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Request for Stakeholder Input - Sales Tax Rules to Conform to Legislation

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The Colorado Department of Revenue, Division of Taxation, is seeking input from stakeholders regarding drafts of the following new and amended rules. The Department has prepared the following drafts to aid in the process of soliciting public comments.

  • Special Rule 2. Agricultural Products and Equipment.  The purpose of this amendment is to conform the existing rule to legislative changes made by House Bill 19-1162, which exempted ear tags and electronic identification readers for food animals, and House Bill 19-1329, which defined sales of fertilizer and spray adjuvants as wholesale sales if they are used in the production of agricultural commodities. This amendment also repeals parts of the rule that are obsolete or duplicative with statute, and makes grammatical, stylistic, and organizational changes to improve the clarity and readability of the rule.
  • Rule 39-26-102(7)–1. Purchase Price. – The purpose of this amendment is to renumber the rule to accommodate an additional rule promulgated pursuant to the same statutory section.
  • Rule 39-26-102(7)–2. Purchase Price Involving a Donation to a Charitable Organization. – The purpose of this rule is to establish the conditions under which a portion of a payment for a sale made by a charitable organization is considered a donation and therefore excluded from the taxable purchase price.
  • Rule 39-26-718. Charitable Organizations. – The purpose of this amendment is to conform the existing rule to legislative changes made by House Bill 19-1323, which modified the limited exemption for sales made by charitable organizations. This amendment also incorporates federal regulation 26 CFR § 1.501(c)(3)‑1, which prescribes certain definitions and requirements for charitable organizations, prescribes requirements for applications for exemption certificates, repeals parts of the rule that are duplicative with statute, and makes grammatical, stylistic, or organizational changes to improve the clarity and readability of the rule.
  • Rule 39-26-717. Medical Material, Equipment, and Drugs. – The purpose of this amendment is to conform the existing rule to legislative changes made by Senate Bill 18-129, which reorganized section 39-26-717, C.R.S. This amendment also incorporates the statutory definition of “prescription drug” from section 12-280-103(42), C.R.S., adopts a definition of “prosthetic devices” consistent with the Streamlined Sales and Use Tax Agreement and federal regulation, repeals parts of the rule that are duplicative with statute, and makes grammatical, stylistic, or organizational changes to improve the clarity and readability of the rule.

Due to the ongoing public health emergency, the Department does not plan to convene a stakeholder workgroup prior to formal rulemaking.  In lieu of a workgroup, we would greatly appreciate written feedback on the proposed rules. Please submit comments on the draft rules by emailing your comments to dor_taxrules@state.co.us.  Written comments will be accepted through September 25, 2020.

After evaluating the comments we receive, the Department will determine whether the draft rules should move forward and, if so, whether further revisions to the rules are necessary.  If the Department moves forward with the proposed rules, additional comments will be accepted following a notice of proposed rulemaking.  Thank you in advance for your input.