Colorado Adopts New Rule for Buyers’ Claims for Sales and Use Tax Refunds

On January 2, 2024, the Colorado Department of Revenue adopted a new rule regarding buyers’ claims for refunds of sales or use tax paid. The rule has been adopted as a result of legislation (H.B. 1118) enacted in 2022.

The rule outlines how buyers can apply for a refund along with the documentation and information that an applicant must provide. When claiming a refund of sales tax paid, an applicant must submit the following:

• A completed, signed Department Form DR 0137B (Claim for Refund of Tax Paid to Vendors) including the purchaser’s name, address and either their Colorado account number, social security number, or Federal Employer Identification Number (FEIN)
• A complete itemization of all purchases included in the claim
• Invoices, purchase orders, and receipts
• Proof of payment
• Any additional data, information and documentation required by the new rule based on the nature of the claim

The adopted rule includes more detailed information on what each of the above requirements entail. Additional details and Form DR 0137B can be found on the Department’s Sales Tax Refund webpage.

Per the rule, a penalty equal to 5% of the total refund claim will be imposed if a refund claim totaling $5000 or more is found to be materially incomplete. The claim is incomplete if it does not include both the required form and substantially all of the pertinent data, information and documentation required by the rule. Note that prior to assessing a penalty for an incomplete refund claim, the Department must notify the buyer (or preparer of the claim) that the claim appears to be incomplete. The purchaser (or preparer) must either correct any omission or withdraw the claim within 60 days of the date of the notice, plus any additional time allowed by the Department for reasonable cause. (Rule 39-26-703–2, Colorado Department of Revenue)