The Colorado Department of Revenue (DOR) issued a private letter ruling regarding a company’s sales of ancestral and health reports and the saliva kits used to collect customers’ DNA for generating the reports. The company sends saliva kits to its customers to self-collect their DNA, which are then sent back to the company for lab analysis. The customers then access their personal reports through the company’s website.
The DOR stated that DNA analysis for ancestral and health history is not among the services explicitly subject to tax in Colorado. The saliva kits are tangible personal property used in the DNA analysis service and are therefore inseparable from the service. Because of this, the taxability of the entire transaction depends on the true object of the transaction.
The DOR determined that in this case, the true object of the transaction is the DNA analysis service and not the saliva kit. Since the true object of the transaction is the nontaxable service, neither the ancestry and health history reports nor the saliva kits used in the analysis are subject to sales tax in Colorado.
While the saliva kits are not subject to sales tax, they are subject to use tax. The company, as a service provider, is the user of the property and is therefore responsible for remitting use tax on the kits. (Private Letter Ruling PLR-24-007, Colorado Department of Revenue, July 2, 2024)