Can a corporation or LLC claim Colorado's nonresident temporary-use exemption on an aircraft or vehicle used briefly in Colorado, and can a Colorado resident avoid use tax on an out-of-state vehicle driven into the state?

Plain-English summary

A taxpayer asked, across three scenarios, whether Colorado's nonresident temporary-use exemption lets an out-of-state owner avoid Colorado use tax on an aircraft or vehicle used briefly in the state. The exemption (§ 39-26-713(2)(c)) covers "the storage, use, or consumption of tangible personal property brought into this state by a nonresident for his or her own storage, use, or consumption while temporarily within this state."

The Department's answers all turned on who can be a "nonresident" and what counts as "temporary."

• Scenario 1 — Oregon corporation's aircraft, in Colorado ≤48 hours per trip, ~twice a month. Not exempt. The exemption applies only to individuals, not corporations. Only individuals are "residents" or "nonresidents"; corporations are "domestic" or "foreign." The statute's use of "his" and "her," and the neighboring exemption for a nonresident "acquiring residency" (§ 39-26-713(2)(g)) — something individuals do and corporations don't — confirm this. The Department distinguished General Motors v. City and County of Denver, 990 P.2d 59 (Colo. 1999) (which read "nonresident" in a municipal ordinance to include corporations) as construing a different, distinguishable provision. So the aircraft owes Colorado use tax, with a credit for any sales tax paid to Oregon.

• Scenario 2 — Colorado resident buys, uses, and registers a vehicle in Florida, drives it into Colorado for under 48 hours. Subject to Colorado use tax. The exemptions in §§ 39-26-713(2)(c) and 719(2) apply only to nonresidents, and the owner is a resident. No other provision exempts the use. Vehicle-registration rules (§ 42-3-103) don't govern when sales or use tax is due.

• Scenario 3 — Two Colorado residents form a Montana LLC that buys and registers a motor home in Montana. Not exempt. The owner (the LLC) is not an individual, so § 39-26-713(2)(c) doesn't apply. And even if it did, using the vehicle in Colorado for an aggregate of six months is clearly not "temporary." The Department declined to set a general "temporary" standard in a GIL, and flagged that the structure raised a possible sham-entity question it wouldn't address in this format.

The letter does not address registration fees — those aren't taxes and are handled by the Division of Motor Vehicles, not the Division of Taxation.

What this means for you

Businesses titling aircraft or vehicles out of state

Putting an aircraft, plane, or vehicle in a corporation or LLC does not unlock Colorado's nonresident temporary-use exemption — that relief is for individual nonresidents only. If a company-owned asset is used or stored in Colorado, expect Colorado use tax, reduced by a credit for sales/use tax already paid to another state.

Colorado residents buying out of state

Buying and registering a car (or motor home) in a no-tax or low-tax state doesn't make it exempt when you bring it home. The temporary-use exemption is for nonresidents; as a resident you don't qualify, and registration rules are a separate question from when tax is due.

"Temporary" has limits

Even where the exemption could apply, six months in aggregate isn't temporary. The Department wouldn't draw a bright line in a GIL, but it signaled that extended or recurring presence defeats a "temporary use" claim — and that an entity built mainly to dodge the tax invites a sham-entity challenge.

Common questions

Q: Can my corporation use Colorado's nonresident temporary-use exemption?
A: No. Section 39-26-713(2)(c) applies only to individuals. Corporations are "foreign" or "domestic," not "nonresident" — so a company-owned aircraft or vehicle used in Colorado is subject to use tax.

Q: I'm a Colorado resident. Can I avoid use tax by buying and registering my car in another state?
A: No. The exemption is for nonresidents. As a resident you owe Colorado use tax when you use the vehicle here, though you may credit sales/use tax paid to the other state.

Q: How long is "temporary"?
A: The Department wouldn't set a number in this letter, but it said an aggregate of six months in Colorado is clearly not temporary.

Q: Does this letter cover registration fees?
A: No. Registration fees aren't taxes; they're administered by the Division of Motor Vehicles, and this letter addresses only taxation.

Q: Can I rely on this letter?
A: No. It's a General Information Letter — general guidance, not binding on the Department.

Citations and references

Statutes and cases:
- §§ 39-26-104(1)(a), 39-26-202(1)(a), C.R.S. — imposition of Colorado sales and use tax
- § 39-26-713(2)(c), C.R.S. — use-tax exemption for property a nonresident brings in for temporary use
- § 39-26-713(2)(f), C.R.S. — credit for sales/use tax paid to another state
- § 39-26-713(2)(g), C.R.S. — nonresident "acquiring residency"
- § 39-26-719(2), C.R.S. — nonresident exemption
- § 42-3-103, C.R.S. — vehicle registration requirements (does not govern when tax is due)
- General Motors Corp. v. City and County of Denver, 990 P.2d 59 (Colo. 1999) — "nonresident" in a municipal ordinance; distinguished

Related Colorado vehicle/credit letters:
- [[gil-07-001-motor-vehicles-leases-credit-for-taxes-paid-to-another]] — credit for tax paid to another state on leased vehicles, and the legal-incidence limit
- [[gil-08-023-ruling-request-tax-on-leases]] — taxability of motor-vehicle leases (amended)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-08-037.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL-2008-037
December 29, 2008
XXXXXXXXXXXXXXXXX
Attn: XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
Re: Use tax exemption
Dear XXXXXXXXXXX,
This letter is in response to your request for a general information letter concerning the
applicability of sales or use tax and registration fees on corporate owned motor vehicles. This
letter is issued pursuant to Department Regulation 24-35-103.5. The guidance provided in this
letter is not binding on the department.
Issue
1. Is an Oregon corporation that purchased an aircraft in Oregon and uses it in Colorado
for 4 days per month exempt from Colorado sales and use tax pursuant to §39-26713(2)(c), C.R.S.?
2. Is a Colorado resident who owns a home in Florida and purchases, uses, registers, and
stores a vehicle in Florida subject to Colorado sales or use tax and registration fees if
the vehicle is used in Colorado for less than 48 hours?
3. Are two Colorado residents who are members of a Montana limited liability company that
purchases and registers a motor vehicle in Montana subject to Colorado sales or use tax
and registration fees?
Background
You have requested guidance on the applicability of Colorado sales and use tax and Colorado
registration fees for three scenarios.
Scenario No. 1. A corporate entity domiciled in Oregon purchases an aircraft in Oregon, stores
the aircraft in Oregon, and flies the aircraft into and out of airports throughout the United States.
The corporation has no physical presence in Colorado, but flies into Colorado twice a month to
call on customers. The aircraft is never in Colorado for more than 48 hours.
Scenario No. 2. A Colorado resident individual owns a vacation home in Florida, and
purchases, uses, and registers a vehicle in Florida. The individual drives the vehicle from

Florida to Colorado to pick up family members in Colorado and then returns to Florida. The
vehicle is in Colorado for less than 48 hours.
Scenario No. 3. Two Colorado residents form and serve as members of a Montana LLC. A
Montana law firms serves as manager and registered agent for the LLC. The LLC acquires a
motor vehicle ( a motor home) in Montana and the LLC registers the vehicle in Montana. The
members use the vehicle to travel across the United States, entering Colorado only temporarily
while in transit to destinations in other states. The vehicle never spends more than 30 days at a
time in Colorado, and never spends more than 6 months in the aggregate in Colorado during
any given year.
Discussion

Scenario No. 1
Colorado levies sales tax on the sale or lease of tangible personal property and use tax on the
use and storage of such property in Colorado. See, generally, §§39-26-104(1)(a) and 202(1)(a),
C.R.S. You ask whether a corporation is exempt from such tax pursuant to §39-26-713(2)(c),
C.R.S., which states in relevant part,
The following shall be exempt from taxation under the provisions of part 2 [use tax] of this
article:
…
(2)(c) The storage, use, or consumption of tangible personal property brought into this state
by a nonresident for his or her own storage, use, or consumption while temporarily within
this state.
The exemption of §713(2)(c) applies only to individuals, not corporations. Individuals, not
corporations, are either residents or nonresidents. Corporations incorporated in this state are
referred to as “domestic” corporations and corporations incorporated in another state are
referred to as “foreign” corporations. See, e.g., §39-22-522(1), C.R.S., §39-22-103(3), (5), and
(6), C.R.S., §35-75-202(6) and (7), C.R.S., § 39-22-514(12)(k), C.R.S., §39-22-115(1)(g),
C.R.S. (repealed). This construction is reinforced by the references in §713(2)(c) to “his” and
“her,” which clearly indicate that the “nonresident” is an individual. This construction is also
consistent with the subsequent section of §39-26-713(2)(g), which refers to the exemption for a
“nonresident” who is “acquiring residency.” Individuals acquire residency; corporations do not.
We are mindful of General Motors v. City and County of Denver, 990 P2d 59 (Colo. 1999) in
which the court held that, in construing a municipal ordinance, the term, “nonresident,” applied
to corporations. However, and for the reasons noted above, the Colorado statute is clearly
distinguishable from the city ordinance.
Thus, the airplane is subject to Colorado use tax, but may claim a credit for sales tax paid, if
any, to Oregon.
Scenario No. 2
Subsections 39-26-713(2)(c) and 719(2) do not apply to Scenario No. 2 because these
exemptions apply only to nonresidents. The owners of the vehicle are residents. There is no
other statutory provision which exempts this use from Colorado use tax. Subsection 42-3-103,
C.R.S., which addresses registration requirements of vehicles that are designed primarily for
use on highways in this state, does not govern the issue of when sales or use tax is due.

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Scenario No. 3.
Subsection 39-26-713(2)(c) does not apply to this scenario to because the owner is not an
individual. Moreover, even if this exemption were applied to corporations, operating the vehicle
for an aggregate of six months is clearly not temporary. We decline to promulgate a general
standard of what constitutes “temporary” in the context of a general information letter. Finally,
the scenario outlined in your example raises a question of a sham entity that cannot be
addressed in the context of a general information letter.
Finally, this letter does not address the applicability of registration fees. The statute and
regulation under which this letter is issued are limited to issues of taxation. Registration fees
are not taxes, are not administered by the Division of Taxation, and are administered by the
Division of Motor Vehicles.
Pursuant to state law and department regulation 24-35-103.5, noted above, the Department will
make public a redacted version of this letter. Your letter requesting this general information
letter is not made public. I enclose a proposed redacted version of this letter. Please contact
me within 60 days from the date of this letter if you have any questions, comments, or objection
concerning the redacted letter.
I hope this is helpful. Please feel free to contact me if you have any questions.
Sincerely,

Office of Tax Policy
Colorado Department of Revenue

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