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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Is the sale of bulk non-potable water — withdrawn from ditches and reservoirs and delivered through surface hoses to oil and gas wells — subject to Colorado sales tax?
No. Bulk water withdrawn from ditches and reservoirs and delivered to customers through conduits (surface lay-flat hoses) is not 'tangible personal property,' because Colorado's rules exclude water in…
Is water and ice dispensed from a vending machine — into containers the customer brings — subject to Colorado sales tax, and does it matter that the machine sits just outside a bar?
No, they're exempt. Water dispensed in discrete quantities is tangible personal property (not a utility service), but it's still exempt as 'food': SNAP-eligible non-carbonated water sold from a vendin…
Does a retailer owe sales or use tax on cooperative direct-mail advertising materials produced and mailed by a third-party advertiser?
No. A retailer that hires a cooperative direct-mail advertiser — one that bundles ads for several businesses into a single mailer — does not owe sales or use tax on the materials produced and mailed. …
Are non-customized digital market reports subject to Colorado sales tax as tangible personal property?
Yes, likely taxable. Colorado treats digital goods as tangible personal property, and a market report that is NOT customized for a particular customer is the sale of goods, not a nontaxable service — …
Does Colorado sales or use tax apply to charging third parties for non-transplantable human tissue?
Yes. Charging third parties for non-transplantable human tissue is a taxable sale of tangible personal property in Colorado, not a tax-free service. Human tissue is corporeal property; the labor to ac…
Is a company's monthly fee for medical credentialing services — collecting documentation, preparing applications, and obtaining insurer credentials for a provider's billing staff using cloud-based software — subject to Colorado sales tax?
No, on these facts. Medical credentialing — collecting documentation, creating profiles, preparing applications, and obtaining the credentials a provider's billing staff need to bill insurers — appear…
Are annual software-update fees and software maintenance agreements taxable in Colorado when the software is delivered electronically — even if the underlying software was taxable when it was bought before July 1, 2012?
No. Software updates and maintenance agreements that are delivered electronically and bought after July 1, 2012 are not subject to Colorado sales or use tax, because electronically delivered software …
Does a photographer have to charge Colorado sales tax on photos delivered digitally over the Internet rather than as prints?
Yes, taxable. Colorado treats digital photographs as tangible personal property, so a photographer must charge sales tax on them — whether delivered as prints, on a CD/DVD/flash drive, or electronical…
Is a monthly charge to lease unlit 'dark' fiber optic cable subject to Colorado sales or use tax?
Likely taxable. The Department's general understanding is that dark fiber — unlit fiber optic cable leased to a customer that must 'light' it themselves — is tangible personal property, not real prope…
Are a company's medical-records services — coding, abstraction, and secure online storage — subject to Colorado sales or use tax?
No. The Department reaffirmed its earlier PLR 13-005 view that retrieving and copying medical records is a service, not a sale of tangible personal property. So coding, abstraction, and secure online …
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…
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…
For Colorado income tax apportionment, is digital imagery delivered electronically tangible personal property, and how is it sourced?
It's tangible personal property, sourced to where it's delivered. For Colorado income tax apportionment, a static digital image delivered electronically is treated as a sale of tangible personal prope…
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…
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…
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…
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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.