1 CCR 201-5 Sales and Use Tax - Special Rules For Specific Businesses

• Library: Colorado Administrative Code
• Edition: 2023
• Currency: Current through Register Vol. 46, No. 23, December 10, 2023
• Citation: 1 CCR 201-5
• Year: 2023

Special Rule 1. Advertising Agencies.

Advertising agencies primarily furnish a service for their customers and, in connection with furnishing such service, acquire items of tangible personal property which are used by the agencies to perform a service or which go to their customers in connection with the performance of the service.

(1) If the advertising agency is primarily performing a service and does not sell tangible personal property, it does not need a sales tax license. Purchases of articles delivered in Colorado are subject to sales tax imposed by a Colorado vendor, or are subject to Colorado consumers use tax if purchased outside Colorado or from an unlicensed Colorado source.

(2) If an agency acquires articles for resale to its clients, the agency must have a sales tax license to purchase such property tax free for resale. The sales tax charged by the agency would apply to the total amount of the retail sale of property prepared by its employees or acquired from outside sources. Sales by an advertising agency of direct mail advertising pieces, hand-outs, throwaways, and similar articles are subject to sales tax if delivered to customers in Colorado.

(3) An agency could operate under both (1) and (2) of this rule. If so, records must be maintained to account for retail sales to customers. Also, purchases subject to use tax, because of their use in the performance of service contracts, must be accounted for.

Special Rule 2. Agricultural Products and Equipment.

Basis and Purpose. The bases for this rule are sections 39undefined39-21-112(1), 39undefined39-21-113(1)(a), 39undefined39-26-102, 39undefined39-26-105(3), 39undefined39-26-116, 39undefined39-26-122, 39undefined39-26-209, 39undefined39-26-703(1), 39undefined39-26-707(1), and 39undefined39-26-716, C.R.S. The purpose of this rule is to clarify the requirements for exempt sales of agricultural products and equipment.

(1) Definition of Production. For the purpose of section 39undefined39-26-102(19), C.R.S., the term "production" does not include storing, preserving, processing, packaging, or moving plants or animals after they are ready for market; or any activities relating to plant or animal products after they are harvested.

(2) Seeds and Orchard Trees. The sale, storage, use, or consumption of seeds and orchard trees are exempt from state sales and use tax if they are used in a farm operation, as defined in section 39undefined39-26-716(1)(e), C.R.S. Seeds and orchard trees are not exempt if used to grow food, as defined in section 39undefined39-26-102 (4.5), C.R.S., for personal consumption by the purchaser's household, unless they are purchased with food stamps.

(3) Documenting Exempt Sales.

(a) Farm Equipment. For exempt sales of farm equipment, the retailer must obtain and retain a complete signed form DR 0511, Affidavit for Colorado Sales Tax Exemption for Farm Equipment. The requirements of undefinedundefined1 CCR 201-4, Rule 39undefined39-26-105 -3 apply to a retailer's acceptance of this form to document that a sale of farm equipment was properly exempted.

(b) For the purpose of undefinedundefined1 CCR 201-4, Rule 39undefined39-26-105 -3, reason to doubt the purchaser's eligibility for the exemption claimed includes, but is not limited to, the following conditions. (i) Food Animal Identification Products. For sales of ear tags or electronic identification readers, if the product is designed for an animal other than those typically used for food or in the production of food for human consumption. (ii) Other Livestock Products. For sales of agricultural compounds, feed, or bedding for animals, if the product is designed for an animal other than those listed in section 39undefined39-26-102 (5.5), C.R.S., as livestock regardless of use. (iii) Other Agricultural Products. For sales of seeds, orchard trees, fertilizer, pesticides, or spray adjuvants (A) the purchaser is an owner, occupant, or manager of a residential or commercial property, acting in that capacity or (B) the purchaser is a person engaged in the use of these products primarily on residential or commercial properties.

Special Rule 3. Automobile Dealers, Vehicles Used in a Manner That Continues the Right to the Resale Exemption.

(1) C.R.S. 42undefined42-3-116(6)(a) sets forth the requirements to receive and use a full-use dealer plate. Any licensed motor vehicle dealer as defined in C.R.S. 44undefined44-20-102(18) who meets the requirements to receive Dealer Full-Use Plates and uses these license plates on motor vehicles within all the requirements of the statute and within all the standards of the motor vehicle dealer regulation, "Dealer Full-Use License Plates,"1 CCR 204-14 shall be considered to have continued the dealers' right to a resale exemption from the sales or use tax as defined in C.R.S. 39undefined39-26-713(2)(b)(II).

(2) C.R.S. 42undefined42-3-116 and the motor vehicle dealer regulation titled "Use of Dealer Demo License Plates" establish the requirements for the use of Dealer Demo License Plates. Any licensed motor vehicle dealer as defined in C.R.S. 44undefined44-20-102(18) who meets the requirements to receive Dealer Demo License Plates and uses these license plates on motor vehicles within all the requirements of the statute and all the standards of the motor vehicle dealer regulation "Dealer Demo License Plates,"1 CCR 204-14 shall be considered to have continued the dealers' right to a resale exemption from the sales or use tax as defined in C.R.S. 39undefined39-26-713(2)(b)(II).

(3) C.R.S. 42undefined42-3-116(4)(a) and the motor vehicle dealer regulation titled "Depot License Plates" establish the requirements for the use of Depot License Plates. Any licensed motor vehicle dealer as defined in C.R.S. 44undefined44-20-102(18) who meets the requirements to receive Depot License Plates and uses these license plates on motor vehicles within all the requirements of the statute and all the standards of the motor vehicle dealer regulation "Depot License Plates,"1 CCR 204-14 shall be considered to have continued the dealers' right to a resale exemption from the sales or use tax as defined in C.R.S. 39undefined39-26-713(2)(b)(II).

(4) C.R.S. 42undefined42-3-116(4)(b) and the motor vehicle dealer regulation titled "In-Transit License Plates" establish the requirements for the use of Dealer In-Transit License Plates. Any licensed motor vehicle dealer as defined in C.R.S. 44undefined44-20-102(18) who meets the requirements to receive Dealer In-Transit License Plates and uses these license plates on motor vehicles within all the requirements of the statute and all the standards of the motor vehicle dealer regulation "Dealer In-Transit License Plates,"1 CCR 204-14 shall be considered to have continued the dealers' right to a resale exemption from the sales or use tax as defined in C.R.S. 39undefined39-26-713(2)(b)(II).

(5) All other vehicles operated in Colorado by a manufacturer or dealer which do not qualify for any of the license plates listed above must be titled to the manufacturer or dealer and the full sales or use tax applies to the lessee's cost or owner's cost, with allowances for trade-in of vehicles transferred after use to dealers for resale in Colorado.

(6) For example, a motor vehicle dealer who does not meet the conditions set forth for exemption and who

(a) has full use license plates revoked seized by or returned to the Department and that revocation is finally upheld or

(b) is cited for an unauthorized use of a full use license plate by the Department and that action is finally upheld: will be subject to a sales or use tax on the cost of the motor vehicle

(7) For example, a vehicle actually sold to an employee, salesman, partner, or other official of the dealer's company is subject to sales tax on the selling price or, if there is a trade-in allowance, on the net selling price of the vehicle.

Special Rule 3.1. [Repealed eff. 09/30/2020]

Special Rule 4. Automotive Repairs.

Parts and accessories installed in automotive vehicles are of the same nature as other sales of tangible personal property and, accordingly, are taxable. The taxable amount is the total charge made to the customer, with deductions therefrom allowed for service or labor charges if separately stated.

If the repair of an automobile is subcontracted to another repairman by the customer's repairman, the sub-repairman will charge sales tax to the customer's repairman on the retail price of the parts used in the repair job unless specifically instructed that the job is for resale, in which case the tax will be billed to the customer by the customer's repairman. In either case, an itemized bill from the sub-repairman must be available to the customer to show that tax was charged by one or the other repairman.

Automobile dealers, garages, repairmen, etc., may purchase tax free only tangible personal property for resale. This exemption does not apply to service vehicles, machinery, equipment, supplies, tools, etc., which they purchase for their own use or consumption and not for resale. Supplies consumed in the performance of a job, such as sandpaper, masking tape, etc., are taxable to the repairman.

Special Rule 5. Broadcasting Stations and Other...