Colorado (CO) Tax Exempt

ColoradoWho can qualify in Colorado for a sales tax exemption on utilities?
A manufacturer or an industrial processor can qualify for a sales tax exemption on utilities. A utility study is required for electric, natural gas, or water for each meter that has production usage. If the percentage of production consumption meets the usage requirement below, the account will be tagged as exempt and Colorado state sales tax will be removed from the bill.

How can one obtain the sales tax exemption on utilities in Colorado ?   
A Colorado company must file the special utility sales tax exemption form DR-1666 with the utility company. If the production usage is at least 75% of total consumption on a meter, the entire meter is exempt from sales tax.

Does the State require that an Exemption Certificate be completed by a professional utility engineer?
No. The utility study doesn’t have to be completed by a licensed engineer. However most companies have the work completed by an outside professional to insure that the study meets the state exemption requirements and that it is certified.

What is required for the utility study?
The utility study determines if a meter qualifies for exemption. A meter’s annual consumption must be used a minimum of 75% for production. Usage for non-production such as office lighting, air conditioning, etc. is taxable. Colorado requires a listing of every piece of equipment and appliance that uses the utility, e.g. electricity. The annual KWH consumption must be listed also for each piece using electric. A separate list of every non-production item must be included along with each one’s individual annual KWH consumption. Inaccurate listing is cause for denial.

What is the scope of work of a Professional providing the Utility sales tax exemption work in Colorado ?

  • Utility Study:  The utility study and evaluation is performed by On Your Mark. There is no charge for the upfront study work. If the meter(s) do not qualify, there is no charge by On Your Mark. If a meter(s) does qualify for exemption,  On Your Mark completes, certifies and files the required certificates and documentation. When approval and savings are obtained by the client, On Your Mark charges the fee.
  • Claim for Refund: If a meter qualifies for a sales tax refund on an exempt meter, On Your Mark will file for the applicable period which can extend to the full 36 month period.
  • Does filing of the utility exemption and/or refund claim raise any red flags? No. This exemption is similar to every exempt purchase for which an exemption certificate is filed with the supplier. The only difference with the utility exemption is that a utility study is required to provide documentation of the production percentage.
  • Minimize time and frustration: The utility study and the documentation required is a time consuming and frustrating project – especially if one has to deal with the learning curve. Wasted time and frustration is eliminated by having this contracting work done by an outside professional.
  • Risk-free Method to Obtain the Utility Sales Tax Exemption – in the shortest amount of time:  On Your Mark provides the  predominate usage evaluation at no charge.  The company only pays a fee after savings are obtained. So no savings, no fees. On Your Mark typically completes the work in 30 days.

Start the process now; save time and have it completed in 30 days. Contact Mark Winski today!