Colorado Simplifies Sales & Use Tax Exemption Forms & Requirements in House Bill 22-1039
On March 30, Governor Jared Polis signed House Bill 22-1039, a law that will simplify sales and use tax exemption forms and requirements in the state of Colorado. The law applies to state and state-collected sales and use taxes only. In Colorado, a person seeking an exemption may need to fill out a form which, depending on the type of exemption being sought, could be described as an affidavit, application, declaration, statement, or certificate. The new law adds Section 39-26-730, stating that burdens “imposed on persons making tax -exempt purchases should be minimized to the extent feasible without impairing the proper administration of the exemptions.”
Overall, the law is instructing the Department of Revenue to examine and possibly eliminate (or consolidate) forms and form-related requirements. In relevant sections of the Colorado Revised Statutes, where exemption language is located, the law amends instructions on items for construction and building materials, machinery and machine tools, aircraft, trailers and trucks, and more, and uses the following (or similar) language to provide important clarification, “UNLESS THE DEPARTMENT DETERMINES PURSUANT TO SECTION 39-26-730 (2) THAT FORMS CAN BE CONSOLIDATED OR ELIMINATED…”
The new law takes effect 90 days following adjournment, absent a referendum petition.
Colorado businesses should take note as this has the potential to make documenting tax-exempt transactions easier and may change what forms to expect from customers.
If you are a taxpayer with questions about the exemption form changes in Colorado, please contact the trusted advisors of REDW’s State and Local Tax team.