Sales & Use Tax Letter Rulings

Noncollecting Retailer Notice & Reporting Requirements - Published March 11, 2024

Concerning the requirements for noncollecting retailers under section 39-21-112(3.5) if the retailer neither maintains any place of business in Colorado nor solicits business in Colorado making sales in Colorado at or exceeding economic nexus thresholds.

Sales of Landscape Construction Materials - Published March 14, 2023

Sales of grass seed and erosion control blankets are exempt from sales tax if the sale is made to a construction contractor who provides a current contractor’s exempt certificate (DR 0163). Sales of fertilizer are not exempt because fertilizer does not contribute to landscape construction but instead is a part of landscape maintenance

Sales and Use Tax on Food For Home Consumption - Published August 14, 2023

The Company’s food products are food for home consumption and are not prepared food or
food marketed for immediate consumption. Therefore, the Company’s food products are exempt
from the state sales and use tax.

Travel Experience Packages - Published October 20, 2023

The taxability of an inseparably mixed transaction depends on the true object of the transaction from the purchaser's perspective. The true object of the Basic Travel Experience Package sold by Company A and provided by Company B is a nontaxable service, so this inseparably mixed transaction is not subject to sales tax.

Sales and Use Taxation of Subscription-based Membership - Published February 8, 2024

The fee that Company’s charges for a subscription-based membership, the primary benefit of which is providing the purchaser with free delivery on future orders that meet certain conditions, is not subject to state sales and use tax. 

Taxability of Delivery Fee - Published January 19, 2024

Company’s delivery service is separable from the sale of tangible personal property because the delivery is performed after the taxable property is offered for sale and the delivery service is optional. Because the delivery service is separable and the charge for the delivery service is separately stated, Company’s delivery fee is not subject to state sales or use tax.

Applicability of the Manufacturing Machinery Exemption to Certain Bakery Equipment - Published February 20, 2024

Company’s purchase and use of certain bakery equipment is exempt from Colorado sales and use tax pursuant to section 39-26-709(1)(a)(II) and (2), C.R.S. This exemption applies to related state-administered local taxes except when the bakery equipment is purchased or used in a locality that has not adopted the optional manufacturing machinery and machine tools exemption.

Bulk Water Sales

Company's sales of water are not sales of tangible personal property and are, therefore, not subject to Colorado sales tax.

Streaming Platform Credits

Company's sales of platform credits are not subject to state and state-administered local sales tax.  The redemption of platform credits by viewers, both with and without third-party enhancements, are not subject to state and state-administered local sales tax.

Sales Tax on Tips in a Dining Establishment - Published October 11, 2023

Pooled tips at a dining establishment are not subject to sales tax when the tip is voluntarily given by a customer and the entire amount of the tip is distributed to the person who actually rendered the service. Prepopulated tips that can be removed by the customer at the point of sale at a dining establishment are not subject to sales tax. Tips at a dining establishment that are added by the vendor and cannot be removed or amended by a customer are subject to sales tax.
 

Taxability of Liquefied Petroleum Gas - Published October 11, 2023

The sale of liquefied petroleum gas for use in recreational vehicles (not for propulsion), cabins, or tents at campsites is subject to sales tax as a retail sale. A retail merchant who uses a portion of liquefied petroleum gas purchased at wholesale for their own use must remit use tax to the department on the purchase price paid for the amount of gas used. Liquefied petroleum gas sold for retail use, and not to propel a motor vehicle, is not subject to the gasoline and special fuel tax.

Retailer Statements Regarding Sales Tax

Colorado imposes two obligations on retailers, one affirmative and one negative, when making statements to consumers regarding sales tax. First, a retailer is required to show sales tax as a separate and distinct item, either on a receipt, invoice, or other document issued to the purchaser, or on signage clearly visible to the purchaser. Second, a retailer may not advertise, directly or indirectly, that sales tax will be refunded to the purchaser, absorbed by the retailer, or not added to the price. Meeting the first obligation does not permit a retailer to avoid the second.

Credit Card Surcharges

Credit card surcharges imposed in accordance with the requirements of Senate Bill 21-091 are not part of the taxable purchase price.

Alcoholic Beverages

Alcoholic beverages sold to state institutions of higher education for official functions are exempt from sales tax.

Sales Tax on Cable Television

Company's sales of Basic Service Packages, Premium Channels, Sports Packages, Pay-Per-View Events, and Video On Demand content (as each are described in the ruling) are not subject to state and state-administered local sales tax.

Paid Subscription Program

Company’s sale of its paid subscription program to Colorado customers is subject to Colorado state and state-administered local sale tax.  Company’s provision of a free, one-month trial of the paid subscription program is not subject to Colorado state and state-administered local sales and use tax.

Sales and Use Tax on Aircraft Brought Into Colorado

Colorado sales tax is not due on sales of aircraft whereby the purchaser takes possession of the aircraft outside of Colorado. However, aircraft based in or brought into Colorado are subject to Colorado use tax.

Acquisition and Leasing of Cranes and Hoists

Company is not required to collect state and state-administered local sales taxes on the provision of cranes and hoists with an operator.  Company must pay sales or use tax upon its acquisition of cranes or hoists, or when equipment is used in Colorado that was purchased in another state.  Related services would not be part of the taxable purchase price if Company was required to collect.

Online Education Platform

The Company’s online learning plan products are subject to state and state-administered local sales tax.  However, the Company’s internet advertising revenue from the pay-per-click model and the fulfilling of insertion orders is not subject to state and state-administered local sales tax.

Sales Tax on Medical Devices

The sale of the heart monitor to Colorado customers is subject to state and state-administered local sales tax in Colorado because the heart monitor is tangible personal property sold by a retailer and is not exempted from sales tax under the medical device exemptions.

Sales Tax on Shredded Tires and Railroad Ties

Company’s purchases of shredded tires and railroad ties that are utilized and burned to subsidize the requirement for coal in the cement manufacturing process are not exempt from sales tax pursuant to section 39-26-102(21), C.R.S.

Sales Tax Exemption for Residential Energy Use

Discussion of the sales tax exemption for residential energy usage as it pertains to multi-unit apartments.

Sales and Use Tax on Items Given as Gifts by a Charitable Organization

This general information letter discusses the taxability or exemption of items purchased tax-free by a charitable organization for the purpose of resale, but then given away by the charitable organization, rather than resold

Prefabricated Housing Manufactured Outside Colorado

A general discussion of retailer collection duties, sourcing, and the exemption for sales of certain prefabricated housing

Guided Walking Tours 

Colorado does not generally impose sales tax on services. Guided walking tours are not among the services specifically subject to sales tax.  However, if nontaxable services are bundled with the sale of taxable tangible personal property, commodities, or services, the nontaxable services will also be subject to sales tax, unless the service is separable from the taxable sale and the service charge is separately stated

Vehicle Sharing Transactions

Vehicle sharing platform operator must collect sales taxes and daily rental fees from drivers on vehicle sharing transactions.

Nonprofit Organization's Regular Charitable Functions and Activities

A charitable organization’s purchase of food for attendees at educational conferences it organizes and hosts are made in the conduct of its regular charitable functions and activities and therefore exempt from sales and use taxes.

Telephones for the Hearing Impaired

The telephones for the hearing impaired provided by company qualify as durable medical equipment and are exempt from sales tax. 

Computer Software

Sales of company's computer software and services are not subject to sales or use tax. 

Sales Tax on Cable Television

Company's sales of Core Service Packages, Premium Channels, Sports Packages, Pay-Per-View Events, and Video On Demand content (as each are described in the ruling) are not subject to state and state-administered local sales tax.

Truck Bed Liner

Discussion of sales of truck bed liner chemicals to retailers as retail or wholesale sales.

Economic Nexus

An out-of-state corporation has economic nexus with Colorado as a result of its prior year sales exceeding the threshold found in 39-26-102(3)(c) and must register to collect and remit state sales tax.

Sales Tax on Rental of Entire Single Family Home

This letter addresses the short term rental of an entire private residence is subject to sales tax.

Collecting Sales Tax on Sales of Motor Vehicles

This letter addresses the obligations of a company to collect sales tax on sales of motor vehicles it facilitates on behalf of its clients.

Collecting Sales Tax on Gift Wrapping Services

This letter addresses the taxability of gift wrapping.

Taxability of Prototype Development

Company's purchase of aircraft component parts that will be used in the construction of an aircraft prototype are exempt from Colorado sales and use tax under § 39-26-711, C.R.S. Machinery and machine tools purchased by Company to build the prototype aircraft will be exempt from Colorado sales and use tax under § 39-26-709, C.R.S.

Sales of Services

When a vendor transfers tangible personal property to a customer as part of services performed by the vendor for the customer, the application of sales tax will depend on whether the sale of property and services are separable and, if not, whether the customer’s “true object” is to acquire the tangible property, in which case the transaction is subject to tax, or to receive the service, in which case the transaction is a non-taxable service. Taxpayer at issue performs services of converting raw data into information delivered to clients. The paper on which the information is sent is incidental to the client’s true object. Therefore, the charges by Company are for a service and are not subject to sales or use tax.

Optional Motor Vehicle Warranties

The price for a non-taxable service sold in connection with the sale of a taxable product is included in the calculation of tax for the taxable product if; the price for the non-taxable service is not separately stated, or the sale of the non-taxable service is inseparable from the sale of the taxable product.

Enterprise Resource Planning Software Maintenance Contracts

Company's charges for its computer program maintenance and support services are not subject to sales or use tax, as company is not selling taxable computer software.

Reporting Requirements for Non-Collecting Retailers

An out-of-state, subscription-based company that offers a monthly service in which no customer action is required to initiate a new monthly shipment does not have to send recurring Transactional Notice's for subsequent shipments. Company must provide the out-of-state purchaser with the Transactional Notice and Annual Purchase Summary and include the out-of-state purchaser in the Annual Customer Information Report sent to the Department.

Monthly Charges for Energy Savings Technology

A monthly “subscription” charge may be subject to sales or use tax when the charge is more reasonably considered a taxable rental of tangible personal property and not a company providing a nontaxable service. Factors that help determine whether a charge is more closely aligned with the provision of a taxable rental of tangible personal property or a nontaxable service are reviewed in this letter.

Tax Due on Delivery and Installation

Tax is collected only on the price paid by the customer for the product, and not on the delivery or installation charges, if those charges are separately stated and the customer is not required to purchase delivery or installation services as part of the sale of the product.

Taxable Nature of Prescription Pet Food

Prescription pet food may be eligible for exemption from sales tax when the prescription pet food is prescribed by a veterinarian, furnished by the prescribing veterinarian, and leaves the veterinarians facility with the patient.

Component Airplane Parts

Component airplane parts that are permanently affixed to aircraft are exempt from sales and use tax, even when the aircraft is not a commercial airline used in interstate commerce.

Occasional Sales

Sales made by charitable organizations are generally subject to state sales tax, but may be exempt if the sales meet the qualifications for occasional sales. If an organization fails to meet the requirements, then all sales by the charitable organization may be subject to sales tax.

Scaffolding Rental 

The rental of scaffolding if delivered on its own without an associated charge for installation would likely be subject to sales tax. Related items, such as tenting, cords, wood planking, and lighting are also tangible personal property and the rental of such would likely be subject to tax.

Installation of Commercial Signage

In cases where the sale of goods also involves the sale of related services, such as the service of installation of property, if the sale of the service is both separable from the sale of the taxable goods and the price for the service is separately stated, then sales tax is calculated only on the price of the taxable goods. If the sale of the installation service is separable from the sale of the sign, then charges for services associated with installation are also likely nontaxable.

Restaurant Condiments

The taxability of a restaurants purchase of ingredients to make condiments is dependent on the restaurants ultimate use of the condiments. When a restaurant makes condiments available to customers, the condiments are not treated as if they are sold to customers. The restaurant is viewed as the user and consumer of these products and must pay sales tax when these items are purchased from suppliers. However, Colorado exempts the purchase of food ingredients that become an integral or constituent part of a food product that is intended to be ultimately sold at retail for human consumption.  If the restaurant separately states a price for a condiment when sold to a customer, the sale is likely a retail sale.

Prescription Containers Purchased by Pharmacies

A pharmacy’s purchase of containers and labels from a vendor will be exempt from sales or use tax when the containers and labels purchased are later used to contain and dispense an order for the pharmacy’s customers.

Sale of Water and Ice through Vending Machines

Water and ice sold through a vending machine is likely not taxable under §§ 39-26-102.15 or 39-26-102(4.5), C.R.S. The Department defines food under the federal Supplemental Nutrition Assistance Program, which defines food to include water in a bottle and crushed or block ice.

Sale of Electric Car Charging Stations and Contracts

This letter provides a brief overview of the considerations the Department makes when determining whether the sale of network access fees and maintenance contracts are subject to sales tax when sold in conjunction with tangible personal property.

Essential Containers

If a food container is “not necessary to transfer the food to the consumer,” the container is nonessential and subject to taxation. If “the retailer cannot transfer the food to the consumer without” the container, it is exempt from taxation.

Catering and Facility Rentals by Charitable Organizations

Catering services provided by a charitable organization are exempt from Colorado sales and use tax if the organization has not exceeded the occasional sale exemption thresholds. Rental of the facility may be subject to sales tax.

Lease of Space on Telecommunications Towers

The lease of space on Company’s telecommunication towers is subject to sales and use tax.

Non-Transplantable Human Tissue

The charge by Taxpayer for provisioning non-transplantable human tissue to third parties is subject to sales and use taxes.

Membership Fees

Taxpayer's sale of membership fees are not subject to Colorado sales or use taxes.

Soil Erosion Control Material

Company must collect state and state-administered sales taxes on retail sales of Excelsior logs and silt fencing to construction contractors and subcontractors who present Company with their contractor's exemption certificates.

Lost or Damaged Leased Property

Payment from a lessee to company for the loss or damage of rental equipment is not subject to sales or use tax. 

Third Party Cooperative Direct Marketing Advertiser

Company is not liable for sales or consumer’s use tax on materials produced and mailed by a third-party cooperative direct market advertiser that advertises for multiple parties in the same mailer.

Audio Visual Equipment

Company may sell audio visual equipment exempt from tax if a contractor is engaged by an exempt entity and presents either the contractor’s sales tax license or the contractor’s exemption certificate.

Equipment Leases

The lease of computers to students does not qualify for the exemption for sales to schools. The lease may be a credit sale and taxes are due on the installment payments. If the lease is a true lease, then lessor must pay tax when the lessor acquires the computers or must obtain permission from the department to collect tax on the lease payments.

Wood Pellets

Wood pellets used for a residential purpose are exempt from sales and use tax.

Change Orders Related to Long Term Leases

The replacement of existing equipment with new equipment does not convert a long term lease to a short term lease. However, if the property does not replace existing equipment but is more accurately viewed as the addition of property added to a lease, then the addition of the new property in the last three years of a lease should be viewed as a short term lease.

Optional Maintenance Agreement

Maintenance agreements when sold in connection with the sale or lease of taxable tangible personal property are generally subject to Colorado sales or use tax unless the maintenance contract is optional and separately stated from the sale or lease of the taxable tangible personal property. Even though the monthly lease payment does not include a breakdown of the portion of the payment that relates to the optional maintenance agreement, the lease is separately stated from the sale or lease of the taxable tangible personal property because the maintenance agreement is a separate contract from the lease contract and customers must separately sign each contract and if the cost of the maintenance agreement is included in the lease, there is a separate line item detailing the cost of the maintenance agreement in the lease contract.

Fluoride Varnish

The fluoride varnish and the other items included in the kit appear to be materials furnished by licensed providers in connection with providing professional services to patients and, therefore, would be exempt.

Marketing Material

Services provided in connection with the marketing material may be subject to tax if the services are not optional and separately stated from the sale of the marketing material.

Medical Imaging Equipment

If the services Company provides pursuant to a service agreement are inseparable from the sale of the original equipment, then the price for the service is included in the calculation of sales tax for the taxable goods.

Electricity to Produce Software

If the activities engaged in by Company did qualify as manufacturing or as an industrial purpose, then the electricity used to program software that is included in the finished goods would likely be viewed as exempt. 

Software and Related Services

Is the sale of software or related services subject to sales tax? 

Market Reports

The sale of market reports are not the sale of a service if the report is not customized for a particular customer.

Security Systems and Related Services

The sale of security systems and related services may be subject to sales or use tax depending on the type of service the Taxpayer offers to its purchasers.

Contracting Manufacturing

The exemption for manufacturing machinery and machine tools likely extends to the purchase and use of these items when used in contract manufacturing.

Core Charges

Colorado sales tax applies to a separately stated core charge if the retailer does not resell the property in the usual course of its business.

Exemption for Silviculture Equipment

Timber and timber product handling equipment purchased after 2013 and valued by the county assessor as silvicultural equipment likely qualifies for the farm equipment exemption.

Orthodontic Materials

Sales of orthodontic materials will not be subject to sales tax if the orthodontic materials are furnished by a licensed provider to a patient and the materials leave the facility with the patient or are consumed by the patient at the medical office.

Electric Service Provider's Use of Electricity 

Electric service used by an electric service provider at its facilities is not subject to Colorado sales or use tax because the consumption of the electricity it generates is not a retail sale.

Billing Services

The paper or electronic billing services are not subject to sales tax because it is an nontaxable service. The paper invoices are an incidental transfer of personal property related to the provision of a nontaxable service.

Amenity Fee

The amenity fee is subject to tax because the amenity fee is included in the charge for taxable living accommodations.

E-book, Online Courses, and Virtual Lessons

E-book and Company's online courses are tangible personal property subject to sales tax. Virtual lessons described in the ruling are a service not subject to tax.

Prosthetic Device

Product is exempt from sales and use tax as a prosthetic device.

Licensed Movies and Content

Both the digital movies/content and the computer hard drives received from the film distributors constitute tangible personal property subject to Colorado sales or use tax.

Food and Nutritional Products

Products that meet the definition of "food" and have a "Nutrition Facts" label are exempt from state sales tax.

Web Collaboration Services

Web collaboration services provided to consumers in Colorado by means of servers located outside Colorado are not subject to Colorado sales tax because it is an interstate service.

Software Updates and Maintenance Agreements

Computer software updates and maintenance agreements purchased after July 1, 2012 that are delivered electronically are not subject to sales tax because they are not tangible personal property, even if the update or maintenance is for computer software that was treated as tangible personal property when purchased.

Per Click Fee

The “per click” fee is not subject to tax because the tangible personal property, which is inseparable from the maintenance service, is exempt as a sale for resale or ingredient or component part used to produce tangible personal property that is sold.

Refunds

When a purchase of taxable tangible personal property includes a taxable shipping charge and the customer returns the item for a refund, the entire amount of sales tax must be refunded to the customer, including the tax paid on the shipping charge.

Hotel Fees and Online Travel Companies

Cancellation charges that are greater than 50% of the daily reservation room rate are generally considered payment for the room and therefore fully taxable. Attrition fees are more accurately characterized as a pricing mechanism by which a retailer adjusts for a volume discount and must be included in calculation of tax. Colorado sales tax is due on the entire amount charged to the customer for the right to occupy a room or accommodation. Therefore, the amount the online travel company charges is the amount that is subject to tax.

Booking Agent Fees

That portion of the customer’s payment taken by Company as a commission is part of the price paid by the customer and, therefore, is included in the calculation of sales tax.

Into-Plane Fee

The nontaxable sale of services are not subject to sales tax because the taxable sale of fuel and a nontaxable sale of services are separable despite their common appearance on a single invoice because the customer must engage in two separate transactions, covered by two separate contracts, with two separate entities.

Web Seminars

Live web seminars are not subject to sales or use tax because the seminar is a service. A pre-recorded web seminar and self-study material online are subject to tax.

Custom Herbal Formulas

The custom herbal formulas Taxpayer prepares and sells are subject to sales tax because they are not a prescription or nonprescription drug.

Vehicle Rentals 

An advance payment applied toward the charge for a vehicle rental is taxable. Additionally, when a nonrefundable advance payment that exceeds 50% of the daily rental charge for the vehicle is forfeited due to cancellation or the customer’s failure to appear at the scheduled time, is likely a charge for the rental of the vehicle and, therefore, taxable. Conversely, a nonrefundable advance payment of 50% or less of the daily rental charge would likely be considered a nontaxable cancellation charge if it was forfeited due to cancellation.

Distributor Fees

Payment of the annual renewal fee is not subject to tax because no tangible personal property is sold.

Energy for TV News Broadcast Station

Electricity used to operate TV communication towers is exempt because TV broadcast uses radio communication to transmit the TV signal and electricity used for radio communication is exempt from tax. However, energy for office computers, printers, lighting, heating, and TV cameras are not exempt.

Credentialing Services

The credentialing process, as described in the letter, appears to be a service that is not subject to sales and use tax.

Management Fee 

If Company’s client must purchase the management service when using Company’s repair and maintenance service, then the management fee is included in the calculation of sales tax, even if the price for the management fee is separately stated from the taxable sale of auto parts.

Leased On-Demand Aircraft

Company’s leases of planes do not appear to qualify for an exemption because the lessee is not a “scheduled” operator and does not meet the requirements for the on-demand carrier exemption.

Third-Party Liability

Payment of the correct type of tax and full amount of tax by one jointly responsible retailer discharges the payment obligation of the other jointly responsible retailer. However, the discharge of the monetary liability does not discharge or otherwise limit the Department’s statutory authority to administer and collect taxes from either jointly responsible retailer if a deficiency occurs in the future.

Paint Stewardship Fee

The fee that is required pursuant to § 25-17-404(2)(j), C.R.S. is included in the calculation of sales tax when purchasing architectural paint.

Electronic Messaging Services

Company's integrated desktop messaging, electronic data interchange (EDI) value added network (VAN), broadcast fax, and production email are services and not subject to Colorado sales and use tax. Company is the user and consumer of the telephone and telegraph service used to provide each of its services.

Research and Development of Product that will be Sold

Purchases of components for manufactured product are exempt as components purchase for manufactured tangible personal property because the manufactured product may be sold. If the product is sold and used outside Colorado, Colorado tax is not due on the sale. If the manufactured product is ultimately used by Company to provide a service rather than sold, Colorado use tax is due on the price Company paid suppliers for the components, but such tax would be due at the time the item is identified as being subject to use by Company.

Electronic Messaging Services

Company's integrated desktop messaging, electronic data interchange (EDI) value added network (VAN), broadcast fax, and notifications email are services and not subject to Colorado sales and use tax. Company is the user and consumer of the telephone and telegraph service used to provide each of its services.

Bulk Water

Bulk water sales sold in tanks are subject to Colorado sales or use taxes, but sales of water through a pipeline are not subject to Colorado sales and use taxes.

Custom-Made Closet Organizer

A retailer's charge for assembly and installation of Product into a home is included in the calculation of sales tax because the charge for assembly is a taxable service to create a finished product and, although installation of the finished product is not taxable service, the charge for installation is not separately stated from the charge for installation.

Lessee Maintenance Agreements

Tax for a separately stated charge for motor vehicle fleet maintenance is not included in the sales tax paid by a lessee of a motor vehicle. Lessor is liable for sales or use tax on tangible personal property used to perform the maintenance agreement

Contractor Exemption Certificate

If a contractor does not provide a certificate of exemption to a retailer, then the contractor cannot claim an exempt sale and the retailer must charge sales tax on the transaction.  A retailer who fails to charge sales tax in such instances is liable for any sales tax that should have been collected as well as penalties and interest.  If the contractor later obtains an exemption certificate, it may apply to the Department for a tax refund or the retailer may, in its discretion refund the sales tax to the contractor and claim a credit on its sales tax return.

Cloud Service Plans

Company’s cloud service plan may constitute intrastate telephone and telegraph services. The Department would likely view charges for data plans by mobile telecommunication providers as telephone service. If the transmission pathway involves both intrastate and interstate telephone service and the charge for the intrastate service is not separately stated, then the entire charge is subject to sales tax. The Department would likely not view the charge for cloud Wi-Fi as a charge for intrastate telephone or telegraph service.

Contract Manufacturing

When a customer supplies all the raw materials used by the manufacturer to manufacture a product for the customer (contract manufacturing), there is no taxable transfer of tangible personal property from the manufacturer to the customer and the manufacturer's charge to the customer is solely one for nontaxable services. Manufacturer's purchase of manufacturing machinery which is occasionally used for contract manufacturing is exempt under the manufacturing machinery exemption because the exemption does not require the machinery or machine tools to be used exclusively in an exempt manner.

Late Payment Fees

Sales tax applies to the full purchase price because sales tax is a transactional tax. Events that occur after the sale generally do not affect the calculation of the tax. A late payment fee is generally assessed after a sale is created and when payment is untimely made. The late payment penalty typically reflects the finance or administrative charge for events after the sale and, therefore, do not reflect or affect the sales price at the time the transaction was created.

Leases of Low-Emitting Heavy Vehicles

A long-term lease is treated as a sale; therefore, sales and use tax exemptions apply to long-term lease payment.

Discharged Maintenance Contract

Car owner's warranty, on which owner paid sales tax, was discharged in bankruptcy and owner subsequently purchased replacement parts that would have been provided tax free to owner under the warranty. Car owner not entitled to a refund of sales tax paid on replacement parts. Events subsequent to a taxable event generally do not affect the taxability of the transaction.

Services in Connection with Retrieving and Copying Medical Records

Retrieving and copying medical records, and activities related thereto, are services rather than the sale of tangible personal property and, therefore, are not subject to tax.

Banquet and Event Provider Charge

A general discussion of the taxability of charges associated with banquet and event rentals.

Audio Visual Equipment

Audio visual equipment is likely not construction or building materials. A contractor who purchases tangible personal property that is not a building material will be treated as a retailer who resells the property to the real property owner. When the real property owner is a tax exempt entity, the contractor does not pay sales tax to the supplier, and does not collect sales tax on the sale of the property to the real property owner because the owner is exempt from tax.

Delivery Charge

Delivery charge is separable from the transaction because the customer can purchase a meal from Company without also being required to have the meal delivered. However, the delivery charge does not meet the "separately stated" requirement because the customer is not aware that they are purchasing a delivery charge. Therefore, the delivery charge is subject to sales tax.

Tax on Asset Acquisition through Foreclosure

A secured lender who obtains title to collateral by foreclosure is not liable for sales tax.  However, if the secured lender thereafter sells the collateral to a third party, such as by auction sale, then that sale is subject to sales tax.

Sales Taxability of Federal Excise Tax on Aviation Fuel Refunded to Customers

State sales tax does not include federal excise tax collected by the aviation fuel supplier from the airline carrier because the federal tax was always refundable and only charged in the first instance as an administrative measure to ensure the federal exemption for fuel is properly claimed.

Contractor Pays Tax when Billing on a Time-and-Material Contract

A contractor must have a sales tax license when using a time-and-material contract with the real property owner.

Replacement Batteries in Electric Wheelchairs

Batteries for wheelchairs, motorized carts, and scooters that qualify as exempt mobility enhancing equipment are exempt. Retailer must exercise reasonable diligence to determine that the exemption applies.

Dark Fiber

Dark fiber appears to be tangible personal property subject to tax and, therefore, the leasing of such cable may be subject to sales or use tax.

Nonessential Food Articles

Condiments that are not incorporated into a prepared meal at the time it is transferred to the consumer but that are provided separately, regardless of the method by which they are provided to the customer, are nonessential food articles.

Medical Equipment and Supplies

The equipment and supplies listed by Company likely do not qualify for the medical equipment and supplies exemption because they are neither purchased pursuant to a prescription nor are they furnished by a licensed provider as part of their professional service to a patient.

Disposable Bag Fee

A municipal disposable bag fee collected by a retailer is not included in the sales and use tax calculation on goods purchased by the customer.

Sale-and-Leaseback Transactions

The tax obligations of the sale-and-leaseback transaction hinge on the term of the lease. If the term of the lease is more than three years, the lease is considered a sale and the lessor may purchase the property without paying tax and collect tax on each lease payment paid by the lessee. If the term of the lease is three years or less, the lessor must pay tax on the property at acquisition and the lease payments paid by the lessee are exempt from tax because the lessor has already paid tax on such property.

Tax Exempt Certificates

A person holding a sales and use tax exempt certificate is exempt from state, city and county, and special district sales and use taxes.

Digital Photographs

Digital photographs sold by a photographer are subject to sales tax.

Foot Orthotics, Braces, Splints and Implant Kits

Most foot orthotics, braces, and splints are exempt only if furnished to the patient by a licensed provider as part of the provider's professional service. A joint implant and pins, which are purchased together with a drill bit as a "kit", are exempt from tax, but the drill bit included in the kit is subject to tax.

Aggregate Mining, Asphalt and Recycled Asphalt Productions

Asphalt production inside and outside an enterprise zone is manufacturing, unless fifty percent or more of the new asphalt is comprised of recycled asphalt. If new asphalt is comprised of fifty percent or more of recycled asphalt, then production of such asphalt is not manufacturing, regardless of whether it is inside or outside an enterprise zone. Aggregate mining and recycled asphalt production is manufacturing when performed in an enterprise zone, but is not manufacturing when performed outside an enterprise zone. Use tax does not apply on aggregate materials mined from manufacturer’s own gravel pit. Lease payments related to mining may constitute the taxable sale of tangible personal property.

Delivery and Pick-up Charges

Company’s delivery and pick-up charges are not subject to Colorado sales and use tax because they are separable from the rental of the equipment.

Food for Retirement Communities

Charges by a residential retirement community to residents for meals are exempt from state sales tax. Company’s purchase of food products from suppliers are also exempt from tax.

Cancer Treatment Therapy

The rental of company’s cancer treatment therapy equipment is exempt from sales and use tax as medical equipment and related accessories for electrotherapy dispensed pursuant to a prescription.

Promotional Videos

The production of a video is a non-taxable sale of services, even though some inconsequential property is transferred from seller to buyer. If charges for the raw footage and project file reflect the value of the services to produce the raw video and not the value of the property, the raw footage and project files will also be considered a non-taxable service. Company must pay sales or use tax on the items it uses to perform its service.

Modular Homes

The sales or use tax on modular homes will depend upon the type of contract the builder uses with the homeowner. The information in this letter applies specifically to modular homes and may not apply to other types of manufactured housing. Please see Sales and Use Tax Topics: Prefabricated Housing for information about other types of manufactured homes.

Domestic Jet Fuel Used in International Flights

Colorado sales tax applies to aviation fuel sold in Colorado to commercial airlines even if the fuel is used for international flights.

Sales Taxability of Federal excise Tax on Jet Fuel Sales

Sales tax is calculated on the price charged to the customer. However, if the purchaser is levied a direct federal tax, the sales tax calculation excludes the direct federal tax. A direct federal tax is a tax levied by the United States on the taxpayer, which, in the case of sales tax, is the purchaser.

Alternating Current Electricity 

“Renewable energy” does not include burning natural gas and equipment used to capture thermal heat from the combustion of natural gas and does not qualify for the sales tax exemption for components used in the production of alternating current electricity from a renewable energy source.

Intrauterine Devices

An IUD that releases hormones is considered a drug and is exempt if dispensed pursuant to a prescription by a licensed provider. An IUD, whether furnished to a patient pursuant to a prescription or not, will likely qualify for the exemption for materials furnished by a licensed provider as part of their professional services because only a licensed provider can insert an IUD and the patient leaves the licensed provider’s office with the IUD.

Membership Fees/Partial Refund

When a membership fee includes both the transfer of tangible personal property and the provision of services (or intangibles) to the buyer, the entire transaction will generally be treated as taxable, unless the true object of the transaction is the acquisition of services (or intangibles) and the value of the tangible personal property is inconsequential. A partial refund of the purchase price presumably means that the buyer has used the property to some extent and, therefore, no refund of tax is allowed. However, if the refund is for property that has not been used, such as in the case of a canceled magazine subscription and the refund reflects the magazines not yet delivered, then a refund of tax for the partial refund of the purchase price is permitted.

Demand Charge

A demand charge for the sale of electricity is taxable unless used for residential or industrial purposes.

Infusion Pumps

An infusion pump that administers medications is exempt from Colorado sales and use tax if prescribed by a licensed provider. An infusion pump that administers medications is exempt from Colorado sales and use tax if prescribed by a licensed provider.

Hemodialysis Devices

Hemodialysis devices may qualify for the durable medical equipment exemption.

Prepaid Fuel Charges for Rental Vehicles and Transportation Charges

Prepaid gasoline and transportation charges relating to the lease of a motor vehicle may not be taxable so long as the charges are separately stated and optional. However, if the lessor’s transportation service is the only realistic transportation option, then those transactions may not be separable, and therefore may be taxable.

Colocation Services

A transaction involving the use of tangible personal property will generally be treated as a taxable rental of tangible personal property if the customer has control over the property. Conversely, the transaction will be treated as a non-taxable service if the provider has primary control over the property. The provision of private lines for intrastate telephone and telegraph services is subject to sales tax.

Marijuana RFID Tags

RFID tags used by marijuana cultivators to track transfers of marijuana are not exempt either as farm equipment (§36-26-716(1)(d), C.R.S.) or as labels (§39-26-102(20), C.R.S.) and, therefore, are subject to sales or use tax when purchased by marijuana cultivators.

Lease Payments on Vehicles Used in Interstate Commerce

A purchase of a new or used trailer, semitrailer, truck, truck tractor, or truck body for use exclusively outside Colorado or in interstate commerce and delivered by a Colorado manufacturer or dealer within Colorado, driven or moved by the buyer outside the state within thirty days after the delivery date is not subject to the sales tax at the time of purchase. If the company is required to designate Colorado as its base jurisdiction, the lease payments will likely be subject to sales tax.

Consolidated Freight Charges

If retailer’s consolidated freight charge genuinely occurs after the product is purchased, then the charge appears to be a drop shipment and the transportation charge is not subject to tax. However, if retailer’s consolidated freight charge is assessed regardless of whether a product is being purchased or before the purchase is complete, then the charge appears to be a freight-in charge subject to tax. A transportation charge must fairly reflect the cost of transportation.

Walk-in Bathtubs, Wheelchair Lifts, Modular Ramps

In-home wheelchair mobility lifts and modular ramps provided pursuant to a prescription by a licensed provided are mobility enhancing equipment exempt from tax. A walk-in bathtub provided pursuant to a prescription by a licensed provider to someone with an illness or injury appears to be eligible for the durable medical equipment exemption.

Fees Related to Retrieving and Copying Medical Records

Fees charged by a company in the business of retrieving and copying medical records of health providers for use by insurance companies, lawyers, and other third-parties are not subject to sales and use tax.

Computer Software and Computer Software Maintenance Contracts

Software that is prepackaged, has a nonnegotiable license agreement, and is delivered on a tangible medium is taxable. Nonnegotiable software license agreements presented to the buyer on-line qualify as a tear-open, nonnegotiable license. Optional maintenance agreements are generally viewed as a service and are not subject to sales and use tax.

Installation, Repair and Inspection Charges and Payments to Third Party Subcontractors

Company’s charges for installation, repair, or inspection of fire suppression system built into real property are subject to sales tax when billing clients on a time and material basis for work performed by a subcontractor. Company’s payments to subcontractors for this work are not subject to sales tax.

Retrieving and Copying Medical Records

Fees charged by a company in the business of retrieving and copying medical records of health providers are not subject to sales and use tax because Company is providing a service.

Hardware and Software Used in the Provision of Intrastate Telephone Services

The hardware and software purchased by Company is consumed by Company in the provisioning of services to clients and is not rented to clients. Company, who provides routing of intrastate telephone calls and other communications, is providing intrastate telecommunication services in Colorado.

Third Party Administrator of Insurance Claim Obligations

Company’s purchases from suppliers are exempt wholesale purchases when Company resells the goods to the insurance companies. Therefore, Company must collect the applicable sales taxes from insurance companies.

Digital Imagery

A static digital image sold under the various methods to various customers is the sale of tangible personal property for purposes of Colorado income tax apportionment. The sale is not a Colorado sale if the destination of the product is not in Colorado and Company is taxable in the destination state. Regardless of whether the destination state treats the sale of digital images to the federal government as sourced to the origination state (Colorado), Company must source a sale to the federal government to the destination state for Colorado apportionment purposes.

Purchase Price that Includes Sales Tax

Company that either provides an invoice for the sale and separately states the tax or has a conspicuous sign that shows the price of each item and separately states the amount of tax for each item offered for sale is in compliance with state law.

Sales Tax Refunds when an Exemption Certificate is Provided After the Sale

The sales tax refund procedure outlined in the ruling, including the ninety day limitation on refunds by vendor, appears to be consistent with Colorado statutes.

Rental and Labor Charges

If a retailer provides both taxable tangible personal property and non-taxable services, the taxability of the transaction is generally be determined on whether the “true object” of the transaction is the sale of a service or rental of tangible personal property.

Natural Gas and Electricity Subject to Special District Taxes

Sales of fuel for industrial purposes are exempt from state, state-administered cities, counties, and special districts sales taxes.

Tear Serum Testing Modules

The exemption for “blood test” does not include a test relating to tears produced by the eye, even though the tests are similar in some respects.

Resale Exemption Certificates for Drop Shipments

Colorado allows Company, as a wholesaler, to accept sales tax licenses and exemption certificates issued by another state. If Company contracts to sell its product directly to the consumer and the consumer has an exemption certificate issued by another state, then Company is not required to collect sales tax from the consumer. However, if Company sells its product to a retailer and the retailer does not have a sales tax license or exemption certificate issued by Colorado or another state, then Company must collect sales tax from the retailer, even if the ultimate consumer has an exemption certificate issued by Colorado or another state.

Maintenance Agreements

Company's client pays an IT services company to install free Microsoft patches and software upgrades, which are taxable standardized software, indicates that the true object is the sale of a nontaxable service rather than the sale of tangible personal property.

Fees Associated with Company-Owned Vending Machines

The taxability of various fees charged by a vending machine operator whose vending machines are located at customers' locations are discussed.

Re-Rental of Equipment

A company that leases equipment from a rental company and that uses its own employees or subcontracts with an independent contractor to operate the equipment cannot claim a resale exemption.

Plumber's Fees

The method a plumber uses to invoice customers determines how sales and use tax is collected.

Sutures and IV Catheters

Sutures qualify for an exemption but IV catheters do not.

Meal Included in 501(c)(3) Organization's $25,000 Proceeds Limit

The net price of the dinner charged by a charitable entity for a fundraising event is included in the gross proceeds calculation of the $25,000 net proceeds exemption.

Software License Renewal

A charge for a license renewal to use taxable software is subject to tax when the original license and software were delivered by a tangible medium but the renewal is delivered electronically with no transfer of tangible personal property because the license renewal is simply a charge for the continuing right to use taxable tangible personal property.

Fees and Charges Applied to Utility Bills

The taxability of charges for connection, disconnection, late-payment and other items are discussed.

Seeds and Plants, Food and Dietary Supplements, Medical Supplies, Test Kits, and a Coupon Book

Exemptions listed under §39-26-716, C.R.S. apply to commercial agriculture and livestock operations. Seeds and orchard trees that are not used for a commercial agricultural purpose are not exempt. Colorado excludes dietary supplements from the definition of food. See ruling for discussion of medical supplies, test kits and coupon books.

Entry Towers

If entry towers are fixtures, their taxability will depend upon the type of contract Company uses with the owner. Contractors who charge the owner a lump sum amount do not collect sales tax from the owner, and, instead, pays sales tax when they acquire the building materials from the supplier or manufacturer. If a contractor uses a “time-and-material” contract with the owner, then the contractor must collect sales tax from the owner on the marked-up price of the entry tower, but not on the labor charges.

Sale of Domestic Jet Fuel for Commercial International Flights

Colorado exempts from its fuel excise tax specially blended kerosene and other fuel products if they are exempt from federal aviation fuel taxes and used in aircraft operated by scheduled air carriers or commuter airline operators.

Electronically Delivered Software

Electronically delivered goods, such as music, movies and books will still be viewed as taxable sales of tangible personal property after July 1, 2012, which is the effective date of amendments to the statutory definition of tangible personal property that exclude electronically delivered computer software. The amendments also exclude from tax charges by application service providers (ASP).

Material Safety Data Sheet

Reports and completed applications for governmental regulatory compliance activities are generally treated as a service. However, access to data, without any significant analysis of the data by Company, would generally be treated as a taxable digital product.

Lease of Medical Equipment

A lessor of a “true lease” must pay sales taxes when it acquires the property if the lease term is three years or less, unless the lessor obtains prior permission from the Department to collect sales or use tax on lease payments. If the lessor uses a leases that is more than three years in duration or if the lease is a finance lease (regardless of whether it is more or less than thirty month duration), then lessor must collect sales or use tax on the lease payments, including the final “purchase” payment, and lessor does not have the option to pay sales or use tax when it first acquires the property.

Bagged and Packaged Salads

Bagged salads that do not include salad dressing or utensils qualify as food for home consumption. Bagged salads that contain all the ingredients of a prepared salad, including the salad dressing, and packaged salads in the shape of a bowl that contain a variety of lettuce, vegetables, salad dressing, a utensil, and may include meat, are “prepared salads” subject to tax.

Drug-Device Combination Products

Product, which provides a framework over which bones grow and heal, is exempt as material furnished by a licensed provider as part of the provider's professional service to the patient, even if Product is purchased by hospitals, clinics or surgery centers. Product does not qualify for the durable medical equipment exemption and may not qualify for the prosthetic device exemption.

Charges for Services

Charges for services, as described in the ruling, are not subject to sales or use tax, regardless of whether Company provides copy/print center services. Company’s charges for certain services would become subject to sales or use tax if Company does not separately state charges for tangible personal property used by Company to provide the services.

Bone Fracture Repair Product

Product, which provides for bone void filling and fracture repair of the pelvis and extremities, is exempt as material furnished by a licensed provider as part of the provider's professional service to the patient, even if Product is purchased by hospitals, clinics or surgery centers.

Welding Gases and Tools

Welding gases that are a fuel or energy source used in one of the enumerated industries are exempt from sales and use tax. Oxygen and inert gases used in welding are not exempt fuel gases. Hand-held torches and welding attachments, parts, and related tools are not machinery or machine tools exempt from Colorado sales and use tax.

Food and Nutritional Products - Rescinded

Subscription Fees

A subscription fee for an online publication, which is a duplicate of Company's newspaper, is not subject to state and state-administered local sales and use taxes because it is still considered a newspaper. A subscription fee for access to stock screens, comparative performance ratings, and emerging stocks is a service and, thus, not subject to state sales or use tax.

Prescription Reviews

Pharmacist's review of patient’s medication record is a service and not subject to sales and use tax, unless the sale of service and tangible personal property are inseparable and the “true object” of patient is the report.

Orthotic Insert

A shoe insert does not qualify for the prosthetic device exemption.

Internal and External Fabrication Labor Costs

Fabrication labor costs performed by a fabricator on goods that the fabricator later converts to its own use are not included in fabricator’s use tax calculation; but fabrication costs are included in the sales tax calculation if the fabricator sells its fabricated goods at retail. Charges for fabrication services performed by a third party are included in the sales tax calculation of the fabricator’s retail sale of the fabricated goods to the ultimate consumer if the third party provides the fabricator with both the materials and fabrication services.

Application Service Providers

Computer software that is used by a consumer via an ASP is not taxable computer software because the software is not considered to be delivered to the consumer in a tangible medium.

Transportation Charges

Transportation charges that are inseparable from the sale of the good are taxable.  Non-optional charges by wholesaler to retailer for drop shipment transportation of goods are not "freight-in" charges and are taxable if passed on to customer.

Durable Medical Equipment

A medical device can qualify for the durable medical equipment exemption if it (a) can withstand repeated use; (b) is primarily and customarily used to serve a medical purpose; (c) is generally not useful to a person in the absence of illness or injury; and (d) is not worn in or on the body.

Tangible Personal Property Assembled in Colorado

Colorado generally exempts from sales and use tax tangible personal property purchased by a manufacturer who integrates the property into a finished manufactured or processed product and holds the same for resale. This exemption applies regardless of whether the finished goods are sold inside or outside Colorado.

Reimbursable Expenses

In general, reimbursable expenses are not subject to sales or use tax, unless the reimbursement is more properly viewed as a resale of taxable goods. However, if goods or services for which reimbursement is sought are more fairly construed as being consumed by a company rather than by the company’s client, then the reimbursement charge to the client is not treated as a resale of the goods or services.

Non-resident Leases of Passenger Cars

The place where the vehicle is registered will determine which state and local taxes apply. If the person leasing the vehicle is, at the time the lease is executed, a non-resident of Colorado and immediately takes the vehicle to another state for use outside of Colorado, then Company/dealer is not liable to collect any taxes on the leased vehicle.

Full-Service Truck Washes

Full-service truck washes are generally viewed as a non-taxable service. However, Company must pay use tax on supplies used within the wash process.

Products for the Blind and Legally Blind

The optical sales and services exemption explicitly excludes Braille reading devices. Products may qualify for the durable medical equipment exemption if the Braille devices serve a “medical” purpose and are dispensed and purchased pursuant to a prescription.

Authentication Services

Sales of authentication services by means of a digital certificate are not subject to Colorado sales or use taxes.

Direct Mail Advertising Materials and Fulfillment Services

Separately stated charges for the sale of direct mail advertising materials to a client who directs an advertising agency to instruct a printer to print and mail the material to customers located outside Colorado are not subject to sales and use tax. Separately stated charges of an advertising agency to its client for mailing fulfillment services are not subject to sales or use tax.

Collecting and Reporting of Adjustment Payments

Company collects and reports sales and use taxes as set forth in the Discussion section.

Software Application or Service

Users true object is the use of the service provided rather than the lease of computer servers or software.

Food and Nutritional Products

Products in question qualify as 'food' and, therefore, are exempt from state sales and use taxes if sold for domestic home consumption. These products are subject to local sales taxes of those local jurisdictions that have elected to levy sales and use taxes on food, unless the product is purchased with SNAP or WIC benefits.

Photovoltaic Energy Systems

The purchase and lease of a photovoltaic energy systems by an entity other than the ultimate user is exempt from state and state-administered sales and use taxes under the Renewable Components exemption, except on an on-site monitoring system which is subject to sales and use taxes.

Partial Purchase Price Exemption

A portion of the purchase price of a fuel used in manufacturing a tangible personal property is exempt from sales and use taxes if a portion of the fuel material is a necessary and desirable component of the manufactured product.

Lay-a-way and Partial Payments Plans

Sales tax is not due on installment payments made on lay-a-way and partial payment plans until final payment is made.

Sales Tax on Personal Property Tax

Charge for reimbursement for personal property tax incurred by lessor and separately stated on lease invoice is included in calculation of sales tax owed by lessee.

Auctioneer Administrative Fees

Auctioneer fees that are not optional and viewed as inseparable from the sales transaction are included in the sales tax calculation.

Auctioneer's Sales Tax Obligation on Motor Vehicles

An auctioneer who sells a motor vehicle on behalf of an owner is, unless an exception applies, a retailer and must collect and remit sales tax administered by the department.

Insulin Infusion Pumps

An infusion pump and related disposable supplies are exempt as an “insulin measuring and injection devices” because the pump measures an insulin dosage and injects the insulin.

Manufacturer Coupons

A retailer is reimbursed by the manufacturer for the amount of the reduction in purchase price; thus, sales tax applies to the full selling price before the deduction for the manufacturer’s coupon.

Freight-in Transportation Charges

Transportation charges incurred in connection with transporting tangible personal property from the place of production or the manufacturer to the seller or to the seller's agent or representative are deemed “freight -in” charges and are subject to tax.

Bi-weekly Newspapers/Printers

A newspaper distributed every two weeks does not qualify as a “newspaper” that is exempt from Colorado sales and use taxes. A printer must collect sales tax from the distributor of a non-exempt newspaper.

Rebates

Programs offering consumers rebates for certain purchases are not deducted from the sales price when computing sales tax.

Liquor-Filled Candy

Liquor-filled candy does not qualify as exempt food for state sales and use taxes and state-administered local sales tax purposes.

Services Related to Medical Devices

Colorado does not impose sales tax on the provisioning of medical-related services.

Lease Payments

In a 'true' lease, lessor is required to pay sales tax on a purchase from a vendor if the sale takes place in Colorado or pay Colorado use tax if its purchase from a vendor occurs outside Colorado. In a finance lease, the “lessor” must collect tax on the “lease” payments.

Electronically Delivered Newspapers and Magazines

Monthly newspapers and magazines delivered electronically are subject to sales tax.

Carbon Dioxide and Tanks

Supplier's sale of carbon dioxide to retailer for beverage carbonation is exempt wholesale sale, but sale of nitrogen as beverage propellant is a taxable retail sale. Supplier's rental charges for gas cylinders and storage tank are not exempt under container exemption.

Transportation Services

Charges for transportation services are presumed exempt, but are taxable if seller does not separately state the charge for services or the service is inseparable from sale of taxable goods.

Patient Meals

Medical facility is the consumer of patient meals prepared by food service company and facility must pay sales tax on the charges by the food service company, including charges for overhead and management fees.

Catheters

Sale of catheter is not an exempt therapeutic device because it is not sold pursuant to a written recommendation. A healthcare provider is a provider of a service and cannot claim a resale exemption for the catheter by itemizing it on the patient's invoice.

Conversion of Association into Corporation

Conversion of an association into a corporate sole does not create a sale or use tax obligation because the corporation is an exempt entity. Declined to address whether conversion constitutes a sale or is supported by consideration.

Acceptance Testing

Acceptance testing by buyer under Colorado's Uniform Commercial Code is part of the sales transaction and is not a separate taxable use.

Hydraulic Fracturing Materials

Company directed to collect state use tax and county sales tax on fracturing materials pending final decision in Noble Energy case.

Services Offered in Conjunction with Vehicle Rental

Toll fee, roadside assistance, and carbon offset programs offered as an option with the rental of motor vehicles and separately stated on invoice are not included in calculation of sales tax.

Sales of Building Materials Between Controlled Companies

General discussion of application of sales and use tax for contractor and manufacturer who are controlled companies.

Taxability of FCC License and Coordination Charge

General discussion of taxability of FCC license and coordination charge made in connection with sale of two-way radio.

Lessor or Seller of Motor Vehicle Must Collect and Remit Sales Tax on Sale of Motor Vehicle

Lessor who sells motor vehicle to lessee at the expiration of a motor vehicle lease must collect and remit sales tax.

Gas Meter Reading Fee

Fee charged by propane distributor is taxable if the service is not separable from sale of taxable sales of propane.

Room Rental to Church Members on Ski Vacations

A sales tax exemption for a church does not apply to lodging by church members if primary activity was a ski vacation.

Enteral Feeding Pump

Feeding pump is not an exempt product.

Preparation of Sales Tax Return and Exemption Certificates 

An Internet service that prepares sales tax exemption certificates and sales tax returns is a non-taxable service.

Medical Supplies

General discussion of exemptions for medical supplies furnished by a doctor or sold to a charitable entity.

Service Charge for Call Center Employing Independent Contractors to Perform Work for Clients in Colorado

General discussion of taxability of marked-up charges in cases of resellers, agents, brokers, third party contracts.

Dietary Supplements

Dietary supplements are not exempt from sales and use tax.

Sales Tax Calculated as a Percentage

Sales tax is calculated by multiplying the tax rate by the sales price. The department does not authorize retailers to use sales tax charts.

Sales of Propane and Firewood

Sales of propane and firewood for residential purposes are exempt from sales and use tax. Retailer must provide reasonable documentation to establish sales are exempt.

Print and Mail Services / Data Transfer / Address Confirmation / Electronic Data Search

General discussion of taxability of printing services.

Display Items

Retailer may be liable for use tax for items pulled from inventory.

Nominal Purchase Price Taxable

Nominal price paid by lessee to purchase vehicle at the expiration of finance lease is subject to sales or use tax.

Pet Recovery Products and Services

Sales tax due on bundled sales of taxable products and non-taxable services.

Custom Disposable Medical Instruments

General discussion of exemptions for custom disposable instruments for patients undergoing joint replacement surgery.

Obligation to File Returns if No Reportable Sales

Company must register and file sales tax returns even if it does not have any sales tax liability for the reporting period.

Modular Home

Modular home retailer liable for sales or use tax in Colorado.

Downloaded Documents

Documents downloaded by customers from the Internet subject to sales or use tax.

Maintenance and Service Agreements

Sales tax applies to maintenance and service agreements sold in connection with the sale of taxable goods, unless the agreement is in a separate contract or retailer obtains permission to exempt a percentage of sales price. If customer has no option but to purchase maintenance/service agreement as part of purchase of taxable goods, then the agreements are taxable.

VoIP

Intrastate Voice over Internet Protocol is a taxable telecommunication service.

Discounted Taxable and Nontaxable Bundled Goods and Services

Sales tax is calculated on the retailer's costs to purchase the items when the taxable item is sold at below cost and bundled with non-taxable services.

Custom Software, Installation, Repair, Transportation, and Training

Custom software, installation, repair, transportation, and training are generally non-taxable services.

Web-Hosting and Network Connectivity Charges

Web-hosting and network connectivity charges by an out-of-state company when the servers are not located in Colorado are not taxable.

Retailer's Due Diligence on Wholesale Sales

Supplier, who knows that some purchases by retailer are not for resale, must take reasonable steps to ensure sales are wholesale sales.

Scooters, Boot Walkers, and Heel Pads

Sales of scooters, boot walkers and heel pads are not exempt therapeutic devices.

Merchandising Services

Retailer providing service of merchandising is not taxable.

Cosmetic Medical Treatments

Cosmetic products may qualify as material furnished by a licensed provider as part of the licensed provider's professional service to the patient.

For-Profit Day Care Providing Food, Plates, and Utensils

A day care is providing a service and is the consumer of the food products and related accessories.

DVD Production

Labor cost of third-party must be included in retailer's purchase price even if separately stated on the customer's invoice.

Contractors Use of Fixtures

Discussion of factors considered in determining when tangible personal property becomes a non-taxable fixture to real property. Department will consider, among other things, how taxpayer treated the property on federal income tax return. Discussion of lump-sum and time and material construction contracts.

School Materials 

A business that offers home study programs and sells books and supplies is not selling a service. Therefore, the sale of books and other goods to customer are taxable.

Credits for Goods for Hosting a Sales Event and Shipping Charges

Credits and discounts are distinguishable. Credits given by a direct marketer to a hostess for holding a sales event at the hostess' home are not allowed for purposes for calculating sales tax. The shipping charges are taxable because customers did not have any alternative but to use retailer's shipping services.

Propane Tanks and Prepaid Phone Cards

Propane is exempt if sold for residential use. The retailer must take reasonable steps to ensure the sale is for an exempt use Discussion of taxability of customer supplied propane tanks and retailer supplied propane tanks. The distributor of prepaid phone cards is the consumer of card stock and is not entitled to the resale exemption. Retailer of the taxable goods or service purchased with card is responsible for collecting tax, not the card distributor.

Mattresses and Pillows

Mattresses and pillows that are not specifically designed for therapeutic purposes are taxable even though they may be used for therapeutic purposes.

Surgical Equipment

Discussion of exempt surgical equipment.

Reporting Excess Sales Tax

Discussion on how to report excess tax collected on a sales tax return.

Software Updates and Upgrades

Upgrades of taxable software are taxable. Software to correct bugs in original taxable software is not taxable.

Federally Funded Coupon Program

Federal program offering consumers rebates for certain purchases is not deducted from sales price when computing sales tax.

Food Supplements, Soap, Deodorant, and Other Products

Supplements and other products are taxable.

Printing and Mailing Material

Discussion of taxability of print material and collection of local sales taxes.

Restocking Fees, Travel, Training and Rental of Equipment

A retailer who charges a restocking fee has not refunded the full purchase price and is not entitled to a refund of any tax. Travel and training are not taxable. Rental of property is taxable.

Dietary Supplements and TENS Unit

Dietary supplements are taxable. TENS is an exempt therapeutic device.

Federally-Funded Coupon Program

Federal program offering consumers rebates for certain purchases is not deducted from sales price when computing sales tax.

Purchase Options on Leases, Insurance Premiums, Late Payment and Documentation Fees

Purchase option at expiration of lease is taxable unless finance lease previously factored to a third-party. Insurance is taxable if not separable from lease. Late payment and documentation fee are inseparable and included in purchase price for sales tax calculation.

Alteration Services

Alteration services are not taxable if separable from the sale of clothing.

Patient Tracking and Incentive System

System for tracking patients and incentive program is a non-taxable service.

Medical Implants

Discussion of whether screws and plates used for bone fractures qualify for the medical supply exemption, and exempt sales to charitable organizations and to government entities.

Signage, Crating, Installation, Transportation, City Permits, Subcontractors

Sale of signage is taxable unless it becomes a fixture to real property or title passes prior to installation. Manufacturer's purchase of crating is exempt wholesale sale, but is a taxable sale to consumer. Installation is an exempt service. Transportation is generally exempt except for freight-in charges or if the charge is inseparable from sale of signs. City permits are not taxable. Repair work of subcontractor is discussed.

Fabrication Services

Use tax does not include labor costs of Taxpayer or third-party fabricators who only provide services, but includes fabrication services of third-parties who also sell raw materials, even though the sale of such goods is in a separate contract.

Medical Vaccines and Testing Equipment

Discussion of exemption for flu vaccine, urine test, and other medically-related items.

Sale of Condominium Furnishings

Developer who purchased and paid tax on furnishings for condominium units that it owned and later sold to fractional interest owners is liable for sales tax on such sale and may be entitled to refund of tax paid to suppliers for such furnishings. Developer liable for sales tax when it rents on a nightly basis condominiums to third-parties.

Hospital Beds and Wheelchairs

General discussion of exemption for sale of hospital beds and wheelchairs.

Property Temporarily Used in Colorado

The exemption from use tax for property used, stored, or consumed temporarily in Colorado applies only to individuals, not business entities.

Credit for Taxes Paid to Another State on Leased Vehicles

Discussion of credit for taxes paid to another state on leases of motor vehicles if the legal incidence of tax falls on lessee, not lessor, even though lessor may collect the tax. Colorado does not require other state to give similar credit as a condition to receiving Colorado credit.

Energy Drinks

Discussion of energy drinks as exempt food or taxable food supplement. Drinks that do not qualify as food under the federal food stamp program are not exempt food.

Crime Remediation Services

Contract is for non-taxable services.

Dark and Lit Fiber Optic Cable

Discussion whether dark and lit fiber optic cable used for telecommunication qualifies as taxable telecommunications service and whether cable is a fixture or tangible personal property.

Gift Card Stock Bundled with Software

A sale by a distributor of card stock is not an exempt wholesale because distributor was the consumer, not reseller, of card stock. Software bundled with card stock may be taxable if not separable from sale of card stock.

Free or Discount Satellite Rental

Satellite TV provider, which offered one month free rental of satellite receiver as an inducement to customers to purchase non-taxable satellite TV service and taxable rental of satellite box, is liable for use tax for the one month of free rental.

Rental of Equipment, Transportation Charges, and Repair Parts

Discussion of taxability of various portable products supplied for drilling sites, including satellite, sewer, water, electrical systems, repair services and repair parts.

Meal and Entertainment Package with Various Vendors

Discussion of sales tax reporting requirements of two retailers which jointly offered discount food and entertainment program.

Consulting and Project Management Services

Consulting and project management services are not taxable if separable from sale of surveillance products. Retailer cannot claim credit for taxes incorrectly paid another state.

Call Center Services

Call center services are non-taxable services.

Employment Recruitment Services

Employment recruitment services are non-taxable services.

Warranty Contracts for Leased Goods

Contracts for service and maintenance of leased goods are not taxable if such contracts are in a separate contract from lease.

Installation and Transportation Charges

Discussion of various aspects of retailer's sale, installation, and transportation of product.

Sales tax Refunds for Completed Transactions

Buyer purchased taxable property then asked retailer to rebill the purchase to a third-party. Retailer is entitled to refund of sales tax for completed transactions only if retailer would have granted full refund to buyer even in absence of buyer's request to rebill transaction to a third-party.

Carbon Dioxide and Tanks

The sale of carbon dioxide by supplier to retailer for soda fountain drinks is exempt. The lease of tanks for shipping carbon dioxide by supplier to retailer may be exempt.

Electricity Used in Manufacturing and Research and Development as Manufacturing

Discussion of availability of exemptions for use of electricity, research and development, and statute of limitation for sales tax.

Medical Equipment

External fixators and wires are exempt medical equipment.

Consumer Surveys and Service Quality Reports

Discussion of criteria for determining whether consumer surveys and service quality reports are non-taxable services or sales of property discussed.

Documentation Requirement for Exempt Sales 

Retailer must ask to view the sales tax license, determine that license is active, and that buyer's statement that the purchase is for resale is reasonably consistent with the buyer's business.

Sales Tax Collection Requirement of a Multi-Level Marketing Company

Sales tax is calculated on discounted prices to consumer and representatives, not on suggested retail prices. A multi-level marketing company is retailer. Company is ultimately liable for unpaid sales tax. Representatives do not need sales tax licenses.

Sales Tax Calculation on Price Adjustments

The distributor is allowed to calculate sales tax on the price that is later adjusted to reflect the discounted price of the product that is sold as a sample as part of marketing effort with retailer.

Cholesterol and Blood Testing Kits

Cholesterol and blood testing kits are not taxable.