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Colorado Extends Tax Relief for Restaurants

Posted on June 17, 2021

Colorado Gov. Jared Polis (D) has signed a bill extending a tax break for qualified retailers that allows them to retain state sales tax to offset revenue losses caused by the COVID-19 pandemic.

Under H.B. 1265, signed into law June 14, restaurants, bars, and other food and beverage businesses that lost revenue because of the pandemic can deduct up to $70,000 in monthly net taxable sales for June, July, and August. The bill extends the temporary tax break created in 2020 by H.B. 1004 — signed into law December 7 — which was available for sales made during November 2020 through February 2021. 

H.B. 1265 also expands eligibility requirements to include food service contractors, caterers, hotel-operated food and drink establishments, and food service providers. 

According to the bill’s fiscal note, extending and expanding the tax break under H.B. 1265 will reduce general fund revenue by approximately $45.1 million in fiscal 2022.

The bill requires the Department of Revenue to report the number of retailers that took the deduction and the resulting amount of lost tax revenue. The DOR will deliver the report at a hearing to be held in January 2022, according to the bill.

The bipartisan legislation was sponsored by lawmakers in both chambers. It was approved by the Senate on a 34–0 vote June 3 after passing the House May 5 on a 62–0 vote.

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