Tax Policy Updates - May 2025

Information about the recent activities of the Office of Tax Policy is provided below. This information includes new and revised publications, rulemaking activities, and recently published letter rulings and information letters.

New and Revised Publications

• Sales & Use Tax Topics: School Exemptions – This new publication replaces FYI Sales 86 and provides guidance regarding exemptions for sales made to public and nonprofit schools and for sales made by schools and school-related organizations.
• Income Tax Topics: Innovative Motor Vehicle Credit and Income Tax Topics: Innovative Truck Credit – These publications were revised to provide additional guidance regarding quarterly reporting requirements and requests for quarterly advance payments. The revised publications also provide guidance regarding the calculation of sales tax for motor vehicles and trucks that qualify for an income tax credit.
• Income Tax Topics: SALT Parity Act – This publication was revised to provide additional clarification regarding tiered partners. Various other clarifying revisions were also made.
• Income Tax Topics: First-Time Home Buyer Savings Account Subtraction – Minor revisions were made to this publication to indicate that the subtraction is not allowed for tax years 2025 and later as the result of changes made by House Bill 24-1036.

Rulemaking Activities

• Sales Tax on Leases – The Department announced a workgroup meeting, scheduled for May 20, 2025, to discuss a draft rule regarding sales tax on leases. The rule defines several terms; addresses the taxability of a lessor’s acquisition of property for lease; explains the tax treatment of lease payments, subleases, sale-leasebacks, maintenance contracts, and sales of previously leased property; and details lessors’ responsibilities in connection with taxable leases. The rule would replace existing Rules 39-26-102(23) and 39-26-713–1.
• Income Tax Rules Hearing – The Department recently announced a rulemaking hearing, scheduled for May 8th, for the following proposed income tax rules:
  • Advanced Payments of Electric Bicycle and Innovative Motor Vehicle and Truck Credits – The proposed rules implement the provisions of House Bill 23-1272 allowing qualifying taxpayers to request advanced payments of qualifying credits on a quarterly basis, provide guidance regarding the electric bicycle tax credit, and revise the existing rule for innovative motor vehicle and truck credits.
  • Partnership Adjustment Reporting – The proposed rule implements the partnership adjustment reporting requirements of House Bill 23-1277.
  • Quantum Facility Investment Credit Recapture – The proposed rule clarifies the conditions under which the Department will disallow a credit under section 39-22-567(10), C.R.S., and require recapture.

Recently Published Private Letter Rulings (PLR) and General Information Letters (GIL)

• GIL-25-002 – Electric Vehicle Charging – Sales of electricity sold at electric vehicle charging stations by entities other than electric utilities are generally not subject to Colorado sales tax. However, charging station operators that are not making taxable sales must pay the Colorado sales tax on the electric service they purchase.
• GIL-25-003 – Event Cancellation Fee – An event cancellation fee imposed on the cancellation of an event that included the use of a banquet hall and food and beverage catering is not subject to state sales or use tax.