Colorado Enacts COVID-19 Tax Relief for Restaurants, Bars and Mobile Food Vendors

In order to provide assistance during the COVID-19 pandemic, Colorado has enacted legislation that provides a temporary deduction from state net taxable sales for qualifying bars, restaurants and mobile food service vendors. The legislation allows qualifying bars and restaurants to deduct the lesser of state net taxable sales or up to $70,000 in net taxable sales from their monthly state sales tax return and retain the resulting sales tax revenue. One deduction is permitted per month for up to five properly licensed fixed physical premises. A qualifying mobile food vendor can deduct the lesser of aggregate state net taxable sales for all sites or up to $70,000 per motorized vehicle or nonmotorized carts and retain the resulting sales tax revenue for each month in the specified time period. The temporary tax deduction is allowed for sales made from November 2020 through February 2021. The temporary deduction applies to state level taxes only. It does not apply to city, county or special district sales taxes. For more information, visit the Colorado Department of Revenue webpage. Vendors in the Colorado food service industry will want to take advantage of this temporary offer in order to help make it through the pandemic. (H.B. 1004, Laws 2020; COVID-19 Sales Tax Relief, Colorado Department of Revenue, December 8, 2020)

UPDATE: This sales tax relief for bars, restaurants, caterers, and mobile food retailers has been made available again for sales made in July 2022, August 2022, and September 2022. Find out details and if it applies to your business from Colorado’s Department of Revenue, here> The special deduction does not apply to any taxes imposed by any state-administered city, county, or special district. (Colorado Department of Revenue, H.B. 22-1406, effective July 2022)

Posted on July 19, 2022