Tax-Exempt Purchases

Requirements for a Tax-Exempt Purchase by a Charitable Organization

The item or service must be used by the organization to conduct its regular religious, charitable, scientific, literary or educational business, including fundraising activities. 

If the purchase totals less than $100: The purchaser must show a copy of the valid exemption certificate (or have a copy of the valid certificate on file with the vendor) and sign an affidavit declaring the purchase is made from the organization’s funds.

If the purchase totals $100 or more: Payment for the item or service must be made with the organization’s check or credit card, not via cash or a personal check or credit card. The organization will not be reimbursed by any person(s) for the use or consumption of the item or service.

Making a Tax-Exempt Purchase

Charitable Organizations

Colorado allows charitable organizations an exemption from state-collected sales tax for purchases made to conduct their regular charitable functions and activities. [§39-26-718 (1) (a), C.R.S.]  Other purchases may not be tax-exempt. 

If the department has granted a charitable organization exemption from paying sales tax, the organization will receive a Colorado tax exemption number. These are 7- or 8-digit numbers beginning with “98” or “098”. The license will have the words “Charitable License” printed on it. Present this number to vendors when making tax-exempt purchases. 

Retailers

Charitable organizations that are exempt from paying sales tax will receive a Charitable License from the department with a Colorado tax exemption number (7- or 8-digit numbers beginning with “98” or “098”). The purchaser must present this number to vendors when making tax-exempt purchases. For each sale, vendors must record this number, date of sale, item(s) or service(s) purchased, and name of the organization. Keep this record in your permanent files for audit purposes. 

Not all purchases made by tax-exempt organizations are nontaxable. You may sell tangible personal property or taxable services tax free only if the requirements above are met. If a vendor has any doubts about whether a sale meets the criteria, collect tax on the sale and advise the purchaser to file a Claim for Refund (DR 0137B)

Local Sales Tax

This exemption does not apply to locally-collected sales tax levied by self-collecting taxation jurisdictions. Self-collecting jurisdictions make their own tax regulations and they must be contacted directly for information. See the DR 1002 for information related to self-collecting jurisdictions.