A Colorado reseller certificate is a great tool for anyone who wants to purchase goods from Colorado businesses and resell them within the state. However, the certificate must be appropriately used to receive the tax exemption on your purchases.

Learn how to use your Colorado reseller certificate following these four steps:

  • Step 1 

Identify eligible purchases to get started, and you’ll need to know what types of purchases your reseller certificate can cover. 

Eligible purchases include:

-Business and commercial equipment used for manufacturing, processing, fabricating, or producing tangible personal property;

-Raw materials, including electricity and natural gas used in manufacturing, processing, or fabricating tangible personal property for sale;

-Tangible personal property used in manufacturing, processing, fabricating, or producing a product for sale.

  • Step 2 

Decide how you will use your certificate. Your reseller permit can be used based on your company’s needs. For example, some companies apply the reseller certificate to each purchase while others use it for larger purchases.

  • Step 3 

Keep track of your reseller purchases and file your reseller certificate each quarter to claim the exemption on eligible purchases. Failure to submit your reseller certificate quarterly means you cannot claim exemptions during those quarters.

  • Step 4 

If you have any questions about using a Colorado reseller certificate, contact the Colorado Department of Revenue.

The application process

The application process involves;

  1. Download the application form

When you have the application form, you need to complete it.

  1. Prepare the Reseller Certificate form

After having the application form, you should make sure to get other forms that are required by the state. It will include the dealer’s resale certificate, affidavit for out-of-state businesses, and other documents that may be needed to process your application successfully.

  1. Submit the application form

After completing the forms, you need to submit them to the department of revenue to process your certificate.

The fees associated with a Colorado Reseller Certificate

There are several fees associated with a Colorado reseller certificate. These include:

-A $5 application fee, submitted with your initial application;

-A $5 renewal fee, paid every two years;

-A $1.50 monthly late payment penalty is charged if the reseller certificate isn’t submitted by the 25th of each month;

-A 1 percent monthly penalty on unpaid tax liability for each month the reseller certificate isn’t submitted; and

-An additional 10 percent penalty on unpaid tax liability is assessed in the case of fraud or intent to evade the law.

How long does it take for a Colorado reseller certificate to be approved?

The processing time for your reseller certificate depends on several factors. If you submit your renewal form before your current reseller permit expires, you can expect no additional delay in receiving your certificate. If you wait for your current reseller permit to expire, then there will be a one-month processing delay before the department issues your new certificate.

Conclusion

Apply as soon as possible to avoid delays in receiving your Colorado Reseller Certificate. The faster the state gets your information, the quicker you can begin getting exemptions on all of your purchases. Remember, you should use your reseller certificate within 120 days of receiving it, or you will need to re-apply for a new one.