Colorado Revised Statutes Title 39 — Taxation

C.R.S. § 39-26-713

Tangible personal property

Official textolls.infolast amended Jan 01, 202314 subsections

# (1)

The following shall be exempt from taxation under the provisions of part 1 of this article 26:

# (a)

Any right to the continuous possession or use for three years or less of any article of tangible personal property under a lease or contract, if the lessor has paid to the state of Colorado a sales or use tax on such tangible personal property upon its acquisition. The department of revenue may permit a lessor of tangible personal property leased for a period of three years or less to acquire the property free of sales or use tax if the lessor agrees to collect sales tax on all lease payments received on the property.

# (b)

Repealed.

# (c)

The sale of tangible personal property for testing, modification, inspection, or similar type of activities in this state if the ultimate use of the property in manufacturing or similar type of activities occurs outside of this state and if the test, modification, or inspection period does not exceed ninety days; and (d) All sales and purchases of tangible personal property by a manufacturer that uses the property as a component part of goods that it manufactures, including, but not limited to, high technology goods, and that donates such goods to the United States government; the state of Colorado or any department, institution, or political subdivision thereof; or any organization exempt from federal income taxes pursuant to section 501 (c)(3) of the Internal Revenue Code of 1986, as amended, to the extent that the aggregate value of the goods included in a single donation exceeds one thousand dollars.

# (2)

The following are exempt from taxation under part 2 of this article 26:

# (a)

The storage, use, or consumption of any tangible personal property the sale of which is subject to the retail sales tax imposed by part 1 of this article, including transactions that are exempt from taxation under section 39-26-704 (5);

# (b)

(I) The storage, use, or consumption of any tangible personal property purchased for resale in this state, either in its original form or as an ingredient of a manufactured or compounded product, in the regular course of a business. (II) For purposes of this subsection (2)(b), any motor vehicle purchased and held for resale in this state by a licensed motor vehicle dealer, as defined in section 44-20-102, who meets the eligibility requirements to receive a full-use dealer plate set forth in section 42-3-116 (6)(a)(I) shall be considered to be in the regular course of business and shall not be subject to taxation under part 2 of this article 26. A motor vehicle shall be considered to be purchased and held for resale if: (A) The manufacturer's certificate of origin or certificate of title for the motor vehicle is assigned to the motor vehicle dealer; (B) The motor vehicle is included in a current list of vehicles for retail sale that is prepared by the motor vehicle dealer in the ordinary course of business; and (C) At any given time, the motor vehicle is available to be purchased and delivered to a retail customer within three business days.

# (c)

The storage, use, or consumption of tangible personal property brought into this state by a nonresident for his or her own storage, use, or consumption while temporarily within this state;

# (d)

The storage, use, consumption, or loan of tangible personal property by or to the United States government, the state of Colorado or its institutions or political subdivisions in their governmental capacities only, or any charitable organization in the conduct of its regular charitable functions and activities;

# (e)

(I) The storage, use, or consumption of tangible personal property by a person engaged in the business of manufacturing or compounding for sale, profit, or use any article, substance, or commodity, which tangible personal property enters into the processing of or becomes an ingredient or component part of the product or service that is manufactured, compounded, or furnished, and the container, label, or the furnished shipping case. (II) As used in subparagraph (I) of this paragraph (e) with regard to food products, tangible personal property enters into the processing of such products and is therefore exempt from taxation when: (A) It is intended that such property become an integral or constituent part of a food product that is intended to be sold ultimately at retail for human consumption; or (B) Such property, whether or not it becomes an integral or constituent part of a food product, is a chemical, solvent, agent, mold, skin casing, or other material; is used for the purpose of producing or inducing a chemical or physical change in a food product or is used for the purpose of placing a food product in a more marketable condition; and is directly utilized and consumed, dissipated, or destroyed, to the extent it is rendered unfit for further use, in the processing of a food product that is intended to be sold ultimately at retail for human consumption.

# (f)

The storage, use, or consumption of any article of tangible personal property the sale or use of which has already been subjected to a tax equal to or in excess of that imposed by part 2 of this article. A credit shall be granted against the use tax imposed by part 2 of this article with respect to a person's storage, use, or consumption in this state of tangible personal property purchased by the person in another state. The amount of the credit shall be equal to the tax paid by the person to another state by reason of the imposition of a similar tax on the purchase or use of the property. The amount of the credit shall not exceed the tax imposed by part 2 of this article.

# (g)

The storage, use, or consumption of tangible personal property and household effects acquired outside of this state and brought into it by a nonresident acquiring residency;

# (h)

The storage, use, or consumption of tangible personal property purchased by a resident of Colorado while outside the state in amounts of one hundred dollars or less; and (i) Repealed. (j) The testing, modification, inspection, or similar type activities of tangible personal property acquired for ultimate use outside of this state in manufacturing or similar type of activities if the test, modification, or inspection period does not exceed ninety days. Source: L. 2004: Entire part added with relocations, p. 1025, § 2, effective July 1. L. 2006: IP(2)(b)(II) amended, p. 1508, § 59, effective June 1. L. 2017: IP(2) and IP(2)(b)(II) amended, (SB 17-240), ch. 395, p. 2065, § 48, effective July 1. L. 2018: (2)(d) amended, (HB 18-1218), ch. 380, p. 2296, § 2, effective July 1; IP(2)(b)(II) amended, (SB 18-030), ch. 7, p. 140, § 14, effective October 1. L. 2022: IP(1) and (2)(h) amended HB 22-1025), ch. 145, p. 946, § 8, effective January 1, 2023; (1)(b)(II) and (2)(i)(II) added by revision, (HB 22-1025), ch. 145, pp. 946, 948, §§ 8, 13. Editor's note: (1) The provisions of this section are similar to several former provisions of §§ 39-26-114 and 39-26-203 as they existed prior to 2004. For a detailed comparison, see the comparative tables located in the back of the index. (2) House Bill 04-1241 amended § 39-26-203 (1)(b), effective April 26, 2004, but that amendment did not take effect in that section since the entire section was repealed by Senate Bill 04-087, effective July 1, 2004. The amendment to § 39-26-203 (1)(b) by House Bill 04-1241 was harmonized with Senate Bill 04-087 and relocated to subsection (2)(b).

# (3)

Subsections (1)(b)(II) and (2)(i)(II) provided for the repeal of subsections (1)(b) and (2)(i), respectively, effective January 1, 2023. (See L. 2022, p. 946.) Cross references: For the legislative declaration contained in the 2004 act amending subsection (2)(b), as said amendment was relocated from § 39-26-203 (1)(b) as amended in House Bill 04-1241, see section 1 of chapter 203, Session Laws of Colorado 2004.

Amendment history

L. 2004: Entire part added with relocations, p. 1025, § 2, effective July 1. L. 2006: IP(2)(b)(II) amended, p. 1508, § 59, effective June 1. L. 2017: IP(2) and IP(2)(b)(II) amended, (SB 17-240), ch. 395, p. 2065, § 48, effective July 1. L. 2018: (2)(d) amended, (HB 18-1218), ch. 380, p. 2296, § 2, effective July 1; IP(2)(b)(II) amended, (SB 18-030), ch. 7, p. 140, § 14, effective October 1. L. 2022: IP(1) and (2)(h) amended HB 22-1025), ch. 145, p. 946, § 8, effective January 1, 2023; (1)(b)(II)

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