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 customer makes a large up-front payment to sign a car lease in Colorado, which local sales taxes apply to that payment and how does the dealer report them?
The up-front payment a customer makes when signing a Colorado motor-vehicle lease is sourced the same way as the monthly payments — to the lease's 'primary property location,' not the dealer's locatio…
Are factory-built (prefabricated/modular) home modules exempt from Colorado sales tax, and who owes tax — the manufacturer's suppliers, the builder, or the home buyer?
Mostly exempt. A Colorado maker of prefabricated/modular housing modules buys its materials tax-free under a wholesale/manufacturing exemption, and its sales of the finished modules are partially exem…
When a construction subcontractor fabricates and installs a staircase into a building, is its labor taxed, or only the materials it buys?
A construction subcontractor who buys materials to fabricate and install a staircase into a building is the consumer of those materials and owes Colorado sales or use tax on the materials it purchases…
If an event organizer charges a cancellation fee for a canceled event that would have included a hotel banquet hall and catered food, is that fee subject to Colorado sales or use tax?
No. A cancellation fee charged when an event — one that would have included a hotel banquet hall and catered food and drink — is canceled is not subject to Colorado state or state-administered local s…
Does a company have to charge Colorado sales tax on DNA-based ancestry and health reports and the saliva kits it sends customers — and does the company owe use tax on those kits itself?
Two answers. The DNA ancestry and health-history reports — and the saliva collection kits sold to customers to produce them — are NOT subject to Colorado sales tax, because the customer's 'true object…
Does Colorado charge sales tax on non-alcoholic beer, kombucha, sweetened bottled coffee, and insulin sold without a prescription?
Mostly taxable, with a nuance on insulin. Colorado charges sales and use tax on non-alcoholic beer and kombucha (any trace of alcohol disqualifies them from the food exemption) and on sweetened bottle…
If my business isn't 'doing business' in Colorado — no location here and not soliciting sales — do I still have to send Colorado's noncollecting-retailer use tax notices to my customers?
No. A person who is not 'doing business' in Colorado — no place of business here and not soliciting sales that meet the economic-nexus thresholds — is not a 'retailer' under Colorado law. The noncolle…
Is the industrial equipment a retailer buys to mass-produce baked goods in its in-store bakeries exempt from Colorado sales and use tax under the manufacturing machinery exemption — and does that exemption reach local taxes?
Yes. Industrial bakery equipment — mixers, dough dividers, ovens, oven racks, depositors, labeling machines, and the like — bought new for over $500 each and used directly and predominantly to mass-pr…
Is propane (liquefied petroleum gas) sold to heat or cook in RVs, cabins, or tents at a campground subject to Colorado sales tax — and when does the special fuel tax or the residential-use exemption apply?
It's taxable. Propane (LPG) sold to heat or cook in RVs, cabins, or tents at a campground is subject to Colorado sales tax — these are temporary accommodations like hotels, so this is commercial consu…
Are pre-cooked, packaged meals that a remote seller ships to Colorado customers — meals that need further cooking and aren't sold hot or with utensils — exempt from Colorado sales and use tax as food for home consumption?
Yes. A remote seller's pre-cooked, air-chilled, packaged meal products — shipped with FDA nutrition labels, not sold hot or with utensils, and requiring further cooking by the customer — are food for …
Does a Colorado seller charge sales tax on an implantable, single-use diagnostic heart monitor sold to healthcare providers, or is it an exempt medical device?
Yes, it's taxable. A single-use heart monitor implanted to diagnose irregular heartbeats is taxable tangible personal property when sold to healthcare providers. It does NOT qualify for Colorado's med…
Does a Colorado crane rental company charge sales tax on cranes and hoists, and does it owe tax when it buys or moves the equipment into the state?
It depends on whether an operator is included. A crane or hoist rented with the company's own operator is a nontaxable service, so no sales tax is collected; instead the company owes sales or use tax …
Does an out-of-state seller with no Colorado location have to collect Colorado sales tax on prefabricated homes, and how much of the price is taxable?
It depends, with two answers. First, Colorado exempts 48% of the purchase price of prefabricated housing from state sales tax, and any later resale is fully exempt from state use tax; these exemptions…
Does Colorado charge sales or use tax on an aircraft that was bought out of state but is then based in or flown into Colorado?
No sales tax, but yes use tax. An aircraft bought outside Colorado is not subject to Colorado sales tax, but once it is based in or used in Colorado it owes Colorado use tax, and the expired aircraft …
Does a charity owe sales or use tax when it pulls resale inventory it bought tax-free and gives the items away to donors, customers, or performers?
It depends. Giving a gift is not a sale, so no sales tax is due on the act of giving — but the giver becomes the user and consumer of the item. When a charity buys goods tax-free for resale and then w…
Is a third-party company's charge for ERP-software maintenance and support — including tax, legal, and regulatory updates delivered electronically — subject to Colorado sales or use tax?
No. The company isn't selling taxable computer software — it's selling maintenance and support services. Even if some tangible personal property changes hands while providing those services, it is de …
When a buyer pays a separately stated fee for a program that pays a credit toward a replacement vehicle if their car is totaled or stolen, is that fee taxable — and does the credit count in the sales tax on the replacement vehicle?
The separately stated, optional program fee is NOT subject to sales or use tax — it buys an intangible right to future compensation, like an insurance premium, not tangible personal property. The comp…
For a company selling EV charging stations, must it collect sales tax on (1) the station, (2) an annual network fee, and (3) maintenance contracts?
A general overview, no binding determination. (1) Selling the charging station is a taxable retail sale of tangible personal property (and use tax can apply to its use). (2) The annual network fee is …
Does a billing-services company owe Colorado sales tax on the printed bills it produces, or on the separately stated postage it charges to mail them?
No to both. A company that turns clients' raw financial data into printed bills and statements is selling a nontaxable service, not taxable goods — the paper the bills are printed on is incidental to …
Can a pharmacy buy prescription bottles and labels tax-free — under the medical-materials exemption, or the container/label exemption?
Yes — but through the container exemption, not the medical-materials exemption. A pharmacy CANNOT use the medical-materials exemption, because that requires a 'licensed provider' with authority to pre…
Are the parts and the machinery a company buys to build an experimental aircraft prototype for its own research and development exempt from Colorado sales and use tax?
Mostly exempt. The parts a company buys and builds into an experimental aircraft prototype for its own R&D are exempt from Colorado sales and use tax — not under the 'components for resale' exemption …
When a company rents scaffolding and bills extras like sheeting, planks, lighting, delivery, on-site equipment, consumables, and erection labor, which of those charges are included in the Colorado sales tax on the rental?
It depends on the rental's length and how each charge relates to the rental — and this GIL lays out the framework without deciding the specific items. Key points: (1) for rentals of three years or les…
Are aircraft parts that are permanently affixed to an aircraft exempt from Colorado sales and use tax even when the aircraft is NOT used in interstate commerce by a commercial airline?
Yes. Tangible personal property permanently affixed as a component part of an aircraft is exempt from Colorado sales and use tax, and — unlike the exemption for the sale of the aircraft itself — there…
When a company sells custom signage to Colorado customers, are its separately stated charges for delivery and installation subject to Colorado sales or use tax?
Generally no, for the delivery and installation. Colorado taxes the sale of the signage (tangible personal property) but not services. Delivery and installation are typically services, so those charge…
Is a company's monthly 'subscription' charge for energy-saving technology it owns and installs at the customer's site a nontaxable service, or a taxable rental of tangible personal property?
It depends — and this GIL does NOT decide it. The question is whether a monthly charge for company-owned energy-saving technology installed at the customer's site is a nontaxable service or a taxable …
For a subscription-box seller that doesn't collect Colorado tax: does each automatic monthly shipment need its own Transactional Notice, and what notices are owed when an out-of-state buyer ships the box to a Colorado resident?
Two answers. (1) No — for an auto-renewing subscription, a Transactional Notice is required only when the customer subscribes, enrolls, or renews; separate notices are NOT required for the repeated au…
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. …
Is a lessee's payment to a rental company for lost or damaged rental equipment subject to Colorado sales or use tax?
No. When a customer pays a rental company for equipment that is lost or damaged beyond repair, that payment is not subject to Colorado sales or use tax. It's compensation for the lost value of the com…
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…
Does Colorado sales or use tax apply to leasing space on a telecommunications tower?
Yes. Leasing space on a telecommunications tower is subject to Colorado state (and state-administered local) sales and use tax. The Department treats the towers as tangible personal property — not rea…
Are licensed digital movies and the hard drives they arrive on taxable tangible personal property, and who owes the tax?
Yes. Both the digital movies/content and the computer hard drives a theater receives from film distributors are taxable tangible personal property — digital goods have a physical existence, and Colora…
Is the electricity a company produces and consumes at its own facilities subject to Colorado sales or use tax?
No. The electricity this company produces and consumes at its own facilities is not subject to Colorado sales or use tax, because there is no 'sale.' Colorado taxes electric service only when it is fu…
On a long-term motor-vehicle lease, does the lessee owe Colorado sales or use tax on the lessor's monthly charge for an optional, separately stated maintenance agreement?
No. Because the maintenance agreement is optional and separately stated, the lessee does not owe Colorado sales or use tax on the lessor's monthly maintenance charge. Instead, the lessor (or its third…
In a sale-and-leaseback, when do the purchase, the resale to the lessor, and the lease-back get taxed — and does the lease term change the answer?
It depends on the lease term. The lessee's original purchase is a tax-free wholesale (resale) buy only if it really resells to the lessor without using the property first. On the lease-back: if the le…
Can a tissue-distribution business buy its surgical equipment and supplies tax-free as medical exemptions, and is the rent it charges for meeting space taxable?
Mostly taxable here. Colorado's medical-equipment and -supply exemptions apply only when the item is bought pursuant to a prescription or furnished by a licensed provider as part of professional servi…
Is audiovisual equipment a 'construction and building material,' and can a contractor buying it for a tax-exempt project use the contractor's exemption certificate?
Generally no. Audiovisual equipment usually isn't a 'construction and building material' (it's removable, not a fixture), so the Department would treat an A/V installer as a retailer reselling the equ…
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…
Is acquiring tangible personal property by foreclosing on a security interest a taxable sale, and is manufacturing machinery used in an enterprise zone exempt?
Two answers. A lender taking possession and title of property by foreclosing on its security interest is NOT a taxable sale (the statute excludes foreclosure/repossession) — but if the lender later se…
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 …
When a company builds and tests a custom piece of equipment in Colorado that it intends to sell, are the components subject to Colorado use tax during the design, build, and test process — and what happens if the company ultimately keeps the equipment to use itself?
On these facts, no use tax during development. Components a company builds into a custom piece of equipment and tests in Colorado are NOT subject to Colorado sales or use tax during the design, build,…
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…
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 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…
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…
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…
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…
Browse Colorado rulings by topic
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.