Colorado Utility Sales Tax Exemption
Colorado provides a utility sales tax exemption for manufacturers and industrial processors, to reduce or eliminate sales tax on utilities on electricity, natural gas, and water used directly in qualifying production activities. Colorado Revised Statutes § 39-26-102(21).
Qualified utilities include:
- Electricity
- Natural gas
- Coal
- Fuel oil
- Steam
- Nuclear fuel
- Coke
Qualified activities include:
- Processing, manufacturing
- Mining, refining
- All industrial uses.
Colorado tax information
- Colorado statute of limitations on tax refund: 3 years
- Colorado sales tax rate: 2.9%
- Colorado local sales tax rate: 4.75%
To obtain a utility sales tax exemption in Colorado, ICS can perform a comprehensive energy study that lists every piece of equipment and appliance (both production and non-production) that uses the utility, along with the annual consumption of each. This study determines the percentage of utility usage that qualifies for the exemption. A Sales Tax Exempt Certificate for Electricity & Gas for Industrial is required from the Colorado Department of Revenue. This certificate must be provided to utility providers to apply for the sales tax exemption. ICS can document and maintain detailed records demonstrating that the utility usage meets the exemption criteria.