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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Does a charity owe sales tax on its catering sales and on renting out its facility?
It depends. Catering — food and drink served by a caterer — is taxable in Colorado, but a charitable organization's sales can be exempt if they are for fundraising, number 12 or fewer in the calendar …
Does a restaurant owe sales tax on the trays, platters, and lids it buys and gives customers with food?
It depends on whether the item is essential to handing the food to the customer — and this GIL sets out the test without deciding it. A free article, bag, or container a food vendor gives a customer i…
When a buyer pays a separately stated fee for a program that pays a credit toward a replacement vehicle if their car is totaled or stolen, is that fee taxable — and does the credit count in the sales tax on the replacement vehicle?
The separately stated, optional program fee is NOT subject to sales or use tax — it buys an intangible right to future compensation, like an insurance premium, not tangible personal property. The comp…
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?
A general overview, no binding determination. (1) Selling the charging station is a taxable retail sale of tangible personal property (and use tax can apply to its use). (2) The annual network fee is …
Does a billing-services company owe Colorado sales tax on the printed bills it produces, or on the separately stated postage it charges to mail them?
No to both. A company that turns clients' raw financial data into printed bills and statements is selling a nontaxable service, not taxable goods — the paper the bills are printed on is incidental to …
Is water and ice dispensed from a vending machine — into containers the customer brings — subject to Colorado sales tax, and does it matter that the machine sits just outside a bar?
No, they're exempt. Water dispensed in discrete quantities is tangible personal property (not a utility service), but it's still exempt as 'food': SNAP-eligible non-carbonated water sold from a vendin…
Can a pharmacy buy prescription bottles and labels tax-free — under the medical-materials exemption, or the container/label exemption?
Yes — but through the container exemption, not the medical-materials exemption. A pharmacy CANNOT use the medical-materials exemption, because that requires a 'licensed provider' with authority to pre…
Does Colorado's $2-per-day vehicle rental fee restart when a short-term rental is terminated and the customer immediately signs a brand-new rental for the same vehicle?
Yes. When the company terminates the first short-term rental and writes a brand-new rental ticket for the next rental (even of the same vehicle), the second rental is a new contract—not a 'renewal' th…
When a restaurant buys dressing mix, compounds it into a condiment, and sells it to customers, is the purchase of the mix taxable and the sale of the condiment taxable?
It turns on whether the condiment is separately priced. If a restaurant just makes a condiment available (no separate charge), the restaurant is the user/consumer — like napkins or utensils — and pays…
When a company sells and installs a commercial sign, are its separately stated charges for surveying, engineering stamps, and permits included in the sales tax on the sign?
It depends on what the charge is really for. A sign is taxable tangible personal property, and a retailer's costs of bringing goods to market — government permits, engineering drawings, manufacturing …
Are the parts and the machinery a company buys to build an experimental aircraft prototype for its own research and development exempt from Colorado sales and use tax?
Mostly exempt. The parts a company buys and builds into an experimental aircraft prototype for its own R&D are exempt from Colorado sales and use tax — not under the 'components for resale' exemption …
When a company rents scaffolding and bills extras like sheeting, planks, lighting, delivery, on-site equipment, consumables, and erection labor, which of those charges are included in the Colorado sales tax on the rental?
It depends on the rental's length and how each charge relates to the rental — and this GIL lays out the framework without deciding the specific items. Key points: (1) for rentals of three years or les…
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?
Yes — and an amended clarification. Colorado's paint stewardship fee on architectural paint is included in the purchase price, so sales tax is calculated on the fee too. Sales tax is figured on the 'p…
Over how many years can a taxpayer claim the refundable enterprise-zone renewable energy investment tax credit, and how much per year?
The taxpayer may take the enterprise-zone renewable energy investment tax credit as a cash refund instead of a credit, but only by reducing the credit by 20% (so the refund equals 80% of the credit) a…
Does a church have to collect Colorado sales tax on prepared meals and prepackaged food it sells to members, or can those sales be exempt as occasional sales?
Generally taxable, unless they qualify as 'occasional sales.' Sales by a church or other charitable organization are subject to Colorado sales tax, but are exempt as occasional sales if ALL three cond…
Are aircraft parts that are permanently affixed to an aircraft exempt from Colorado sales and use tax even when the aircraft is NOT used in interstate commerce by a commercial airline?
Yes. Tangible personal property permanently affixed as a component part of an aircraft is exempt from Colorado sales and use tax, and — unlike the exemption for the sale of the aircraft itself — there…
Is prescription pet food exempt from Colorado sales tax — and does it matter whether you buy it from your veterinarian or from a pet store?
It depends on where you buy it. Pet food is NOT a 'prescription drug' (food is excluded from the drug definition), so it can't be exempt on that basis. But prescription pet food can qualify for the ex…
When a customer gets a rebate from a manufacturer, utility, or government, is Colorado sales tax calculated on the full price or the price after the rebate?
On the full price, before the rebate. Manufacturer rebates are included in the Colorado sales tax base because a third party reimburses the retailer for that portion of the price, so tax is figured on…
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?
Generally no, for the delivery and installation. Colorado taxes the sale of the signage (tangible personal property) but not services. Delivery and installation are typically services, so those charge…
Is a company's monthly 'subscription' charge for energy-saving technology it owns and installs at the customer's site a nontaxable service, or a taxable rental of tangible personal property?
It depends — and this GIL does NOT decide it. The question is whether a monthly charge for company-owned energy-saving technology installed at the customer's site is a nontaxable service or a taxable …
For a subscription-box seller that doesn't collect Colorado tax: does each automatic monthly shipment need its own Transactional Notice, and what notices are owed when an out-of-state buyer ships the box to a Colorado resident?
Two answers. (1) No — for an auto-renewing subscription, a Transactional Notice is required only when the customer subscribes, enrolls, or renews; separate notices are NOT required for the repeated au…
Is a corporation's gain from selling its LLC interest business income, and is that gain (or the LLC's sales) included in the Colorado apportionment factor?
On these facts: (1) the gain is business income, because the corporation's LLC interest was intangible property used in its trade or business (and a corporation can elect to treat all income as busine…
Are the materials and components of orthodontic braces subject to Colorado sales tax?
It depends on where the material ends up. Orthodontic materials a licensed provider furnishes to the patient — that leave with the patient or are consumed by the patient at the office (like the braces…
Does a retailer owe sales or use tax on cooperative direct-mail advertising materials produced and mailed by a third-party advertiser?
No. A retailer that hires a cooperative direct-mail advertiser — one that bundles ads for several businesses into a single mailer — does not owe sales or use tax on the materials produced and mailed. …
Is a lessee's payment to a rental company for lost or damaged rental equipment subject to Colorado sales or use tax?
No. When a customer pays a rental company for equipment that is lost or damaged beyond repair, that payment is not subject to Colorado sales or use tax. It's compensation for the lost value of the com…
Are sales and leases of timber-harvesting (silviculture) equipment exempt from Colorado sales tax as farm equipment?
Likely yes. Timber-harvesting equipment (fellers, skidders, etc.) bought after 2013 and valued by the county assessor as silvicultural personal property likely qualifies for Colorado's farm-equipment …
Must a seller collect Colorado sales tax on erosion-control logs and silt fencing sold to contractors who present a contractor's exemption certificate?
Yes — the seller must collect tax. Excelsior (wood-fiber) erosion-control logs and silt fencing sold to construction contractors are NOT 'construction and building materials,' so the public-works cont…
Is a separately stated 'core charge' on a recyclable automotive part subject to Colorado sales tax?
Yes. A 'core charge' — the separately stated, refundable amount on a recyclable/remanufacturable auto part — is part of the part's purchase price, so sales tax applies even though it's separately stat…
Does the manufacturing-machinery exemption apply to a contract manufacturer that doesn't own or sell the finished product?
Likely yes. Colorado's exemption for manufacturing machinery and machine tools applies even when the manufacturer doesn't sell the finished product — including contract manufacturers who process a thi…
How do Colorado sales and use taxes apply to selling, renting, installing, and monitoring security and surveillance systems?
Security equipment (cameras, surveillance, alarms) is taxable tangible personal property; bundled services like installation, monitoring, and shipping are excluded only if they're optional AND separat…
Are non-customized digital market reports subject to Colorado sales tax as tangible personal property?
Yes, likely taxable. Colorado treats digital goods as tangible personal property, and a market report that is NOT customized for a particular customer is the sale of goods, not a nontaxable service — …
Which of a software company's products and services — licenses, SaaS, support, training, hardware — are subject to Colorado sales tax?
Mostly not taxable, with hardware the main exception. Electronically delivered software, SaaS/hosting, accounting, conversion, training, consulting, and travel reimbursements are not subject to Colora…
Are membership fees and golf-bay play charges at a golf-entertainment venue subject to Colorado sales tax?
No. At a golf-entertainment venue, the membership fees, the charges to play in the golf bays, and the line-skip passes are all nontaxable services, not taxable rentals of tangible personal property. T…
Does Colorado sales or use tax apply to charging third parties for non-transplantable human tissue?
Yes. Charging third parties for non-transplantable human tissue is a taxable sale of tangible personal property in Colorado, not a tax-free service. Human tissue is corporeal property; the labor to ac…
Does Colorado sales or use tax apply to leasing space on a telecommunications tower?
Yes. Leasing space on a telecommunications tower is subject to Colorado state (and state-administered local) sales and use tax. The Department treats the towers as tangible personal property — not rea…
Is electricity used to power computers that write and test software exempt from Colorado sales tax as manufacturing or industrial use?
It depends on whether the broader activity is genuine manufacturing or industrial use. Electricity for commercial use is taxable, but electricity for manufacturing or industrial use is exempt (treated…
When an affiliated group's members must use different apportionment formulas (trucking, airlines, financial institutions, general), how does the group compute its combined Colorado income tax?
The affiliated group may use the subgroup methodology from the Department's prior rulings PLR-11-002 and PLR-15-005: financial and non-financial members eliminate all intercompany transactions, each s…
How are service agreements, shipping, restocking fees, and resale certificates taxed on sales of medical imaging equipment in Colorado?
It depends on separability. A separate, optional service agreement on medical imaging equipment isn't taxed (the servicer pays tax on parts it uses) — but if it charges the customer for parts, it must…
Is a company's charge for designing, printing, and distributing door-hanger marketing materials subject to Colorado sales tax?
Largely yes. A company that designs, prints, and distributes door-hanger marketing material is selling tangible goods — the printed material is the 'true object' — so a lump-sum charge is taxable. Eve…
Are fluoride varnish and oral-health kits sold to dental and medical providers exempt from Colorado sales tax?
Likely yes — but not as a prescription drug. The FDA classifies fluoride varnish as a Class II medical device, not a drug, so it doesn't qualify for Colorado's prescription-drug exemption. It does, ho…
Is an optional maintenance agreement bought with a vehicle lease subject to Colorado sales tax?
No, not if it is truly optional and separately stated. A maintenance agreement sold with a vehicle lease is normally taxable unless it is separable from the lease — and it is separable when (1) the cu…
When a lessor replaces or adds equipment on a long-term lease with under three years left, is it still a long-term lease or a new short-term lease?
It depends on whether you replace or add. Replacing existing equipment on a long-term lease (over three years) keeps it a long-term lease — you keep collecting tax on each lease payment — even if the …
Are wood pellets sold for home heating exempt from Colorado sales tax?
Yes. Wood pellets bought for residential use are exempt from Colorado state sales tax. Wood pellets are wood, and wood sold for residential heating (stoves, space heaters, and other domestic fuel uses…
Is a $1-buyout computer lease to a student taxable, and does the schools exemption apply?
Taxable. A computer 'lease' to a student that lets the student buy the equipment for $1 at the end is really a credit sale (a financed purchase), which is taxable — and even if it were a true lease it…
Must a seller collect tax on audio/visual equipment sold to a contractor who presents a contractor's exemption certificate?
When a contractor working for an exempt entity (government, charity, or school) buys audio/visual equipment, the sale is exempt — and the retailer may accept either the contractor's exemption certific…
If a digital marketplace collects and remits Colorado sales tax on its third-party sellers' sales as a 'jointly responsible' retailer, does that relieve the third-party sellers of liability — and are both relieved when a buyer presents an exemption certificate naming the marketplace as seller?
Largely yes. When a marketplace collects and remits Colorado sales tax on its third-party sellers' sales as a 'jointly responsible' retailer (an agent the Department may treat as jointly liable under …
After an out-of-state buyer restructures the ownership, is a holding company's gain from selling its partnership interest included in Colorado's apportionment factor?
On these facts, no. The gain is business income (the holding company's whole business was buying, holding, and selling the investment), and the company includes its distributive share of the partnersh…
Is a long-term lease of aircraft to a Colorado operator that the FAA authorizes as an on-demand charter/air-taxi service exempt from Colorado sales and use tax under either aircraft exemption?
Likely taxable — neither aircraft exemption appears to fit. A long-term aircraft lease (over 3 years) is treated as a taxable sale, with tax on the lease payments. The first exemption (§ 39-26-711) is…
Is a fleet repairer's 'management fee' — charged for online access to its maintenance database/reports — subject to Colorado sales tax, and does it matter that the fee is separately stated from parts and labor?
It turns on whether the fee is optional. A fleet maintenance company's 'management fee' gives clients online access to its maintenance database — application service provider (ASP) software, which Col…
Is a company's monthly fee for medical credentialing services — collecting documentation, preparing applications, and obtaining insurer credentials for a provider's billing staff using cloud-based software — subject to Colorado sales tax?
No, on these facts. Medical credentialing — collecting documentation, creating profiles, preparing applications, and obtaining the credentials a provider's billing staff need to bill insurers — appear…
Is the electricity and natural gas a TV news station uses to produce and broadcast its programming exempt from Colorado sales tax — as energy used in 'radio communication' or as 'industrial' use?
Only partly. Energy used to power the TV broadcast TRANSMITTER appears to be EXEMPT under the 'radio communication' energy exemption — the Department reads the 1937 'radio communication' term to inclu…
Does a multi-level marketing company owe sales tax on the annual renewal fee its distributors pay to stay active, and on the fee for its online Dashboard and personal-website tools?
On these facts, neither fee is taxable. The annual renewal fee distributors pay to stay 'active' isn't taxable: the magazine they receive is incidental promotional material (it's also given to custome…
Are advance payments and reservation fees for a short-term car rental subject to Colorado sales tax — including when the customer never shows up — and does it matter whether the payment is refundable?
It depends on whether the payment is refundable and how big it is, by analogy to hotel deposits. Any advance payment that's actually applied to the rental charge is taxable. A NONREFUNDABLE advance pa…
Are custom herbal formulas that a licensed acupuncturist prepares and sells to clients exempt from Colorado sales tax as prescription drugs, nonprescription drugs, or materials furnished by a licensed provider?
They're taxable. Custom herbal formulas an acupuncturist prepares and sells do NOT qualify for Colorado's medical exemptions for prescription drugs, nonprescription drugs, or materials furnished by a …
Does Colorado sales tax apply to charges for a live web seminar, a pre-recorded webinar, and a self-study course delivered over the web?
It splits three ways by how 'live' the instruction is. A charge to attend a LIVE web seminar is NOT taxable — it's a service, because a live instructor is providing educational services. A charge to w…
Is the 'into-plane fee' for transporting aviation fuel from the airport fuel farm to a customer's aircraft subject to Colorado sales tax when the customer buys the fuel from one company but contracts separately with a different fixed-base operator for the fueling service?
No, on these facts. The 'into-plane' fee — for moving fuel from the airport fuel farm into the customer's aircraft — is a nontaxable service here, because the customer buys the taxable fuel from one c…
When a vacation-rental booking agent takes a commission out of what the guest pays for a Colorado short-term rental, is sales/lodging tax calculated on the full amount the guest paid, including the agent's commission?
Yes. When a booking agent collects a guest's payment for a Colorado short-term rental and keeps part of it as commission before forwarding the rest to the property manager, the lodging sales tax is ca…
Which hotel group-contract fees (early departure, room and food-and-beverage attrition, cancellation, no-show, meeting-room cancellation) are subject to Colorado sales/lodging tax, and is the tax on an online-travel-company booking figured on the lower contract rate or the higher website rate?
It depends on the fee. Early departure, no-show, and cancellation fees are cancellation charges judged by the '50% rule': if the charge is more than 50% of the daily room rate it's taxable as payment …
If a retailer charged sales tax on mandatory shipping and a customer returns the goods for a full refund of the item price but not the shipping, must the retailer refund the sales tax it collected on the shipping charge?
Yes. When a retailer refunds the customer the full purchase price of returned goods but keeps the mandatory shipping charge, it must also refund the sales tax it collected on that shipping charge. Man…
Does an out-of-state franchisor have Colorado sales- or income-tax nexus, and which of its franchise revenues count toward the income-tax thresholds?
The Department wouldn't decide sales-tax nexus—too fact-intensive for a general letter. For income tax, a company has nexus if it exceeds Public Law 86-272 and meets any one threshold ($50,000 propert…
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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.