A Bill for an Act
Page 1, Line 101Concerning the retention of the sales tax vendor fee for
Page 1, Line 102collecting and remitting state sales tax.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
Current law requires a retailer to periodically remit to the department of revenue the sales tax revenue that it collects and allows some retailers to retain a sales tax vendor fee to cover the retailer's expenses incurred in collecting and remitting state sales tax (vendor fee).
For sales made on or after January 1, 2026, the bill increases the maximum dollar amount that a retailer may retain as a vendor fee from $1,000 to $2,000. Beginning on January 1, 2026, the bill requires that:
- The percentage of sales tax reported that a retailer may retain as a vendor fee must never fall below 2% of the tax reported; and
- The maximum dollar amount that a retailer may retain in any filing period as a vendor fee must never fall below $2,000.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. Legislative declaration. (1) The general assembly finds and declares that:
Page 2, Line 3(a) Small retailers are the backbone of Colorado's economy and
Page 2, Line 4a vital part of the communities they serve. From main street shops to
Page 2, Line 5family-run businesses, small retailers provide jobs, sponsor local events, and keep dollars circulating in Colorado's neighborhoods.
Page 2, Line 6(b) Colorado's retail sector faces a growing burden from
Page 2, Line 7ever-increasing regulations, compliance requirements, and administrative
Page 2, Line 8costs. The vendor fee, allowing retailers to retain a small percentage of
Page 2, Line 9the state sales tax they collect, was created to help offset those costs and
Page 2, Line 10recognize the important role that small businesses play in collecting and remitting sales tax revenue on behalf of the state.
Page 2, Line 11(c) Current law permits retailers that make less than $1 million per
Page 2, Line 12filing period in taxable sales income to keep 4% of the state sales tax that
Page 2, Line 13they collect, up to $1,000 per filing period. This cap has not kept pace
Page 2, Line 14with rising costs, making it harder for small retailers to absorb the impact of regulatory changes and inflation.
Page 2, Line 15(d) The general assembly intends to strengthen support to retailers
Page 2, Line 16by increasing the maximum vendor fee retention cap to $2,000 per filing
Page 2, Line 17period. This adjustment will help small retailers remain competitive,
Page 2, Line 18protect local jobs, and sustain the economic vitality of communities across Colorado without increasing taxes.
Page 3, Line 1SECTION 2. In Colorado Revised Statutes, 39-26-105, amend (1)(d)(I)(A); and add (1)(d)(V) as follows:
Page 3, Line 239-26-105. Vendor liable for tax - definitions - repeal.
Page 3, Line 3(1) (d) (I) (A) For sales made on or after January 1, 2020, except as
Page 3, Line 4provided in subsection (1)(d)(I)(B) of this section, the amount retained by
Page 3, Line 5a retailer to cover the retailer's expense in collecting and remitting tax in
Page 3, Line 6accordance with this section is four percent of the tax reported; except
Page 3, Line 7that, for sales made on or after January 1, 2020, but before
Page 3, Line 8January 1, 2026, a retailer shall not retain more than one thousand
Page 3, Line 9dollars in any filing period, and for sales made on or after January
Page 3, Line 101, 2026, a retailer shall not retain more than two thousand dollars in any filing period.
Page 3, Line 11(V) (A) On and after January 1, 2026, the percentage of
Page 3, Line 12sales tax reported that a retailer may retain to cover the
Page 3, Line 13retailer's expense in collecting and remitting tax as set forth in
Page 3, Line 14subsection (1)(d)(I)(A) of this section must never fall below two percent of the tax reported.
Page 3, Line 15(B) On and after January 1, 2026, the maximum dollar
Page 3, Line 16amount that a retailer may retain in any filing period as set
Page 3, Line 17forth in subsection (1)(d)(I)(A) of this section must never fall below two thousand dollars.
Page 3, Line 18SECTION 3. Act subject to petition - effective date. This act
Page 3, Line 19takes effect at 12:01 a.m. on the day following the expiration of the
Page 3, Line 20ninety-day period after final adjournment of the general assembly; except
Page 3, Line 21that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 3, Line 22of the state constitution against this act or an item, section, or part of this
Page 4, Line 1act within such period, then the act, item, section, or part will not take
Page 4, Line 2effect unless approved by the people at the general election to be held in
Page 4, Line 3November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.