Understanding new tax exemptions

RBC I On May 14 the Rio Blanco County Board of County Commissioners passed Resolution 12-15 allowing three new sales tax exemptions to the original sales tax resolution. These are already exempt at the state level and will now be exempt at the county level effective July 1. Some vendors have already received specific information regarding these exemptions.
The sales tax exemptions that were adopted include an exemption for occasional sales for charitable organizations, a farm equipment exemption and an exemption for school-related items. Below is a brief overview of each exemption with excerpts from Colorado Department of Revenue FYI’s which are informational publications relating to specific tax issues.

FYI Sales 2: Sales Tax Exempt Status for Charitable Organizations:
Application Requirements
Colorado allows charitable organizations an exemption from state-collected sales tax for purchases made in the conduct of their regular charitable functions and activities. [§39-26-718 (1) (a), C.R.S. The threshold for sales tax exempt status in Colorado is exemption from income tax under Section 501(c)(3) of the Internal Revenue Code. Such income tax exempt status must first be obtained from the federal Internal Revenue Service. Package 1023 is the “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.” Organizations must be organized specifically for one of the following purposes:
n religious, charitable, scientific, testing for public safety, literary or educational;
n to foster national or international amateur sports competition, as long as no part of its activities involve providing athletic facilities or equipment;
n the prevention of cruelty to children or animals, as long as no part of the net earnings benefit any private shareholder or individual.

FYI Sales 75
Farm Equipment Exemption
Effective July 1, 1999, and as modified effective July 1, 2000, and again on July 1, 2001, a sales tax exemption is provided for certain qualifying farm, dairy and ranch equipment and shipping aids. [§39-26-716, C.R.S.] Colorado sales tax exempts many non-registered farm vehicles, towed equipment, trailers, and the attachments to these vehicles, irrigation equipment, dairy equipment, aircraft used in crop dusting, and repair and maintenance parts for these exempt items. The statute also exempts farm use of bailing wire, binders twine, surface wrap, pallets and crates. Shipping pallets, aids and crates are exempt when used in the transfer or shipping of agricultural products.
While the broad term “farm equipment” is used in the exemption statute, only non-registered vehicles, trailers and towables are included as exempt. The exemption law defines farm equipment to be farm tractors and implements of husbandry as defined in motor vehicle statutes. If the farm vehicle is registered with the county motor vehicle office, then it does not qualify for the exemption.

FYI Sales 86
Sales Tax Exemption on School-Related Items
Beginning Sept. 1, 2008, sales made by schools, school activity booster organizations, and student classes or organizations are exempt from state sales tax if all proceeds of the sale are for the benefit of a school or school-approved student organization. A “school” includes both public and private school for students in kindergarten through 12th grade or any portion of those school grades. [§39-26-725(2), C.R.S] Preschools, trade schools, and post-secondary schools are not eligible for this exemption. All of the proceeds of the sale must go to the benefit of the school or school-approved student organization in order to qualify for this exemption. The only exception is that the proceeds can be used to pay the actual cost of the commodity sold. This exemption does not apply if proceeds are used to pay facility charges (rental of space or equipment), labor (school employee, security personnel, or independent contractor costs), transportation, meals, insurance, and other costs.
This state sales tax exemption includes, but is not limited to, fundraiser items such as gift wrap, bake sale goods, silent auction donation items, and booster club concession stand food items that are sold by the school or a school-related organization.
For more information, go to www.colorado.gov then go into Taxes, go into Tax Information, go into FYI Sales and find the FYI you need.
You may also contact Debbie Morlan, Rio Blanco County Sales and Use Tax Administrator at 970-878-9610 or at debmorlan@ co.rio-blanco.co.us.