If you’re selling at a festival, craft fair, or holiday market in Colorado, you need a special event license from the Colorado Department of Revenue, you must collect the combined state and local sales tax for the event’s location, and you must file Form DR 0098 and remit the tax by the 20th of the month following the event. Colorado’s special event sales tax rules apply whenever more than three sellers gather at a location that isn’t their normal place of business. The state rate is 2.9 percent, and nearly every event location adds county, city, or special district tax on top of that.1Department of Revenue – Taxation. Special Event Sales Tax
One exception collapses the whole process: if the event organizer has obtained a special event license and is collecting tax on behalf of vendors, you don’t need your own license or return for that event.2Department of Revenue – Taxation. Special Event License Ask the organizer in writing before the event. If they aren’t collecting for you, everything below applies.
Which License You Need
Colorado offers two versions of the license under ยง 39-26-103(9).2Department of Revenue – Taxation. Special Event License
- A single event license covers one event at one location and costs $8.
- A multiple event license covers unlimited special events over a two-year cycle tied to even-numbered years. It costs $16 if you buy it between January and June of an even-numbered year, or $12 if purchased between July and December (prorated for the remainder of the cycle). The license expires at the end of the following odd-numbered year.
If you already hold a standard Colorado sales tax license, the special event license fee is waived, but you still need the license itself.2Department of Revenue – Taxation. Special Event License Apply using Form DR 0589, submitted with the fee and a copy of a government-issued photo ID.3Colorado Department of Revenue. DR 0589 – Special Event Sales Tax Application
The math on the choice is simple. If you’ll attend two or more events in the two-year window, the multiple event license is cheaper and cuts paperwork, because single event holders file a separate return for every event.
Home Rule Cities Need Their Own License
This is the compliance trap that catches the most vendors. The state license covers state tax and state-administered local taxes only. It does not cover home rule cities, which collect and administer their own sales tax.4Department of Revenue – Taxation. Local Government Sales Tax Denver and Broomfield are the most familiar examples, but dozens of Colorado municipalities are self-collecting.
If the event is inside a home rule city, you likely need a separate license from that city and must file a return directly with its tax office in addition to your state filing. Each home rule city sets its own rates, exemptions, and deadlines. The DR 1002 publication lists self-collecting jurisdictions and their contact information.5Department of Revenue – Taxation. How to Look Up Location Codes and Tax Rates Call the city before the event.
Finding the Right Rate
Every event location in Colorado has a six-digit location code that determines the combined rate: the 2.9 percent state rate plus applicable county, city, and special district taxes.6Department of Revenue – Taxation. Sales Tax Guide Look up the code and rate using the Department’s GIS tool or the DR 1002 spreadsheet before you set your prices, not after.5Department of Revenue – Taxation. How to Look Up Location Codes and Tax Rates
To calculate what you owe, take gross sales for the event, subtract qualifying deductions (sales to exempt buyers, refunds on returns), and multiply the resulting net taxable sales by the combined rate for the location.
Exempt Sales and Resale Certificates
Sales to a business that’s buying for resale can be exempt if the buyer gives you Form DR 5002 (Declaration of Wholesale or Entity Sales Tax Exemption) at the time of purchase.7Colorado Department of Revenue. DR 5002 – Declaration of Wholesale or Entity Sales Tax Exemption Keep the form in your records rather than sending it in. Out-of-state buyers can present a valid resale certificate or sales tax permit from their home state.
If you can’t produce the certificate during an audit, you owe the tax as if you’d never had an exemption. The burden is yours.
Filing Form DR 0098
Special event sales tax is reported on Form DR 0098.8Colorado Department of Revenue. DR 0098 – Special Event Retail Sales Tax Return Single event license holders file one for each event. Multiple event holders file on the schedule set when their license was issued.
Revenue Online is the Department’s preferred filing channel. Log in, select “File a Special Event Sales Tax Return” under the Sales and Use Tax section, locate your event, enter sales figures for each jurisdiction, and pay. Paper returns are still accepted.
Deadline and Late Penalties
The return and payment are due by the 20th day of the month following the month the event began.9Department of Revenue – Taxation. Colorado Taxes and Fees Due Date Guide A three-day festival that starts September 12 produces a return due October 20.
If you miss the deadline, the penalty is the greater of $15 or 10 percent of the unpaid tax, plus 0.5 percent of the unpaid amount each additional month, capped at 18 percent overall. Interest accrues on top of that at a rate the Department sets annually.10FindLaw. Colorado Revised Statutes Title 39 Taxation 39-26-118 For a small vendor, a return left unfiled for several months can generate charges that exceed the tax itself.
Records to Keep
Colorado requires vendors to keep books, accounts, and records that support the tax reported for at least three years.6Department of Revenue – Taxation. Sales Tax Guide Hold onto copies of every DR 0098, transaction receipts, exemption certificates, and Revenue Online confirmations. If an auditor asks for backup and you don’t have it, the Department will estimate your liability, and the estimate is unlikely to be generous.