Colorado Sales Tax License Revocation / Business
Shutdown Checklist
Introduction
A Colorado sales tax license revocation occurs when the Colorado Department of Revenue withdraws a business’s authority to collect and remit sales tax on retail tangible personal property or taxable services. This enforcement action usually follows unresolved sales tax compliance issues, such as failure to file sales tax returns, failure to pay sales tax obligations, or repeated violations of sales tax law.
A sales tax license is a legal requirement for licensed vendors operating in Colorado, including short-term rental operators, cannabis retailers, and businesses subject to local taxes or the retail delivery fee. Losing this authorization prevents lawful retail sales activity and may disrupt business operations, particularly for entities operating in home-rule cities or subject to state and local tax requirements.
What This Issue Means
A sales tax license revocation means the Department of Revenue has formally canceled or suspended a business’s Colorado sales tax license. Once revoked, the company may not legally collect sales tax, apply the applicable sales tax rate, or remit sales and use taxes through
Revenue Online or other state systems.
Revocation typically represents the final stage of enforcement after prior notices, compliance warnings, and opportunities to cure deficiencies. Under Colorado Revised Statutes, selling retail tangible personal property without a valid sales tax license is unlawful and exposes the business to additional penalties and enforcement actions.
Why the State Issued This or Requires This
Colorado law requires businesses engaged in taxable business activities to complete the registration process, obtain sales tax permits, and comply with statutory compliance obligations.
The Department of Revenue may revoke a license when a business repeatedly fails to file sales tax returns, pay tax liabilities, or respond to notices from tax authorities.
Triggers may include ongoing delinquency, unresolved assessments, violations identified through tax software or compliance management software, or failure to meet economic nexus or sales tax nexus requirements. Authority for revocation is grounded in sales tax law, administrative rules, and enforcement powers granted by the Colorado Legislature.
What Happens If This Is Ignored
Continuing retail sales without a valid sales tax license violates Colorado tax law and may result in criminal penalties and civil enforcement. Under current law, making retail sales without a permit is a petty offense, punishable by fines, jail time, or both, in addition to daily accruing civil penalties.
The state may also pursue collection actions for unpaid sales tax, interest charges, and fees through Revenue Online, court order, or referral to state tax authorities. Failing to address revocation notices may increase exposure to administrative dissolution, business closure, or judicial dissolution if compliance failures persist.
What This Does NOT Mean
A sales tax license revocation does not automatically require the permanent shutdown of a business or its administrative dissolution. Reinstatement is often possible once compliance issues are resolved and all the necessary filings and payments have been completed.
Revocation does not forgive unpaid tax obligations or eliminate the requirement to file a
Colorado sales tax return for prior periods. Businesses retain the right to appeal, including review by the district court, and may pursue resolution through formal or informal administrative processes.
Checklist: What to Do After Receiving a Sales Tax
License Revocation Notice
Step 1: Read the revocation notice carefully
Review the notice to identify the effective date, reason for revocation, and contact information for the Department of Revenue. Confirm whether the action relates to sales tax returns, unpaid balances, or registration issues.
Step 2: Identify the cause of revocation
Determine whether the revocation resulted from missed filings, unpaid tax liabilities, or failure to respond to prior notices. This step guides the resolution strategy.
Step 3: Gather all sales tax records
Collect sales tax returns, payment confirmations, correspondence, exemption certificates, and resale certificate documentation. Accurate records support reinstatement discussions.
Step 4: Verify the total balance due
Confirm unpaid sales tax, interest charges, and fees using Revenue Online or by contacting the
Department of Revenue. Clarify whether local taxes, lodging tax, or cannabis tax are included.
Step 5: Cease retail sales activity immediately
Stop making retail sales of tangible personal property or taxable digital goods until you receive written approval. Continuing to sell without a license increases the risk of enforcement.
Step 6: Contact the Colorado Department of Revenue
Please reach out using the contact details provided on the notice to discuss your account status and next steps. Ask about compliance requirements and reinstatement eligibility.
Step 7: Ask about the reinstatement process
Request written guidance on the application process, required forms, and timelines. Confirm whether Form DR 0100, CR 0100, or related filings are needed.
Step 8: Inquire about payment options
Inquire about installment arrangements or deposit refund offsets if the balance cannot be paid in full. Discuss whether penalties may be reduced.
Step 9: Request an assigned contact
Obtain the name of the representative handling the case. Direct communication helps avoid delays.
Step 10: Confirm ongoing filing obligations
Ask whether sales tax returns must continue during the revocation period, particularly if sales occurred before the effective date.
Step 11: Document all communications
Follow up in writing to confirm agreements or instructions. Retain confirmation pages and correspondence.
Step 12: Maintain complete records
Keep copies of notices, filings, and communications as part of your compliance file. These records may be required later.
Step 13: Do not resume retail sales without approval
Wait for explicit written authorization before collecting sales tax again. Operating prematurely increases legal exposure.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 14: Review other tax responsibilities
Confirm compliance with income tax, unemployment insurance benefits, Family and Medical
Leave Insurance, and other state programs.
What Happens After This Is Completed
After contact is made, the Department of Revenue reviews the account and determines eligibility for reinstatement. Written instructions outlining required actions, payment terms, or additional filings are typically issued.
Reinstatement timing varies depending on compliance history and response speed. Businesses operating in home-rule cities, such as the City of Grand Junction, may also need to coordinate with local authorities like the Denver Treasury Division or Community Development Department.
Common Mistakes to Avoid
Ignoring revocation notices allows penalties and interest to accumulate, increasing enforcement exposure. Many businesses delay action, assuming the issue will resolve itself on its own.
Continuing to conduct retail sales without a valid sales tax license can result in additional violations and criminal penalties. Clear separation of business activities during revocation is critical.
Failing to inquire about payment options or reinstatement procedures often prolongs the revocation process. Proactive communication improves outcomes.
Frequently Asked Questions
Is a revoked sales tax license the same as a forced business closure?
No, revocation prevents lawful retail sales but does not automatically close the business.
Can a revoked license be reinstated?
Yes, reinstatement is often possible once compliance issues are resolved.
Do tax obligations continue after revocation?
Yes, unpaid sales tax, interest, and fees remain due.
What if the business cannot pay immediately?
Payment plans or other options may be available through the Department of Revenue.
Does revocation affect personal finances?
Revocation is a business matter, but unpaid taxes may lead to collection actions.
How long does revocation last?
Duration depends on compliance actions taken and account status.
Is legal representation required?
Representation is optional and depends on case complexity.
Can other business activities continue?
Non-retail activities may continue; however, please confirm with the Department of Revenue to ensure compliance.
What if the revocation is disputed?
The district court may review revocation orders upon application.
Should the business be dissolved?
This is a business decision, not a tax requirement.
Closing Summary
A Colorado sales tax license revocation is a serious enforcement action, but it is often reversible with prompt compliance. Understanding the cause, stopping retail sales, and engaging directly with the Colorado Department of Revenue are essential first steps.
By addressing tax compliance issues, maintaining clear records, and following reinstatement guidance, businesses can minimize disruptions and resume lawful operations. Early action and clear communication provide the best opportunity for resolution and long-term compliance.
Facing State Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
We help with:
20+ years experience • Same-day reviews available
