§ 39-26-117 — Tax lien - exemption from lien

Colorado § 39-26-117

• Jurisdiction: Colorado
• Title 39: Taxation
• Art.: Sales and Use Tax

Text

(1) (a) Except as provided in
paragraphs (b) and (f) of this subsection (1), the tax imposed by this part 1 shall be a
first and prior lien upon the goods and business fixtures of or used by any retailer or
qualified purchaser under lease, title retaining contract, or other contract
arrangement, excepting stock of goods sold or for sale in the ordinary course of
business, and shall take precedence on all such property over other liens or claims
of whatsoever kind or nature.

(b) Any retailer or person in possession shall provide a copy of any lease
pertaining to the assets and property described in paragraph (a) of this subsection
(1) to the department of revenue within ten days after seizure by the department of
such assets and property. The department shall verify that such lease is bona fide
and notify the owner that such lease has been received by the department. The
department shall use its best efforts to notify the owner of the real or personal
property which might be subject to the lien created in paragraph (a) of this
subsection (1). The real or personal property of an owner who has made a bona fide
lease to a retailer shall be exempt from the lien created in paragraph (a) of this
subsection (1) if such property can reasonably be identified from the lease
description or if the lessee is given an option to purchase in such lease and has not
exercised such option to become the owner of the property leased. This exemption
shall be effective from the date of the execution of the lease. Such exemption shall
also apply if the lease is recorded with the county clerk and recorder of the county
where the property is located or based or a memorandum of the lease is filed with
the department of revenue on such forms as may be prescribed by said department
after the execution of the lease at a cost for such filing of two dollars and fifty
cents per document. Motor vehicles which are properly registered in this state,
showing the lessor as owner thereof, shall be exempt from the lien created in
paragraph (a) of this subsection (1); except that said lien shall apply to the extent
that the lessee has an earned reserve, allowance for depreciation not to exceed fair
market value, or similar interest which is or may be credited to the lessee. Where
the lessor and lessee are blood relatives or relatives by law or have twenty-five
percent or more common ownership, a lease between such lessee and such lessor
shall not be considered as bona fide for purposes of this section.

(b.5) Any coin-operated vending machine or video or other game machine
shall be exempt from the lien created in paragraph (a) of this subsection (1) if:

(I) The machine is placed on the retailer's premises under the terms of a
lease or other agreement under which the retailer is given no right to become the
owner of the machine;

(II) The machine is plainly marked in a location accessible to agents of the
department of revenue with information sufficient to permit identification of the
owner of said property; and

(III) The owner of the machine has filed with the department of revenue a
schedule listing the machine by serial number and including thereon the owner's
full name and the address of his business and such other information as the
executive director of the department of revenue may require. To protect the
anonymity of owners of property, the executive director of the department of
revenue may permit property covered by this paragraph (b.5) to be marked using
numbers or other coded identification.

(c) Any retailer who is in possession of property under the terms of a lease,
which property is exempt from lien as provided in this section, may be required by
the executive director of the department of revenue to remit taxes collected at
more frequent intervals than monthly, but no more frequently than semimonthly, or
may be required to furnish security for the proper payment of taxes whenever the
collection of taxes appears to be in jeopardy.

(d) Any retailer who sells out his business or stock of goods, or quits
business, shall be required to make out the return as provided in this part 1, within
ten days after the date he sold his business or stock of goods or quit business, and
his successor in business shall be required to withhold sufficient purchase money
to cover the amount of said taxes due and unpaid until such time as the former
owner produces a receipt from the executive director of the department of revenue
showing that the taxes have been paid or a certificate that no taxes are due.

(e) If the purchaser of a business or stock of goods fails to withhold the
purchase money as provided in paragraph (d) of this subsection (1), and the taxes
are due and unpaid after the ten-day period allowed, he, as well as the vendor, shall
be personally liable for the payment of the taxes unpaid by the former owner.
Likewise, anyone who takes any stock of goods or business fixtures of or used by
any retailer under lease, title retaining contract, or other contract arrangement, by
purchase, foreclosure sale, or otherwise, takes same subject to the lien for any
delinquent sales taxes owed by such retailer and shall be liable for the payment of
all delinquent sales taxes of such prior owner, not, however, exceeding the value of
property so taken or acquired.

(f) Any qualified purchaser that provides a direct payment permit number
issued pursuant to section 39-26-103.5 to a vendor or retailer shall be subject to
the lien created in paragraph (a) of this subsection (1) to the extent of any tax owed
as a result of purchases made by the qualified purchaser plus any penalty and
interest assessed pursuant to this article or article 21 of this title.

(2) Whenever the business or property of any taxpayer subject to this part 1
shall be placed in receivership, bankruptcy, or assignment for the benefit of
creditors, or seized under distraint for property taxes, all taxes, penalties, and
interest imposed by this part 1, and for which said retailer is in any way liable under
the terms of this part 1, shall be a prior and preferred claim against all the property
of said taxpayer, except as to preexisting claims or liens of a bona fide mortgagee,
pledgee, judgment creditor, or purchaser whose rights shall have attached prior to
the filing of the notice as provided in section 39-26-118 on the property of the
taxpayer, other than the goods, stock in trade, and business fixtures of such
taxpayer. No sheriff, receiver, assignee, or other officer shall sell the property of
any person subject to this part 1 under process or order of any court without first
ascertaining from the executive director the amount of any taxes due and payable
under this part 1, and, if there are any such taxes due, owing, or unpaid, it is the duty
of such officer to first pay the amount of said taxes out of the proceeds of said sale
before making payment of any moneys to any judgment creditor or other claims of
whatsoever kind or nature, except the costs of the proceedings and other
preexisting claims or liens as provided in this section. For the purposes of this part
1, taxpayer includes retailer.

Legislative History

Source: L. 35: p. 1014, � 10. CSA: C. 144, � 24. L. 37: p. 1093, � 1. L. 39: p. 503, � 2. CRS 53: � 138-6-23. C.R.S. 1963: � 138-5-23. L. 69: p. 1137, � 2. L. 77: (1)(b) amended, p. 1803, � 2, effective June 19. L. 89: (1)(b.5) added, p. 1509, � 2, effective April 6. L. 92: (1)(a) and (1)(b) amended, p. 2201, � 4, effective April 16. L. 99: (1)(a) amended and (1)(f) added, p. 13, � 4, effective January 1, 2000.