Get A Colorado Resale Certificate Online | DR 0563 Form
HOW TO GET A RESALE CERTIFICATE IN COLORADO
A Colorado Resale Certificate (DR 0563 Form) is an official document issued by the Colorado Department of Revenue that allows businesses to purchase goods intended for resale without paying sales tax to the Colorado State. Sales Tax Exemption Certificate is issued in the form of a Sales Tax License. Businesses can use this license number as their resale certificate when making tax-exempt purchases for resale purposes. A Resale Certificate is commonly known as a reseller permit, resale license, reseller license, and tax exemption certificate.
To get a Resale Certificate in Colorado, complete the 3 steps given below.
✔ STEP 1 : Obtain a Colorado Sales Tax License
✔ STEP 2 : Fill out the Colorado Tax Exemption Certificate form
✔ STEP 3 : Present a copy of this certificate to suppliers when you wish to purchase items for resale
WHAT IS A COLORADO RESALE CERTIFICATE
A Colorado resale certificate is a tax-exempt form that permits a business to purchase goods from a supplier that are intended to be resold without the reseller having to pay sales tax on them. The Resale Certificate is issued by the Colorado Department of Revenue. It allows suppliers to know that you are legally allowed to purchase the goods without them having to charge you sales tax, since you will be reselling the goods and collecting sales tax from the consumer (end user). There is no limitation on where a reseller permit can be used as long as the seller accepts it. Also, any items can be purchased using the permit assuming that the items will be resold.
WHAT INFORMATION IS ON A COLORADO RESALE CERTIFICATE?
Common details listed on the Colorado resale certificate include the name (company or individual) and address of the buyer, a descriptive detail of the goods being purchased, a reference that this merchandise is intended to be resold and the accurate Colorado sales tax number. It is important that you follow the correct procedure and protocol involved in the resale certificate process. Any errors occurring during this process could cause delays or penalties to be incurred by either party.
IS A RESALE CERTIFICATE THE SAME AS A SALES TAX PERMIT IN COLORADO?
No, the Resale Certificate and Sales Tax Permit are not the same in Colorado. A Sales Tax License permits a business to collect sales tax from customers on taxable sales. A Resale Certificate allows a business to purchase items for resale without paying sales tax at the time of purchase. In Colorado, the Sales Tax License number functions as the Resale Certificate number. Therefore, obtaining a Sales Tax License enables a business to both collect sales tax and make tax-exempt purchases for resale purposes. In order to have a Colorado resale certificate, you must first apply for a Colorado sales tax permit. This sales permit will provide you with a Colorado Tax ID number (sales tax number) which will be a necessary field on the Colorado resale certificate.
DO I NEED A RESALE CERTIFICATE IN COLORADO?
Yes, you need a resale certificate in Colorado if your business is a retail or wholesale operation that does not want to be responsible for collecting sales tax on resold items and does not want to have any exposure to any future tax liability, then a Colorado resale certificate will be required. Since sales tax is only supposed to be paid one time on a taxable good or service, then you want to make sure you are compliant at your phase of the product’s sales life. Even though sales tax is usually paid by the end user, the only way to ensure this is with a Colorado resale certificate that is properly filled out.
DO I NEED A RESELLER'S LICENSE TO SELL ONLINE IN COLORADO?
Yes. If you sell taxable goods or services online to customers in Colorado, you are required to obtain a Colorado Sales Tax License. This license authorizes your business to collect and remit sales tax and to issue resale certificates to suppliers.
DOES COLORADO ACCEPT OUT OF STATE RESALE CERTIFICATES?
Yes. Colorado accepts out-of-state resale certificates, including the Multistate Tax Commission’s Uniform Sales & Use Tax Certificate. However, the seller has the discretion to accept or reject out-of-state certificates. It’s advisable to confirm with your supplier whether they accept such certificates.
HOW LONG DOES IT TAKE TO GET A RESALE CERTIFICATE IN COLORADO?
After registering for a Colorado Sales Tax License, your resale certificate is typically available immediately. You can access and print your resale certificate through the Revenue Online system once your account is active.
HOW LONG IS A RESALE CERTIFICATE VALID IN COLORADO?
In Colorado, resale certificates do not have a specific expiration date. However, it’s recommended to update them every three years to ensure the information remains current. Additionally, your Sales Tax License must be renewed annually to maintain the validity of your resale certificate.
HOW TO USE OR ACCEPT A COLORADO RESALE CERTIFICATE
To use a resale certificate in Colorado, present the seller with your resale certificate when making purchases intended for resale. The Resale License should be provided at the time of purchase to ensure the transaction is exempt from sales tax. It’s essential to use the resale certificate only for items purchased for resale and not for personal or non-resale purposes, which is prohibited and can lead to compliance issues.
Consider using the Uniform Sales & Use Tax Resale Certificate, accepted by 36 states, including Colorado, for transactions involving multiple jurisdictions. This multijurisdiction form simplifies the process when operating across state lines.