Effective May 12, 2023, the Sales Use Tax Exemption Wildfire Disaster Construction Act (HB23-1240) creates a refundable exemption for the sales and use tax paid for construction and building materials used directly in rebuilding or repairing a qualified homeowner's qualified residential structure due to a declared wildfire disaster between January 1, 2020, and December 31, 2022.
No retailer may exempt construction and building materials at the point of sale. The exemption is claimed solely as a refund by a qualified homeowner for each qualified residential structure for which a building permit and a wildfire rebuild exemption certificate are issued by a local government. The refund is equal to the state, regional transportation district, and science and cultural facilities district taxes, (a total of four percent), imposed on the estimated construction and building materials cost to rebuild or repair a qualified residential structure due to a declared wildfire disaster. The exemption does not apply to city, county, or other special district sales and use taxes.
See FAQ #6 below for detail on how to claim the exemption.
It is a refund for the state, regional transportation district, and scientific and cultural facilities district taxes imposed on building materials to rebuild or repair a home damaged or lost in a declared wildfire disaster.
The State of Colorado, the regional transportation district, and the scientific and cultural facilities district impose sales and use taxes on the sale and use of most goods, including construction and building materials. Most contractors and subcontractors pay these sales taxes when they buy building materials. In some cases, they are reported to the state as a use tax.
NOTE: The state, regional transportation district, and scientific and cultural facilities district sales and use taxes are in addition to the municipal and county sales and use taxes. The municipal and county sales and use taxes are typically paid at permitting, not at the point of sale. The Department of Revenue will not issue refunds for municipal or county sales and use taxes; however, these local governments may have their own refund or exemption programs for wildfire disasters. Contact the applicable local government for more information.
No, your refund will not be less. By rule a qualified residential structure that is outside the regional transportation district, the scientific and cultural facilities district, or both, is still eligible for the four percent refund rate.
To qualify, you must meet the following criteria:
- You owned a home when it was destroyed or damaged in a declared wildfire disaster in 2020, 2021 or 2022 (see the list below);
- You are rebuilding or repairing that home, or you have hired a contractor to rebuild or repair that home; and
- The replacement/repair costs exceed your homeowner’s insurance coverage under any policy associated with the home.
The following disaster declarations qualify:
- D 2020 143: July 2020 - Elephant Butte, Jefferson County
- D 2020 171: July 2020 - Pine Gulch, Mesa and Garfield Counties
- D 2020 187: August 2020 - Grizzly Creek and Red Canyon, Garfield/Eagle Counties/I-70
- D 2020 197: August 2020 - Lewstone, Larimer County
- D 2020 204: August 2020 - East Fork, Las Animas County
- D 2020 208: August 2020 - Cameron Peak, Larimer County
- D 2020 233: September 2020 - Mullen, Jackson County
- D 2020 252: October 2020 - East Troublesome, Grand and Larimer Counties
- D 2020 253: October 2020 - Calwood, Boulder County
- D 2020 254: October 2020 - Lefthand, Boulder County
- D 2021 123: June 2021 - Muddy Slide, Routt County
- D 2022 004: December 2021 - Marshall Fire, Boulder
- D 2022 019: April 2022 - Bent’s Fort and Fort Lyons, Otero and Bent Counties
- D 2022 024: May 2022 - High Park, Teller County
- D 2022 025: May 2022 - Ute Pass, La Plata County
- D 2022 030: May 2022 - Menkhaven, Conejos County
Before filing a claim for refund, a qualified homeowner must first obtain a building permit from the local government with jurisdiction to issue the building permit for the residential structure(s). However, you do not need to obtain a new building permit if you were already issued one. If you no longer have a copy of a previously issued building permit, the local government can help you acquire one.
A few local government emails to submit your application to:
- building@larimer.org
- building@co.grand.co.us
- building@louisvilleco.gov
- marshallfire@superiorcolorado.gov
A qualified homeowner must complete and submit an Application for Wildfire Rebuild Exemption Certificate (form DR 0992) to the applicable local government for the Wildfire Rebuild Exemption Certificate. Upon receipt of a completed application from a homeowner, an authorized official from the applicable local government that has issued a building permit to the homeowner (or the homeowner’s contractor) for an area affected by a declared wildfire disaster will review the application and, if appropriate, issue a Wildfire Rebuild Exemption Certificate to the qualified homeowner.
Once a qualified homeowner receives a Wildfire Rebuild Exemption Certificate from the applicable local government, the qualified homeowner must complete section 6, entitled “Wildfire Refund Claim”, on the Wildfire Rebuild Exemption Certificate. That claim must be submitted to the Colorado Department of Revenue. Submission instructions are included on the Wildfire Rebuild Exemption Certificate. The Wildfire Refund Claim must be filed with the Colorado Department of Revenue no later than June 30, 2028.
Refund claims may be submitted as soon as the homeowner obtains the building permit and wildfire rebuild exemption certificate from the applicable local government and must be submitted no later than June 30, 2028.
The allowable refund for rebuilding or repairing a qualified homeowner's qualified residential structure refund is equal to 4% of the cost amount used by the local government to collect estimated use tax in connection with the issuance of a building permit. If no estimated use tax has been collected, the refund is equal to 4% of half of the total contract price or total cost for rebuilding or repairing a qualified residential structure. Using the permit estimate streamlines the refund application and allows homeowners to receive these funds earlier in the rebuilding process.
Because the allowable refund is based on the cost amount used to collect local use tax, it is important that anyone applying for a building permit provides the local government accurate information about the cost for rebuilding or repairing a qualified residential structure.
This determination is made with respect to the qualified residential structure that was damaged or destroyed by a declared wildfire disaster. If the cost to fully repair or replace the qualified residential structure that was damaged or destroyed, including any necessary upgrades to comply with applicable building codes, exceeds the homeowner’s insurance coverage for repairing or replacing the qualified residential structure, this requirement is met.
The actual amount spent to repair or replace the qualified residential structure is not relevant in making this determination. For example, if the cost to fully replace a qualified residential structure that has been destroyed is $500,000 and the homeowner’s insurance policy for that qualified residential structure only provides $400,000 of coverage, the requirement is met, even if the new, replacement residence the homeowner builds costs only $400,000.
IRS publications provide information about taxable and nontaxable income and casualty loss deductions. The rules may vary from year to year, so it is important to review the version of the publication for the correct tax year.
IRS Publication 525, Taxable and Nontaxable Income provides information about:
- Qualified disaster relief payments
- Qualified disaster mitigation payments
- Payments (including insurance payments) received for property damage
IRS Publication 525, Taxable and Nontaxable Income can be accessed through the following links:
IRS Publication 547, Casualties, Disasters, and Thefts provides information about casualty losses as the result of a disaster, such as a fire. This publication can be accessed through the following links:
Marshall ROC provides links to additional IRS publications and guidance at: marshallroc.org/tax-resources/
If you prefer to get help from a professional tax advisor, the IRS provides guidance on how to choose a tax professional (https://www.irs.gov/tax-professionals/choosing-a-tax-professional). From this page, you can access a directory of credentialed federal tax preparers and obtain information on volunteer income tax assistance available to qualifying individuals.
As a result of a recent update in our instructions, you may now truncate your social security number (SSN) or individual taxpayer identification number (ITIN) by providing the local government with the last four digits of your SSN or ITIN on the Application for Wildfire Rebuild Exemption Certificate (DR 0992).
However, when you obtain the Wildfire Rebuild Exemption Certificate from the local government, you must provide your full SSN or ITIN in Section 6 “Wildfire Refund Claim” that you file with the Department using our secure online portal (Colorado.gov/RevenueOnline) or by mail. The Department will not be able to process your claim if you truncate your SSN or ITIN on the claim form.
As stated in the instructions, the mailing address supplied on the claim for refund form (DR 0993) will be used to mail correspondence and a refund check. You can make changes to your mailing address for your refund claim by either:
- Mailing a written notification with the information below to:
Colorado Department of Revenue
Business Tax Accounting
PO Box 17087
Denver, CO 80217-0087 - Sending a web message through Revenue Online.
If you submitted your claim electronically, Revenue Online is the portal you used for the submission. Visit Revenue Online and log into your account. You should have already registered for a Revenue Online Account when you submitted your claim.
If you submitted your claim by mail, you can still change your address electronically. Visit Revenue Online and register for a Revenue Online Account by clicking Sign Up in the Log in box.
The written notification or web message must include the following information:
- Subject Line: “Address Change for Wildfire Sales & Use Tax Refund Claim”
- Homeowner Name
- Colorado Account Number (CAN)
- Date of your original submission
- Total refund calculated from line 6b of the Wildfire Rebuild Exemption Certificate
- Phone number
- Power of Attorney (POA) form (DR0145) if the email is being sent by a third party