What Do You Need to Know About Consumer Tax Laws in Colorado?

consumer tax laws

What Do You Need to Know About Consumer Tax Laws in Colorado?

By Rodney Atherton Attorney Arvada

When we talk about consumer tax laws, we are referring to consumption taxes – collecting a tax when someone purchases good and services. The most common form of consumption tax is retail sales tax. Most states have a general sales tax in effect, and nearly every state has laws specific to certain types of products such as liquor, cigarettes, and gasoline.

“Consumption taxes can take the form of sales taxes, tariffs, excise and other taxes on consumed goods and services,” notes Investopedia. “The term can also refer to a taxing system as a whole where people are taxed based on how much they consume rather than how much they add to the economy (income tax).”

The fundamental idea behind state consumer taxes is that it’s an accepted way for a state to collect revenue from ayone making purchases. However, taxes can have additional purposes as well – incentivizing people not to spend money on habits that threaten public health or lead to crime. In the case of alcohol, overconsumption leads to cases of physical abuse and drunk driving, so Colorado pushes people to control their drinking by charging extra taxes at the liquor store.

The basics on Colorado consumer taxes

Sales tax in Colorado is actually extraordinarily low vs. most other states, just 2.9 percent. (Compare that to 6.5 percent in Kansas and 5.125% in New Mexico, for instance.) However, as FindLaw discusses, a “home rule” tax system allows local governments to charge as much as 10.4 percent on sales (ie, an additional 7.5%). That means Denver’s sales tax is effectively 6.55 percent, because the city locally collects 3.65 percent.

In Colorado, the cap on gambling taxes is 40 percent, but brick-and-mortar casinos effectively have to pay 20 percent, half of which is sent to the state’s general fund.

Here are tax rates for different types of consumer purchases, as of October 2016:

  • Sales tax – 2.9% (reaching as high as 10.4% with local taxes included)
  • Cigarette tax – 84 cents on each standard pack of cigarettes
  • Marijuana tax – 10%
  • Gasoline tax – 40.4 cents per gallon (18.4 cents of which is a federal tax)
  • Use tax – 2.9%
  • Alcohol tax – Spirits, $2.28 per gallon; Wine, 28 cents per gallon; beer, 8 cents per gallon
  • Gambling tax – Maximum 40% of adjusted gross profits.

Understanding use tax

Use tax is tax on any transactions made via the Internet, phone, or mail order for which you did not pay Colorado sales tax. “Individuals and businesses have always been required to pay sales or use tax on taxable purchases from out-of-state vendors if the item is sold, leased, or delivered in Colorado for use, storage, distribution, or consumption in the state,” explains the Colorado Department of Revenue.

Do you have further questions about Colorado or federal taxation? At Ergo Law, we offer practical, accurate and effective tax advice, as well as innovative tax strategies and financial products to maximize wealth protection. Meet our attorneys.


Too Many Lawyers

too many lawyers rodney atherton attorney

By Rodney Atherton Attorney

Being a lawyer myself, I may not be the best person to suggest there are too many lawyers.  It may come across as self-serving to suggest others should stay out of this profession.  That’s not my point.

In the last 27 years of practicing law, I have noticed a disturbing trend in litigation.  There is way too much litigation and it seems that often the smallest of disputes ends up with lawyers involved advocating with as much animosity as one can muster on behalf of their client.  And the clients are stuck paying legal fees, trusting that the professional they have hired is working in their best interest.

This issue I have seen over and over is that the litigation process is expensive and disheartening for those that enter it. The judges are given imperfect facts that two parties typically recall from two very different perspectives.  A judge is asked to make a call on who is being more truthful and that judgment call is fraught with complexities that makes the judge’s job impossible to get right much of the time.  As a result, the clients are stick with imperfect conclusions by the judges and the lawyers are often left scratching their heads in disbelief with the judge’s ruling.  I have been there and I must admit that the system where parties are left to litigate their disputes should   be the absolute last resort.  Yet, the legal profession exists to provide what the lawyers claim is the ordinary citizens “access to justice.”  Yet, I see little justice occurring in the court system.

You cannot turn on the television these days without seeing a lawyer advertising and encouraging you to hire them to sue somebody and obtain justice.  Billboards litter our highways with this same junk.  We are constantly reminded to sue somebody to get what we deserve.   Really?

I believe one of the first changes we can make to create a better system is to have fewer lawyers.  I would like to see the general public find better ways to resolve their differences.  For example, there is a growing business in mediation where citizens can take their complaints to a mediator for the purpose of having an independent third party sit and listen to both sides and help the sides find a reasonable settlement.  But lawyers don’t steer clients this direction.   And as a result, the lawyers file the lawsuit and start making a living based on what I (from a somewhat cynical perspective) consider to be a system that benefits the lawyers at the detriment of their clients.

Fewer lawyers makes taking these trivial disputes less attractive.  But if a lawyer needs the hours to bill, they welcome the litigants walking into their office.

Recently, I have witnessed lawyers getting their clients excited over the slightest factual or legal analysis and even suggesting that the client’s pursue the opposing counsel for their litigation strategy.  If you don’t like the outcome of your case, you can even find a lawyer to sue your lawyer.  It does not seem to stop.

In spite of my complaints, I know that we have the best legal system among every other legal system in other countries.  But our system could be improved. And hold out little hope that it will be improved.  Instead, I would suggest that it will get worse.  The law school business model thrives on getting more students into those schools and so they turn out more and more lawyers.  In fact, they turn out a lot more lawyers than the medical schools turn out doctors.  That fact alone, should scare us.  To think that the ordinary citizen needs more legal help than medical help is disturbing.

So what do we do?  I have watched clients get sued and spend over a million dollars in defense costs.  I have been sued many times myself.  And I believe this trend for people in the business world will get worse.

Asset protection is one answer to this problem.  Take your assets and protect them from possible litigants that see you as a deep pocket – an answer to their financial woes.

There are many states that allow a person to shelter much of their assets in a self-settled trust for example.  You can set up your own trust, provide for you and your family from those assets and protect them from the reach of these litigation incensed plaintiffs and their advertising lawyers.

By Rodney Atherton Attorney

Business Overseas – A Smart Idea?

business overseas by Rodney Atherton Attorney

By Rodney Atherton Attorney

Business Overseas

In today’s uncertainty, I hear much about taking advantage of foreign investment worlds.  To many, this is “foreign,” so to speak, but for many there are reasons to look outside our country for investment.  A little bit of paying attention to the US markets makes one queasy.  The banking system is troubled, the government’s reliance on student debt payments makes me want to run away and with our election choices for president, we have reason to wonder how our country has in store for our investment portfolios, whether stocks, bonds, real estate, business interests or the many other forms of investment.

Maybe I am being a pessimist.  But the crash in 2008 taught us a good lesson and history does repeat itself.  And I am not the best person to rely on when it comes to how to invest.  In fact, my investment history would make you quite comfortable in just doing the opposite of what I do!

But I must say, that I have many clients that seem to do a good job of investing.  And I watch them and often attempt to follow their lead.  A recent trend tells me that I should be looking abroad to other markets and other countries for a part of my investment strategy.  I don’t know that there is any one country or one investment that I have seen people jump at.  In fact, the opposite is true.  What I have seen is a more global perspective for investment ideas.  And that seems like an okay concept to me.

However, the US has a few rules that we have to comply with if our investments leave our US shores.  I can help weave through those rules to make sure that you don’t make a misstep here.  As US citizens, we are taxed out our world-wide income.  Therefore, foreign investment does not tend to offer big tax incentives to us.  It might offer some asset protection if it is structured properly and tax deferral works in foreign countries similar to what can be achieved in the US.   We can help you understand what those deferral strategies can look like.

Best wishes weaving through the next few years with your investments!

By Rodney Atherton Attorney