Sales and Use Tax Rulings | Procedures

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GIL-18-001   Reporting Requirements for Non-collecting Retailers

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.

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-15-017   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-15-024   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.

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-13-001   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-13-006   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.

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-13-016   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.

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.

PLR-11-005   Collecting and Reporting of Adjustment Payments

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.

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-11-006   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-11-009   Rebates

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 minimus.

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.

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-09-026   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-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.

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-07-014   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-07-028   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-07-033   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.