Colorado Issues Guidance on Taxability of Leased Vehicles Used in Interstate Commerce

Colorado has issued guidance on whether certain lease payments for vehicles used in interstate commerce are subject to sales or use tax and has clarified the procedure to document the exemption. Generally, a new or used trailer, semitrailer, truck, truck tractor, or truck body purchased for use exclusively outside Colorado or in interstate commerce and delivered by a Colorado manufacturer or dealer within Colorado that is subsequently driven or moved by the buyer outside the state within 30 days after the delivery date is not subject to sales tax at the time of purchase. The exemption applies only to purchases of vehicles used in interstate commerce. Long Term Leases which are leases greater than 3 years are considered purchases and therefore this exemption will apply. For leases less than 3 years, the lessor is generally considered the user and is liable for payment of use tax on the purchase of the vehicles unless the lessor has been granted permission to treat the leases as sales. If this has been granted then the leases will qualify for the interstate commerce exemption. For sales or tax exempt motor vehicle purchases, the Colorado Department of Revenue recommends that purchasers use DR 0780. (GIL 14-021, Colorado Department of Revenue, October 9, 2014, released December 2014)

Posted on May 13, 2015