Collection of local taxes

[Rosimartin_22]

A common practice in my area is to collect local sales taxes on products sold and then send them to the city/ state on quarterly/annual reports. However, no sales tax is collected on services, massage, haircuts, facials, etc.  Recently it was noted that government offices are defining business engagements as " performing or providing services or selling, leasing, renting, delivering or installing tangible personal property for storage, use or consumption within the City". As a sole proprietor, am I supposed to render sales tax payments for services provided, a tax not collected upfront from clientele?

[LeticiaF1 · Accepted solution]

The collection of sales tax is determined by individual states and cities. ‌It depends on what your specific city and state decides about what services are taxable and which ones aren't. Could you please clarify what state and city you are referring to?

[Rosimartin_22]

Yes, thank you for your prompt reply. Greeley, Colorado

[LeticiaF1]

According to ‌information on the City of Greeley's website, the city taxes the of tangible property and some services. Per their site, they tax the storage, use, or consumption of Tangible Personal Property and Taxable Services as stated in the Municipal Code. They define tangible personal property as something that is not attached to real property. ‌Some of the examples of taxable services they list on their website are:

• Gas and Electric Service
• Cover Charges
• Phone Service
• Leases and/or Rental of Tangible Personal Property
• Freight and/or Delivery Charges for Taxable Tangible Personal Property

Generally, the State of Colorado and the City of Greeley tax have the same rules except for the following that are taxed by the city and not by the state:

• Software downloaded electronically and software maintenance agreements
• Food for Home Consumption (Greeley taxes at 3.46%)
• Electricity, Gas, Steam for Domestic Home Use
• Cable TV
• Interstate and International Phone Service

I would suggest that if you have a specific question on a service, you contact the City of Greeley directly. For more information on specific rules for different industries, see the following link:

Other Sales & Use Tax Guidance Publications

@Rosimartin_22