Letter Rulings

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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 1 CCR 201-1 (24-35-103.5)

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.

PLR-17-002   Lease of Space on Telecommunications Towers

The lease of space on Company’s telecommunication towers is subject to sales and use tax.

PLR-17-003   Non-Transplantable Human Tissue

The charge by Taxpayer for provisioning non-transplantable human tissue to third parties is subject to sales and use taxes.

GIL-17-001   Audio Visual Equipment

Company may sell audio visual equipment exempt from tax if a contractor is engaged by an exempt entity and presents either the contractor’s sales tax license or the contractor’s exemption certificate.

GIL-17-002   Equipment Leases

The lease of computers to students does not qualify for the exemption for sales to schools. The lease may be a credit sale and taxes are due on the installment payments. If the lease is a true lease, then lessor must pay tax when the lessor acquires the computers or must obtain permission from the department to collect tax on the lease payments.

GIL-17-003   Wood Pellets

Wood pellets used for a residential purpose are exempt from sales and use tax.

GIL-17-004   Change Orders Related to Long Term Leases

The replacement of existing equipment with new equipment does not convert a long term lease to a short term lease. However, if the property does not replace existing equipment but is more accurately viewed as the addition of property added to a lease, then the addition of the new property in the last three years of a lease should be viewed as a short term lease.

GIL-17-005   Sales of Mobile Devices

Company is doing business in Colorado because it has an employee who is located in Colorado and who solicits sales on behalf of Company. Therefore, Company has an obligation to collect sales or retailer’s use tax depending on where the sale occurs.

GIL-17-006    Optional Maintenance Agreement

Maintenance agreements when sold in connection with the sale or lease of taxable tangible personal property are generally subject to Colorado sales or use tax unless the maintenance contract is optional and separately stated from the sale or lease of the taxable tangible personal property. Even though the monthly lease payment does not include a breakdown of the portion of the payment that relates to the optional maintenance agreement, the lease is separately stated from the sale or lease of the taxable tangible personal property because the maintenance agreement is a separate contract from the lease contract and customers must separately sign each contract and if the cost of the maintenance agreement is included in the lease, there is a separate line item detailing the cost of the maintenance agreement in the lease contract.

GIL-17-007    Fluoride Varnish

The fluoride varnish and the other items included in the kit appear to be materials furnished by licensed providers in connection with providing professional services to patients and, therefore, would be exempt.

GIL-17-008    Marketing Material

Services provided in connection with the marketing marterial may be subject to tax if the services are not optional and separately stated from the sale of the marketing material.

GIL-17-009    Retailer’s Use Tax on Leases

Because ownership and possession occur outside of Colorado and Company will be doing business in Colorado when it hires an employee who works in Colorado, Company must collect retailer’s use tax on sales shipped to Colorado once an employee works in Colorado.

GIL-17-010   Medical Imagine Equipment

If the services Company provides pursuant to a service agreement are inseparable from the sale of the original equipment, then the price for the service is included in the calculation of sales tax for the taxable goods

GIL-17-011   Electricity to Produce Software

If the activities engaged in by Company did qualify as manufacturing or as an industrial purpose, then the electricity used to program software that is included in the finished goods would likely be viewed as exempt. 

PLR-16-001   Electric Service Provider’s Use of Electricity

Electric service used by an electric service provider at its facilities is not subject to Colorado sales or use tax because the consumption of the electricity it generates is not a retail sale.

PLR-16-002   Oil and Gas Well Cementing Products and Services

Charges for services performed in connection with manufacturing cement slurry must be included in the total taxable sales price. Examples of such services include analytical services needed to create the cement slurry and delivery of the cement slurry to the purchaser. However, the installation of the cement slurry is not performed in connection with the manufacture of the cement slurry and, therefore, is not included in the price upon which tax is calculated.

PLR-16-003   Billing Services

The paper or electronic billing services are not subject to sales tax because it is an nontaxable service. The paper invoices are an incidental transfer of personal property related to the provision of a nontaxable service.

PLR-16-004   Amenity Fee

The amenity fee is subject to tax because the amenity fee is included in the charge for taxable living accommodations.

PLR-16-005   Enterprise Zone Investment Tax Credit

The conversion of the Project Company from a disregarded entity to a partnership or, alternatively, the technically dissolution of the original Project Partnership and transfer of Project to newly formed New Project Partnership, within one year of Project being placed into service does not disqualify Taxpayer from claiming the enterprise zone investment tax credit.

PLR-16-006   Credit for Taxes Paid to Another State

Taxpayers are entitled to a credit for taxes paid to Ohio on income that Colorado sources to Ohio. Taxpayers determine the amount of income sourced to Ohio by using an average of the limited liability company’s apportionment ratios for the three tax years immediately preceding the tax year in which the husband’s interest in the limited liability company was sold.

PLR-16-007   E-book, Online Courses, and Virtual Lessons

E-book and Company's online courses are tangible personal property subject to sales tax. Virtual lessons described in the ruling are a service not subject to tax.

PLR-16-008   Prosthetic Device

Product is exempt from sales and use tax as a prosthetic device.

PLR-16-009   Licensed Movies and Content

Both the digital movies/content and the computer hard drives received from the film distributors constitute tangible personal property subject to Colorado sales or use tax.

PLR-16-010   Local Tax Obligation

Company does not have a business presence in the state-administered cities and counties. However, Company does have an obligation to collect the state retailer’s use tax and state-administered special districts use tax.

PLR-16-011   Colorado Sales or Use Tax

Company should collect retailer’s use tax on purchases by Colorado customers because Company's sales take place outside of Colorado.

PLR-16-012   Child Care Contribution Tax Credit Certification

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.

PLR-16-013   Food and Nutritional Products

Products that meet the definition of "food" and have a "Nutrition Facts" label are exempt from state sales tax.

PLR-16-014   Web Collaboration Services

Web collaboration services provided to consumers in Colorado by means of servers located outside Colorado are not subject to Colorado sales tax because it is an interstate service.

PLR-16-015   Acquisition and Restructuring Transaction

Both the partnership income received by the corporate partner and the gain the corporate partner realized from the sale of its interest in the partnership are business income for the corporate partner. Based on multiple factors appertaining to the sale, the gain from the sale is excluded from the corporate partner’s apportionment factor in determining its Colorado tax.

GIL-16-001   LCC Employee in Colorado

If company does not fall within the protection of P.L 86-272, members of the S corporation must file a Colorado income tax return if the S Corporation has substantial nexus with Colorado.

GIL-16-002   Software Updates and Maintenance Agreements

Computer software updates and maintenance agreements purchased after July 1, 2012 that are delivered electronically are not subject to sales tax because they are not tangible personal property, even if the update or maintenance is for computer software that was treated as tangible personal property when purchased.

GIL-16-003   Per Click Fee

The “per click” fee is not subject to tax because the tangible personal property, which is inseparable from the maintenance service, is exempt as a sale for resale or ingredient or component part used to produce tangible personal property that is sold.

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.

GIL-16-005   Refunds

When a purchase of taxable tangible personal property includes a taxable shipping charge and the customer returns the item for a refund, the entire amount of sales tax must be refunded to the customer, including the tax paid on the shipping charge.

GIL-16-006   Hotel Fees and Online Travel Companies

Cancellation charges that are greater than 50% of the daily reservation room rate are generally considered payment for the room and therefore fully taxable. Attrition fees are more accurately characterized as a pricing mechanism by which a retailer adjusts for a volume discount and must be included in calculation of tax. Colorado sales tax is due on the entire amount charged to the customer for the right to occupy a room or accommodation. Therefore, the amount the online travel company charges is the amount that is subject to tax.

GIL-16-007   Booking Agent Fees

That portion of the customer’s payment taken by Company as a commission is part of the price paid by the customer and, therefore, is included in the calculation of sales tax.

GIL-16-008   Into-Plane Fee

The nontaxable sale of services are not subject to sales tax because the taxable sale of fuel and a nontaxable sale of services are separable despite their common appearance on a single invoice because the customer must engage in two separate transactions, covered by two separate contracts, with two separate entities.

GIL-16-009   Web Seminars

Live web seminars are not subject to sales or use tax because the seminar is a service. A pre-recorded web seminar and self-study material online are subject to tax.

GIL-16-010   Custom Herbal Formulas

The custom herbal formulas Taxpayer prepares and sells are subject to sales tax because they are not a prescription or nonprescription drug.

GIL-16-011   Vehicle Rentals

An advance payment applied toward the charge for a vehicle rental is taxable. Additionally, when a nonrefundable advance payment that exceeds 50% of the daily rental charge for the vehicle is forfeited due to cancellation or the customer’s failure to appear at the scheduled time, is likely a charge for the rental of the vehicle and, therefore, taxable. Conversely, a nonrefundable advance payment of 50% or less of the daily rental charge would likely be considered a nontaxable cancellation charge if it was forfeited due to cancellation.

GIL-16-012   Distributor Fees

Payment of the annual renewal fee is not subject to tax because no tangible personal property is sold.

GIL-16-013   Hotel Thirty-Day Rule

Discussion of the requirements to be eligible for the thirty-day hotel reservation rule that would exempt the hotel room from tax.

GIL-16-014   Energy for TV News Broadcast Station

Electricity used to operate TV communication towers is exempt because TV broadcast uses radio communication to transmit the TV signal and electricity used for radio communication is exempt from tax. However, energy for office computers, printers, lighting, heating, and TV cameras are not exempt.

GIL-16-015   Credentialing Services

The credentialing process, as described in the letter, appears to be a service that is not subject to sales and use tax.

GIL-16-016   Consignment Warehouse

Company is likely doing business in Colorado because it holds inventory in a warehouse in Colorado. Therefore, it appears Company must collect, report, and remit sales tax for taxable sales in Colorado.

GIL-16-017   Mobile Home

The amount of the mobile home subject to tax depends on whether the mobile home retains its identity as tangible personal property or whether the mobile home becomes so permanently attached to the real property at the time of the sale that it is treated as real property.

GIL-16-018   Management Fee

If Company’s client must purchase the management service when using Company’s repair and maintenance service, then the management fee is included in the calculation of sales tax, even if the price for the management fee is separately stated from the taxable sale of auto parts.

GIL-16-019   Leased On-Demand Aircraft

Company’s leases of planes do not appear to qualify for an exemption because the lessee is not a “scheduled” operator and does not meet the requirements for the on-demand carrier exemption.

GIL-16-020   Third-Party Liability

Payment of the correct type of tax and full amount of tax by one jointly responsible retailer discharges the payment obligation of the other jointly responsible retailer. However, the discharge of the monetary liability does not discharge or otherwise limit the Department’s statutory authority to administer and collect taxes from either jointly responsible retailer if a deficiency occurs in the future.

GIL-16-021   Paint Stewardship Fee

The fee that is required pursuant to § 25-17-404(2)(j), C.R.S. is included in the calculation of sales tax when purchasing architectural paint.

PLR-15-001   Electronic Messaging Services

Company's integrated desktop messaging, electronic data interchange (EDI) value added network (VAN), broadcast fax, and production email are services and not subject to Colorado sales and use tax. Company is the user and consumer of the telephone and telegraph service used to provide each of its services.

PLR-15-002   Research and Development of Product That Will be Sold

Purchases of components for manufactured product are exempt as components purchase for manufactured tangible personal property because the manufactured product may be sold.  If the product is sold and used outside Colorado, Colorado tax is not due on the sale. If the manufactured product is ultimately used by Company to provide a service rather than sold, Colorado use tax is due on the price Company paid suppliers for the components, but such tax would be due at the time the item is identified as being subject to use by Company.

PLR-15-003   Electronic Messaging Services

Company's integrated desktop messaging, electronic data interchange (EDI) value added network (VAN), broadcast fax, and notifications email are  services and not subject to Colorado sales and use tax. Company is the user and consumer of the telephone and telegraph service used to provide each of its services.

PLR-15-004   Bulk Water

Bulk water sales sold in tanks are subject to Colorado sales or use taxes, but sales of water through a pipeline are not subject to Colorado sales and use taxes.

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.

PLR-15-007   Custom-Made Closet Organizer

A retailer's charge for assembly and installation of Product into a home is included in the calculation of sales tax because the charge for assembly is a taxable service to create a finished product and, although installation of the finished product is not taxable service, the charge for installation is not separately stated from the charge for installation.

PLR-15-008   Lessee Maintenance Agreements

Tax for a separately stated charge for motor vehicle fleet maintenance is not included in the sales tax paid by a lessee of a motor vehicle.  Lessor is liable for sales or use tax on tangible personal property used to perform the maintenance agreement

GIL-15-001   Interest, Dividend, and Capital Gain Distributions from Colorado and U.S. Obligations

If the dividend paid by the mutual fund is interest income from a United States obligation, the interest income can be subtracted from federal taxable income to the extent the income is included in federal taxable income. Colorado imposes tax on interest income from obligations of other states or their political subdivisions, but not on interest income derived from obligations of the State of Colorado and its political subdivisions.

GIL-15-002   Contractor Exemption Certificate

If a contractor does not provide a certificate of exemption to a retailer, then the contractor cannot claim an exempt sale and the retailer must charge sales tax on the transaction.  A retailer who fails to charge sales tax in such instances is liable for any sales tax that should have been collected as well as penalties and interest.  If the contractor later obtains an exemption certificate, it may apply to the Department for a tax refund or the retailer may, in its discretion refund the sales tax to the contractor and claim a credit on its sales tax return.

GIL-15-003   Cloud Service Plans

Company’s cloud service plan may constitute intrastate telephone and telegraph services. The Department would likely view charges for data plans by mobile telecommunication providers as telephone service.  If the transmission pathway involves both intrastate and interstate telephone service and the charge for the intrastate service is not separately stated, then the entire charge is subject to sales tax. The Department would likely not view the charge for cloud Wi-Fi as a charge for intrastate telephone or telegraph service.

GIL-15-004   Contract Manufacturing

When a customer supplies all the raw materials used by the manufacturer to manufacture a product for the customer (contract manufacturing), there is no taxable transfer of tangible personal property from the manufacturer to the customer and the manufacturer's charge to the customer is solely one for nontaxable services. Manufacturer's purchase of manufacturing machinery which is occasionally used for contract manufacturing is exempt under the manufacturing machinery exemption because the exemption does not require the machinery or machine tools to be used exclusively in an exempt manner.

GIL-15-005   Cattle ID Tags and Verification of Marketing Claims

Cattle identification systems that are not used at a dairy farm in connection with the production of raw milk are not exempt as “cow identification systems”. The Department would likely view the Company's auditing activities as a nontaxable service but Company is liable for sales and use taxes on its purchases of tangible personal property used to provide auditing services.

GIL-15-006   Late Payment Fees

Sales tax applies to the full purchase price because sales tax is a transactional tax.  Events that occur after the sale generally do not affect the calculation of the tax. A late payment fee is generally assessed after a sale is created and when payment is untimely made.  The late payment penalty typically reflects the finance or administrative charge for events after the sale and, therefore, do not reflect or affect the sales price at the time the transaction was created.

GIL-15-007   Leases of Low-Emitting Heavy Vehicles

A long-term lease is treated as a sale; therefore, sales and use tax exemptions apply to long-term lease payment.

GIL-15-008   Discharged Maintenance Contract

Car owner's warranty, on which owner paid sales tax, was discharged in bankruptcy and owner subsequently purchased replacement parts that would have been provided tax free to owner under the warranty. Car owner not entitled to a refund of sales tax paid on replacement parts.  Events subsequent to a taxable event generally do not affect the taxability of the transaction.

GIL-15-009   Services in Connection with Retrieving and Copying Medical Records

Retrieving and copying medical records, and activities related thereto, are services rather than the sale of tangible personal property and, therefore, are not subject to tax.

GIL-15-010   Banquet and Event Provider Charges

A general discussion of the taxability of charges associated with banquet and event rentals. 

GIL-15-011   Audio Visual Equipment

Audio visual equipment is likely not construction or building materials. A contractor who purchases tangible personal property that is not a building material will be treated as a retailer who resells the property to the real property owner. When the real property owner is a tax exempt entity, the contractor does not pay sales tax to the supplier, and does not collect sales tax on the sale of the property to the real property owner because the owner is exempt from tax.

GIL-15-012   Delivery Charge

Delivery charge is separable from the transaction because the customer can purchase a meal from Company without also being required to have the meal delivered. However, the delivery charge does not meet the "separately stated" requirement because the customer is not aware that they are purchasing a delivery charge. Therefore, the delivery charge is subject to sales tax.

GIL-15-013   Tax on Asset Acquisition through Foreclosure

A secured lender who obtains title to collateral by foreclosure is not liable for sales tax.   However, if the secured lender thereafter sells the collateral to a third party, such as by auction sale, then that sale is subject to sales tax.

GIL-15-014   Sales Taxability of Federal Excise Tax on Aviation Fuel Refunded to Customers

State sales tax does not include federal excise tax collected by the aviation fuel supplier from the airline carrier because the federal tax was always refundable and only charged in the first instance as an administrative measure to ensure the federal exemption for fuel is properly claimed.

GIL-15-015   Contractor Pays Tax when Billing on a Time-and-Material Contract

A contractor must have a sales tax license when using a time-and-material contract with the real property owner.

GIL-15-016   Employee Creates Nexus

Company that is located outside Colorado but has an employee working in Colorado has nexus and must collect sales tax on sales made to customers in Colorado.

GIL-15-017   Replacement Batteries in Electric Wheelchairs

Batteries for wheelchairs, motorized carts, and scooters that qualify as exempt mobility enhancing equipment are exempt.  Retailer must exercise reasonable diligence to determine that the exemption applies.

GIL-15-018   Dark Fiber

Dark fiber appears to be tangible personal property subject to tax and, therefore, the leasing of such cable may be subject to sales or use tax

GIL-15-019   Nonessential Food Articles

Condiments that are not incorporated into a prepared meal at the time it is transferred to the consumer but that are provided separately, regardless of the method by which they are provided to the customer, are nonessential food articles.

GIL-15-020   Propane Reporting

Company can file Colorado Distributor Returns for January 1, 2014 to present on a net gallons basis. However, until January 1, 2016, those gallons that are able to be reported on a gross gallon basis, should be reported as such rather than a net gallon basis.

GIL-15-021   Medical Equipment and Supplies

The equipment and supplies listed by Company likely do not qualify for the medical equipment and supplies exemption because they are neither purchased pursuant to a prescription nor are they furnished by a licensed provider as part of their professional service to a patient.

GIL-15-022   Disposable Bag Fee

A municipal disposable bag fee collected by a retailer is not included in the sales and use tax calculation on goods purchased by the customer.

GIL-15-023   Sale-and-Leaseback Transactions

The tax obligations of the sale-and-leaseback transaction hinge on the term of the lease. If the term of the lease is more than three years, the lease is considered a sale and the lessor may purchase the property without paying tax and collect tax on each lease payment paid by the lessee. If the term of the lease is three years or less, the lessor must pay tax on the property at acquisition and the lease payments paid by the lessee are exempt from tax because the lessor has already paid tax on such property.

GIL-15-024   Tax Exempt Certificates

A person holding a sales and use tax exempt certificate is exempt from state, city and county, and special district sales and use taxes.

GIL-15-025   Digital Photographs

Digital photographs sold by a photographer are subject to sales tax.

PLR-14-001   WITHDRAWN

PLR-14-002    Foot Orthotics, Braces, Splints, and Implant Kits   

Most foot orthotics, braces, and splints are exempt only if furnished to the patient by a licensed provider as part of the provider's professional service. A joint implant and pins, which are purchased together with a drill bit as a "kit", are exempt from tax, but the drill bit included in the kit is subject to tax.

PLR-14-003   Aggregate Mining, Asphalt and Recycled Asphalt Production

Asphalt production inside and outside an enterprise zone is manufacturing, unless fifty percent or more of the new asphalt is comprised of recycled asphalt. If new asphalt is comprised of fifty percent or more of recycled asphalt, then production of such asphalt is not manufacturing, regardless of whether it is inside or outside an enterprise zone. Aggregate mining and recycled asphalt production is manufacturing when performed in an enterprise zone, but is not manufacturing when performed outside an enterprise zone. Use tax does not apply on aggregate materials mined from manufacturer’s own gravel pit. Lease payments related to mining may constitute the taxable sale of tangible personal property.

PLR-14-004   Delivery and Pick-up Charges

Company’s delivery and pick-up charges are not subject to Colorado sales and use tax because they are separable from the rental of the equipment.

PLR-14-005   Internet Wine Sales

Out-of-state retailer’s employee working in Colorado creates nexus and retailer must collect sales tax on online sales to Colorado residents.

PLR-14-006   Food for Retirement Communities

Charges by a residential retirement community to residents for meals are exempt from state sales tax. Company’s purchase of food products from suppliers are also exempt from tax.

PLR-14-007   Cancer Treatment Therapy

The rental of company’s cancer treatment therapy equipment is exempt from sales and use tax as medical equipment and related accessories for electrotherapy dispensed pursuant to a prescription.

GIL-14-001   Promotional Videos

The production of a video is a non-taxable sale of services, even though some inconsequential property is transferred from seller to buyer.  If charges for the raw footage and project file reflect the value of the services to produce the raw video and not the value of the property, the raw footage and project files will also be considered a non-taxable service.  Company must pay sales or use tax on the items it uses to perform its service. 

GIL-14-002   Manufactured Homes

The tax liability will depend upon the type of contract the builder uses with the homeowner. 

GIL-14-003   Domestic Jet Fuel Used in International Flights

Colorado sales tax applies to aviation fuel sold in Colorado to commercial airlines even if the fuel is used for international flights.

GIL-14-004   Sales Taxability of Federal Excise Tax on Jet Fuel Sales

Sales tax is calculated on the price charged to the customer.  However, if the purchaser is levied a direct federal tax, the sales tax calculation excludes the direct federal tax. A direct federal tax is a tax levied by the United States on the taxpayer, which, in the case of sales tax, is the purchaser.

GIL-14-005   Mail Order Sales

Company is doing business in Colorado and is required to collect sales tax on sales made into Colorado. Company must collect local sales taxes in jurisdictions in which Company shares with the purchasers. If Company ships product into a local jurisdiction in which it does not have a direct or indirect location, then Company should report the sale on its Retailer’s Use Tax Account and collect state use tax and, if the customer is within a special district that levies a use tax, any applicable special district use tax.

GIL-14-006   Alternating Current Electricity

“Renewable energy” does not include burning natural gas and equipment used to capture thermal heat from the combustion of natural gas and does not qualify for the sales tax exemption for components used in the production of alternating current electricity from a renewable energy source. 

GIL-14-007   Intrauterine Devices

An IUD that releases hormones is considered a drug and is exempt if dispensed pursuant to a prescription by a licensed provider. An IUD, whether furnished to a patient pursuant to a prescription or not, will likely qualify for the exemption for materials furnished by a licensed provider as part of their professional services because only a licensed provider can insert an IUD and the patient leaves the licensed provider’s office with the IUD.

GIL-14-008   Membership Fees/Partial Refund

When a membership fee includes both the transfer of tangible personal property and the provision of services (or intangibles) to the buyer, the entire transaction will generally be treated as taxable, unless the true object of the transaction is the acquisition of services (or intangibles) and the value of the tangible personal property is inconsequential. A partial refund of the purchase price presumably means that the buyer has used the property to some extent and, therefore, no refund of tax is allowed.  However, if the refund is for property that has not been used, such as in the case of a canceled magazine subscription and the refund reflects the magazines not yet delivered, then a refund of tax for the partial refund of the purchase price is permitted.

GIL-14-009   Demand Charge

A demand charge for the sale of electricity is taxable unless used for residential or industrial purposes. 

GIL-14-010   Doing Business in Colorado

A shipper has substantial nexus with Colorado if it uses a contract carrier, which is an agent of the shipper, to make regular deliveries into Colorado. 

GIL-14-011   S Corporation Colorado Source of Income

Subchapter S corporations are not subject to Colorado income tax.  A Subchapter S corporation is not required to register an income tax account or withholding account with the Department. A Subchapter S shareholder may have an obligation to file an income tax return and pay Colorado income taxes if the person is a resident, or, if not a resident, the nonresident has any income from the sources described in §39-22-109. C.R.S. 

GIL-14-012   Infusion Pumps

An infusion pump that administers medications is exempt from Colorado sales and use tax if prescribed by a licensed provider.

GIL-14-013   Local Sales Tax Collection on Equipment Leases

The continuous presence of a lessor's business assets in a local tax jurisdiction is typically sufficient to create nexus in that local tax jurisdiction and, thus,  the lessor must collect  local sales taxes.

GIL-14-014   Hemodialysis Devices

Hemodialysis devices may qualify for the durable medical equipment exemption.

GIL-14-015   Nexus for Sales and Income Taxes

In general, a seller has sales tax nexus in Colorado if it has employees or independent contractors in this state, even if their activities are completely unrelated to the sales transactions.  A contract carrier, unlike a common carrier, can also create substantial nexus with Colorado (and the local jurisdictions into which it delivers goods) if Company regularly ships goods via a contract carrier into Colorado. A company has substantial nexus for purposes of income tax if it has property, payroll, or sales in Colorado that exceed a certain dollar thresholds. Employees in Colorado for less than a day do not give rise to a wage withholding obligation. However, if the employee performs services for more than a single day in Colorado, they are required to file and pay Colorado income tax, and the employer is required to withhold and remit Colorado income tax.

GIL-14-016   Prepaid Fuel Charges for Rental Vehicles and Transportation Charges

Prepaid gasoline and transportation charges relating to the lease of a motor vehicle may not be taxable so long as the charges are separately stated and optional.  However, if the lessor’s transportation service is the only realistic transportation option, then those transactions may not be separable, and therefore may be taxable.

GIL-14-017   Separate Accounting

The Department does not generally allow taxpayers to use separate accounting for an alternative apportionment methodology without extensive and sufficient demonstration as to why separate accounting more fairly reflects taxpayer's business.

GIL-14-018   Colocation Services

A transaction involving the use of tangible personal property will generally be treated as a taxable rental of tangible personal property if the customer has control over the property.  Conversely, the transaction will be treated as a non-taxable service if the provider has primary control over the property. The provision of private lines for intrastate telephone and telegraph services is subject to sales tax.

GIL-14-019   Income Earned by Nonresident

Income derived from a tax lien certificate is sourced to Colorado because it is income from an ownership of an interest in real property in Colorado, and if the taxpayer purchases the lien for investment purposes, it is income derived from carrying on of a trade or business in Colorado and it is income derived from an intangible that is used in a trade or business in Colorado.

GIL-14-020   Marijuana RFID Tags

RFID tags used by marijuana cultivators to track transfers of marijuana are not exempt either as farm equipment (§36-26-716(1)(d), C.R.S.) or as labels (§39-26-102(20), C.R.S.) and, therefore, are subject to sales or use tax when purchased by marijuana cultivators.

GIL-14-021   Lease Payments on Vehicles Used in Interstate Commerce

A purchase of a new or used trailer, semitrailer, truck, truck tractor, or truck body for use exclusively outside Colorado or in interstate commerce and delivered by a Colorado manufacturer or dealer within Colorado, driven or moved by the buyer outside the state within thirty days after the delivery date is not subject to the sales tax at the time of purchase. If the company is required to designate Colorado as its base jurisdiction, the lease payments will likely be subject to sales tax.

GIL-14-022   Consolidated Freight Charges

If retailer’s consolidated freight charge genuinely occurs after the product is purchased, then the charge appears to be a drop shipment and the transportation charge is not subject to tax.  However, if retailer’s consolidated freight charge is assessed regardless of whether a product is being purchased or before the purchase is complete, then the charge appears to be a freight-in charge subject to tax. A transportation charge must fairly reflect the cost of transportation.

GIL-14-023   Fuel Tax on and Reporting Requirements of Propane

A propane dealer is not required to be a special fuel licensee if it is certain no sales of its fuel will be used to propel a motor vehicle. Any licensed propane dealer who makes no motor fuel (or potential motor fuel) sales need not post the bond. Any licensed propane dealer must also report all sales of propane in COFTS.

GIL-14-024   Walk-in Bathtubs, Wheelchair Lifts, Modular Ramps

In-home wheelchair mobility lifts and modular ramps provided pursuant to a prescription by a licensed provided are mobility enhancing equipment exempt from tax. A walk-in bathtub provided pursuant to a prescription by a licensed provider to someone with an illness or injury appears to be eligible for the durable medical equipment exemption.

PLR-13-001   Alternative Apportionment

Company may file under an alternative method of apportionment as described in the letter.

PLR-13-002   Fees Related to Retrieving and Copying Medical Records

Fees charged by a company in the business of retrieving and copying medical records of health providers for use by insurance companies, lawyers, and other third-parties are not subject to sales and use tax.

PLR-13-003   Computer Software and Computer Software Maintenance Contracts

Software that is prepackaged, has a nonnegotiable license agreement, and is delivered on a tangible medium is taxable.  Nonnegotiable software license agreements presented to the buyer on-line qualify as a tear-open, nonnegotiable license. Optional maintenance agreements are generally viewed as a service and are not subject to sales and use tax.

PLR-13-004   Installation, Repair and Inspection Charges and Payments to Third Party Subcontractors

Company’s charges for installation, repair, or inspection of fire suppression system built into real property are subject to sales tax when billing clients on a time and material basis for work performed by a subcontractor. Company’s payments to subcontractors for this work are not subject to sales tax.

PLR-13-005   Retrieving and Copying Medical Records

Fees charged by a company in the business of retrieving and copying medical records of health providers  are not subject to sales and use tax because Company is providing a service.

PLR-13-006   Hardware and Software Used in the Provision of Intrastate Telephone Services

The hardware and software purchased by Company is consumed by Company in the provisioning of services to clients and is not rented to clients. Company, who provides routing of intrastate telephone calls and other communications, is providing intrastate telecommunication services in Colorado.

PLR-13-007   Third Party Administrator of Insurance Claim Obligations

Company’s purchases from suppliers are exempt wholesale purchases when Company resells the goods to the insurance companies. Therefore, Company must collect the applicable sales taxes from insurance companies.

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.

PLR-13-009   Consigned Merchandise Procured for Auction

Company, which has nexus in Colorado, must collect sales tax on property sold at its auctions, which are conducted outside Colorado, if the taxable tangible personal property is delivered to a buyer who is located in Colorado, or delivered to a person who is designated by buyer to receive the goods and who is located in Colorado.  Company also has an obligation to collect Colorado use tax if the sale is deemed to occur outside Colorado but is delivered into Colorado to the buyer for use, storage, or consumption in Colorado.  Company does not have an obligation to collect sales or use tax if the property is sold at auction conducted outside Colorado and the property is delivered to the buyer or consumer who is located outside Colorado.

GIL-13-001   Purchase Price That Includes Sales Tax

Company that either provides an invoice for the sale and separately states the tax or has a conspicuous sign that shows the price of each item and separately states the amount of tax for each item offered for sale is in compliance with state law.

GIL-13-002   Sales Tax Refunds When an Exemption Certificate Is Provided After the Sale

The sales tax refund procedure outlined in the ruling, including the ninety day limitation on refunds by vendor, appears to be consistent with Colorado statutes.

GIL-13-003   Rental and Labor Charges

If a retailer provides both taxable tangible personal property and non-taxable services, the taxability of the transaction is generally be determined on whether the “true object” of the transaction is the sale of a service or rental of tangible personal property. 

GIL-13-004   Natural Gas and Electricity Subject to Special District Taxes

Sales of fuel for industrial purposes are exempt from state, state-administered cities, counties, and special districts sales taxes.

GIL-13-005   Tear Serum Testing Modules

The exemption for “blood test” does not include a test relating to tears produced by the eye, even though the tests are similar in some respects.

GIL-13-006   Resale Exemption Certificates for Drop Shipments

Colorado allows Company, as a wholesaler, to accept sales tax licenses and exemption certificates issued by another state.  If Company contracts to sell its product directly to the consumer and the consumer has an exemption certificate issued by another state, then Company is not required to collect sales tax from the consumer.  However, if Company sells its product to a retailer and the retailer does not have a sales tax license or exemption certificate issued by Colorado or another state, then Company must collect sales tax from the retailer, even if the ultimate consumer has an exemption certificate issued by Colorado or another state.

GIL-13-007   Maintenance Agreements

Company's client pays an IT services company to install free Microsoft patches and software upgrades, which are taxable standardized software, indicates that the true object is the sale of a nontaxable service rather than the sale of tangible personal property.

GIL-13-008   Fees Associated with Company-Owned Vending Machines

The taxability of various fees charged by a vending machine operator whose vending machines are located at customers' locations are discussed.

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-13-010   Re-Rental of Equipment

A company that leases equipment from a rental company and that uses its own employees or subcontracts with an independent contractor to operate the equipment cannot claim a resale exemption.

GIL-13-011   Plumber's Fees

The method a plumber uses to invoice customers determines how sales and use tax is collected.

GIL-13-012   Sutures and IV Catheters

Sutures qualify for an exemption but IV catheters do not.

GIL-13-013   Meal Included in 501(c)(3) Organization’s $25,000 Proceeds Limit

The net price of the dinner charged by a charitable entity for a fundraising event is included in the gross proceeds calculation of the $25,000 net proceeds exemption.

GIL-13-014   Software License Renewal

A charge for a license renewal to use taxable software is subject to tax when the original license and software were delivered by a tangible medium but the renewal is delivered electronically with no transfer of tangible personal property because the license renewal  is simply a charge for the continuing right to use taxable tangible personal property.

GIL-13-015   Fees and Charges Applied to Utility Bills

The taxability of charges for connection, disconnection, late-payment and other items are discussed.

GIL-13-016   Fair Market Value Lease Rate Between Related Parties

The Department generally uses the lease price resulting from arms-length transactions as the best method for valuing an airplane lease price that is not the result of an arms-length transaction.  If arms-length pricing is not available, the Department will look at various cost components, including interest rates, to calculate the fair market value of airplane lease payments.

GIL-13-017   Seeds and Plants, Food and Dietary Supplements, Medical Supplies, Test Kits, and a Coupon Book

Exemptions listed under §39-26-716, C.R.S. apply to commercial agriculture and livestock operations.  Seeds and orchard trees that are not used for a commercial agricultural purpose are not exempt. Colorado excludes dietary supplements from the definition of food. See ruling for discussion of medical supplies, test kits and coupon books.

GIL-13-018   Entry Towers

If entry towers are fixtures, their taxability will depend upon the type of contract Company uses with the owner. Contractors who charge the owner a lump sum amount do not collect sales tax from the owner, and, instead, pays sales tax when they acquire the building materials from the supplier or manufacturer.  If a contractor uses a “time-and-material” contract with the owner, then the contractor must collect sales tax from the owner on the marked-up price of the entry tower, but not on the labor charges.

GIL-13-019   Sale of Domestic Jet Fuel for Commercial International Flights

Colorado exempts from its fuel excise tax specially blended kerosene and other fuel products if they are exempt from federal aviation fuel taxes and used in aircraft operated by scheduled air carriers or commuter airline operators.

GIL-13-020   Electronically Delivered Software

Electronically delivered goods, such as music, movies and books will still be viewed as taxable sales of tangible personal property after July 1, 2012, which is the effective date of amendments to the statutory definition of tangible personal property that exclude electronically delivered computer software. The amendments also exclude from tax charges by application service providers (ASP).

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-13-022   Material Safety Data Sheet

Reports and completed applications for governmental regulatory compliance activities are generally treated as a service. However, access to data, without any significant analysis of the data by Company, would generally be treated as a taxable digital product.

GIL-13-023   Lease of Medical Equipment

A lessor of a “true lease” must pay sales taxes when it acquires the property if the lease term is three years or less, unless the lessor obtains prior permission from the Department to collect sales or use tax on lease payments. If the lessor uses a leases that is more than three years in duration or if the lease is a finance lease (regardless of whether it is more or less than thirty month duration), then lessor must collect sales or use tax on the lease payments, including the final “purchase” payment, and lessor does not have the option to pay sales or use tax when it first acquires the property.

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.

GIL-13-025   Liquefied Petroleum Gas and Excise Taxes

Liquefied petroleum gas used for home heating and other non-vehicle purposes does not fall within the definition of special fuels and, thus, are not be subject to the excise tax when used in such a manner. Because the tax must sometimes be paid before the ultimate use is established, only fuel that the distributor is reasonably certain will be used for home heating or other non-vehicle purposes may be sold without the excise tax. The Department will presume that propane delivered to a stationary tank located next to a residence that does not have any attachments to extract the propane, except for a delivery line to the home, is used solely for home heating and can be sold tax free.

GIL-13-026   Innovative Motor Vehicle Credit

A taxpayer can claim an innovative motor vehicle credit for each motor vehicle it purchases or leases so long as the vehicle is registered, titled, and used in Colorado.

GIL-13-027   Drilling Equipment

Company’s purchases of steel, cement, pipe, and other material from suppliers are not wholesale purchases because Company alters and uses the materials to build structures. If the sale of equipment occurs outside Colorado and Company pays sales or use tax to another state and Company, thereafter, moves the machinery to Colorado for use in Colorado, then Company must pay Colorado state use tax and any state-administered local use tax applicable to the location where the machinery is registered. Company is entitled to a credit against any such Colorado state and local use taxes equal to the amount of sales or use tax paid to the other state.

GIL-13-028   Bagged and Packaged Salads

Bagged salads that do not include salad dressing or utensils qualify as food for home consumption. Bagged salads that contain all the ingredients of a prepared salad, including the salad dressing, and packaged salads in the shape of a bowl that contain a variety of lettuce, vegetables, salad dressing, a utensil, and may include meat, are “prepared salads” subject to tax.

PLR-12-001   Drug-Device Combination Products

Product, which provides a framework over which bones grow and heal, is exempt as material furnished by a licensed provider as part of the provider's professional service to the patient, even if Product is purchased by hospitals, clinics or surgery centers. Product does not qualify for the durable medical equipment exemption and may not qualify for the prosthetic device exemption.

PLR-12-002   Affiliate Nexus

Company has nexus in Colorado because  it is a component member of a combined group of corporations and another component member has a business presence in Colorado. In addition, Affiliated Company is an indirect representative of Company when it acts on behalf of Company to solicit and facilitate sales and sales-related activities because, among other reasons, it accepts returns on behalf of Company  and participates in a loyalty points program with Affiliated Company. Therefore, Company must open a sales tax account and retailer’s use tax account to report and collect local and special district sales taxes for sales shipped into local jurisdictions in which Affiliated Company's stores are located.

PLR-12-003   Charges for Services

Charges for services, as described in the ruling, are not subject to sales or use tax, regardless of whether Company provides copy/print center services. Company’s charges for certain services would become subject to sales or use tax if Company does not separately state charges for tangible personal property used by Company to provide the services.

PLR-12-004   Bone Fracture Repair Product

Product, which provides for bone void filling and fracture repair of the pelvis and extremities, is exempt as material furnished by a licensed provider as part of the provider's professional service to the patient, even if Product is purchased by hospitals, clinics or surgery centers.

PLR-12-005   Welding Gases and Tools

Welding gases that are a fuel or energy source used in one of the enumerated industries are exempt from sales and use tax.  Oxygen and inert gases used in welding are not exempt fuel gases.  Hand-held torches and welding attachments, parts, and related tools are not machinery or machine tools exempt from Colorado sales and use tax.

PLR-12-006   Food and Nutritional Products

Meal replacements that have a Nutrition Facts label qualify as 'food' and, therefore, are exempt from state sales and use taxes if sold for domestic home consumption. Products are subject to local sales taxes of local jurisdictions that elect to levy sales and use taxes on food, unless product is purchased with SNAP or WIC benefits. The tax treatment of a bundled transaction depends on the items in the bundle, the value of the items, and whether the items are separable.

PLR-12-007   Subscription Fees

A subscription fee for an online publication, which is a duplicate of Company's newspaper, is not subject to state and state-administered local sales and use taxes because it is still considered a newspaper. A subscription fee for access to stock screens, comparative performance ratings, and emerging stocks is a service and, thus, not subject to state sales or use tax. 

PLR-12-008   Net Capital Gain From The Sale of Business Assets

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-12-001   Prescription Reviews

Pharmacist's review of patient’s medication record is a service and not subject to sales and use tax, unless the sale of service and tangible personal property are inseparable and the “true object” of patient is the report.

GIL-12-002   Orthotic Insert

 A shoe insert does not qualify for the prosthetic device exemption.

GIL-12-003   Lay-a-way Service and Cancelation Fees

A lay-a-way service is not a sale until final payment. The lay-a-way service fee is included in the sales tax calculation if the fee for the service is not optional. If the lay-a-way is canceled before title or  possession is transferred to customer, then the lay-a-way service fee and cancelation fee is not subject to sales tax because there was no taxable sale.

GIL-12-004   Fluoride Varnishes and Streaming Videos to Dentist's Office

Fluoride varnishes sold to a dentist's office may qualify as material furnished to a patient as part of a licensed provider's professional service. General discussion on whether electronically delivered informational videos delivered to a business are subject to tax.

GIL-12-005   Internal and External Fabrication Labor Costs

Fabrication labor costs performed by a fabricator on goods that the fabricator later converts to its own use are not included in fabricator’s use tax calculation; but fabrication costs are included in the sales tax calculation if the fabricator sells its fabricated goods at retail. Charges for fabrication services performed by a third party are included in the sales tax calculation of the fabricator’s retail sale of the fabricated goods to the ultimate consumer if the third party provides the fabricator with both the materials and fabrication services.

GIL-12-006   Application Service Providers

Computer software that is used by a consumer via an ASP is not taxable computer software because the software is not considered to be delivered to the consumer in a tangible medium.

GIL-12-007   Transportation Charges

Transportation charges that are inseparable from the sale of the good are taxable.   Non-optional charges by wholesaler to retailer for drop shipment transportation of goods are not "freight-in" charges and are taxable if passed on to customer.

GIL-12-008   Sales to Native American Tribal Members and Tribal Governments

A sale of tangible personal property to a Native American tribal member is exempt from sales tax if the sale occurs on the tribal member's tribal land. However, sales to non-tribal members on tribal lands are not exempt, and sales to tribal members off the member's tribal lands are not exempt sales.

GIL-12-009   Durable Medical Equipment

A medical device can qualify for the durable medical equipment exemption if it (a) can withstand repeated use; (b) is primarily and customarily used to serve a medical purpose; (c) is generally not useful to a person in the absence of illness or injury; and (d) is not worn in or on the body. 

GIL-12-010   Tangible Personal Property Assembled in Colorado

Colorado generally exempts from sales and use tax tangible personal property purchased by a manufacturer who integrates the property into a finished manufactured or processed product and holds the same for resale. This exemption applies regardless of whether the finished goods are sold inside or outside Colorado.

GIL-12-011   Reimbursable expenses

In general, reimbursable expenses are not subject to sales or use tax, unless the reimbursement is more properly viewed as a resale of taxable goods. However, if goods or services for which reimbursement is sought are more fairly construed as being consumed by a company rather than by the company’s client, then the reimbursement charge to the client is not treated as a resale of the goods or services.  

GIL-12-012   Non-resident Leases of Passenger Cars

The place where the vehicle is registered will determine which state and local taxes apply. If the person leasing the vehicle is, at the time the lease is executed, a non-resident of Colorado and immediately takes the vehicle to another state for use outside of Colorado, then Company/dealer is not liable to collect any taxes on the leased vehicle.

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.

GIL-12-014   Full-Service Truck Washes

Full-service truck washes are generally viewed as a non-taxable service. However, Company must pay use tax on supplies used within the wash process.

GIL-12-015   Manufacturing Equipment Exemption for Bakeries

Large-scale wholesale bakery would likely be treated as a as manufacturer. If Company is engaged in manufacturing, then purchases of machinery or machine tools and parts thereof are exempt from state sales and use tax when the machinery is used in manufacturing. 

GIL-12-016   Affiliate Nexus

The affiliate nexus rule applies to state-administered localities.

GIL-12-017   Products for the Blind and Legally Blind

The optical sales and services exemption explicitly excludes Braille reading devices. Products may qualify for the durable medical equipment exemption if the Braille devices serve a “medical” purpose and are dispensed and purchased pursuant to a prescription.

GIL-12-018   Special Mobile Machinery

When Company and lessee / purchaser are located in the same tax jurisdiction, then Company must collect sales tax for that state-administered local tax jurisdiction, but does not have an obligation to collect the local sales taxes of other local tax jurisdictions in which Company does not have a sufficient nexus.

GIL-12-019   Nexus

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.

PLR-11-001   Direct Marketing Advertising Material

 Out-of-state direct marketing company subject to consumer's use tax for material mailed to Colorado recipients.

PLR-11-002   Financial and Non-Financial Institutions File Combined Report

Affiliated corporations must file a combined report that includes both affiliated financial and non-financial institutions.

PLR-11-003   Authentication Services

Sales of authentication services by means of a digital certificate are not subject to Colorado sales or use taxes.

PLR-11-004   Direct Mail Advertising Materials and Fulfillment Services

Separately stated charges for the sale of direct mail advertising materials to a client who directs an advertising agency to instruct a printer to print and mail the material to customers located outside Colorado are not subject to sales and use tax. Separately stated charges of an advertising agency to its client for mailing fulfillment services are not subject to sales or use tax.

PLR-11-005   Collecting and Reporting of Adjustment Payments

Company collects and reports sales and use taxes as set forth in the Discussion section.

PL-11-006   Local Sales Tax

The collection of local sales and use taxes depends on the local tax jurisdiction in which both the retailer and customer are located. The means by which a product is delivered can affect whether local sales and use tax applies.

PLR-11-007   Software Application or Service

Users true object is the use of the service provided rather than the lease of computer servers or software.

PLR-11-008   Food and Nutritional Products

Products in question qualify as 'food' and, therefore, are exempt from state sales and use taxes if sold for domestic home consumption. These products are subject to local sales taxes of those local jurisdictions that have elected to levy sales and use taxes on food, unless the product is purchased with SNAP or WIC benefits. 

PLR-11-009   Photovoltaic Energy Systems

The purchase and lease of a photovoltaic energy systems by an entity other than the ultimate user is exempt from state and state-administered sales and use taxes under the Renewable Components exemption, except on an on-site monitoring system which is subject to sales and use taxes.

PLR-11-010   Partial Purchase Price Exemption

A portion of the purchase price of a fuel used in manufacturing a tangible personal property is exempt from sales and use taxes if a portion of the fuel material is a necessary and desirable component of the manufactured product.

GIL-11-001   Lay-a-way and Partial Payment Plans

Sales tax is not due on installment payments made on lay-a-way and partial payment plans until final payment is made.

GIL-11-002   Sales Tax on Personal Property Tax

Charge for reimbursement for personal property tax incurred by lessor and separately stated on lease invoice is included in calculation of sales tax owed by lessee.

GIL-11-003   Auctioneer Administrative Fees

Auctioneer fees that are not optional and viewed as inseparable from the sales transaction are included in the sales tax calculation.

GIL-11-004   Auctioneer's Sales Tax Obligation on Motor Vehicles

An auctioneer who sells a motor vehicle on behalf of an owner is, unless an exception applies, a retailer and must collect and remit sales tax administered by the department.

GIL-11-005   Insulin Infusion Pumps

An infusion pump and related disposable supplies are exempt as an “insulin measuring and injection devices” because the pump measures an insulin dosage and injects the insulin. 

GIL-11-006   Manufacturer Coupons

A retailer is reimbursed by the manufacturer for the amount of the reduction in purchase price; thus, sales tax applies to the full selling price before the deduction for the manufacturer’s coupon.

GIL-11-007   Freight-in Transportation Charges

Transportation charges incurred in connection with transporting tangible personal property from the place of production or the manufacturer to the seller or to the seller's agent or representative are deemed “freight -in” charges and are subject to tax.

GIL-11-008   Bi-weekly Newspapers / Printers

A newspaper distributed every two weeks does not qualify as a “newspaper” that is exempt from Colorado sales and use taxes. A printer must collect sales tax from the distributor of a non-exempt newspaper.

GIL-11-009   Rebates

Programs offering consumers rebates for certain purchases are not deducted from the sales price when computing sales tax.

GIL-11-010   Liquor-Filled Candy

Liquor-filled candy does not qualify as exempt food for state sales and use taxes and state-administered local sales tax purposes.

GIL-11-011   Services Related to Medical Devices

Colorado does not impose sales tax on the provisioning of medical-related services.

GIL-11-012   Local Sales Tax on Internet Sales

An internet retailer who has a business presence in a local tax jurisdiction must collect that jurisdiction’s sales tax.

GIL-11-013   Lease Payments

In a 'true' lease, lessor is required to pay sales tax on a purchase from a vendor if the sale takes place in Colorado or pay Colorado use tax if its purchase from a vendor occurs outside Colorado.  In a finance lease, the “lessor” must collect tax on the “lease” payments.

GIL-11-014   Electronically Delivered Newspapers and Magazines

Monthly newspapers and magazines delivered electronically are subject to sales tax.

PLR-10-001   Carbon Dioxide and Tanks

Supplier's sale of carbon dioxide to retailer for beverage carbonation is exempt wholesale sale, but sale of nitrogen as beverage propellant is a taxable retail sale. Supplier's rental charges for gas cylinders and storage tank are not exempt under container exemption.

PLR-10-002   Transportation Services

Charges for transportation services are presumed exempt, but are taxable if seller does not separately state the charge for services or the service is inseparable from sale of taxable goods.

PLR-10-003   Patient Meals

Medical facility is the consumer of patient meals prepared by food service company and facility must pay sales tax on the charges by the food service company, including charges for overhead and management fees.

PLR-10-004   Catheters 

Sale of catheter is not an exempt therapeutic device because it is not sold pursuant to a written recommendation.  A healthcare provider is a provider of a service and cannot claim a resale exemption for the catheter by itemizing it on the patient's invoice.

PLR-10-005   Conversion of Association into Corporation

Conversion of an association into a corporate sole does not create a sale or use tax obligation because the corporation is an exempt entity.  Declined to address whether conversion constitutes a sale or is supported by consideration.

PLR-10-006   Acceptance Testing

Acceptance testing by buyer under Colorado's Uniform Commercial Code is part of the sales transaction and is not a separate taxable use.

GIL-10-001   Daily Rental Fee

Daily rental fee applies only to retailers who typically lease motor vehicles for less than 30 days, regardless of whether the vehicle was leased for more than 30 days.

PLR-09-002   Apportionment of Income for Debit Card Company

Debit card company is a financial institution and must apportion income based on market approach.

PLR-09-003   Hydraulic Fracturing Materials

Company directed to collect state use tax and county sales tax on fracturing materials pending final decision in Noble Energy case.

PLR-09-004   Services Offered in Conjunction with Vehicle Rental

Toll fee, roadside assistance, and carbon offset programs offered as an option with the rental of motor vehicles and separately stated on invoice are not included in calculation of sales tax.

GIL-09-001   Service charge and  Sales and Income Tax Nexus of Call Center Employing Independent Contractors

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-09-002   Sales of Building Materials Between Controlled Companies

General discussion of application of sales and use tax for contractor and manufacturer who are controlled companies.

GIL-09-003   Taxability of FCC License and Coordination Charge

General discussion of taxability of FCC license and coordination charge made in connection with sale of two-way radio.

GIL-09-004   Gift Baskets

Sales tax on gift baskets containing taxable and non-taxable items whose prices are not separately stated is computed on the full purchase price unless the value of the taxable item is de minimis.

GIL-09-005   Lessor or Seller of Motor Vehicle Must Collect and Remit Sales Tax on Sale of Motor Vehicle

Lessor who sells motor vehicle to lessee at the expiration of a motor vehicle lease must collect and remit sales tax.

GIL-09-006   Gas Meter Reading Fee

Fee charged by propane distributor is taxable if the service is not separable from sale of taxable sales of propane.

GIL-09-007   Room Rental to Church Members on Ski Vacations

A sales tax exemption for a church does not apply to lodging by church members if primary activity was a ski vacation.

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.

GIL-09-009   Enteral Feeding Pump

Feeding pump is not an exempt product.

GIL-09-010   Employee in Colorado Providing Service to Clients Outside Colorado

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-09-011   Preparation of Sales Tax Return and Exemption Certificates

An Internet service that prepares sales tax exemption certificates and sales tax returns is a non-taxable service.

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.

GIL-09-013   Medical Supplies

General discussion of exemptions for medical supplies furnished by a doctor or sold to a charitable entity.

GIL-09-014   Service Charge for Call Center Employing Independent Contractors to Perform Work for Clients in Colorado.  

General discussion of taxability of marked-up charges in cases of resellers, agents, brokers, third party contracts. 

GIL-09-015   Dietary Supplements

Dietary supplements are not exempt from sales and use tax.

GIL-09-016   Sales Tax Calculated as a Percentage

Sales tax is calculated by multiplying the tax rate by the sales price.  The department does not authorize retailers to use sales tax charts.

GIL-09-017   Sales of Propane and Firewood

Sales of propane and firewood for residential purposes are exempt from sales and use tax.  Retailer must provide reasonable documentation to establish sales are exempt.

GIL-09-018   Print and Mail Services / Data Transfer / Address Confirmation / Electronic Data Search

General discussion of taxability of printing services. 

GIL-09-019   Display Items

Retailer may be liable for use tax for items pulled from inventory.

GIL-09-020   Nominal Purchase Price Taxable

Nominal price paid by lessee to purchase vehicle at the expiration of finance lease is subject to sales or use tax.

GIL-09-021   Pet Recovery Products and Services

Sales tax due on bundled sales of taxable products and non-taxable services.

GIL-09-022   Custom Disposable Medical Instruments 

General discussion of exemptions for custom disposable instruments for patients undergoing joint replacement surgery.

GIL-09-023   Obligation to File Returns if No Reportable Sales

Company must register and file sales tax returns even if it does not have any sales tax liability for the reporting period.

GIL-09-024   Modular Home

Modular home retailer liable for sales or use tax in Colorado.

GIL-09-025   Downloaded Documents

Documents downloaded by customers from the Internet subject to sales or use tax.

GIL-09-026   Tax Returns and Remittance Requirements by Agent / Income Tax for Industrial Banks

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-09-027   Maintenance and Service Agreements

Sales tax applies to maintenance and service agreements sold in connection with the sale of taxable goods, unless the agreement is in a separate contract or retailer obtains permission to exempt a percentage of sales price.  If customer has no option but to purchase maintenance/service agreement as part of purchase of taxable goods, then the agreements are taxable.

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.

GIL-09-029   Oilfield Fishing Equipment

Taxability of oilfield fishing equipment will depend on whether the true object of the transaction is a service or the rental of taxable tangible personal property.  The department will consider a number of factors, including whether customer charged a lump-sum, whether customer must use taxpayer's equipment operator, and whether customer has obligations typical of a lessee.

GIL-09-030   VoIP

Intrastate Voice over Internet Protocol is a taxable telecommunication service.

PLR-08-001   Insurance Company Subject to Gross Premium Tax

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.

PLR-08-002   Discounted Taxable and Nontaxable Bundled Goods and Services

Sales tax is calculated on the retailer's costs to purchase the items when the taxable item is sold at below cost and bundled with non-taxable services.

GIL-08-001   Custom Software, Installation, Repair, Transportation, and Training

Custom software, installation, repair, transportation, and training are generally non-taxable services

GIL-08-002   Web-Hosting and Network Connectivity Charges

Web-hosting and network connectivity charges by an out-of-state company when the servers are not located in Colorado are not taxable.

GIL-08-003   Retailer's Due Diligence on Wholesale Sales

Supplier, who knows that some purchases by retailer are not for resale, must take reasonable steps to ensure sales are wholesale sales.

GIL-08-004   Scooters, Boot Walkers, and Heel Pads

Sales of scooters, boot walkers and heel pads are not exempt therapeutic devices.

GIL-08-005   Merchandising Services

Retailer providing service of merchandising is not taxable.

GIL-08-006   Cosmetic Medical Treatments

Cosmetic products may qualify as material furnished by a licensed provider as part of the licensed provider's professional service to the patient.

GIL-08-007   For-Profit Day Care Providing Food, Plates, and Utensils

A day care is providing a service and is the consumer of the food products and related accessories.

GIL-08-008   DVD Production

Labor cost of third-party must be included in retailer's purchase price even if separately stated on the customer's invoice.

GIL-08-009   Contractors Use of Fixtures

Discussion of factors considered in determining when tangible personal property becomes a non-taxable fixture to real property.  Department will consider, among other things, how taxpayer treated the property on federal income tax return.  Discussion of lump-sum and time and material construction contracts.

GIL-08-010   School Materials

A business that offers home study programs and sells books and supplies is not selling a service.  Therefore, the sale of books and other goods to customer are taxable.

GIL-08-011   Credits for Goods for Hosting a Sales Event and Shipping Charges

Credits and discounts are distinguishable.  Credits given by a direct marketer to a hostess for holding a sales event at the hostess' home are not allowed for purposes for calculating sales tax.  The shipping charges are taxable because customers did not have any alterative but to use retailer's shipping services.

GIL-08-012   Propane Tanks and Prepaid Phone Cards

Propane is exempt if sold for residential use.  The retailer must take reasonable steps to ensure the sale is for an exempt use  Discussion of taxability of customer supplied propane tanks and retailer supplied propane tanks.  The distributor of prepaid phone cards is the consumer of card stock and is not entitled to the resale exemption.  Retailer of the taxable goods or service purchased with card is responsible for collecting tax, not the card distributor.

GIL-08-013   Mattresses and Pillows

Mattresses and pillows that are not specifically designed for therapeutic purposes are taxable even though they may be used for therapeutic purposes.

GIL-08-014   Surgical Equipment

Discussion of exempt surgical equipment.

GIL-08-015   Reporting Excess Sales Tax

Discussion on how to report excess tax collected on a sales tax return.

GIL-08-016   Software Updates and Upgrades

Upgrades of taxable software are taxable.  Software to correct bugs in original taxable software is not taxable.

GIL-08-017   Federally Funded Coupon Program

Federal program offering consumers rebates for certain purchases is not deducted from sales price when computing sales tax.

GIL-08-018   Food Supplements, Soap, Deodorant, and Other Products

Supplements and other products are taxable.

GIL-08-019   Printing and Mailing Material

Discussion of taxability of print material and collection of local sales taxes.

GIL-08-020   Restocking Fees, Travel, Training and Rental of Equipment

A retailer who charges a restocking fee has not refunded the full purchase price and is not entitled to a refund of any tax.  Travel and training are not taxable.  Rental of property is taxable.

GIL-08-021   Dietary Supplements and TENS Unit

Dietary supplements are taxable.  TENS is an exempt therapeutic device.

GIL-08-022   Federally-Funded Coupon Program

Federal program offering consumers rebates for certain purchases is not deducted from sales price when computing sales tax.

GIL-08-023   Purchase Options on Leases, Insurance Premiums, Late Payment and Documentation Fees

Purchase option at expiration of lease is taxable unless finance lease previously factored to a third-party.  Insurance is taxable if not separable from lease.  Late payment and documentation fee are inseparable and included in purchase price for sales tax calculation.

GIL-08-024   Alteration Services

Alteration services are not taxable if separable from the sale of clothing.

GIL-08-025   Patient Tracking and Incentive System

System for tracking patients and incentive program is a non-taxable service.

GIL-08-026   Medical Implants

Discussion of whether screws and plates used for bone fractures qualify for the medical supply exemption, and exempt sales to charitable organizations and to government entities.

GIL-08-027   Signage, Crating, Installation, Transportation, City Permits, Subcontractors

Sale of signage is taxable unless it becomes a fixture to real property or title passes prior to installation.  Manufacturer's purchase of crating is exempt wholesale sale, but is a taxable sale to consumer.  Installation is an exempt service.  Transportation is generally exempt except for freight-in charges or if the charge is inseparable from sale of signs.  City permits are not taxable.  Repair work of subcontractor is discussed.

GIL-08-028   Nonresident Directors Subject to State Income 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-08-029   Leased Property

Local sales tax does not apply to retailer/lessor who did not have presence in local jurisdiction.

GIL-08-030   Fabrication Services

Use tax does not include labor costs of Taxpayer or third-party fabricators who only provide services, but includes fabrication services of third-parties who also sell raw materials, even though the sale of such goods is in a separate contract.

GIL-08-031   Copying of Medical Records Service

Company that provides copies of hospital medical records to third-parties may be providing a service.

GIL-08-032   Medical Vaccines and Testing Equipment

Discussion of exemption for flu vaccine, urine test, and other medically-related items.

GIL-08-033   Sale of Condominium Furnishings

Developer who purchased and paid tax on furnishings for condominium units that it owned and later sold to fractional interest owners is liable for sales tax on such sale and may be entitled to refund of tax paid to suppliers for such furnishings.  Developer liable for sales tax when it rents on a nightly basis condominiums to third-parties.

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.

GIL-08-035   Hospital Beds and Wheelchairs

General discussion of exemption for sale of hospital beds and wheelchairs.

GIL-08-036   Surgical Stapler and Forceps

 Medical supplies exempt from sales and use tax if they leave with the patient but subject to tax if they are used and consumed by the physician.  General nexus discussion.

GIL-08-037   Property Temporarily Used in Colorado

The exemption from use tax for property used, stored, or consumed temporarily in Colorado applies only to individuals, not business entities.

GIL-07-001   Credit for Taxes Paid to Another State on Leased Vehicles

Discussion of credit for taxes paid to another state on leases of motor vehicles if the legal incidence of tax falls on lessee, not lessor, even though lessor may collect the tax. Colorado does not require other state to give similar credit as a condition to receiving Colorado credit.

GIL-07-002   Energy Drinks

Discussion of energy drinks as exempt food or taxable food supplement.  Drinks that do not qualify as food under the federal food stamp program are not exempt food.

GIL-07-003   Crime Remediation Services

Contract is for non-taxable services.

GIL-07-004   Dark and Lit Fiber Optic Cable

Discussion whether dark and lit fiber optic cable used for telecommunication qualifies as taxable telecommunications service and whether cable is a fixture or tangible personal property.

GIL-07-005   Special Events Creating Nexus

Out-of-state retailer which held special events in Colorado may have nexus for sales tax collection.  Retailer's status as a 501(c)(3) does not make its sales exempt.

GIL-07-006   Gift Card Stock Bundled with Software

A sale by a distributor of card stock is not an exempt wholesale because distributor was the consumer, not reseller, of card stock.  Software bundled with card stock may be taxable if not separable from sale of card stock.

GIL-07-007   Free or Discount Satellite Rental

Satellite TV provider, which offered one month free rental of satellite receiver as an inducement to customers to purchase non-taxable satellite TV service and taxable rental of satellite box, is liable for use tax for the one month of free rental.

GIL-07-008   Nexus of Out-of-State Distributor

Discussion of nexus for out-of-state distributor.

GIL-07-009   Lease of Water Treatment Solutions

Discussion of nexus of out-of-state company that leases property located in Colorado and whether property is exempt from tax.

GIL-07-010   Animal Management Software and Property

Discussion of taxability of products and services offered by retailer for animal management business.

GIL-07-011   Drop Shipments and Wholesale Sale Documentation

Out-of-state supplier not liable for sales or use tax for property delivered to in-state consumer.  Out-of-state retailer may use another state's sales tax license to document wholesale sale exemption.

GIL-07-012   Local Sales Tax

Discussion of collection of local sales and use taxes.

GIL-07-013   Rental of Equipment, Transportation Charges, and Repair Parts

Discussion of taxability of various portable products supplied for drilling sites, including satellite, sewer, water, electrical systems, repair services and repair parts.

GIL-07-014   Meal and Entertainment Package with Various Vendors

Discussion of sales tax reporting requirements of two retailers which jointly offered discount food and entertainment program.

GIL-07-015   Wheelchairs and Scooters

Wheelchairs are exempt, but scooters and related accessories are taxable.

GIL-07-016   Consulting and Project Management Services

Consulting and project management services are not taxable if separable from sale of surveillance products.  Retailer cannot claim credit for taxes incorrectly paid another state.

GIL-07-017   Call Center Services

Call center services are non-taxable services.

GIL-07-018   Employment Recruitment Services

Employment recruitment services are non-taxable services.

GIL-07-019   Warranty Contracts for Leased Goods

Contracts for service and maintenance of leased goods are not taxable if such contracts are in a separate contract from lease.

GIL-07-020   Installation and Transportation Charges

Discussion of various aspects of retailer's sale, installation, and transportation of product.

GIL-07-021   Sales Tax Refunds for Completed Transactions

Buyer purchased taxable property then asked retailer to rebill the purchase to a third-party.  Retailer is entitled to refund of sales tax for completed transactions only if retailer would have granted full refund to buyer even in absence of buyer's request to rebill transaction to a third-party.

GIL-07-022   Carbon Dioxide and Tanks

The sale of carbon dioxide by supplier to retailer for soda fountain drinks is exempt.  The lease of tanks for shipping carbon dioxide by supplier to retailer may be exempt.

GIL-07-023   Nexus of Out-of-State Distributor

Out-of-state distributor does not have nexus to Colorado.

GIL-07-024   Electricity Used in Manufacturing and Research and Development as Manufacturing

Discussion of availability of exemptions for use of electricity, research and development, and statute of limitation for sales tax.

GIL-07-025   Medical Equipment

External fixators and wires are exempt medical equipment.

GIL-07-026   Nexus for Conducting Sales Seminars

Out-of-state retailer which conducts the following activities in state has nexus: training seminars, sales representatives, arrange financing, and delivers product.

GIL-07-027   Consumer Surveys and Service Quality Reports

Discussion of criteria for determining whether consumer surveys and service quality reports are non-taxable services or sales of property discussed.

GIL-07-028   Documentation Requirement for Exempt Sales

Retailer must ask to view the sales tax license, determine that license is active, and that buyer's statement that the purchase is for resale is reasonably consistent with the buyer's business.

GIL-07-029   Sales Tax Collection Requirement of a Multi-Level Marketing Company

Sales tax is calculated on discounted prices to consumer and representatives, not on suggested retail prices.  A multi-level marketing company is retailer.  Company is ultimately liable for unpaid sales tax.  Representatives do not need sales tax licenses.

GIL-07-030   Nexus of Application Service Provider

Nexus discussion of an Application Service Provider

GIL-07-031   Drop Shipments

A distributor that ships by common carrier and does not have representatives, a store, or any other connection with Colorado does not have nexus.  However, a distributor that does not have nexus is nevertheless obligated to collect tax if it voluntarily obtained sales tax license.

GIL-07-032   Drug Test Kits

Drug test kits qualify as an exempt medical supply.  The distributor may not have nexus, but the consumer of the drug test kit must pay use tax.

GIL-07-033   Sales Tax Calculation on Price Adjustments

The distributor is allowed to calculate sales tax on the price that is later adjusted to reflect the discounted price of the product that is sold as a sample as part of marketing effort with retailer.

GIL-07-034   Cholesterol and Blood Testing Kits

Cholesterol and blood testing kits are not taxable.