When the motor vehicle dealer and the purchaser reside in the same local taxing area, the dealer must collect all applicable local sales taxes (special districts, county and city) in addition to the state sales tax. The state-administered taxes are to be paid to the Department of Revenue on the Colorado Sales Tax Return (DR 0100).
Special district taxes apply to all purchasers living within the boundaries of these districts. In order to facilitate titling procedures, dealers not located in the district should collect the tax from residents of the district and send the tax directly to the motor vehicle department of the purchaser's county of residence along with the title application. Special district taxes are not applicable to purchasers buying within the district but not residing in the district.
Taxes are due when buying a motor vehicle outside the limits of the local taxing entity where the purchaser resides. Tax must be paid to the county motor vehicle deparment prior to registering the motor vehicle. Dealers should collect local use taxes and send them directly to the motor vehicle department of the purchaser's county of residence along with the title application.
Motor vehicles must be registered in the local jurisdiction of residence of the purchaser. For a private individual, this means the county and town where he/she is registered to vote. For a business purchaser, this means the business address from which the vehicle is principally operated and maintained.
Motor vehicle sales or trades between unlicensed, private individuals are subject to sales/use tax. The purchaser must pay the tax on the purchase price to the county motor vehicle department when registering and titling the vehicle
With all motor vehicle leases, the lessor must present the lessee with the Statement of Sales Tax Paid on Motor Vehicle Leases (DR 0026). This form shows which taxes are collected on the lease payments by the lessor and which taxes must be collected before the vehicle is registered or titled. The DR 0026 is required for all leases, except for short-term motor vehicle rentals or wholesale leases. For more information on leases, please see Publication FYI Sales 56, Leases on Motor Vehicles and Other Tangible Personal Property.