970-498-7050 – Special Event Sales Tax License and other vendor requirements for Colorado.

SPECIAL EVENT LICENSING IN WINDSOR
Only the Event Organizer is required to obtain a Windsor Special Event sales tax license. A minimum of thirty (30) days is recommended for planning and meeting with town officials for event approval. The cost of the sales tax license application is $10.00. The fee is not refundable. In cases when an event must be cancelled due to inclement weather and rescheduled, all the processes and approvals from all departments must be re-submitted and re-approved for the new date(s). The fee may be waived on the new sales tax license application.

This FAQ is not all-inclusive of all regulations in the Town of Windsor. PLEASE REVIEW ADDITIONAL FAQs in the "Sales Tax" section in the Finance Department on this website for additional information.

6. Are Shipping and Delivery Charges and Drop Shipping Taxable?

http://www.windsorgov.com/DocumentView.aspx?DID=1163 Sometimes it becomes confusing when a business is trying to determine if shipping charges are taxable or exempt from sales tax on a sale. The charge can be either taxable or exempt from tax, depending on who assumes responsibility for loss or damage during shipping.
Generally, when the business assumes responsibility for the property loss or damage during shipping, then shipping charges are taxable. If the buyer or common carrier is assuming the responsibility for property loss or damage, then it is not taxable.

TERMINOLOGY USED IN THIS FYI:
Shipping Charges can be referred to as “shipping”, “shipping & handling”, “freight”, “delivery”, or “transportation fees”. Shipping includes common carrier freight and transportation or delivery in the vehicle of the seller and drop shipping.
Property is referring to “tangible personal property” or “merchandise” or “inventory” that is sold in a retail transaction.
Seller is referring to “the company”, “the business”, “the merchant”, “the retailer”, “the vendor”, or “the person who is releasing ownership of the property”.
Buyer can be referred to as “the customer”, “the purchaser”, or “the person acquiring the property”. They have become the end user of the merchandise when they assume title or ownership of the property.
Common Carrier is referring to a company whose business it is to only perform a delivery service. Examples could be the US Mail, UPS, or FedEx. Private courier companies also fall into this category.
TAXABLE SHIPPING CHARGES
When the act of shipping is combined with a retail sale of tangible property, the charge for shipping becomes part of the selling price of the product.
1. If the seller assumes responsibility for loss or damage to the property during shipping and the seller recovers that expense from the buyer, it becomes part of the selling price of the property; whether or not it is billed as a separate charge.
2. If the charge for shipping appears on the invoice, the charge is presumed to be taxable, unless the seller can demonstrate that they did not assume responsibility for loss or damage of the property during shipping. Otherwise, the seller is held liable for sales tax not billed on the receipt for shipping.
3. Freight charges appearing on the purchase invoice are presumed taxable, unless it can be shown that the buyer has no recourse to the seller if the merchandise is damaged during shipping.
4. If shipping charges are combined with any other taxable charges, such as “shipping and handling”, then the entire charge is taxable.
EXEMPT SHIPPING CHARGES
The act of shipping tangible personal property is generally a service when it is performed as a “stand-alone” transaction, then the shipping charge is exempt from sales tax.
1. Sometimes, as a convenience to the customer, the merchant will arrange for shipping on behalf of the buyer. If this service is arranged separate from the sale of the property, and the seller assumes no responsibility after it leaves the seller’s premises, then the charge for shipping is exempt. The seller has assumed no risk for the merchandise during shipping and the customer must go to the shipping company to recover the cost if the property is lost or damaged.
2. If the buyer is arranging for transportation, then the shipping cost is an exempt service. That shipper is an agent of the buyer and the buyer pays for shipping directly to the shipping company. This cost is not part of the purchase price of the property.

DROP SHIPPING

The Drop Ship method of merchandising allows anyone to sell products without buying and stocking any inventory of those products. Generally, these are internet sales. In short, the internet retailer takes orders and payment for the property; then forwards those orders to the supplier, who then ships the property directly to the customer. Under this system, the retailer does not have to invest any money in stock or inventory before it is sold. The advantages of this system include: minimal space requirements,
elimination of loss on unsalable goods, and zero packing and shipping expenses.
However, if the internet retailer is located in Windsor and they make a sale to a Windsor resident or business, then a physical presence has been made and he has created “Nexus” or “Agency” or “a connection” with the wholesaler. Therefore the retailer must be licensed and collect and remit the Windsor sales tax in these sales.

7. How do I fix an error on a previously filed tax return?

It is very important that taxpayers double check their returns for accuracy before remitting the return and the tax to the city and that every return is signed. However, once in a while, after remitting a tax return, you will discover that a payment in a previous period was either underpaid or overpaid because of a mathematical error or an omission on the return. Corrections or adjustments may be made in three (3) ways: amend an original return; apply an adjustment to a future return; or submit a refund claim in writing to the Director of Finance if the refund is greater than $50.00.
A taxpayer may apply for a refund or use a credit for overpayment within sixty (60) days after filing the original return provided the procedures outlined below are followed. In cases of overpayment, the Director of Finance will review the claim and either pay or deny the claim. If the claim is denied, the taxpayer will receive an explanation in writing of his decision. The taxpayer then has fifteen (15) days from that notice to request a hearing on the claim.

Be forewarned that a taxpayer who files multiple amended returns or multiple refund requests may be required to attend a sales tax class. Or, the account may be flagged for an immediate audit and an investigation for suspicion of evasion or avoidance of tax or for fault or fraudulent refund requests may follow.

You may find more information concerning Sales and Use Tax in the Windsor Municipal Code by logging onto our website at www.windsorgov.com and click on Information/Brochures. Select Municipal Code, then 04 Revenue & Finance. The index at the beginning of this chapter will lead you to the section you want to read.

The procedures on the following page provide instruction on how to correct errors on previously filed sales tax returns in Windsor. Check with Colorado Department of Revenue for methods to correct state filed sales tax returns.

IF YOU UNDERPAID THE TAX DUE IN ANY PERIOD, YOU MAY FILE AN AMENDED TAX RETURN:

• Make a copy of the original sales tax return for the period in error.
• Write “AMENDED RETURN” in large print at the top.
• Make your corrections “for the difference only”.
• Re-calculate the tax due based on the difference.
• Issue a check for the difference amount.
• Attach supporting documentation.

The amount you calculated and remitted on the Original return plus the amount of the “difference” on the Amended return must equal the total net sales and the total sales tax collected for Windsor during that period. You are not allowed to take additional Vendor Fees.

IF YOU OVERPAID THE TAX IN ANY PERIOD YOU MAY APPLY THE CREDIT ON YOUR NEXT RETURN:

• Prepare and calculate your next regular sales tax return as you normally would.
• Fill in Line 12 by entering the amount you overpaid on a previous return.
• DEDUCT Line 12 from Line 11 and enter that amount on Line 13.
• Write you check for the adjusted amount due.
• Make a notation in the space provided in Schedule A noting the period in which the overpayment occurred.
• Attach supporting documentation.

YOU MAY REQUEST A REFUND FOR OVERPAYMENT IF YOUR CREDIT IS MORE THAN $50 OR IF YOU FILE ANNUAL RETURNS BY:

• Requests must be in writing.
• Include your account number, name and address.
• Provide the contact person’s name and daytime phone number.
• Explain why a refund is being requested.
• Indicate the amount of the refund.
• Attach supporting documentation.

Credits less than $50 must be deducted on future returns unless you are an Annual Filer. If you are an Annual filer, you may not want to wait until the end of the next year to use the credit on the return in which you may write the Director and request a refund. If your overpayment was more than $50, you may not want to wait until the next filing period to deduct it from your regular return. Please be advised however, that after receiving your refund request in writing, it may take up to three (3) business weeks to generate a payment back to you.

8. What is required for licensing, reporting final sales tax due and payment of tax due on tangible business assets?

STARTING, BUYING OR CLOSING, SELLING A BUSINESS:
WHAT IS REQUIRED FOR LICENSING, REPORTING FINAL SALES TAX DUE, AND PAYMENT OF TAX DUE ON TANGIBLE BUSINESS ASSETS?

In Windsor, a sales tax license terminates the day the business changes ownership or quits. No license shall be transferable. The new owner is required to obtain a new sales tax license prior to the first day of business under their ownership.

A Final sales tax return and payment must be remitted to the Town of Windsor within fifteen (15) days after the business is sold or the taxpayer quits business. A final return must include all current and delinquent sales tax, penalty and fees collected through the last day of business.

Sales tax must also be remitted for tangible personal property assets acquired with the purchase or transfer of possession of the business based on the purchase price paid, within fifteen (15) days of purchase. Colorado Department Of Revenue requires payment within twenty (20) days of purchase (see CDOR FYI Sales 74 for more state information). Tangible assets do not include tax on inventory that is intended to be resold to the public in the course of regular business. Examples of tangible assets would include items like cash registers, shelving, scales, machinery, tools, ice makers, ovens and appliances, furniture, non-disposable dishes and service wear, utensils, linens, etc.

The Purchaser shall withhold sufficient money to cover all taxes until such time that the former owner produces a receipt from the Director showing all taxes have been paid in full.

Both the Seller and Purchaser is personally liable for all sales tax due and both are subject to tax collection proceedings for unpaid taxes, interest, and penalty and collection costs. Delinquent taxes are a subject to a lien on both the seller and purchaser.

A bona fide gift of tangible personal property is not a “sale”.

No final inspection shall be made by the Building Inspector and no Certificate of Occupancy shall be issued unless all taxes due have been paid. Town of Windsor Ordinance, Sec 4-45

PLEASE SEE THE FAQs in the Sales Tax section under the Finance Department for more information.