Corporate Income | Letter Rulings
Private Letter Rulings and General Information Letters
Businesses and individuals can request a general information letter or private letter ruling on any tax administered by the department. General information letters are general discussions of tax issues that are not specifically addressed in other department publication, such as FYIs, rules and regulations, or form instructions. General Information Letters are general statements of department understanding and cannot be relied upon as binding guidance. Private letter rulings are specific determinations of the tax consequences of a proposed or completed transaction. Unlike general information letters, private letter rulings are binding on the department and, therefore, provide taxpayers with greater certainty for their business and personal taxes. However, private letter rulings can only be relied upon by the party to whom the ruling is issued. Private letter rulings cannot be relied upon by any taxpayer other than the taxpayer to whom the ruling is made. For more information about general information letters and private letter rulings including fee amounts and how to submit a request, please see department regulation 24-35-103.5.
Taxpayer can annually claim a refund of the renewable energy investment tax credit of up to $750,000 pursuant to §39-30-104(2.6), C.R.S. until the refund is fully utilized, assuming Taxpayer is entitled to claim a refund of that amount in the enterprise zone renewable energy investment tax credit.
PLR-17-001 Apportionment of Income on a Combined Report
All corporations meeting the requirements to be included in an affiliated group must be included in the combined corporate income tax return. The affiliated group may calculate its combined income tax liability using the methodology outlined in Department Private Letter Ruling PLR-11-002 and PLR-15-005.
The sale of Company's ownership interest in an LLC is intangible personal property. The LLC was formed in furtherance of the purpose of Company, and therefore the gain realized from the sale of the LLC is business income. Where Company's pass-through income generated from the LLC is business income for Colorado tax purposes, than Company's distributive share of the LLC's gross sales are Company's own gross sales.
Contributions made to a fund that awards grants to eligible nonprofit child care programs in Colorado to make capital improvements are eligible for the child care contribution credit despite the contribution not being made directly to the child care facility or program.
GIL-16-004 Income Tax Nexus of Franchisor
Discussion of what items of a franchisor's income would likely be considered in the sales calculation to determine whether company has substantial nexus for income tax purposes.
PLR-15-005 Apportionment of Combined Report's Income
All corporations meeting the requirements to be included in an affiliated group must be included in the combined corporate income tax return. The affiliated group may calculate its combined income tax liability using the methodology outlined in Department Private Letter Ruling PLR-11-002 for tax years 2014 and prior; however, once adopted by the Department, Affiliated Group must calculate its combined income tax liability using the methodology that will be adopted by the Department in amended Department Regulation 1 CCR 201-2, 39-22-303(11)(c).
PLR-15-006 Apportionment of Corporate Income Tax
Company, which primarily performs services which it consumes, is akin to a service provider and must apportion its gross receipts based on where the costs to perform the service are incurred rather than the Company’s commercial domicile.
Company may file under an alternative method of apportionment as described in the letter.
PLR-13-008 Digital Imagery
A static digital image sold under the various methods to various customers is the sale of tangible personal property for purposes of Colorado income tax apportionment. The sale is not a Colorado sale if the destination of the product is not in Colorado and Company is taxable in the destination state. Regardless of whether the destination state treats the sale of digital images to the federal government as sourced to the origination state (Colorado), Company must source a sale to the federal government to the destination state for Colorado apportionment purposes.
GIL-13-009 C Corporation Income Tax Return
A company engaged only in the solicitation of orders for other companies is liable for income tax if it has nexus in Colorado. Public Law 86-272 does not apply because company is engaged in a service and not the sale of tangible personal property.
GIL-13-021 Public Law 86-272
A company will exceed the protections of P.L. 86-272 if an employee participates in activities that are considered more than activities closely related to solicitations. A company whose employee regularly accepts returns on behalf of company or regularly handles warranty claims will likely be viewed as having engaged in activities that exceed those protected by P.L. 86-272 and, therefore, subject the company to a Colorado income tax filing obligation.
GIL-13-024 Colorado Source Income
Out-of-state accounting firm, which has a non-resident employee working remotely in Colorado, has nexus in Colorado if the employee's income exceeds $50,000, and, thus, the firm must allocate income to Colorado based on where the cost to perform the service is incurred.
Taxpayer, a limited liability company, and its members cannot subtract from Colorado taxable income net capital gain resulting from the sale of the Taxpayer’s goodwill because the sale did not qualify as a sale of a ownership interest.
GIL-12-013 Training Classes for Corporations
The provision of education and training is generally a non-taxable service. If tangible personal property is transferred from the educational service provider to the student, this may change the tax obligation. Company may need to remit income tax if it has sufficient nexus to be considered to be doing business in Colorado.
Nexus can be established by the presence of taxpayer's employees in this state, even if their work is not directly related to the taxable transaction.
Affiliated corporations must file a combined report that includes both affiliated financial and non-financial institutions.
Debit card company is a financial institution and must apportion income based on market approach.
General discussion of taxability of mark-up charges in cases of resellers, agents, brokers, third party contracts. General discussion of nexus for income and sales tax purposes.
GIL-09-008 Nexus Created by Related Service Activity
Non-taxable services may create nexus for sales tax collection for one to two sales per year by nonresident single member LLC. Income generated from sources within Colorado is subject to Colorado income tax.
A corporation must apportion to Colorado some of its income generated from services provided to customers outside Colorado because a portion of the cost of providing that service was incurred in Colorado.
GIL-09-012 Income Tax Nexus
Company, whose only contact with Colorado is to make drop shipments of goods to recipients located in Colorado and to maintain a warehouse in Colorado, has nexus with Colorado for income tax purposes and is not protected by PL 86-272.
Sales tax license and registration must be under taxpayer's name, not agent of taxpayer who invoices and collects tax from lessees. Sale of finance lease accelerates sales tax obligation. General discussion of income tax regarding industrial banks.
GIL-09-028 Insurance Company Income Tax Nexus
Insurance company does not create nexus if only contact is to register with the Secretary of State to do business in Colorado, but may have nexus if insurance law requires taxpayer to administer claims in state.
An insurance company is exempt from income tax because it is not "subject to" the gross premium tax, even though it is also exempt from gross premium tax.
Nonresident corporate directors who attended two-day board of directors' meeting in Colorado incurred state income tax liability based on number of days performing duties in Colorado.
GIL-08-034 Internet Game, Energy Drinks, and Samples
Internet gaming lessons are nontaxable services and nontaxable intangible personal property. Income earned from sources within Colorado are subject to income tax, but nexus issue not addressed. Energy drinks are generally nonexempt food supplements. Distribution of samples is not subject to sales tax, but distributor liable for use tax.