For a company selling EV charging stations, must it collect sales tax on (1) the station, (2) an annual network fee, and (3) maintenance contracts?

Plain-English summary

A company sells electric-vehicle charging stations to owners (shipping them in from out of state), charges those owners an annual network fee (so they can let drivers pay to charge), and sells maintenance contracts that kick in after the warranty. In some cases the company owns the stations itself and charges drivers a fee per kilowatt-hour or time. It asked which of these it must collect sales tax on. The Department gives a general overview of three pieces (it's a GIL, so no binding determination):

1. Selling the charging station — taxable property. Colorado imposes sales tax on retail sales of tangible personal property, and a charging station is tangible personal property. A compensating use tax also applies to the storage, use, or consumption of property bought at retail (relevant since these stations ship in from out of state). So the sale of the station is taxable.

2. The annual network fee — a service, usually not taxable, with two exceptions. Selling a service is generally not subject to sales tax. But watch two exceptions:
- A service sold in connection with the sale of taxable property gets pulled into the taxable price if the service charge isn't separately stated or the buyer is required to buy the service as part of buying the property; and
- Telephone and mobile telecommunications services can be taxable in their own right — relevant because a "network" fee may involve connectivity.

So a network fee that's separately stated and optional, and isn't a taxable telecom service, generally stays non-taxable.

3. Maintenance contracts — taxable unless separately stated AND optional. A maintenance contract sold in connection with the sale or rental of taxable property is included in the tax on that property — unless the maintenance charge is both (a) separately stated and (b) optional (the buyer can decline it). Even when the contract itself is non-taxable, the tangible personal property the provider uses to perform the service may still be taxed (the provider may owe tax on its own parts/tools).

The recurring theme across all three is Colorado's bundling rule: a service or add-on tied to a taxable sale escapes tax only when it's separately stated and genuinely optional. Bundle it in or require it, and it rides into the taxable price.

What the letter doesn't squarely answer: whether the per-charge fee the company collects from drivers (by kWh or time) when it owns the station is itself taxable. The Department frames the issues around the station, network fee, and maintenance, and gives only a general overview — so for the driver-facing charging fee, and for any specific facts, a binding private letter ruling is the safer path. (Colorado later issued GIL 25-002 specifically on electric-vehicle charging — a useful newer cross-reference.)

Because this is a General Information Letter, it's general guidance only and not binding on the Department.

What this means for you

EV-charging companies and equipment sellers

Treat the station sale as taxable tangible personal property (and mind use tax when you ship units in from out of state). For your network fees and maintenance contracts, the tax answer depends on packaging: keep them separately stated and optional to keep them out of the taxable price; bundle them with the station or require them and they become taxable along with the hardware. Be alert that a "network" fee with a connectivity component could be a taxable telecommunications service. For the per-kWh/time fee you charge drivers at company-owned stations, this letter doesn't give a clear answer — get a private letter ruling.

Property owners who host or buy stations

If you buy a station, expect sales/use tax on the hardware. Whether the network fee and maintenance add tax depends on whether they're separately stated and optional in your contract.

Accountants and tax professionals

Three buckets: (1) station = taxable TPP (§ 39-26-104(1)(a)) plus use tax (§ 39-26-202(1)); (2) network fee = service, non-taxable unless swept in under the § 39-26-105(4) bundling rule (not separately stated or required) or taxable as telecom (§ 39-26-104(1)(c)); (3) maintenance contract included in the taxable sale/rental unless separately stated and optional, with the provider's own property potentially taxable. The driver-facing charging fee is left open. Cross-reference the newer GIL 25-002 (electric-vehicle charging) for the Department's later treatment.

Common questions

Q: Is selling an EV charging station taxable in Colorado?
A: Yes. A charging station is tangible personal property, so its retail sale is subject to sales tax, and use tax can apply to its use (including when shipped in from out of state).

Q: Is the annual network fee taxable?
A: Generally not — it's a service. But it becomes taxable if it's sold in connection with the taxable station and isn't separately stated or the buyer is required to buy it, or if it qualifies as a taxable telephone/mobile telecommunications service.

Q: Are maintenance contracts taxable?
A: A maintenance contract sold with a taxable station (or rental) is taxed as part of that sale unless it's both separately stated and optional. Even then, the property the provider uses to perform the service may be taxable to the provider.

Q: What about the fee drivers pay to charge their cars?
A: This letter doesn't squarely address the per-kWh or per-time charging fee. Because it's only a general overview, seek a binding private letter ruling for that and any fact-specific question; see also the later GIL 25-002 on EV charging.

Q: Does this cover city sales tax?
A: No. The Department administers state and state-administered local taxes only. Colorado's self-collected home-rule cities set their own rules. Check with each home-rule city.

Citations and references

Statutes:
- § 39-26-104(1)(a), C.R.S. (sales tax on retail sales of tangible personal property)
- § 39-26-202(1), C.R.S. (compensating use tax on storage, use, or consumption)
- § 39-26-105(4), C.R.S. (services in connection with a taxable sale included in price unless separately stated and optional)
- § 39-26-104(1)(c), C.R.S. (telephone and mobile telecommunications services may be taxable)
- § 39-26-102(15), C.R.S. (definition of tangible personal property); 1 CCR 201-4, § 26-102.15 and § 26-105.2; SR-28 (service contracts)
- See also GIL 17-006 (service contracts) and GIL 25-002 (electric-vehicle charging)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-18-012.pdf

Original ruling text

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

GIL 18-012
August 21, 2018
XXXXXX
Attn: XXXXXX
XXXXXX
XXXXXX
Re: Sales tax on electric car charging stations
Dear XXXXXX,
You submitted a request for guidance on behalf of XXXXXX (“Company”) regarding the
applicability of sales tax to electric car charging stations.
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.
Issues
Must Company collect and remit sales tax on the following transactions;
1. the sale of electric car charging stations;
2. an annual network fee charged to Owners; or
3. maintenance contracts for the electric car charging stations.

1
DR 4010A (06/11/14)

Background
Company sells electric car charging stations to Owners. Company ships the stations
from a location outside Colorado to locations in Colorado. Company charges owners a
network fee to allow Owners to charge customers for use of the stations to recharge
their electric cars. Company also sells to Owners a maintenance contract that applies
after the Company’s warranty to Owners expires. In some cases, Company owns the
stations and charges electric car customers a fee to recharge their cars based on
kilowatt usage or time. These stations are located on property owned by third-parties
and Company pays the third-party either by reimbursing the third-party of the cost of
energy or sharing the fee charged to customers.
Discussion
There are several issues raised in this request for guidance. The following is a general
overview of the tax issues and tax law applicable to these facts.
1. Sale of electric charging stations
Colorado imposes sales tax on sales of tangible personal property at retail.1 Colorado
also imposes a compensatory use tax on the storage, use, or consumption of tangible
personal property purchased at retail.2 Tangible personal property is broadly defined in
statute and by regulation.3
2. Network Fees
The sale of services is generally not subject to sales or use taxes. There are two
exceptions to this general rule. First, charges for services sold in connection with the
sale of taxable tangible personal property are generally included in the purchase price if
the service charge is not separately stated or the buyer is required to buy the service as
part of its purchase of the property.4 Second, charges for telephone and mobile
telecommunications service may be subject to tax under certain circumstances.5
3. Maintenance contracts
A charge for maintenance contracts sold in connection with the rental or sale of taxable
tangible personal property is included in the calculation of sales tax of the rental or
purchase of the goods, unless the maintenance charge is both separately stated and
1

§ 39-26-104(1)(a), C.R.S.
§ 39-26-202(1), C.R.S. While the property subject to sales and use tax are the same for the state and
for certain local taxing jurisdictions, other local jurisdictions have a more limited range of items subject
to use tax. Compare § 39-26-202(1), C.R.S., and § 29-2-109(1), C.R.S.
3
§ 39-26-102(15), C.R.S.; see also 1 Colo. Code. Regs. 201-4, § 26-102.15.
4
§ 39-26-105(4), C.R.S.; see also 1 Colo. Code. Regs. 201-4, § 26-105.2.
5
§ 39-26-104(1)(c), C.R.S.
2

2

the buyer has the option not to purchase the maintenance contract as part of its rental
or purchase of the taxable goods, although tangible personal property used to perform
the service may be taxed.6
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 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

6

See, e.g., GIL 17-006. See 1 Colo. Code Regs. 201-4, § 26-105.2; see also 1 Colo. Code Regs. 2015, SR-28 (discussing treatment of service contracts unrelated to a sale of tangible personal property).
§ 39-26-105(4), C.R.S.
3