Colorado § 39-26-202 - Authorization of tax.

§ 39-26-202. Authorization of tax.

(1) (a) Except as otherwise provided in subsection (1)(b) of this section, there is imposed and shall be collected from every person in this state a tax or excise at the rate of three percent of storage or acquisition charges or costs for the privilege of storing, using, or consuming in this state any articles of tangible personal property purchased at retail.

(b) Except as otherwise provided in section 39-26-901, on and after January 1, 2001, there is imposed and must be collected from every person in this state a tax or excise at the rate of two and ninety one-hundredths percent of storage or acquisition charges or costs for the privilege of storing, using, or consuming in this state any articles of tangible personal property purchased at retail.

(c) Such tax shall be payable to and shall be collected by the executive director of the department of revenue and shall be computed in accordance with schedules or systems approved by said executive director. The transfer of wireless telecommunication equipment as an inducement to enter into or continue a contract for telecommunication services that are taxable pursuant to part 1 of this article shall not be construed to be storage, use, or consumption of such equipment by the transferor.

(2) Notwithstanding the three percent rate provisions of subsection (1) of this section, for the period May 1, 1983, through July 31, 1984, the rate of the tax imposed pursuant to this section shall be three and one-half percent.

(3) Repealed.

Source: L. 37: p. 1098, § 1. CSA: C. 144, § 34. L. 45: p. 580, § 5. CRS 53: § 138-6-33. C.R.S. 1963: § 138-5-33. L. 65: p. 1125, § 6. L. 65, 1st Ex. Sess.: p. 17, § 2. L. 77: Entire section R&RE, p. 1825, § 2, effective July 1. L. 83: Entire section amended, p. 1518, § 4, effective March 22; (2) amended, p. 2098, § 7, effective October 13. L. 84: (2) amended, p. 1142, § 5, effective June 7. L. 96: (1) amended, p. 758, § 3, effective May 22. L. 2000: (1) amended and (3) added, p. 1434, § 4, effective May 31. L. 2020: (1)(a) amended and (3) repealed, (HB 20-1174), ch. 104, p. 401, § 3, effective September 14. L. 2024: (1)(b) amended, (SB 24-228), ch. 170, p. 901, § 11, effective May 14.

Cross references: For the legislative declaration contained in the 1996 act amending this section, see section 1 of chapter 160, Session Laws of Colorado 1996.

ANNOTATION

Law reviews. For article, "Colorado Sales and Use Tax Consequences in Sales of Businesses", see 11 Colo. Law. 679 (1982). For article, "Recent Developments in Colorado Sales and Use Taxes", see 18 Colo. Law. 2101 (1989).

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

Denial of trade-in allowance on out-of-state purchase unconstitutional. It is constitutionally impermissible for the Colorado taxing authorities to deny a trade-in allowance in computing the use tax on a motor vehicle purchased outside the state when such a credit is allowed when the vehicle was purchased in Colorado. Such unequal treatment is discriminatory and constitutes an impermissible burden on interstate commerce. Matthews v. Dept. of Rev., 193 Colo. 44, 562 P.2d 415 (1977).

When issue of material fact existed as to whether general partnership had been assessed with a use tax, trial court erred in entering motion for summary judgment in favor of individual partner on grounds that partner could not be held jointly and severally liable for deficiency owed by partnership. AF Prop. v. Dept. of Rev., 852 P.2d 1267 (Colo. App. 1992).

Use taxes equalize burden between in-state and out-of-state purchasers. Use taxes are enacted primarily to equalize the tax burden as between those who purchase within and without the state. Matthews v. Dept. of Rev., 193 Colo. 44, 562 P.2d 415 (1977).

Use tax is not a separate tax from the sales tax and should not be viewed in isolation. Matthews v. Dept. of Rev., 193 Colo. 44, 562 P.2d 415 (1977).

The use tax is supplementary to the sales tax. Matthews v. Dept. of Rev., 193 Colo. 44, 562 P.2d 415 (1977).

Multiple taxation is to be avoided. CF&I Steel Corp. v. Charnes, 637 P.2d 324 (Colo. 1981).

Use tax no greater than necessary to compensate for earlier avoided sales tax. Given the supplementary nature and equalizing function of the use tax, the burden on the taxpayer should be no greater than necessary to compensate for the sales tax originally avoided on purchases of materials for manufacturing and resale. A levy upon the "full finished goods cost" or "capitalized cost" of goods withdrawn from a company's inventory inevitably would have the effect of taxing the company's labor and overhead. In effect, it would amount to a value added tax. Int'l Bus. Machs. Corp. v. Charnes, 198 Colo. 374, 601 P.2d 622 (1979).

Only tangible personalty purchased at retail subject to use tax. While the use of tangible personal property may constitute a taxable event, only that tangible personal property purchased at retail is subject to the use tax. CF&I Steel Corp. v. Charnes, 637 P.2d 324 (Colo. 1981).

Use tax liability depends on use, not ownership. Tri-State Generation & Transmission Ass'n v. Dept. of Rev., 636 P.2d 1335 (Colo. App. 1981); AF Prop. v. Dept. of Rev., 852 P.2d 1267 (Colo. App. 1992).

It is the privilege of using property installed in making an improvement on realty that is taxable under this and following sections. The exercise of the privilege of using it results in the incidence of the tax, and no subsequent use, or failure to use, the completed structure can relieve the owner from its payment. Fifteenth St. Inv. Co. v. People, 102 Colo. 571, 81 P.2d 764 (1938).

Party controlling construction project "uses" materials. Where a party shares in the direction and control of a construction project, that party "uses" the materials going into the project for use tax purposes. Tri-State Generation & Transmission Ass'n v. Dept. of Rev., 636 P.2d 1335 (Colo. App. 1981).

Contractors purchasing out-of-state supplies for in-state job liable for tax. Painting and electrical contractors who purchase supplies outside the state and use such supplies in a construction job which is delivered complete for a fixed price are liable for the use tax on the supplies. Craftsman Painters & Decorators, Inc. v. Carpenter, 111 Colo. 1, 137 P.2d 414 (1942).

Purchase of a laundry business is subject to a use tax deficiency assessment upon the privilege of storing, using, or consuming the tangible personal property so purchased in connection therewith. Palmer v. Perkins, 119 Colo. 533, 205 P.2d 785 (1949).

Purchase of bar snacks subject to use tax. Hotel's purchase of bar snacks to promote its bar services is subject to a use tax since the snacks were made available on a complimentary basis and were not purchased for resale. Broadmoor Hotel v. Dept. of Rev., 773 P.2d 627 (Colo. App. 1989).

In considering the meaning of the statutory use tax exemption, the definitions of wholesale and retail sale established by the general assembly differ from the ordinarily accepted general conception of those terms. Bedford v. Colo. Fuel & Iron Corp., 102 Colo. 538, 81 P.2d 752 (1938); Hirschfeld Press v. Denver, 806 P.2d 917 (Colo. 1991).