Colorado State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Colorado, with full citations and the original source on every page.
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Which purchases for Colorado marijuana manufacturing and cultivation qualify for sales or use tax exemptions?
The Department exempted qualifying manufacturing machinery, farm-marketed fertilizers and agricultural compounds, and certain irrigation equipment and fertilizer sprayers under the stated…
Are wound dressings, bandages, gauze, and skin-closure products bought by a Colorado healthcare provider exempt from sales tax?
Yes, if the products are intended to be furnished by a practitioner as part of professional services to patients. The exemption covered Rx-only antimicrobial dressings, nonmedicated dressings,…
Does Colorado sales tax apply when a client pays for a photoshoot and online-gallery photo license, or when a third party buys a separate extended-use license?
Generally yes under the Department's analysis. Online-gallery photographs are taxable digital goods, a photoshoot charge can be included in the taxable price when the photos are expressly bargained…
When does Colorado use tax apply to inventory used for promotional giveaways, and what sales-tax duties can a marketplace seller have when inventory is stored in Colorado?
Colorado use tax generally applies when wholesale inventory is withdrawn in Colorado for free promotions, or when inventory withdrawn elsewhere is brought into Colorado for use. A credit is…
Must a Colorado seller collect sales tax on wholesale goods sold for resale to a purchaser outside the United States when the purchaser takes possession in Colorado under FOB Origin terms?
No, if the sale is genuinely for resale and the seller documents and verifies the wholesale exemption. Colorado says wholesale sales are exempt regardless of the purchaser's country, FOB Origin…
Can a Colorado wholesaler without a state-issued sales tax license use the Multistate Tax Commission's Uniform Sales & Use Tax Resale Certificate to buy tax-free?
No. A wholesaler without a state-issued Colorado sales tax license cannot use the Multistate Tax Commission's Uniform Sales & Use Tax Resale Certificate, because that form requires attesting to a…
When a customer makes a large up-front payment to sign a car lease in Colorado, which local sales taxes apply to that payment and how does the dealer report them?
The up-front payment a customer makes when signing a Colorado motor-vehicle lease is sourced the same way as the monthly payments — to the lease's 'primary property location,' not the dealer's…
Is a company that processes card payments for online merchants — and briefly takes 'flash title' to the goods — a retailer that must collect Colorado sales tax?
No. A company whose real role is processing card payments for international e-commerce merchants is not a Colorado retailer, marketplace facilitator, consignee, auctioneer, or seller — even under…
When a partnership makes a one-off sale of Colorado real estate outside its regular business, do those gross receipts go into the apportionment factor that determines its owner's Colorado-source income?
No. Gross receipts from a partnership's infrequent, out-of-the-ordinary-course sale of Colorado real estate are not 'receipts' under § 39-22-303.6(1)(d), so they're excluded from the apportionment…
Can an electing Alaska Native Settlement Trust deduct its beneficiary distributions on its Colorado return, and must it withhold Colorado tax on distributions to nonresident beneficiaries from renting a Colorado building?
No to both. Because the trust elected out of the IRC § 661 distribution deduction federally, it can't claim that deduction on its Colorado return either (Colorado starts from federal taxable…
Can a partner claim Colorado's affordable housing tax credit allocated by a pass-through entity if the partner joins the partnership before the tax return claiming the credit is filed?
Yes. A pass-through entity may allocate the affordable housing credit to its partners, and a partner admitted before the partner's tax return claiming the credit is filed may claim the allocated…
Does a Colorado bakery have to charge state sales tax on packaged baked goods sold individually, in multi-packs, or as catering and bulk orders?
No. Cold, packaged baked goods sold by a bakery with no eating facilities are exempt from Colorado state sales tax as food for home consumption, including multi-packs and catering or bulk orders, as…
When I buy something at a shopping center that charges a Public Improvement Fee (PIF), is that PIF part of the price that gets sales-taxed?
Yes. A Public Improvement Fee (PIF) — a private fee a developer or landlord adds to purchases at certain shopping centers to fund parking, landscaping, and other on-site improvements — is part of…
Does a prepaid wireless plan with unlimited voice minutes have to collect Colorado's prepaid wireless 911, 988, and TRS/telephone-disability-access charges?
No. Because the units (voice minutes) in an unlimited plan never decline with use in a known amount, the plan isn't 'prepaid wireless telecommunications service' under § 29-11-101(21), C.R.S., so…
Does an online marketplace facilitator have to remit Colorado's firearms and ammunition excise tax on guns and ammo sold by third-party sellers through its platform?
No. A marketplace facilitator that never takes title or possession of the goods is not the 'vendor' for Colorado's 6.5% firearms and ammunition excise tax. The third-party seller is the vendor and…
Are factory-built (prefabricated/modular) home modules exempt from Colorado sales tax, and who owes tax — the manufacturer's suppliers, the builder, or the home buyer?
Mostly exempt. A Colorado maker of prefabricated/modular housing modules buys its materials tax-free under a wholesale/manufacturing exemption, and its sales of the finished modules are partially…
When a construction subcontractor fabricates and installs a staircase into a building, is its labor taxed, or only the materials it buys?
A construction subcontractor who buys materials to fabricate and install a staircase into a building is the consumer of those materials and owes Colorado sales or use tax on the materials it…
If an event organizer charges a cancellation fee for a canceled event that would have included a hotel banquet hall and catered food, is that fee subject to Colorado sales or use tax?
No. A cancellation fee charged when an event — one that would have included a hotel banquet hall and catered food and drink — is canceled is not subject to Colorado state or state-administered local…
Does a company that runs electric-vehicle charging stations (and isn't a utility) have to charge Colorado sales tax on the fees customers pay to charge?
Generally no. Fees a non-utility operator charges customers to use electric-vehicle charging stations are not subject to Colorado state sales tax, because EV charging is a discrete, one-time sale…
When figuring Colorado's 10% residential energy storage tax credit, does the purchase price include the cost of the on-site generation (like solar panels) paired with the batteries, or only the storage system itself?
Only the storage system itself. Colorado's 10% residential energy storage credit is based on the purchase price of the storage system and its batteries (including batteries paired with on-site…
If my customer hires their own shipping company to pick up goods at my Colorado dock and deliver them out of state, is the sale sourced to my location or to the customer's?
The sale is sourced to where the customer actually receives the goods — not the seller's dock. When a buyer hires its own third-party carrier to pick up goods at the seller's Colorado location (an…
If my utility passes through a municipal franchise fee on my gas or electric bill, is that fee subject to Colorado sales tax?
Yes. A municipal franchise fee — the charge a city imposes on a utility for using its streets and rights-of-way, often passed through to customers — is part of the taxable purchase price of…
If a Colorado manufacturer sells goods to the U.S. Government for delivery out of state but stores them in Colorado until the government is ready, are those sales sourced to Colorado for income tax apportionment?
No. The receipts are not Colorado receipts. Goods sold to the U.S. Government are sourced to where they're delivered or shipped to the purchaser — outside Colorado — regardless of f.o.b. point or…
Does a company have to charge Colorado sales tax on DNA-based ancestry and health reports and the saliva kits it sends customers — and does the company owe use tax on those kits itself?
Two answers. The DNA ancestry and health-history reports — and the saliva collection kits sold to customers to produce them — are NOT subject to Colorado sales tax, because the customer's 'true…
Does Colorado charge sales tax on non-alcoholic beer, kombucha, sweetened bottled coffee, and insulin sold without a prescription?
Mostly taxable, with a nuance on insulin. Colorado charges sales and use tax on non-alcoholic beer and kombucha (any trace of alcohol disqualifies them from the food exemption) and on sweetened…
If a contractor shows me a valid Colorado sales tax license, is that enough to sell them building materials tax-free for resale — and does it matter whether the goods go to their warehouse or a job site?
Yes. Verifying that a retailer-contractor holds a valid Colorado sales tax license is enough to treat their purchases of building and construction materials as tax-exempt resale purchases — whether…
Can a Colorado business subtract, from its federal taxable income, the wages that federal law disallowed as a deduction because it claimed the COVID-19 employee retention credit?
Yes — under the specific circumstances of this ruling. A taxpayer that reduced its federal wage deduction under IRC § 3134(e) because it claimed the COVID-19 employee retention credit may subtract…
Can a donor claim Colorado's child care contribution tax credit for a monetary gift to a licensed nonprofit child placement (adoption) agency?
Yes. A monetary contribution to a licensed nonprofit child placement (adoption) agency qualifies for Colorado's child care contribution credit — 50% of the qualifying contribution, capped at…
If my business isn't 'doing business' in Colorado — no location here and not soliciting sales — do I still have to send Colorado's noncollecting-retailer use tax notices to my customers?
No. A person who is not 'doing business' in Colorado — no place of business here and not soliciting sales that meet the economic-nexus thresholds — is not a 'retailer' under Colorado law. The…
Is a foreign student, intern, or trainee in Colorado on an F-1, M-1, or J-1 visa a Colorado resident for income tax purposes?
Generally no. A foreign student, intern, or trainee on a temporary F-1, M-1, or J-1 visa is not domiciled in Colorado, and ordinary student housing (dorms, hotels, or college-provided housing) is…
Is the industrial equipment a retailer buys to mass-produce baked goods in its in-store bakeries exempt from Colorado sales and use tax under the manufacturing machinery exemption — and does that exemption reach local taxes?
Yes. Industrial bakery equipment — mixers, dough dividers, ovens, oven racks, depositors, labeling machines, and the like — bought new for over $500 each and used directly and predominantly to…
Is a subscription or membership fee whose main benefit is free delivery on future orders subject to Colorado sales or use tax?
No. An optional subscription whose primary benefit is unlimited free delivery on future orders is not subject to Colorado state sales or use tax. The membership is essentially prepayment for a…
Is the delivery fee a retailer charges to bring a product to the customer subject to Colorado sales tax, if the customer could instead choose to pick the item up?
The Department held that this retailer’s optional, separately stated Delivery Fee was not subject to Colorado state sales or use tax. The company said it taxed a separate Shipping Fee, but the…
What happens to excess child care contribution credit, how can an unlicensed organization accept qualifying contributions to build a child care facility, and what if a facility is used partly for other purposes?
Excess child care contribution credit is not refunded but carries forward up to five years (earliest years first), then is lost. An organization not yet licensed can accept qualifying contributions…
Are a marijuana cultivator and dispensaries 'affiliated' for the retail marijuana excise tax when they have no common ownership but are both controlled by the same branding company through contracts?
Yes. Common ownership is not required for affiliation. Because one branding company contractually controls both the cultivator and the dispensaries, they are 'affiliated marijuana business…
Is an all-inclusive, bundled multi-day train 'travel experience package' — which lumps interstate train travel, on-board sightseeing/guides, catered meals, and a Colorado hotel night into one price — subject to Colorado sales tax?
No. Where a multi-day travel experience is sold as one inseparable, all-inclusive bundle, Colorado taxes it by the transaction's 'true object.' Here the true object is the nontaxable train travel…
Is propane (liquefied petroleum gas) sold to heat or cook in RVs, cabins, or tents at a campground subject to Colorado sales tax — and when does the special fuel tax or the residential-use exemption apply?
It's taxable. Propane (LPG) sold to heat or cook in RVs, cabins, or tents at a campground is subject to Colorado sales tax — these are temporary accommodations like hotels, so this is commercial…
Can an individual taxpayer claim Colorado's foreign source income exclusion if they claim the federal foreign tax credit?
No. Colorado's foreign source income exclusion under § 39-22-303(10), C.R.S., is available only to C corporations, not to individuals. It sits within the Colorado C Corporation Income Tax Act and is…
At a restaurant, which tips are subject to Colorado sales tax — pooled tips, a mandatory gratuity the customer can't remove, and prepopulated tips the customer can remove at checkout?
It depends on whether the customer can decline the tip and whether all of it reaches the staff. Voluntary tips — including pooled and prepopulated tips a customer can remove at checkout — are NOT…
Are pre-cooked, packaged meals that a remote seller ships to Colorado customers — meals that need further cooking and aren't sold hot or with utensils — exempt from Colorado sales and use tax as food for home consumption?
Yes. A remote seller's pre-cooked, air-chilled, packaged meal products — shipped with FDA nutrition labels, not sold hot or with utensils, and requiring further cooking by the customer — are food…
When a real estate rental partnership makes an infrequent sale of Colorado property, are the sale proceeds included as 'receipts' in its income apportionment factor?
No. Although the gain on a rental partnership's infrequent sale of Colorado real estate is apportionable income, the sale proceeds are not 'receipts' under § 39-22-303.6(1)(d) because the sale isn't…
When a retailer sells grass seed, erosion-control blankets, and fertilizer to a construction contractor holding a DR 0163 exempt certificate, which of those are exempt from Colorado sales tax as construction and building materials?
It depends on the item. Grass seed and erosion-control blankets ARE exempt as construction and building materials when sold to a contractor who presents a current Contractor's Exempt Certificate (DR…
If I claim a refund of Colorado's conservation easement tax credit, is there a cap—and how does it work when a partnership or S corporation made the donation?
Only when a refund is claimed. Under § 39-22-522(5)(b)(III), C.R.S., if you claim any refund of the conservation easement credit, your refund plus the credit you use to offset income tax cannot…
When a vendor or caterer sells alcoholic beverages to a Colorado state university for an official function, is that sale exempt from sales tax under the government-purchase exemption?
Yes, if the government-purchase exemption applies. Sales of alcoholic beverages to a Colorado state institution of higher education for official functions are exempt from sales tax, because alcohol…
Can a Colorado business subtract, from its federal taxable income, the wages that federal law disallowed as a deduction because it claimed the COVID-19 employee retention credit?
Yes — under the specific circumstances of this ruling. A taxpayer (here a restaurant S corporation) that reduced its federal wage deduction under IRC § 3134(e) because it claimed the COVID-19…
Are 'platform credits' that viewers buy on a live-streaming site and send to streamers — the kind that emphasize a chat message or unlock badges and overlays — subject to Colorado sales tax when bought or when redeemed?
No, on both counts. Selling 'platform credits' (viewer-purchased tokens on a streaming site) is NOT subject to Colorado sales tax — the credits work like gift cards, an intangible right with no…
Is a trust a Colorado 'resident trust' subject to Colorado income tax when its beneficiary lives in Colorado but the trust is administered by an out-of-state trustee?
No. A trust is a Colorado 'resident trust' only if it is administered in Colorado. Here the corporate trustee handles all day-to-day administration, books, and records from Delaware, so the trust is…
Is a trust a Colorado 'resident trust' subject to Colorado income tax when its beneficiary lives in Colorado but the trust is administered by an out-of-state trustee?
No. A trust is a Colorado 'resident trust' only if it is administered in Colorado. Here the corporate trustee handles all day-to-day administration, books, and records from Delaware, so the trust is…
Is a trust a Colorado 'resident trust' subject to Colorado income tax when its beneficiary lives in Colorado but the trust is administered by an out-of-state trustee?
No. A trust is a Colorado 'resident trust' only if it is administered in Colorado. Here the corporate trustee handles all day-to-day administration, books, and records from Delaware, so the trust is…
If a Colorado retailer adds a credit-card surcharge to a sale, is that surcharge part of the taxable purchase price — meaning the customer pays sales tax on it too?
No, if it's done by the book. A credit-card surcharge that complies with the conditions in § 5-2-212, C.R.S. — charged only when the customer chooses a credit or charge card, shown as a separate…
How does Colorado source a nonresident partner’s business income and other partnership items?
Ordinary partnership business income is apportioned under Colorado’s business-income rules. Other items are sourced separately unless the partnership elects to apportion all items. Gain on a sold…
Can a Colorado retailer advertise or post total 'out-the-door' prices that already include the sales tax, as long as the receipt breaks out the price and the tax separately?
The Department describes separate-statement and no-tax-absorption advertising duties but does not determine whether the retailer’s proposed tax-included “out-the-door” pricing complies. The GIL is…
Is the sale of bulk non-potable water — withdrawn from ditches and reservoirs and delivered through surface hoses to oil and gas wells — subject to Colorado sales tax?
No. Bulk water withdrawn from ditches and reservoirs and delivered to customers through conduits (surface lay-flat hoses) is not 'tangible personal property,' because Colorado's rules exclude water…
If another state already taxed my Social Security or annuity contributions, does Colorado give a subtraction or credit when those benefits are later taxed on my Colorado return?
Not specifically. Colorado has no special break just because another state already taxed your Social Security or annuity contributions. As a Colorado resident you start from federal taxable income,…
Are shredded tires and railroad ties that a cement plant burns as an alternative fuel exempt from Colorado sales tax under the manufacturing-energy exemption?
No, they're taxable. Shredded tires and railroad ties that a cement plant burns as an alternative fuel to reduce its coal use are NOT exempt from Colorado sales tax. The manufacturing-energy…
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?
It depends on whether food and drink are included. A guided walking tour by itself is a nontaxable service — it's not on Colorado's list of taxed services. But if the price includes food or…
Does a Colorado seller charge sales tax on an implantable, single-use diagnostic heart monitor sold to healthcare providers, or is it an exempt medical device?
Yes, it's taxable. A single-use heart monitor implanted to diagnose irregular heartbeats is taxable tangible personal property when sold to healthcare providers. It does NOT qualify for Colorado's…
When does an out-of-state partnership that provides investment-advisory services to mutual funds have Colorado income-tax nexus?
Colorado uses the same nexus standards for partnerships and other pass-through entities as for corporations. The partnership measures its sales, property, and payroll at the entity level, and…
Are subscriptions to an online learning platform — streaming video courses bundled with tutoring and advising — subject to Colorado sales tax, and is the platform's internet advertising revenue taxable?
Two answers. (1) Yes — the online learning subscriptions (all six plan tiers) ARE subject to Colorado sales tax. Even though they're delivered by streaming and bundle in tutoring and advising, the…
Does a Colorado crane rental company charge sales tax on cranes and hoists, and does it owe tax when it buys or moves the equipment into the state?
It depends on whether an operator is included. A crane or hoist rented with the company's own operator is a nontaxable service, so no sales tax is collected; instead the company owes sales or use…
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These are official tax letter rulings and advisory opinions issued by Colorado's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.