Is Colorado's paint stewardship fee on architectural paint part of the taxable purchase price — so that sales tax applies to the fee — and what if the paint sale itself is exempt?

Plain-English summary

Colorado runs a paint stewardship program that requires retailers of architectural paint to add a per-container stewardship fee (a producer assessment) to each sale, funding paint recycling. A paint seller asked whether that fee is part of the price that gets sales tax calculated on it. (This is an amended General Information Letter — originally issued November 28, 2016, and reissued March 28, 2018 to add the exempt-sale clarification below.)

The Department's answer is yes, the fee is taxable. Colorado calculates sales tax on the "purchase price," which means the money received or due from the consumer (§ 39-26-102(7); Rule 39-26-102.7(a)). The paint stewardship fee is money the consumer pays the retailer, so it's part of the purchase price. On top of that, the paint-program statute itself is explicit: under § 25-17-406(2), "for each container of architectural paint sold in Colorado, a retailer shall add the amount of the producer's paint stewardship assessment … to the purchase price of the container." So both the general purchase-price rule and the specific statute put the fee inside the taxable amount.

The amendment's clarification is the practical wrinkle worth remembering: if the sale of the architectural paint is itself exempt — the Department's example is a sale to a government entity — then sales tax doesn't apply to the fee either. The fee follows the taxability of the paint: taxable sale → fee taxed; exempt sale → fee not taxed.

What this means for you

Paint retailers and hardware stores

When you sell architectural paint, calculate sales tax on the paint price plus the stewardship fee — don't treat the fee as a tax-free pass-through. The fee is baked into the taxable purchase price by statute. The exception: if the whole sale is exempt (e.g., to a government or other exempt buyer), the fee rides along as exempt too. Make sure your point-of-sale system applies tax to the fee on taxable sales and drops it on exempt ones.

Accountants advising paint sellers

This is a clean "purchase price includes the fee" result, doubly grounded: the general definition (§ 39-26-102(7), Rule 39-26-102.7(a)) and the program statute's express add-to-purchase-price language (§ 25-17-406(2)). The fee's taxability tracks the underlying paint sale — exempt sale, exempt fee. Watch the home-rule-city caveat, and note this is the amended version of the 2016 letter.

Common questions

Q: Is the Colorado paint stewardship fee subject to sales tax?
A: Yes. The fee is part of the purchase price of architectural paint — both because the purchase price is the money the consumer pays and because § 25-17-406(2) expressly adds the fee to the purchase price — so sales tax is calculated on it.

Q: What if I sell the paint to an exempt buyer, like a government agency?
A: Then no sales tax applies to the fee either. The amendment clarified that if the underlying paint sale is exempt, the fee isn't taxed.

Q: Can I list the stewardship fee separately and leave it untaxed?
A: No. Separately stating it doesn't remove it from the taxable purchase price; the statute requires it to be added to the price.

Q: Why is this an "amended" letter?
A: The Department originally issued it November 28, 2016, then reissued it March 28, 2018 to add the clarification that the fee isn't taxed when the paint sale itself is exempt (and to trim some now-unnecessary discussion). The core guidance was unchanged.

Q: Can I rely on this letter?
A: Only as general guidance. A General Information Letter is not binding on the Department and makes no specific determination. For a binding answer on your facts, request a private letter ruling.

Citations and references

Statutes and rules:
- § 39-26-104(1), C.R.S. (sales tax on tangible personal property, including paint)
- § 39-26-102(7), C.R.S.; 1 CCR 201-4, Rule 39-26-102.7(a) (purchase price = money received or due from the consumer)
- § 25-17-404(2)(j), C.R.S. (producer's paint stewardship assessment)
- § 25-17-406(2), C.R.S. (retailer adds the stewardship fee to the purchase price of each container)

Source

• Landing page: Colorado Sales & Use Tax Letter Rulings
• Original PDF: GIL-16-021.pdf

Original ruling text

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

GIL-16-021 (AMENDED)
March 28, 2018
XXXXXX
Attn: XXXXXX
XXXXXX
XXXXXX
XXXXXX
Re: Paint Stewardship Fee
Dear XXXXXX,
You submitted on behalf of XXXXXX (“Company”) a request for guidance to
determine whether the paint stewardship fee is included in the calculation of sales
tax on the sale of architectural paint.
The Colorado Department of Revenue (“Department”) issues general information
letters and private letter rulings. A general information letter provides a general
overview of the relevant tax issues, but is not binding on the Department. A private
letter ruling provides a specific determination for a specific set of facts, is binding
on the Department but not on the taxpayer, and requires payment of a fee. For
more information about general information letters and private letter rulings, please
see Department Rule 1 CCR 201-1, 24-35-103.5.
The Department issued a General Information Letter to you dated November 28,
2016 in response to your request for guidance. The Department has had an
opportunity to review the letter and issues this amended letter, which clarifies that
the fee is not taxable if the sale of architectural paint is exempt from tax and
deletes, as unnecessary, a portion of the Discussion section relating to other
similar guidance. Other than the clarification noted above, this amendment does
not alter the guidance provided in the letter.
Issue
Is the fee that is required pursuant to § 25-17-404(2)(j), C.R.S. included in the
purchase price for architectural paint?

1

DR 4010A (06/11/14)

Background
Colorado enacted a paint stewardship program that requires retailers of
architectural paint to collect a fee on the sale of such paint.1 Company requests
guidance whether such fee is included in the calculation of sales tax.
Structure of Analysis
To determine whether the fee is included in the calculation of sales tax, the
Department will examine the following question:
1. Is the fee part of the purchase price paid by the consumer for the purchase
of tangible personal property pursuant to §§ 39-26-104(1), 102(7), and §2517-406(2), C.R.S.?
Discussion
Colorado levies sales tax on the sale of tangible personal property, including
paint.2 Sales tax is calculated on the “purchase price.”3 Purchase price means
“[t]he amount of money received or due in cash and credits paid by the
consumer.”4 The paint stewardship fee is money paid by the consumer to the
retailer and, therefore, is included as part of the purchase price. Moreover, the
statute governing the architectural paint fee expressly states that the fee is part of
the purchase price.5 However, if the sale of architectural paint is exempt from tax,
such as a sale to a government entity, then sales tax is not applied to the fee.
For these reasons, the state’s paint stewardship fee is included in the sales tax
calculation for the sale of architectural paint.
Miscellaneous
This letter represents the good faith opinion of Department personnel who are
knowledgeable on state taxes issues. However, the Department does not make a
specific determination here on any of the issues raised and the Department is not
bound by this general information letter.
The Department administers state and state-administered local sales and use
taxes. This letter does not address sales and use taxes administered by homerule cities and home-rule counties. You may wish to consult with local
governments which administer their own sales or use taxes about the applicability
of those taxes. Visit our web site at www.colorado.gov/tax for more information
about state and local sales taxes.

1

§ 25-17-401, et seq., C.R.S.
§ 39-26-104(1), C.R.S.
3
Ibid
4
Department Rule 1 CCR 201-4, 39-26-102.7(a)
5
§ 25-17-406(2), C.R.S. (“For each container of architectural paint sold in Colorado, a retailer
shall add the amount of the producer's paint stewardship assessment, established under
section 25-17-404(2)(j), to the purchase price of the container of architectural paint.”)
2

2

DR 4010A (06/11/14)

Enclosed is a redacted version of this letter. Pursuant to statute and regulation,
this redacted letter will be made public within 60 days of the date of this
letter. Please let me know in writing within that 60 day period whether you have
any suggestions or concerns about this redacted letter.
Sincerely,

Office of Tax Policy
Colorado Department of Revenue

3

DR 4010A (06/11/14)

Physical Address:
1375 Sherman Street
Denver, CO 80203

Mailing Address:
P.O. Box 17087
Denver, CO 80217-0087

GIL-16-021

November 28, 2016
XXXXXXXXXXXXXXXXX
Attn: XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
Re: Paint Stewardship Fee
Dear XXXXXXXXXXXXX,
You submitted on behalf of XXXXXXXXXXXXXXX (“Company”) a request for guidance to
determine whether the paint stewardship fee is included in the calculation of sales tax on
the sale of architectural paint.
The Colorado Department of Revenue (“Department”) issues general information letters
and private letter rulings. A general information letter provides a general overview of the
relevant tax issues, but is not binding on the Department. A private letter ruling provides a
specific determination for a specific set of facts, is binding on the Department but not on
the taxpayer, and requires payment of a fee. For more information about general
information letters and private letter rulings, please see Department Rule 1 CCR 201-1,
24-35-103.5.
The Department treats this request as a general information letter. It is important to
remember that general information letters, such as this one, are general discussions of tax
law and are not binding on the Department. If Company would like the Department to
issue a private letter ruling on the issue raised here, Company can submit a request and
pay the fee in compliance with Department Rule 1 CCR 201-1, 24-35-103.5.
Issue
Is the fee that is required pursuant to § 25-17-404(2)(j), C.R.S. included in the purchase
price for architectural paint?
Background
Colorado enacted a paint stewardship program that requires retailers of architectural paint
to collect a fee on the sale of such paint.1 Company requests guidance whether such fee
is included in the calculation of sales tax.

1

§ 25-17-401, et seq., C.R.S.
DR 4010A (06/11/14)

Structure of Analysis
To determine whether the fee is included in the calculation of sales tax, the Department
will examine the following question:
1. Is the fee part of the purchase price paid by the consumer for the purchase of
tangible personal property pursuant to §§ 39-26-104(1), 102(7), and §25-17-406(2),
C.R.S.?
Discussion
Colorado levies sales tax on the sale of tangible personal property, including paint.2 Sales
tax is calculated on the “purchase price.”3 Purchase price means “[t]he amount of money
received or due in cash and credits paid by the consumer.”4 The paint stewardship fee is
money paid by the consumer to the retailer and, therefore, is part of the purchase price.
Moreover, the statute governing the architectural paint fee expressly states that the fee is
part of the purchase price.5
More generally, the legislature defines purchase price to exclude direct federal taxes but
does not exclude government fees.6 For example, government fees related to the
provisioning of telephone services, such as the Colorado High Cost Service Charge and
County 911 surcharges, are collected by the telephone company from the customer.
These fees are included in the calculation of sales tax applicable to telephone service
because these fees are not, as noted above, expressly excluded from the definition of
purchase price.7
Moreover, a retailer cannot exclude these fees from the calculation of sales by separately
stating the fee on the customer’s invoice. Consistent with this view, the department has
previously ruled in analogous circumstances that the state business personal property tax
on property leased by a lessor to a lessee is part of the lease payment on which sales tax
is collected, even if the lessor separately states the property tax in the lease contract.8
For these reasons, the state’s paint stewardship fee is included in the sales tax calculation
for the sale of architectural paint.
Miscellaneous
This letter represents the good faith opinion of Department personnel who are
knowledgeable on state taxes issues. However, the Department does not make a specific
determination here on any of the issues raised and the Department is not bound by this
general information letter.

2
3
4
5

6
7
8
2

§ 39-26-104(1), C.R.S.
Ibid
Department Rule 1 CCR 201-4, 39-26-102.7(a)
§ 25-17-406(2), C.R.S. (“For each container of architectural paint sold in Colorado, a retailer
shall add the amount of the producer's paint stewardship assessment, established under
section 25-17-404(2)(j), to the purchase price of the container of architectural paint.”)
§ 39-26-102(7), C.R.S.
FYI Sales 80 Telephone and Telecommunications
Colorado Revenue Bulletin 99-19
DR 4010A (06/11/14)

The Department administers state and state-administered local sales and use taxes. This
letter does not address sales and use taxes administered by home-rule cities and homerule counties. You may wish to consult with local governments which administer their own
sales or use taxes about the applicability of those taxes. Visit our web site at
www.colorado.gov/tax for more information about state and local sales taxes.
Enclosed is a redacted version of this letter. Pursuant to statute and regulation, this
redacted letter will be made public within 60 days of the date of this letter. Please let me
know in writing within that 60 day period whether you have any suggestions or concerns
about this redacted letter.
Sincerely,

Neil L. Tillquist
Colorado Department of Revenue
Office of Tax Policy Analysis

3

DR 4010A (06/11/14)