Colorado State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Colorado, with full citations and the original source on every page.
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Does Colorado's low-emitting heavy-vehicle exemption carry through to a long-term lease, and who is the 'dealer' that completes Form DR 1369?
Yes. Because a long-term lease (over three years) is treated as a sale, the low-emitting heavy-vehicle exemption flows through to the lease payments. The 'dealer' for Form DR 1369 is whoever sells or …
Does Colorado sales tax apply to a late-payment fee a seller charges when a customer pays an invoice late?
No. A late-payment fee is not included in the sales tax calculation as long as it is separately stated from the purchase price. Sales tax is a transactional tax fixed when the sale is created, and a l…
Are bulk water sales subject to Colorado sales or use tax when the water is sold to the oil and gas industry — and does it matter whether the customer takes it by tanker truck or through a pipeline?
It depends on how the water moves. Bulk water taken by tanker truck (in tanks) IS subject to Colorado sales or use tax, because water is corporeal tangible personal property and the Department's regul…
Is contract manufacturing (making goods from a customer's own raw materials) a non-taxable service, and does doing some of it cost a manufacturer the machinery exemption under § 39-26-709?
When a manufacturer makes goods entirely from the customer's own raw materials, there's no transfer of property, so it's a non-taxable service, not a sale. And the manufacturing-machinery exemption (§…
Are a camera maker's cloud-storage service plans subject to Colorado sales or use tax — both the software/server side and the cellular-data side?
Likely mixed. The cloud software and storage appear non-taxable because the company looks like an application service provider (ASP), whose hosted software Colorado does not tax. But the cellular-data…
If a Colorado contractor pays sales tax on construction materials and only later gets an exemption certificate, must the supplier go back and refund or credit that tax?
No. A supplier is not required to go back and refund or credit sales tax it correctly charged before a contractor presented an exemption certificate. The contractor must apply to the Department for a …
Are walk-in bathtubs, in-home wheelchair lifts, and modular ramps exempt from Colorado sales tax as medical equipment?
It depends on the item — and all of them need a prescription. In-home wheelchair mobility lifts and modular ramps appear to qualify for Colorado's MOBILITY ENHANCING EQUIPMENT exemption, because they'…
Is the monthly rental of a prescription device that treats brain tumors with alternating electric fields subject to Colorado sales or use tax?
Exempt. The rental of this cancer-treatment therapy — a prescription device that delivers alternating electric fields through scalp electrodes to slow recurrent brain-tumor (GBM) cell division — is ex…
Is a 'consolidated freight charge' for moving goods between a seller's own facilities subject to Colorado sales tax, even if separately stated?
Probably taxable. A 'consolidated freight charge' — a fee for moving goods between the seller's own plants to combine a customer's order into one shipment — escapes sales tax only if BOTH conditions h…
Does Colorado's interstate-commerce exemption apply to lease payments on trucks, and how is the exemption documented?
It can apply to lease payments, but two conditions matter — and the second likely defeats it here. Colorado's interstate-commerce exemption (§ 39-26-712(1)(b)) reaches a LEASE only if the lease is tre…
Are the RFID tracking tags that marijuana growers are required to use exempt from Colorado sales and use tax as farm equipment?
They're taxable. The RFID tags Colorado requires growers to attach to track marijuana through the supply chain are subject to sales or use tax when purchased by cultivators. The grower's firm argued t…
Does Colorado sales tax apply to a separately stated prepaid-fuel charge or to freight/transportation charges on a vehicle?
It depends. A prepaid-gasoline charge is likely NOT taxable as long as it's optional and separately stated, because gasoline itself is exempt from state sales tax — but if the customer is required to …
Are colocation cross connects, cables, direct private lines, and remote-management software subject to Colorado sales or use tax?
It depends, and the Department gave only limited guidance because the company declined to request a (binding) private letter ruling. Whether colocation cross connects and cables are a taxable rental o…
Does hemodialysis equipment qualify for Colorado's durable medical equipment or prosthetic device exemption?
Durable medical equipment — yes (apparently); prosthetic device — doubtful. Prescribed hemodialysis equipment appears to qualify for Colorado's durable medical equipment exemption: it withstands repea…
Is the sale of an infusion pump for at-home pain management subject to Colorado sales or use tax?
It's exempt — by either of two routes. An infusion pump that delivers medication is exempt from Colorado sales and use tax as a medical/disposable 'infusion' supply when dispensed pursuant to a prescr…
Is a 'demand charge' on a commercial electricity bill subject to Colorado sales or use tax?
It's taxed the same as the electricity it's part of. A demand charge — the higher rate a utility charges for the ability to draw a large load (here ~74,600 watts) at peak times — is simply part of the…
Are an association's membership fees taxable when membership comes with both goods (a guidebook, a magazine) and services, and is tax refundable if a member cancels?
It depends on the true object. A membership fee can be a taxable sale when the member gets tangible goods (here, an instructor's guidebook, marketing material, and a magazine subscription) for the fee…
Are intrauterine devices (IUDs) subject to Colorado sales or use tax — hormonal versus copper?
Exempt, by two different routes. A hormone-releasing IUD is treated as a prescription drug, so it's exempt from Colorado sales and use tax when dispensed pursuant to a prescription by a licensed provi…
Do tanks for a natural-gas combined-cycle power plant qualify for Colorado's renewable-energy or manufacturing-machinery sales tax exemptions?
No renewable-energy exemption, and the manufacturing question was left open. Tanks for a natural-gas combined-cycle power plant don't qualify for Colorado's exemption for components that produce AC el…
Is the federal excise tax on jet fuel included in the price Colorado sales tax is calculated on, or is it backed out?
It depends who the federal excise tax (FET) is levied on. Colorado sales tax is figured on the price charged, but a DIRECT federal tax — one levied on the purchaser — is backed out of the base, while …
Can an airline get a refund of Colorado sales tax on jet fuel it buys (and fuels up) in Colorado but burns on international flights?
No refund. Colorado sales tax applies to jet fuel sold and pumped into an aircraft's tanks in Colorado, even if the fuel is later burned on an international flight. Sales tax is a transactional tax fi…
When a modular-home manufacturer sells to a builder who installs the home for a homeowner, who collects the sales tax — and how is the 52% rule applied?
It depends on the builder's contract. Colorado taxes only 52% of a manufactured home's purchase price, and a later resale isn't taxed again. If the builder uses a LUMP-SUM contract it's the consumer a…
Is a custom promotional video a taxable sale of property or a non-taxable service, and what about charges for raw footage and project files?
Likely a non-taxable service. Under the 'true object' test, producing a custom promotional video is generally a non-taxable service even though some property (a DVD, thumb drive, or hard drive) change…
Are refrigerated bagged or packaged salads exempt from Colorado sales tax as food, or are they taxable 'prepared salads'?
It turns on whether dressing (and a utensil) is included. Colorado exempts food for home consumption but statutorily EXCLUDES 'prepared salads' from the definition of food. A bagged salad of lettuce a…
Is a third-party administrator that buys auto glass and bills insurers a marked-up price correctly collecting Colorado sales tax on the marked-up amount?
Yes — the method is correct. A third-party administrator of auto glass insurance claims that buys glass from local repair shops and bills the insurer a marked-up price is acting as a RESELLER, not a m…
When an out-of-state company leases medical equipment to Colorado doctors, dentists, and vets, is sales tax collected up front at the start of the lease or on each rental payment?
When the tax is due depends on the type of lease. Colorado taxes leases of medical equipment — both 'true' leases and 'finance' leases — and the end-of-lease purchase price (nominal or fair-market) is…
Is a company that maintains a Material Safety Data Sheet (MSDS) database and prepares regulatory compliance reports, permits, and transport documents making taxable sales of tangible personal property, or providing nontaxable services?
The Department couldn't decide. A digital Material Safety Data Sheet (MSDS) is tangible personal property — like a digital reference manual — and is taxable if the customer is really just buying acces…
Are a medical-records company's retrieval and copying fees taxable in Colorado, and must the company collect tax?
Not taxable, and the company doesn't have to collect tax. The Department ruled that a company's charges for retrieving and copying medical records aren't subject to Colorado sales tax no matter how de…
After Colorado reinstated the exemption for electronically delivered software on July 1, 2012, are digital e-books, music, and movies also exempt, and how is tax applied to ASPs and software accessed over the internet?
It depends on what's delivered. Effective July 1, 2012, Colorado exempts electronically delivered computer SOFTWARE from sales and use tax — but digital BOOKS, MUSIC, and MOVIES remain taxable tangibl…
When a company installs fire sprinkler/alarm systems into buildings through subcontractors and bills clients time-and-material, who owes Colorado sales tax?
The company's time-and-material charges to clients are taxable; its payments to subcontractors are not. A company that installs, repairs, and inspects fire sprinkler and alarm systems built into build…
Are a sign company's entry towers installed at car dealerships taxed as real-property fixtures, and does lump-sum vs. time-and-material billing change who pays?
If the entry towers are FIXTURES — tangible personal property so affixed to a building that it can't be removed without substantial damage (Reg 39-26-102.15) — then Colorado's CONTRACTOR rules govern,…
Is the electronic renewal of a software license taxable when the original prewritten software was delivered on a CD but the renewal involves no new tangible delivery?
Yes — the renewal is taxable. For software sold on or after July 1, 2012, Colorado taxes prewritten 'canned' software only if it's (1) pre-packaged for repeated sale/license, (2) governed by a tear-op…
Is domestic (non-bonded) jet fuel sold to a commercial airline for international flights exempt from Colorado tax the way fully tax-exempt bonded jet fuel is?
The Department wouldn't decide. Domestic (non-bonded) jet fuel used only for international flights might qualify for Colorado's fuel excise tax exemption, but only if the federal government exempts no…
Are the various per-record fees a medical-records company charges (copying, retrieval, certification, postage, etc.) subject to Colorado sales tax?
None of them are taxable. The Department ruled that every enumerated fee a medical-records release-of-information company charges — basic, retrieval, certification, photo/per-page, handling, postage, …
Which of these are taxable in Colorado: garden seeds and plants, glucose tablets, rehydration products, glucose/urinalysis test strips, pregnancy and ovulation test kits, and a coupon book?
A mixed bag, item by item. (1) Garden/vegetable/fruit seeds, flower seeds, fruit trees, and vegetable plants are EXEMPT only if used in a COMMERCIAL AGRICULTURAL operation (§ 39-26-716(4)(b)); bought …
Which fees on a utility bill — connection, reconnection, disconnection, late payment, returned check — are subject to Colorado sales tax?
For a TAXABLE (commercial) gas or electric account, the fees split by whether they're part of getting the service. Connection, reconnection, and disconnection fees are generally TAXABLE — they're inse…
Was a monthly server-support/maintenance fee covering free Microsoft patches and upgrades taxable under Colorado's 2010–2012 software rules?
Probably not taxable — though the Department gave only general guidance. The question covered the window from March 1, 2010 to June 30, 2012, when 'standardized' (prewritten) software was taxable no m…
For an equipment lease, are the purchase option, insurance premiums, documentation fees, late-payment fees, and reimbursed personal property taxes subject to Colorado sales/use tax?
Mixed, and this amended (2013) letter REVERSED the original 2008 conclusion on late fees. Leases of tangible personal property are taxable (and the purchase-option price—fair-market or nominal—is taxa…
Does a charity have to charge sales tax on dinner tickets at its annual fundraiser, and how do donations and the $25,000 limit factor in?
A charity's fundraiser sales are exempt as an 'occasional sale' only if it stays under BOTH limits — no more than 12 days of sales in the year AND no more than $25,000 in NET proceeds used for a chari…
Are sutures and IV catheters used in a hospital procedure exempt from Colorado sales tax, and does it matter whether they leave with the patient?
It depends on whether the item leaves with the patient. Colorado exempts nonprescription drugs or materials furnished by a licensed provider as part of professional services to a patient (§ 39-26-717(…
Is a plumber doing sewer inspection, clean-out, and thawing a taxable contractor, does itemizing equipment make it a taxable rental, and when are local taxes due?
Mostly not — but only general guidance was given. (1) A plumber is a 'contractor' (with lump-sum vs. time-and-material tax rules, SR-10) only when incorporating tangible personal property INTO real pr…
If an event company rents equipment from a lessor and hires its own contractors to operate it, can it buy the rental tax-free for resale — or does it owe tax as the user?
It turns on who operates the equipment. A production-event company rents stage/sound/lighting gear from a lessor and either hires its own third-party contractors to run it or lets the client's employe…
Are a supplier's implementation, web-hosting, management, and payment-processing fees for on-site vending machines taxable as part of the product sales?
Likely taxable — the Department's general view is that these 'service' fees are inseparable from the taxable product sales and ride into the tax base. A supplier of fasteners and industrial goods put …
In a Colorado drop-shipment, can the seller accept an out-of-state resale or exemption certificate, whose certificate counts, and what form is used?
Yes — Colorado accepts out-of-state documentation in drop shipments, with conditions. A wholesaler may accept a buyer's sales tax license issued by another state to document a resale exemption (using …
Are tear/serum osmolarity testing modules exempt from Colorado sales tax as 'blood and urine testing kits and materials'?
No — they're taxable. Colorado exempts the sale of 'blood and urine' testing kits and materials (§ 39-26-717(d)), but the Department concluded that tear/serum osmolarity testing modules (such as TearL…
Can a Colorado special district levy its sales tax on natural gas and electricity that a business buys for industrial/manufacturing use?
No. Natural gas and electricity bought for manufacturing and other industrial processes are exempt from Colorado state sales and use tax (§ 39-26-102(21)), and the Department's special districts follo…
Are charges for renting equipment, for the on-site labor of an operator who runs it, and for chemicals used with it subject to Colorado sales or use tax?
It depends on how the deal is structured — and the Department could only give general guidance, not a determination. Colorado taxes the rental of tangible personal property (like motors and tooling), …
If a Colorado customer pays sales tax and later provides an exemption certificate, how and when can the seller refund the tax — and can the customer force the seller to do it?
Yes, with limits. A seller that collected Colorado sales tax because the buyer didn't show an exemption certificate at the time of sale may later refund the tax once the buyer provides a valid certifi…
Can a Colorado retailer sell items at an even, tax-included price instead of adding sales tax separately at the register?
Generally no — not silently. Colorado law makes it unlawful for a retailer to advertise or hold out that it will absorb the sales tax or won't add it to the selling price, and the regulation requires …
Is a subscription fee for an online financial newspaper, and for interactive online stock screens and performance ratings, subject to Colorado sales or use tax?
Neither is taxable. The subscription fee for an online version of a daily financial newspaper is NOT subject to Colorado sales or use tax: Colorado excludes qualifying daily 'newspapers' from taxable …
Are Braille devices, electronic magnifiers, adapted phones, and other products that help blind and legally blind people exempt from Colorado sales and use tax?
Probably not exempt, though the Department made no determination. Three Colorado exemptions might seem to apply — optical sales, prosthetic devices, and durable medical equipment — but the optical exe…
Does a full-service truck wash owe Colorado sales tax on the wash, and use tax on the soaps, wax, water, electricity, gas, and equipment it uses?
Likely a non-taxable service — but with use tax on the supplies. A full-service wash where the company's own employees run the equipment is treated as a non-taxable service, not a taxable equipment re…
When a company buys parts out of state, has them assembled in Colorado into a finished unit, and then exports that unit out of the country, must it pay Colorado tax on the parts, or are they exempt wholesale purchases?
The parts are likely exempt as components of a manufactured product, though the Department made no determination. Colorado exempts tangible personal property bought by a manufacturer that becomes an I…
Does an out-of-state company that occasionally sends tutors to teach a corporate training course in Colorado owe Colorado sales tax or income tax?
Generally no sales tax on the teaching itself, but watch the materials and income tax. Colorado treats education and training as nontaxable services, so charges for instruction aren't subject to sales…
Does Colorado sales or use tax apply when a company leases a passenger car for more than 24 months to someone who lives outside Colorado?
Generally no. If the lessee is a Colorado nonresident when the lease is signed and immediately takes the car to another state to register and use it, the lease is exempt from Colorado sales and use ta…
When a company rents out equipment and also bills customers for reimbursable expenses like lodging, airfare, and car rentals for its on-site staff, are those reimbursed expenses subject to Colorado sales tax?
It depends on separability and the true object — the Department made no determination. When a company both rents taxable equipment (two-way radios) and provides non-taxable services (sending staff to …
Is a prescribed cold-therapy band/cuff that wraps around the body and is connected to a cooling device exempt from Colorado sales tax as durable medical equipment?
Maybe, but the Department wouldn't decide. A prescribed cold-therapy band — wrapped around an injured area and connected to a separate cooling device, used in orthopedic-surgery recovery — could be ex…
Are welding gases (acetylene, oxygen, argon, CO2) and welding equipment, attachments, and tools exempt from Colorado sales tax when sold to a manufacturer whose welding is part of its manufacturing process?
Mostly taxable, with one exemption. ACETYLENE used in a manufacturing or cutting process is EXEMPT from Colorado state sales tax as an industrial fuel ('gas') because it is an energy source — though s…
Are separately stated transportation/delivery charges subject to Colorado sales tax, including in a drop-shipment where goods ship directly from the manufacturer to the customer?
It depends on separability. Transportation of goods between a retailer and a buyer is presumptively a NON-TAXABLE service, but a delivery charge is excluded from sales tax only if it is BOTH (1) separ…
Is the product delivered by an Application Service Provider (ASP) — such as an electronic sales-tax-rate lookup accessed over the internet — subject to Colorado sales and use tax?
Generally not taxable software, but the Department didn't decide this specific product. Colorado taxes tangible personal property, and effective July 1, 2012, computer software is taxable only if it i…
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These are official tax letter rulings and advisory opinions issued by Colorado's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.