Are guided walking tours subject to Colorado sales tax, and what happens when food or drinks at a tour stop are included in the price?
Plain-English summary
A guided-walking-tour operator asked Colorado three questions: is a tour taxable when the price is just the tour; is it taxable when the price also covers food and drinks the group consumes at a third-party stop; and can the operator buy that food and drink tax-free using a resale certificate? The Department laid out the general rules.
The tour itself is a nontaxable service. Colorado taxes sales of tangible personal property, prepared food and drink, and a short list of specifically named services. Guided walking tours aren't on that list, so a pure tour charge isn't subject to sales tax.
But adding food and drink changes things. Prepared food or drink served at a dining establishment is taxable. When a nontaxable service is bundled with a taxable sale, the service charge becomes taxable unless two conditions are met: the service is genuinely separable from the taxable part, and the service charge is separately stated from the price of the taxable food/drink. So a tour that includes food at a stop risks making the entire package taxable unless the operator separates and separately states the tour fee from the food and drink.
Buying the food for resale. A tour operator can buy food and drink tax-free with a resale certificate — but only if it then resells that food and drink to its customers in a separately taxable transaction (i.e., it charges tax on the food/drink it passes along). The resale exemption is only available because the operator is reselling, not consuming, the items.
What this means for you
Tour and experience operators
A bare guided tour is a nontaxable service in Colorado. The moment you fold in food or drinks consumed on the tour, you're mixing a taxable item into a nontaxable service. To avoid tax washing over the whole price, separate the food/drink from the tour and state the tour charge separately on the bill. And if you buy the food/drink to pass to customers, use a resale certificate only if you'll resell it in a separately taxed transaction — don't use it for items you consume yourself.
Restaurants and venues hosting tour stops
When you sell prepared food or drink to a tour operator who is reselling it to guests, that can be a tax-free wholesale sale if the operator gives you a valid resale certificate. If the operator is the end consumer instead, it's a taxable retail sale.
Accountants and tax professionals
This is the standard "excluded service bundled with a taxable sale" analysis: separable + separately stated under 1 CCR 201-4, Rules 39-26-102(12) and 39-26-102(7)(a)(5), with A.D. Store as the anchor. Prepared food/drink is taxable under § 39-26-104(1)(e). The resale mechanism turns on the wholesale-sale definitions (§ 39-26-102(18), (19)) and requires an actual downstream taxable sale. As a GIL, none of this binds the Department.
Common questions
Q: Is a guided walking tour taxable in Colorado?
A: By itself, no. A guided walking tour is a service, and it isn't among the services Colorado specifically taxes, so a standalone tour charge isn't subject to sales tax.
Q: What if the tour price includes food and drinks at a stop?
A: The prepared food and drink are taxable. If you don't separate them out, the whole bundled charge can become taxable. To keep the tour portion untaxed, the tour service must be separable from the food and the tour charge must be separately stated.
Q: Can I buy the food and drinks tax-free with a resale certificate?
A: Only if you resell them to your customers in a separately taxable transaction. The resale exemption applies because you're reselling the items, not consuming them; if you're the end user, you owe tax on them.
Q: How do I keep my tour charge from being taxed?
A: Make the food/drink genuinely separable from the tour and state the tour fee separately from the food and drink on the invoice. Bundling them into one price risks taxing the entire amount.
Q: Can I rely on this letter?
A: Not as binding authority. A General Information Letter is general guidance only, not binding on the Department, and represents the good-faith opinion of Department personnel. For a binding answer on your facts, request a private letter ruling.
Q: Does this cover city tax too?
A: No. The Department administers state and state-administered local sales and use tax only. Self-collected home-rule municipalities set their own rules and may tax tours or prepared food differently. Check each jurisdiction.
Citations and references
Statutes and rules:
- § 39-26-104(1), C.R.S. (sales tax; only specifically enumerated services are taxed)
- § 39-26-104(1)(e), C.R.S. (sales tax on prepared food or drink at dining and like establishments)
- § 39-26-102(9), C.R.S. (every sale that is not a wholesale sale is a retail sale)
- § 39-26-102(18), (19), C.R.S. (wholesale sale; purchase for resale)
- § 39-26-102(8), C.R.S. (definition of retailer)
- § 39-26-105, C.R.S. (retailer duty to collect; resale purchases)
- 1 CCR 201-4, Rule 39-26-102(12) and Rule 39-26-102(7)(a)(5) (separable, separately stated charges)
- 1 CCR 201-4, Rule 39-26-102(4.5)(1)(b)(4) (prepared food or drink)
Cases:
- A.D. Store Co. v. Exec. Dir., Dep't of Revenue, 19 P.3d 680 (Colo. 2001)
Subject
Request for general information letter to determine whether guided walking tours are
Source
- Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
- Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-21-005.pdf
Original ruling text
Office of Tax Policy Analysis
P.O. Box 17087
Denver, CO 80217-0087
[email protected]
GIL 21-005
October 28, 2021
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Re: Request for general information letter to determine whether guided walking tours are
subject to sales and use tax
Dear XXXXXXXXXX:
You submitted a request for a general information letter to determine whether guided walking
tours are subject to sales and use tax. 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, and requires payment of a fee. For more information about general information
letters and private letter rulings, please see 1 CCR 201-1, Rule 24-35-103.5.
Issues
1. Whether guided walking tours are subject to sales and use tax when the purchase price does
not include food and beverages consumed at third-party establishments.
2. Whether guided walking tours are subject to sales and use tax when the purchase price
includes food and beverages consumed during a tour stop at a third-party establishment.
3. Whether a guided walking tour operator may purchase food and beverages consumed during
a tour at a third-party establishment tax free with a resale certificate.
Discussion
Colorado imposes a sales tax on retail sales of tangible personal property, prepared food or
drink, and certain services.1 Colorado does not generally impose sales tax on services, only
1 Section 39-26-104(1), C.R.S.
GIL 21-005
October 28, 2021
Page 2
those services specifically included in the statute.2 Guided walking tours are not among the
services explicitly subject to tax.
Excluded services may be subject to sales tax if they are provided as part of a transaction
involving the sale of taxable tangible personal property, commodities, and services.3 Charges
for excluded services are subject to sales tax unless the service is separable from the taxable
sale and the service charge is separately stated from the sales price of the otherwise-taxable
portion of the sale.4 Colorado sales tax is imposed upon the retail sale of food or drink served or
furnished in or by dining establishments and other like places of business at which prepared
food or drink is regularly sold.5
Every sale that is not a wholesale sale is a retail sale.6 A wholesale sale is a sale by a
wholesaler to a retailer, jobber, dealer, or other wholesaler for the purpose of resale.7 A retailer
is required to collect sales tax on any retail sale of tangible personal property, prepared food or
drink, or taxable service made in Colorado if the retailer is doing business in Colorado.8 The
term “retailer” broadly encompasses any person engaged in the business of selling to the user
or consumer, and not selling for resale.9
A retailer may purchase food or drink without paying sales tax at the time of the purchase if the
retailer then sells the food or drink to consumers in a separately taxable transaction.10 Such a
purchase would be classified as a wholesale sale to a retailer and would be exempt from the
sales tax as a wholesale sale.11
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 self-collected home-rule municipalities.
You are encouraged to consult with those local governments that administer their own sales or
use taxes about the applicability of those taxes. Visit our website at tax.colorado.gov for more
2 A.D. Store Co., Inc. v. Executive Dir. of Dept. of Rev., 19 P.3d 680 (Colo. 2001).
3 1 CCR 201-4, Rule 39-26-102(12); A.D. Store, 19 P.3d at 683.
4 1 CCR 201-4, Rule 39-26-102(12); 1 CCR 201-4, Rule 39-26-102(7)(a)(5); A.D. Store ,19 P.3d at 683-84.
5 Section 39-26-104(1)(e), C.R.S.; 1 CCR 201-4, Rule 39-26-102(4.5)(1)(b)(4).
6 Section 39-26-102(9), C.R.S.
7 Sections 39-26-102(18) and (19), C.R.S.
8 Section 39-26-105, 39-26-106(2)(a), C.R.S.
9 Section 39-26-102(8), C.R.S.
10 Sections 39-26-102(9), 39-26-102(19), 39-26-104(1)(a), 39-26-105(3)(a), C.R.S.; see also 1 CCR 201-4, Rule 39-
26-105(3).
11 Section 39-26-102(19), C.R.S.
GIL 21-005
October 28, 2021
Page 3
information about state and local sales taxes.
Sincerely,
Office of Tax Policy Analysis
Colorado Department of Revenue