New city sales tax to bring changes for Craig business owners
CRAIG – On July 1, the city of Craig will begin collecting the 1.75 percent sales tax increase, which was narrowly passed by voters in November.
The increase will raise the current 2.25 percent sales tax to 4 percent. The tax increase does not affect the lodging industry, which will remain at its current sales tax rate. Motor vehicles and off-highway vehicles will be exempt from the city sales tax.
The additional revenues are not expected to hit the city’s coffers until August, as the tax must be collected, then processed.
When the increased sales tax rate hits, the city will begin collecting its own sales tax for the first time ever. Currently, business owners submit city, county and state sales tax returns to the Colorado Department of Revenue. The state then processes it and directs the appropriate funds back to local governments.
Because Craig’s sales tax will include lodging and motor vehicle exceptions, the state will no longer process city sales taxes.
“It’s not that Craig necessarily wanted to start self-collecting. It’s because of the way the ballot measure was written, with the exemptions for motor vehicles and hotel accommodations,” said Katy Burns, senior sales tax accountant for the city. “They (the state) don’t have a way to manage it on a broad scale.”
Several other Colorado communities, including Steamboat Springs, Rifle and Alamosa, collect their own sales taxes.
For consumers in Craig, this will not create a significant change, Burns said. When July 1 hits, shoppers will simply pay a higher sales tax rate on most purchases in Craig.
Local business owners, on the other hand, will now file two tax returns. County and state sales tax will be submitted to the Colorado Department of Revenue, as they are currently, and city sales taxes will be filed directly with the city. To file taxes, business owners must enroll in a new, online system called MUNIRevs.
The city has also set up computer kiosks in the lobby of City Hall to allow business owners who might not have access to a computer or the web to register and file documents related to the sales tax.
Registration for MUNIRevs will be open June 1 through 30 and must be completed online. Burns said letters with business’s account numbers and access codes are set to go out within the next week.
Filing frequencies will remain the same as the state requirements. Business owners that file sales taxes monthly will still file monthly, and those that file annually will still file once per year.
Burns has sent monthly letters to business owners to help them prepare for the change. These letters are also posted online. Additionally, Burns is available for one-on-one appointments to guide business owners through registration and the first filings throughout the months of June and August. Support is also available through MUNIRevs by email and phone.
“That’s one good thing about the sales tax: You are going to have a local contact here, whereas, when you’re dealing with the state, you don’t,” Burns said. “It’s a lot more impersonal that way.”
Vendors participating in special events will also see some changes. Special event vendors must purchase a special events sales tax license, which will cost $10 per event per vendor per month. Hosts of special events are responsible for ensuring all vendors have paid for and completed a special event sales tax license and submitting those documents to the city before the event.
Though they still must apply for a special event sales tax license, the associated fees will be waived for vendors who hold already hold a city sales tax license.
For more information about how municipal sales taxes will be collected, contact Burns at 970-826-2003 or by visiting the city’s website at ci.craig.co.us/departments/finance_department/sales_tax.
Contact Eleanor Hasenbeck at 970-875-1795. Follow her on Twitter, @elHasenbeck.
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