University of Colorado Denver
Sales Tax Procedure
The purpose of this procedure is to ensure that University of Colorado Denver complies with sales
tax regulations for the State of Colorado, County and City of the location of sales, and Special
District as appropriate.
I. What is a Sales Tax?
Colorado’s sales tax is a transactional tax charged when a buyer purchases tangible
personal property or benefits from certain taxable services in Colorado. Colorado
imposes a sales tax of 2.9% on retail sales transactions of 17 cents or more. Colorado
State’s sales taxes are levied upon the transaction itself which apply to both profitable
transactions and transactions that do not generate profits. The sales tax is charged on the
sales price.
A. Tangible personal property- is personal property that can be felt or touched.
Examples include food and beverages, publications, t-shirts and other clothing, mugs,
pens, books and souvenirs, etc. Intangible personal property is not subject to tax.
Examples of intangible personal property include contracts, common currency, gift
certificates, tickets, commercial paper, patents, copyrights, etc.
B. Taxable services- Normally taxable services include rooms and accommodations,
catering, commercial gas and electrical service, steam, telephone and telegraph service,
transportation charges.
II. Should the University Pay Sales Tax When Making Purchases?
No. The University of Colorado, as a public institution of higher education of the State of
Colorado is exempt from all federal excise taxes under Chapter 32 and 33 of the Internal
Revenue Code and from all Colorado State and local government sales taxes. The
University’s tax exempt status applies only to purchases made for the exclusive use of the
University and using a University purchase order or University procurement card. A
purchase by a University employee who is making the purchase with personal funds —
even if the employee presents a tax-exemption number and plans to be reimbursed — is not
tax-exempt. Tax exempt certificates for CU campuses are available at
https://www.cu.edu/psc/purchasing/vendor/exemption.html .
1
III. Determining When to Charge Sales Tax
When the University sells tangible personal property or products or perform taxable
services (please see Section I.B of this procedure) to a non-exempt end user, the University
must collect sales tax.
A. The University shouldn’t charge sales tax under the circumstance where a purchaser
presents a Colorado tax exemption number and/or tax-exempt certificate for in state
exempt purchases. Because not all states issue tax exemption numbers, you may
request the purchaser to sign a verification affidavit or a statement and record
additional information for sales to Out-of-State tax-exempt organizations. The
department must keep a copy of the tax-exempt certificate, record the tax exemption
number, date of sale, goods purchased, and name of the organization to demonstrate
the purchaser’s tax exemption for each sale. Please keep this record on file
permanently for audit purposes.
B. Leases/rentals are also subject to sales tax such as computer leases to students, caps
and gowns rented for commencement.
C. With the exception of taxable services detailed in Section I.B of this procedure,
Colorado does not generally impose sales tax on pure services. If a sale involves both
goods and services, such as auto repair services which involve charges for parts
(tangible personal property) and labor (services), services must be itemized separately
on the services provider’s bill to have exempt status. Failure to do this can cause the
entire amount of the sale subject to sales tax. If itemized, the parts are taxable but the
service is not.
IV. Special Consideration: Food and Beverage Sale
A. Non-Taxable Food and Beverage Sale
“Food” means food for domestic home consumption
1. Food items and canned drinks sold from vending machine are nontaxable.
(Please see Section IV.B.1 of this procedure for exception)
2. Meals provided at no cost or reduced cost to employees, if the meal is considered
part of the employee’s income, are nontaxable.
B. Taxable Food and Beverage Sale
1. Taxable Food and Beverage Sold from Vending Machine
The following items are not considered to be food when sold in a vending
machine and would therefore be taxable:
Carbonated water marketed in containers
Chewing gum
Prepared salads
Packaged and unpackaged cold sandwiches
2
Hot or cold beverages served in unsealed containers or cups that are
vended by or through machines or non-coin operated food and snack
devices
2. Prepared Food and Beverage for Immediate Consumption
Prepared food and beverage for immediate consumption are always taxable.
Examples include:
All food furnished or served for consumption at tables, chairs, or counters,
or from trays, glasses, dishes, or other tableware provided by the retailer.
All hot food and food marketed to be heated on the premises.
Food and beverage served or furnished in or by restaurants, cafés, lunch
counters, hotels, snack bars, caterers, carryout shops, pushcarts, motor
vehicles, and other like places of business at which prepared food is
regularly sold.
Food and beverage sold in gift shops, offices or other commercial
buildings, recreation facilities etc.
3. Fund-Raising Meals
Fund-raising meals priced in excess of the regular selling price are subject to tax
on the regular selling price.
V. Determining How Much Sales Tax to Charge
Sales tax= sales price times sales tax rate
The sales tax rate used to calculate the sales tax depends upon the following factors:
The type of product being sold and
When the sale took place and
Where the sale took place, i.e., where the customer took possession of the product.
A. Product and Tax Rate
Exhibit 1, on the next page, lists items frequently sold on campus, and identifies which
sales tax rate to apply.
3
Note: This is not an all-inclusive list of items to be taxed. It is a representative sample.
Contact your area accountant for questions.
Exhibit 1
Identifying the Appropriate Sales Tax Rate to Apply
Example Taxable item
(Listed in Alphabetical Order)
Artwork
Audio Tapes
Books
Calculators
CDs
Class Notes
Computers
Computer Printouts
Containers (Tanks)
Craft Items
DVDs
Food Service Equipment
Greeting Cards
Jewelry
Map
Mugs
Musical Instruments
Office Supplies and Equipment
Plants
Photocopies
Photographs
Postcards
Posters
Prepared Food and Beverage
Sales from
Carry-out Shops
Concession Stands
Café
Gift Shops
Offices
Pushcarts
Restaurants
Snack Shops
Publications
Stationery
Souvenirs
T-Shirts and Other Clothing
Videos
Use General
Sales Tax Rate
Use Food & Beverage
Sales Tax Rate
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
4
B. Current Sales Tax Rate Searched by Address
Sales tax rates are subject to change during both January and July of each year.
Current sales tax rate for Downtown Denver Campus is 7.72%
Current sales tax rate for Anschutz Medical Campus is 8.60 %
Current sales tax rate for off-campus locations, please go to website below:
http://taxco.g1.com/CentrusRegistration/RegPanels.aspx?Redirect=CentrusDemo.
It is the site that allows you to determine local tax jurisdictions and tax rates based
on address inputs. It is free at no charge to Colorado businesses.
C. Sales Tax Calculator Website
You can use the website below to calculate sales tax.
http://www.businesstax.state.co.us/calculator/
Enter the tax rate and press the "Calculate" button. This will calculate sales taxes on
sales from .01 to 100 dollars for the rate entered.
VI. Operational Aspects of Sales Tax
A. Displaying the Sales Tax License
The University of Colorado Denver has current standard State of Colorado sales tax
license and City and County of Denver sales tax license. Current sales tax license is
required to be posted in a conspicuous place in the sales location.
Copies of these licenses are available from the Finance Office
by email at wei.wan@uchsc.edu
by phone at 303-315-2266.
B. Displaying Sales Tax Charged
In order to have good records of the amount of sales tax collected for each sale, we
recommend that sales tax charged should be displayed as a separate line item on the
receipt given to a buyer at the time of each sale. In circumstances where sales tax can’t
be displayed separately on the receipt or no receipt is available to the buyer at the time
of sale, you may impute sales tax but should let the buyer know the sales tax rate and
the fact that the sales price includes sales tax.
C. Fundraising Special Events Sales Tax
For fundraising special events sale, please contact Special Event Compliance
Coordinator Karen Ichiba by phone at 303-315-2084 or by email at
karen.ichiba@cusys.edu for policy and procedure.
D. Recording Sales Tax to Account Code 100400 Sales Tax Payable
Except for fundraising special event sale, please record sales tax payable in the same
speed-type where sales revenue sits.
1. Recording Sales Tax by Cash Receipt
When the cash receipt is prepared to record the sales revenue and sales tax, the
sales tax liability is listed on a line separate from the revenue.
Exhibit 2, on the next page, provides an example of how to record revenue and
sales tax liability on a cash receipt form.
5
Note: A copy of each cash receipt on which revenue and sales tax liability are recorded
must be kept on file by the department. The department is responsible for producing the
necessary documentation in the event of an audit.
Exhibit 2
Recording Revenue and Sales Tax Liability on a Cash Receipt
University of Colorado Denver
CASH RECEIPT
DATE
CASH RECEIPT No.
Enter the date,
cash receipt
no., and your
department
information in
this section.
DEPARTMENT NAME
PREPARED BY
AUTHORIZED SIGNATURE
DEPARTMENTAL ADDRESS/CAMPUS BOX
Revenue
Line
** Revenue
account range
is 200000379999.
Please click
the following
link for
reference.
http://www.uc
dhsc.edu/admi
n/finance/docu
ments/Aux_R
ev_021903_C
hart.xls
Sales Tax
Liability
Line
PHONE
(#) INDICATES NUMBER OF CHARACTER SPACES
(10)
(6)
(5)
(10)
(5)
(5)
(4)
(15)
Speed Type
Account
Fund
Org
Program
SubClass
Budget Year
Project/Grant
62914567
Revenue
**
29
(30)
20851
45892
(6)
Description
2008
( 16 )
(1)
Reference
Amount
T-Shirts Sales Revenue
D/C
$200.00
Speed Type
Account
Fund
Org
Program
62914567
100400
29
20851
45892
Description
SubClass
Budget Year
C
Project/Grant
2008
Reference
T-Shirts Sales Tax Liability
D/C
$15.44
Cash
Checks
Credit
Cards
$215.44
C
TOTAL THIS PAGE
$215.44
TOTAL FROM ATTACHMENT
Wire
-
Other
CASH RECEIPT TOTAL
Total
$215.44
$215.44
TOTAL MUST MATCH CASH RECEIPT TOTAL
6
2.
Imputing Sales Tax
Some departments prefer impute sales tax instead of booking it directly at the time
of sale. Total sales are recorded into revenue account. At a later date, a journal
entry is prepared to move sales tax payable from the revenue account to account
code 100400 sales tax payable. This method is not recommended. The journal
entry and supporting documentation must be sent to the Finance Office for
approval by journal entry deadline of the month that sales event ends. If you have
a permanent location where sales are conducted continuously, the journal entry and
supporting documentation must be sent to the Finance Office for approval by
journal entry deadline of every month.
a. Determine the current sales tax rate. Please see Section V.B of this procedure
to determine the current sales tax rate.
b. Calculate sales tax payable.
Step1.
Step2.
c.
Take
Divide By
To Get
Total Sales
1+Current Sales Tax Rate
(for example 1+.0772=1.0772)
Taxable Base
Take
Minus
To Get
Total Sales
Taxable Base (from Step 1)
Sales Tax Payable
Record the total sales, including sales tax, in your speed-type using a revenue
account. Use the normal cash receipt process through the Bursar Office.
d. Create a journal entry to record the sales tax payable.
Debit
Credit
the speed-type revenue account code used in step #3, above.
the same speed-type where revenue sits account code 100400.
Note: A copy of each cash receipt on which revenue is recorded and a copy of the journal
entry for recording sales tax liability must be kept on file by the department. The
department is responsible for producing the necessary documentation in the event of an
audit.
VII. Questions:
Please contact Diane Roche at Finance Office for any sales tax questions. Diane can be
reached by phone at 303-315-2254 or by email at diane.roche@ucdenver.edu.
7