As of July 1, certain Colorado businesses can retain their sales tax revenue due to Colorado House Bill 22-1406. The bill was proposed by Rep. Dylan Roberts and was signed into law by Gov. Polis June 3. 

From July to September of 2022, stationary or mobile businesses that provide a food service — such as ones that serve alcoholic beverages, cater or are “retailers operating a hotel-operated restaurant, bar or catering service in the state” — can keep those extra state tax dollars. 

There is one caveat, however. Businesses that apply can collect up to a cap of $70,000 of tax revenue over a maximum of five locations, if there is more than one location a business is collecting from.

A bill similar to this one was passed in 2020 and 2021 because of the coronavirus pandemic. Roberts said many businesses were hurt by shutdown, especially those in mountain tourism industries.

 “A lot of restaurants, of course, had to stop in-person dining, and were really impacted by the pandemic restrictions, so that’s where the concept came from,” Roberts said. “Then we just decided to do it again this year.”

Roberts chose to renew the bill for the months of July, August and September — which was the same timeframe for the 2021 version.

“We had targeted it for the time when restaurants, particularly here in our mountain communities, are the most busy,” he said. “We wanted to try to maximize the return.” 

T.J. Messerschmitt, the owner of Fatty’s Pizzeria in Breckenridge and the president of the Breckenridge Restaurant Association, said there are only benefits to this bill. Post-pandmeic, he said businesses have struggled with lack of employment and increased prices. 

“Over the last 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 — from wine, beer, liquor, food — everything has gone up, including all of our paper goods.”

The inflation rate in the United States reached 8.6% in May of 2022. For comparison, inflation was only at 5% in May of 2021. So why does the bill apply to just the food service industry? 

Roberts, who is currently the representative for Eagle and Routt counties, said he wanted to focus on helping businesses that support the tourism industry.

“Those are both major employers in our communities, but also the lifeblood of our economy,” he said. 

This bill, then, will help restaurants to afford both big and little purchases.

“It’s a positive thing,” Messerschmitt said. “It’s a nice little bonus for restaurant owners.”

Any businesses that qualify will have to claim the deduction on their tax filings to the state. According to the bill text, “eligible entities are restaurants (except multistate chains), bars, food trucks, catering companies and hotels that serve food.”

More information can be found at Tax.Colorado.gov, and questions can be directed to the Colorado Department of Revenue, or to Roberts’ office at 303-866-2923. 

“If we can give the employers who employ those folks a little bit of a break, hopefully we can increase wages, retain employees, and try to get through this period and keep people here,” Roberts said.