When a company sells custom signage to Colorado customers, are its separately stated charges for delivery and installation subject to Colorado sales or use tax?

Plain-English summary

A company described sales of custom signs to Colorado customers, with third parties delivering and installing the signs. It separately stated delivery and installation charges and asked about their tax treatment. The Department gave general guidance and made no specific determination.

The letter discusses the general rule that delivery and installation charges may be excluded from the taxable price when the charges are separately stated and the services are separable from the sale. It does not decide a particular contract. A footnote cites Special Regulation 10(3), but the letter does not analyze contractor status, sign attachment, or whether a contractor rule changes the result.

What this means for you

Review the invoice and contract for separate statement and separability. This GIL does not establish a separate contractor analysis for signs attached to buildings or poles and does not decide how a particular installation should be classified.

Common questions

Q: Does this letter decide that every delivery and installation charge is nontaxable?
A: No. It discusses the conditions of separate statement and separability and makes no specific determination.

Q: Does the GIL decide contractor status for an attached sign?
A: No. Special Regulation 10(3) appears in a footnote, but the letter does not discuss contractor status or attachment as a separate issue.

Q: What facts does the letter discuss for delivery and installation?
A: It discusses whether the charges are separately stated and whether the services are separable from the sale. The treatment of another contract requires its own analysis.

Citations and references

Statutes and rules:

• § 39-26-104, C.R.S. (sales and use tax on tangible personal property, not services)
• 1 CCR 201-5, Special Regulation SR 18 (Transportation Charges)
• Department Regulation § 39-26-102.7(a)(5) (charges included in / excluded from the purchase price)
• Department Regulation § 39-26-102.12 (purchase price)
• 1 CCR 201-5, Special Regulation SR 10(3) (Contractors; lump-sum vs. time-and-material contracts)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-18-003.pdf

Original ruling text

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

GIL-18-003
January 30, 2018
XXXXXXXXXXXXXX
Attn: XXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXX
Re: Tax on Signage
Dear XXXXXXXXXX,
You submitted on behalf of your client (“Company”) a request for guidance relating to the applicability of sales and use tax to various charges for the sale, delivery, and installation of signage. 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 Does sales or use tax apply to charges for delivery and installation? Background Company, which is located outside Colorado, sells custom-made signage to customers located in Colorado. The signage is attached either to a building or to a pole that is cemented into the ground. The signage is delivered and installed by third parties. Company is registered to do business and holds a sales tax license in Colorado. Company’s charges for delivery and installation are separately stated on the invoice and these charges are higher than what the third-parties charge the Company.

Discussion
Colorado levies sales and use tax on the sale, use, storage, or consumption of tangible personal property but not on services.1 Delivery and installation are typically classified as services and, therefore, the charges for these services are not taxable, unless the provision of the service is inseparable from the sale of the taxable goods or the charge for the service is not separately stated.2 Tax is collected only on the price paid by the customer3 for the signage and not on the delivery or installation charges if those charges are separately stated and the customer is not required to purchase delivery or installation services from Company as part of the sale of signage. Colorado administers sales tax for special districts (e.g., the Regional Transportation Authority), most Colorado counties, and certain cities. The sales taxes of some counties and cities (known as home-rule cities and counties) are not administered by the state of Colorado. The Department does not administer the use tax for any local tax jurisdictions except special districts. For a list of local tax jurisdictions administered by the Department, see Department Form DR 1002 on Colorado Sales/Use Tax Rates. 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 home-rule 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. 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

1 §39-26-104, C.R.S.

2 See Special Regulation 1 C.C.R. 201-5: SR 18 (Transportation Charges), and Department

Regulation §§ 39-26-102.7(a)(5), -102.12.

3 See Special Regulation 1 C.C.R. 201-5: SR 10(3) (Contractors) for lump sum v. time-and-

material contracts.

2

DR 4010A (06/11/14)