Sales and Use Tax Rulings | Procedures
An out-of-state subscription-based company that offers a monthly service in which no customer action is required to initiate a new monthly shipment does not have to send recurring Transactional Notice's for subsequent shipments. Company must provide the out-of-state purchaser with the Transactional Notice and Annual Purchase Summary and include the out-of-state purchaser in the Annual Customer Information Report sent to the Department.
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-17-004 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-16-011 Vehicle Rental
Any 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, we would expect it to be properly classifiable as a charge for the rental of the vehicle and therefore taxable as well. 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-16-020 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-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-15-011 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.
A contractor must have a sales tax license when using a time-and-material contract with the real property owner.
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-15-024 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.
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-13-001 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.
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-13-006 Resale Exemption Certificates
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.
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-13-016 Fair Market Value Lease Rate
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.
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.
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.
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.
Company collects and reports sales and use taxes as set forth in the Discussion section.
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.
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-11-006 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.
Programs offering consumers rebates for certain purchases are not deducted from the sales price when computing sales tax.
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-09-016 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-09-019 Display Items
Retailer may be liable for use tax for items pulled from inventory.
Company must register and file sales tax returns even if it does not have any sales tax liability for the reporting period.
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-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-08-012 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-08-015 Reporting Excess Sales Tax
Discussion on how to report excess tax collected on a sales tax return.
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.
Discussion of sales tax reporting requirements of two retailers which jointly offered discount food and entertainment program.
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.
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-07-033 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.