Sales and Use Tax Rulings | Exemptions

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PLR-18-003   Taxability of Prototype Development

Company's purchase of aircraft component parts that will be used in the construction of an aircraft prototype are exempt from Colorado sales and use tax under § 39-26-711, C.R.S. Machinery and machine tools purchased by Company to build the prototype aircraft will be exempt from Colorado sales and use tax under § 39-26-709, C.R.S.

GIL-18-004   Taxable Nature of Prescription Pet Food

Prescription pet food may be eligible for exemption from sales tax when the prescription pet food is prescribed by a veterinarian, furnished by the prescribing veterinarian, and leaves the veterinarians facility with the patient.

GIL-18-005   Component Airplane Parts

Component airplane parts that are permanently affixed to aircraft are exempt from sales and use tax, even when the aircraft is not a commercial airline used in interstate commerce. 

GIL-18-006   Occasional Sales

Sales made by charitable organizations are generally subject to state sales tax, but may be exempt if the sales meet the qualifications for occasional sales. If an organization fails to meet the requirements, then all sales by the charitable organization may be subject to sales tax. 

GIL-18-009   Restaurant Condiments

The taxability of a restaurants purchase of ingredients to make condiments is dependent on the restaurants ultimate use of the condiments. When a restaurant makes condiments available to customers, the condiments are not treated as if they are sold to customers. The restaurant is viewed as the user and consumer of these products and must pay sales tax when these items are purchased from suppliers. However, Colorado exempts the purchase of food ingredients that become an integral or constituent part of a food product that is intended to be ultimately sold at retail for human consumption.  If the restaurant separately states a price for a condiment when sold to a customer, the sale is likely a retail sale.

GIL-18-010   Prescription Containers Purchased by Pharmacies

A pharmacy’s purchase of containers and labels from a vendor will be exempt from sales or use tax when the containers and labels purchased are later used to contain and dispense an order for the pharmacy’s customers.

GIL-18-011   Sale of Water and Ice Through Vending Machines

Water and ice sold through a vending machine is likely not taxable under §§ 39-26-102.15 or 39-26-102(4.5), C.R.S. The Department defines food under the federal Supplemental Nutrition Assistance Program, which defines food to include water in a bottle and crushed or block ice.

GIL-18-012   Sale of Electric Car Charging Stations and Contracts

This letter provides a brief overview of the considerations the Department makes when determining whether the sale of network access fees and maintenance contracts are subject to sales tax when sold in conjunction with tangible personal property. 

GIL-18-013   Essential Containers

If a food container is “not necessary to transfer the food to the consumer,” the container is nonessential and subject to taxation. If “the retailer cannot transfer the food to the consumer without” the container, it is exempt from taxation. 

GIL-18-014   Catering and Facility Rentals by Charitable Organizations

Catering services provided by a charitable organization are exempt from Colorado sales and use tax if the organization has not exceeded the occasional sale exemption thresholds. Rental of the facility may be subject to tax. 

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-17-006   Soil Erosion Control Material

Company must collect state and state-administered sales taxes on retail sales of Excelsior logs and silt fencing to construction contractors and subcontractors who present Company with their contractor's exemption certificates. 

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-17-003   Wood Pellets

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

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-17-011   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. 

GIL-17-016   Contract Manufacturing

The exemption for manufacturing machinery and machine tools likely extends to the purchase and use of these items when used in contract manufacturing. 

GIL-17-018   Exemption for Silviculture Equipment

Timber and timber product handling equipment purchased after 2013 and valued by the country assessor as silvicultural equipment likely qualifies for exemption.

GIL-17-020   Orthodontic Materials

Sales of orthodontic materials will not be subject to sales tax if the orthodontic materials are furnished by a licensed provider to a patient and the materials leave the facility with the patient or are consumed by the patient at the medical office.

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-16-003   Billing Services

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

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-16-013   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.

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-16-008   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-16-012   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-16-017   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.

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-15-008   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-15-002   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-15-007   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-15-009   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-15-013   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-15-022   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.

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-14-006   Food for Retirement Communities

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

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-14-004   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-14-006   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-14-009   Demand Charge

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

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-14-014   Hemodialysis Devices

Hemodialysis devices may qualify for the durable medical equipment exemption.

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-14-018   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-14-021   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-14-024   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-13-002   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-13-005   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-13-007   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.

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 Exempt from 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-13-011   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-13-017   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-13-022   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-13-028   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-12-003   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. 

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-12-004   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-12-008   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-12-017   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.

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-11-007   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-11-005   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-11-010   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-11-014   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-10-004   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-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-09-007   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-09-009   Enteral Feeding Pump

Feeding pump is not an exempt product.

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-09-013   Medical Supplies

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

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-09-021   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-09-027   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-09-029   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-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-08-004   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-08-009   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-08-012   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-08-014   Surgical Equipment

Discussion of exempt surgical equipment.

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-08-020   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-08-024   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-08-031   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-08-034   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-07-002   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-07-009   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-07-011   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-07-015   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-07-022   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-07-024   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-07-027   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-07-032   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-07-034   Cholesterol and Blood Testing Kits

Cholesterol and blood testing kits are not taxable.