Table of Contents

  1. Changes Effective January 1, 2014
  2. What should you do?
  3. What are your priority issues and when do you want them resolved?
Abandoned cabin near Mount Princeton in Colorado.

Colorado Sales and Use Tax Exemption on Manufacturing Equipment

Published: May 5th, 2018

Changes Effective January 1, 2014

The Colorado Department of Revenue published revisions to two FYIs noting changes that made the sales and use tax base of the Regional Transportation District (RTD) and the Scientific and Cultural District (CD) the same as the state sales and use tax base. The RTD and CD did not previously exempt Machinery and Machine Tools.

Though adding the exemption was a primary change, we also note some other wording changes in the FYIs. For example, in revised FYI 69 under the heading “Expanded Exemption”, the new language states, “To qualify for this exemption, the machine, tool, or part must be used solely and exclusively in the enterprise zone, and must be used directly and predominately in the manufacturing or mining process. Simply using a machine in the mine is not sufficient evidence by itself of exemption.”

The prior language was, “To qualify for this exemption, the machine, tool, or part must be used directly in the mining process. Using a machine in the mine is not sufficient evidence by itself of exemption.”

The FYIs the represent an effort to address information in simple and straightforward language and are not binding, however; we feel the changed language should be noted.

What should you do?

Vendors are not to charge RTD or CD sales tax and purchasers are not to accrue use tax if the transaction qualifies for the State’s exemption and a properly completed Exemption Certificate is in place. See Colorado FYI Sales 10 “Sales Tax Exemption on Manufacturing Equipment” and FYI Sales 69 “Enterprise Zone Exemption for Machinery and Machine Tools Used in Mining” for more details. NOTE: 6/18/15 – These publications are no longer current and are not available on the DOR’s website. They remain published on STC’s site for historic reference.

CO DOR form DR 1191 or DR 1192 is required for the exemption.

The information in this tax tip addresses issues in general and is limited in scope. Any potential results discussed may vary and circumstances may warrant more or less favorable outcomes.

It’s best to be proactive and to identify and resolve issues before an auditor contacts you. Voluntary Disclosure Agreements are no longer available once you’ve been contacted.

Remedies are often available when you’ve discovered obligations before auditors contact you. Anonymous Voluntary Disclosure is one option. Even if you are already under audit, we can often help. See our Audit Case Studies.

To learn more about how we can help with these or the following issues, please Contact us today:

  • Assistance with proactive minimization of prior period sales/use tax liabilities
  • Help with nexus questions and issues
  • Other sales and use tax related questions

What are your priority issues and when do you want them resolved?

Please click here for more Sales Tax Tips. For additional insight on common sales tax concerns, please see the Did You Know? section of our website.

This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.