As of July 1, some Colorado businesses may retain sales tax revenue due to Colorado House Bill 22-1406. The bill was proposed by Rep. Dylan Roberts and was signed into law by Governor Polis on June 3.
From July to September 2022, fixed or mobile businesses that provide a food service – such as those that serve alcoholic beverages, process or are “retailers operating a hotel-operated restaurant, bar or food service in the ‘State’ – can keep these extra taxpayers money from the state.
However, there is a caveat. Businesses that apply can collect up to a cap of $70,000 in tax revenue from up to five locations, if there is more than one location from which a business is collecting.
A bill similar to this was passed in 2020 and 2021 due to the coronavirus pandemic. Roberts said many businesses have been impacted by the shutdown, especially those in the mountain tourism industries.
“A lot of restaurants, of course, have had to stop eating in person and have been really impacted by the pandemic restrictions, so that’s where the concept came from,” Roberts said. “Then we decided to do it again this year.”
Roberts opted to renew the bill for the months of July, August and September – which was the same deadline for the 2021 version.
“We had targeted it for when restaurants, especially here in our mountain communities, are busiest,” he said. “We wanted to try to maximize the return.”
TJ Messerschmitt, owner of Fatty’s Pizzeria in Breckenridge and president of the Breckenridge Restaurant Association, said there are only benefits to this bill. After the pandemic, he said businesses struggled with lack of jobs and rising prices.
“Over the past two years wages have skyrocketed, but the big thing we’ve seen this year is inflation and the cost of all of our products,” Messerschmitt said. “Everything we buy – wine, beer, liquor, food – everything has gone up, including all of our paper goods.”
The inflation rate in the United States has reached 8.6% in May 2022. For comparison, inflation was only 5% in May 2021. So why does the bill only apply to the restaurant sector?
Roberts, who currently serves as the representative for Eagle and Routt counties, said he wants to focus on helping businesses that support the tourism industry.
“They are both major employers in our communities, but also the engine of our economy,” he said.
So this bill will help restaurants afford both big and small purchases.
“It’s a positive thing,” Messerschmitt said. “It’s a nice little bonus for restaurateurs.”
All eligible businesses will need to claim the deduction on their state tax returns. According to the text of the bill, “eligible entities are restaurants (except multi-state chains), bars, food trucks, catering businesses and hotels that serve food.”
More information can be found at Tax.Colorado.govand questions can be directed to the Colorado Department of Revenue or to Roberts’ office at 303-866-2923.
“If we can give employers who employ these people some breathing space, hopefully we can raise wages, retain employees, and try to get through this and keep people here,” Roberts said.