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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When a steel fabricator does internal fabrication work, or buys fabrication services from a third party, are those labor costs subject to Colorado sales and use tax?
It depends on who fabricates, who supplies the materials, and what happens to the goods. Colorado taxes the FULL purchase price of articles made to order, INCLUDING the fabrication labor, even if labo…
Is a custom 'bio-engineered' orthotic shoe insert exempt from Colorado sales and use tax as a prosthetic device or durable medical equipment?
The Department wouldn't decide, and it signaled skepticism. A custom 'bio-engineered' orthotic shoe insert might be exempt as a prosthetic device — an artificial device that aids or replaces a bodily …
Is a pharmacy's charge for a pharmacist's comprehensive review of a patient's medication records subject to Colorado sales tax, even though the patient may receive a printed report or medication chart?
Likely not taxable. A pharmacist's comprehensive medication-record review and face-to-face consultation looks like a non-taxable professional SERVICE — like advice from a doctor or accountant — even i…
Can a manufacturer claim a Colorado sales/use tax exemption on coal and shredded tires that serve as both kiln fuel and as a chemical ingredient in the finished product?
Partly exempt. A manufacturer may exempt the portion of its coal and shredded-tire purchases that becomes a component of its product — silica and alumina from coal ash, and iron from the tires' steel …
Are the components of a leased residential rooftop solar photovoltaic system exempt from Colorado sales and use tax under the renewable-energy components exemption?
Mostly exempt. The components of a leased residential solar photovoltaic system — modules, racks, inverter, wiring — are exempt from Colorado state and state-administered local sales and use tax under…
Are complete-nutrition and specialized nutritional shakes exempt from Colorado sales tax as 'food,' or taxable as dietary supplements?
They're exempt food. Four nutritional shakes — a complete-nutrition shake, a specialized-nutrition shake, a diabetic shake, and a post-workout shake — all qualify as exempt 'food' because each carries…
Is a web-based subscription service for sending, receiving, and tracking large digital files subject to Colorado sales or use tax, or is it a non-taxable service?
It's a non-taxable service. A web-based subscription for sending, receiving, and tracking large digital files is a service — not a rental of software or servers — so it is not subject to Colorado sale…
When a vehicle lease has an end-of-lease 'true-up' payment between the leasing company and the customer, how is Colorado state and local sales/use tax adjusted, refunded, or collected?
Treat the true-up as an adjustment to the earlier lease payments. Because the lease agreement says the payments are only estimates to be finalized when the vehicle is sold at lease-end, the true-up re…
As an out-of-state lessor of equipment used in Colorado, do I collect from lessees both the sales tax I paid when I bought the property and use tax on their lease payments?
No — you choose one method, not both. For a true lease of 36 months or less, the default is the lessor pays sales/use tax up front when it buys the property and does NOT collect tax from lessees (it c…
Does Colorado sales or use tax apply to an advertising agency's separately stated charges for direct-mail materials and mailing fulfillment when the materials are printed in Colorado but mailed to recipients outside the state?
No. An advertising agency's separately stated charge for direct-mail advertising materials — printed in Colorado but mailed to the client's potential customers located outside Colorado — is not subjec…
Is a prescribed, at-home ophthalmic monitoring device — and the monitoring, data-processing, and call-center services that go with it — subject to Colorado sales tax?
No on both. A prescribed ophthalmic device a patient uses at home to monitor for eye disease appears to qualify as exempt durable medical equipment (it withstands repeated use, serves a medical purpos…
Is liquor-filled candy exempt from Colorado sales tax as food, or is it taxable?
It's taxable. Liquor-filled candy does not qualify as 'food' under the federal SNAP and WIC definitions that Colorado uses for its food exemption, so it's subject to Colorado state sales and use tax (…
When a customer uses a coupon, does Colorado sales tax apply to the price before or after the coupon — and does it matter whether it's a manufacturer's or a store coupon?
It depends on who funds the coupon. A manufacturer's coupon doesn't reduce the Colorado sales tax base — because the manufacturer reimburses the retailer for that part of the price, tax is calculated …
When must a Colorado auctioneer collect sales tax on items it sells (including motor vehicles), and when is the owner responsible instead?
The auctioneer usually must collect. A Colorado auctioneer selling goods on an owner's behalf is treated as the retailer and must collect and remit sales tax — unless one of two exceptions applies: (1…
Is an auctioneer's separately stated administrative fee (buyer's premium) subject to Colorado sales tax, or is it a non-taxable service charge?
It's taxable. An auctioneer's administrative fee or buyer's premium — even when stated separately on the invoice — is included in the Colorado sales tax base, because the fee is generally not optional…
If my equipment lease requires me to reimburse the lessor for the personal property tax on the equipment, is that reimbursement subject to Colorado sales tax — even when it's billed separately?
Yes. When a lease requires the lessee to reimburse the lessor for the personal property tax on the leased equipment, that reimbursement is a taxable 'lease payment' and is included in the Colorado sal…
On a layaway or partial-payment plan, when is Colorado sales tax due — as each installment is paid, or only when the customer finishes paying and takes the item?
Sales tax is due only at the final payment. Because Colorado taxes a 'sale' — the transfer of title or possession of goods — and on both layaway and partial-payment plans the store keeps title and pos…
Must a printer charge Colorado sales tax to print a bi-weekly newspaper that the owner distributes free to the public?
Yes. A bi-weekly newspaper does not qualify as a tax-exempt 'legal publication' under § 24-70-102 (that exemption is keyed to publishing frequency, such as daily), so it is taxable tangible personal p…
Does a church's conversion from an unincorporated nonprofit association to a corporation sole create Colorado sales or use tax liability on the personal property it already owns?
No tax. A church's conversion from an unincorporated nonprofit association to a corporation sole does NOT create Colorado sales or use tax liability on the personal property it owns. Even assuming the…
Is a single-use medical catheter exempt from Colorado sales and use tax when the manufacturer sells it to a healthcare provider who uses it on a patient?
Taxable. A single-use catheter that a healthcare provider buys from the manufacturer and uses to treat a patient is NOT exempt from Colorado sales or use tax. The therapeutic-device exemption only app…
When a food-service company prepares patient meals for a for-profit hospital, is sales tax due on the whole charge — including the labor and management fee — or only on the food?
On the whole charge tied to the meals. A food-service company that prepares patient meals for a for-profit hospital is treated as a caterer selling prepared meals, so it must collect Colorado sales ta…
Are a supplier's transportation/delivery charges included in Colorado sales or use tax on the goods — and does billing freight on a separate invoice change the answer?
Generally not taxable, and a separate freight invoice is fine. A supplier's transportation charge is excluded from Colorado sales/use tax when it's separable (the buyer could use its own or another ca…
Is an injectable dermal filler used to smooth smile lines exempt from Colorado sales and use tax?
Yes—but on a narrow ground. In this amended letter (which reversed the Department's original 2008 conclusion that the product was taxable), the Department held the injectable dermal filler is EXEMPT b…
Are optional, separately stated charges for a rental car company's prepaid-toll, roadside-assistance, and carbon-offset programs subject to Colorado sales or use tax?
Not taxable. A rental car company's optional, separately stated charges for prepaid-toll, roadside-assistance, and carbon-offset programs are NOT subject to Colorado sales or use tax. Each is a servic…
Are over-the-counter retail sales of propane and firewood subject to Colorado sales and use tax?
Exempt for residential use, but presumed taxable. Propane and firewood sold to residents to heat/power their homes are exempt from Colorado sales/use tax (a non-commercial RV counts as a 'residence').…
May a retailer calculate Colorado sales tax by multiplying the sale by the tax rate percentage instead of using sales tax charts?
Yes—compute by percentage. A retailer may (and should) calculate Colorado sales tax by multiplying the taxable sales amount by the tax rate (the state rate is currently 2.9%); the Department does NOT …
Are sales of dietary supplements subject to Colorado sales tax, or do they qualify for the food exemption?
Taxable. Dietary supplements are subject to Colorado sales tax—they don't qualify as exempt 'food.' Colorado exempts food for home consumption only if it meets the federal SNAP/Food Stamp definition (…
Does a 'third-party intermediary' that arranges and marks up repair/maintenance work for retailers have Colorado sales tax liability on its markup?
Undetermined—the Department declined to decide. A company acts as a 'third-party intermediary': retailers call it for repair/maintenance work, it hires a local contractor, pays the contractor (includi…
Is Voice over Internet Protocol (VoIP) phone service subject to Colorado sales tax?
Yes. Colorado taxes intrastate telephone/telecommunications services, and the Department treats VoIP as functionally the same as traditional telephone service—so charges for VoIP are subject to sales …
Are a seller's charges for installation, troubleshooting, removal, reinstallation, and trip fees on equipment subject to Colorado sales tax?
It depends on how the labor is sold. Charges for services are generally not subject to Colorado sales tax, but a charge for maintenance or a service warranty made in connection with the sale or lease …
When a bank buys equipment-lease contracts from an affiliate that services them, who registers and files Colorado sales tax — the bank or the servicing affiliate?
The bank that owns the leases must register and file in its own name. A taxpayer can hire an agent to handle invoicing and collections, but the duty to register for a Colorado sales/use tax license, f…
Are PDF documents that customers pay for and download from the internet subject to Colorado sales or use tax?
Yes. Colorado defines taxable tangible personal property as 'corporeal' property, and the Department treats electronic data as corporeal—so the sale of documents (such as PDFs) downloaded from the int…
Does a company that sells and installs a factory-built (modular) home in Colorado owe sales tax, and is any part of the price exempt?
Yes, but only on part of the price. A modular or other factory-built home is taxable tangible personal property, and the seller must collect Colorado sales tax from the buyer—but 48% of the purchase p…
If my business has Colorado nexus but no sales tax to report for a period, do I still have to register and file a Colorado sales tax return?
Yes. Once a retailer is required to hold a Colorado sales tax license, it must file a sales tax return for every reporting period—even one with no tax due—using the Department's free 'zero file' optio…
Are custom single-use surgical instruments a manufacturer sells to hospitals and surgery centers subject to Colorado sales or use tax?
Taxable. Custom, single-use surgical instruments a manufacturer sells to hospitals and surgery centers are subject to Colorado sales/use tax. Colorado's medical exemption covers therapeutic devices an…
Is short-term lodging furnished to an out-of-state church youth group on a ski trip exempt from Colorado sales tax as a sale to a charitable organization?
Taxable. Short-term lodging (under 30 days) furnished to an out-of-state church youth group on a ski trip is subject to Colorado sales tax. Colorado taxes room accommodations rented for fewer than 30 …
When a motor-vehicle lessor sells the leased vehicle to the lessee at the end of the lease, who is responsible for collecting Colorado sales or use tax?
The lessor collects the tax. When a motor-vehicle lessor sells the leased vehicle to the lessee at the end of the lease (here, at fair market value), that's a taxable sale and the Company, as seller, …
Are pet microchips, scanners, and ID tags taxable, and how are bundled pet-recovery services and 'free' chips treated under Colorado sales tax?
Goods taxable, services not. Pet microchips, scanners, and ID collar tags are tangible personal property, so their sale is subject to Colorado sales/use tax; no exemption applies (the livestock-drug e…
Is Colorado sales or use tax due when a lessee pays $1 to take title at the end of a Lease Intended as Security (LIS) agreement?
It depends on the structure, and the Department didn't decide. Whether tax is due when a lessee pays $1 to take title at the end of a 'Lease Intended as Security' (LIS) turns on whether the arrangemen…
Are a company's print-and-mail service and its electronic data services (file transfer, address correction, database search) subject to Colorado sales tax?
Mostly non-taxable services, but the Department made no specific determination. A company's electronic data services—automated file transfers (VPN/SSL), USPS address corrections, and database-search/u…
How is Colorado sales and use tax applied when related companies sell building materials to one another, and a contractor installs them into real property?
A contractor is the consumer of building materials it incorporates into real property and pays sales tax when it buys them; the building owner pays no sales or use tax on those materials. A manufactur…
Are a web-hosted exemption-certificate portal and an online sales/use tax-return preparation service subject to Colorado sales or use tax?
Not taxable. Two web-hosted products—an online portal where customers fill out, print, and submit sales-tax exemption certificates, and a service that prepares and files a client's sales/use tax retur…
Are retail sales of enteral feeding pumps subject to Colorado sales tax?
Taxable. Retail sales of enteral feeding pumps are subject to Colorado sales tax. Colorado taxes retail sales of tangible personal property, and while several medical-equipment exemptions exist, the D…
Is a separately stated fee to read the meter on a customer's propane tank subject to Colorado sales tax?
It depends on the customer, and the Department made no binding determination on separability. A fee to read the meter on a propane tank is NOT taxable when the gas sale itself is exempt—Colorado exemp…
Are an FCC-license fee and a 'coordination fee' that a two-way-radio distributor charges its customers subject to Colorado sales or use tax?
It depends, and the Department made no binding determination. FCC-license and 'coordination' fees a distributor bills along with two-way radios are TAXABLE if either (1) the radio service qualifies as…
A condo developer paid sales tax when it bought furniture, then sells the furnishings to fractional-interest buyers with the units—does it owe sales tax again on that sale, and is that double taxation?
Yes, the sale to fractional-interest buyers is a taxable retail sale of tangible personal property—even though the developer already paid sales tax when it bought the furniture. The developer is actin…
When a company sells taxable equipment below its cost to get customers to sign up for a non-taxable service, is sales tax based on the low price the customer pays or on the company's cost?
On the company's cost, not the low price the customer pays. When a company sells taxable equipment below its acquisition cost as an inducement to buy a non-taxable service, Colorado sales tax is compu…
Are specialty therapy mattresses (low-air-loss, pressure-relieving, turning, bariatric), HI/LOW and bariatric bed frames, and wheelchairs subject to Colorado sales tax?
It depends on the item. Colorado taxes tangible personal property, but the medical exemption specifically covers wheelchairs and hospital beds. Therapeutic devices, appliances, and related accessories…
Are medical diagnostic test kits—a flu A+B test, an RSV test, and an hCG urine test—subject to Colorado sales or use tax?
The Department gave the framework, not a firm answer. Colorado taxes tangible personal property unless exempt (§39-26-104), and several medical exemptions can apply to diagnostic products—prescription…
How does Colorado tax commercial signs and the related charges—installation, removal, crating, freight, city permits, electrical hookup, and subcontracted repairs—on a customer's invoice?
Signs are generally taxable tangible personal property—most commercial signage does NOT lose its identity to become an integral, inseparable part of realty just by being bolted down (Reg (39)26-102.15…
Are orthopedic implants (screws and plates made in standard sizes, not fitted to one person) exempt from Colorado sales tax, even if they don't meet the 'prosthetic device' definition?
They may well be exempt, but through a different door than the company assumed. Rather than fighting over whether standard-size screws and plates are 'prosthetic devices' (which FYI Sales 68 defines a…
When a printer in one Colorado city prints marketing material and either ships it to a direct-mail company or mails it to recipients, whose local sales tax applies?
It depends on where the printed material is delivered, and many of the relevant taxes are home-rule taxes the Department doesn't administer. For the state-administered county taxes, a retailer that de…
In Colorado, are food supplements (vitamins, minerals), therapeutic medicines, and toiletries like soap and deodorant exempt from sales tax as 'food'?
Most of them are taxable. Colorado exempts 'food' (tied to the federal food stamp definition, 7 U.S.C. §2012(g)), but food supplements and deficiency correctors—vitamins, minerals, cod liver oil, and …
Are the fees a company charges dentists for a turnkey patient-rewards program (including the mailers it sends to patients) subject to Colorado sales or use tax?
The Department gave the framework rather than a firm answer. Colorado taxes tangible personal property and only a limited number of services; when the TRUE OBJECT of a transaction is a service, it isn…
When a customer applies a $40 federal NTIA coupon toward a TV converter box, does Colorado sales tax apply to the full price or the reduced price the customer pays?
Tax applies to the full price. Under the federal NTIA program a household gets coupons worth up to $40 each toward a TV converter box, so a $59.99 box costs the customer $19.99—but Colorado sales tax …
In Colorado, are dietary supplements, TENS units, and 'pads' subject to sales tax, or do they qualify as exempt food or exempt therapeutic devices?
Supplements are generally taxable—dietary supplements like vitamins and minerals are tangible personal property and don't qualify as exempt food (Regulation (39)-26-102.4.5(b)(8)/(9)) or, generally, a…
In Colorado, are restocking fees, passed-through vendor travel/expense charges, on-site training, and equipment rentals subject to sales or use tax?
Four answers. (1) Restocking fees: if a retailer charges one, it gets NO sales-tax refund on the return, because §39-26-102(5) allows the credit only when the FULL purchase price is refunded—a partial…
Are optional, separately stated clothing alterations (hemming, shortening, taking in) ordered at the time you buy the garment subject to Colorado sales tax?
No. Optional, separately stated alteration services—shortening, hemming, taking in—that a customer orders from the retailer at the time of buying the clothing are NOT subject to Colorado sales or use …
When a customer uses a $40 federal government coupon toward a converter box, is Colorado sales tax computed on the full price or on the reduced price the customer actually pays?
Tax is computed on the full price, not the discounted price. A $40 federal coupon used toward a $49.99 converter box means the customer pays $9.99, but Colorado sales tax still applies to the full $49…
Are updates to 'canned' software and the support services in an optional maintenance contract taxable in Colorado, when sales tax was already paid on the original software license?
It depends on whether an update merely repairs the existing software or is a new upgrade, and whether the maintenance contract is optional. Bug-fix updates that repair, correct, or maintain the origin…
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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.