As used in this
article 26, unless the context otherwise requires:
(1) Agricultural commodity means any agricultural commodity as defined in
section 35-28-104 (1), C.R.S.; except that, for purposes of this article, agricultural
commodity shall also include sugar beets, timber and timber products, oats,
malting barley, barley, hops, rice, milo, and any other feed grain.
(1.3) Auction sale means any sale conducted or transacted at a permanent
place of business operated by an auctioneer or a sale conducted and transacted at
any location where tangible personal property is sold by an auctioneer when such
auctioneer is acting either as agent for the owner of such personal property or is in
fact the owner thereof. The auctioneer at any sale defined in subsection (10) of this
section, except when acting as an agent for a duly licensed retailer or vendor or
when selling only tangible personal property that is exempt under the provisions of
section 39-26-716 (4)(a) and (4)(b), is a retailer or vendor as defined in subsection
(8) of this section and the sale made by the auctioneer is a retail sale as defined in
subsection (9) of this section, and the business conducted by said auctioneer in
accomplishing such sale is the transaction of a business as defined by subsection
(2) of this section.
(2) Business includes all activities engaged in or caused to be engaged in
with the object of gain, benefit, or advantage, direct or indirect.
(2.5) Charitable organization means any entity organized and operated
exclusively for religious, charitable, scientific, testing for public safety, literary, or
educational purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the provision of athletic
facilities or equipment), or for the prevention of cruelty to children or animals, no
part of the net earnings of which inures to the benefit of any private shareholder or
individual, no substantial part of the activities of which is carrying on propaganda,
or otherwise attempting, to influence legislation, and which does not participate in,
or intervene in (including the publishing or distributing of statements), any political
campaign on behalf of any candidate for public office, or any veterans' organization
registered under section 501 (c)(19) of the federal Internal Revenue Code of 1986,
as amended.
(2.6) Coins means monetized bullion or other forms of money
manufactured from gold, silver, platinum, palladium, or other such metals now, in
the future, or heretofore designated as a medium of exchange under the laws of
this state, the United States, or any foreign nation.
(2.7) Cooperative direct mail advertising means advertising for one or more
businesses which is in the form of discount coupons, advertising leaflets, or other
printed advertising which are delivered by mail in a single package or bundle to
potential customers of such businesses participating in such advertising.
(2.8) Direct mail advertising materials means discount coupons, advertising
leaflets, and other printed advertising, including, but not limited to, accompanying
envelopes and labels.
(3) Doing business in this state means the selling, leasing, or delivering in
this state, or any activity in this state in connection with the selling, leasing, or
delivering in this state, of tangible personal property or taxable services by a retail
sale as defined in this section, for use, storage, distribution, or consumption within
this state. This subsection (3) affects the imposition, application, or collection of
sales and use taxes only. Doing business in this state includes, but shall not be
limited to, the following acts or methods of transacting business:
(a) The maintaining within this state, directly or indirectly or by a subsidiary,
of an office, distribution facility, salesroom, warehouse, storage place, or other
similar place of business, including the employment of a resident of this state who
works from a home office in this state; or
(b) The soliciting, either by direct representatives, indirect representatives,
manufacturers' agents, or by distribution of catalogues or other advertising, or by
use of any communication media, or by use of the newspaper, radio, or television
advertising media, or by any other means whatsoever, of business from persons
residing in this state and by reason thereof receiving orders from, or selling or
leasing tangible personal property to, such persons residing in this state for use,
consumption, distribution, and storage for use or consumption in this state.
(c) Economic nexus. (I) Except as provided in subsection (3)(c)(II) of this
section, a person is doing business in this state in a calendar year:
(A) If in the previous calendar year the person has made retail sales of
tangible personal property, commodities, or services in the state as specified in
section 39-26-104 (3), exceeding one hundred thousand dollars; or
(B) On and after the first day of the month after the ninetieth day after the
person has made retail sales of tangible personal property, commodities, or
services in the state as specified in section 39-26-104 (3), in the current calendar
year that exceed one hundred thousand dollars.
(II) Beginning October 1, 2019, for purposes of determining whether the
thresholds set forth in subsection (3)(c)(I) of this section are met:
(A) A marketplace facilitator shall include all sales made by marketplace
sellers in and through its marketplace; and
(B) A marketplace seller shall not include any sales made in or through a
marketplace facilitator's marketplace.
(III) This subsection (3)(c) does not apply to any person who is doing business
in this state under subsection (3)(a) of this section but otherwise applies to any
other person.
(4) Farm close-out sale means a sale by auction or private treaty of all
tangible personal property of a farmer or rancher previously used by him in carrying
on his farming or ranching operations. Unless said farmer or rancher is making or
attempting to make full and final disposition of all property used in his farming or
ranching operations and is abandoning the said operations on the premises whereon
they were previously conducted, such sale shall not be deemed a farm close-out
sale within the meaning of this article.
(4.5) (a) Food means food for domestic home consumption as defined in 7
U.S.C. sec. 2012 (k), as amended, for purposes of the federal food stamp program, or
any successor program, as defined in 7 U.S.C. sec. 2012 (l), as amended; except that
food does not include carbonated water marketed in containers; chewing gum;
seeds and plants to grow foods; prepared salads and salad bars; packaged and
unpackaged cold sandwiches; deli trays; and hot or cold beverages served in
unsealed containers or cups that are vended by or through machines or non-coin-operated coin-collecting food and snack devices on behalf of a vendor.
(b) In determining whether a food product is for domestic home
consumption, unless the vendor is described in section 39-26-104 (1)(e), no
inference shall be drawn from the type of vendor selling the product, the location of
the product within a store, or the manner in which the product is marketed.
(5) Gross taxable sales means the total amount received in money, credits,
or property, excluding the fair market value of exchanged property which is to be
sold thereafter in the usual course of the retailer's business, or other consideration
valued in money from sales and purchases at retail within this state, and embraced
within the provisions of this article. The taxpayer may take credit in this report of
gross sales for an amount equal to the sale price of property returned by the
purchaser when the full sale price thereof is refunded whether in cash or by credit.
The fair market value of any exchanged property which is to be sold thereafter in
the usual course of the retailer's business, if included in the full price of a new
article, shall be excluded from the gross sales. On all sales at retail, valued in
money, when such sales are made under conditional sales contract, or under other
forms of sale where the payment of the principal sum thereunder is extended over a
period longer than sixty days from the date of sale thereof, only such portion of the
sale amount thereof may be counted for the purpose of imposition of the tax
imposed by this article as has actually been received in cash by the taxpayer during
the period for which the tax imposed by this article is due and payable. Taxes paid
on gross sales represented by accounts found to be worthless and actually charged
off for income tax purposes may be credited upon a subsequent payment of the tax
provided in this article, but if any such accounts are thereafter collected by the
taxpayer, a tax shall be paid upon the amounts so collected.
(5.5) Livestock means cattle, horses, mules, burros, sheep, lambs, poultry,
swine, ostrich, llama, alpaca, and goats, regardless of use, and any other animal
which is raised primarily for food, fiber, or hide production. Livestock shall also
mean alternative livestock as defined under section 35-41.5-102, C.R.S.
Livestock shall not mean a pet animal as defined under section 35-80-102 (10),
C.R.S.
(5.6) Livestock production facility means any structure used predominately
for the housing, containing, sheltering, or feeding of livestock, including, without
limitation, barns, corrals, feedlots, and swine houses.
(5.7) Mainframe computer access means the provision of access to
computer equipment for the purpose of storing or processing data. Mainframe
computer access does not include the provision of access to computer equipment
for the purpose of examining or acquiring data maintained by the vendor.
Mainframe computer access does not include the provision of access to computer
equipment incident to electronic computer software delivery, as defined in
subsection (15)(c)(II)(C) of this section, or incident to the use of computer software
hosted by an application service provider, as defined in subsection (15)(c)(II)(A) of
this section.
(5.8) Marketplace means a physical or electronic forum, including, but not
limited to, a store, a booth, an internet website, a catalog, or a dedicated sales
software application, where tangible personal property, commodities, or services
are offered for sale.
(5.9) (a) Marketplace facilitator means a person who:
(I) Contracts with a marketplace seller to facilitate for consideration,
regardless of whether the consideration is deducted as fees from the transaction,
the sale of the marketplace seller's tangible personal property, commodities, or
services through the person's marketplace;
(II) Engages directly or indirectly, through one or more affiliated persons, in
transmitting or otherwise communicating the offer or acceptance between a
purchaser and the marketplace seller; and
(III) Either directly or indirectly, through agreements or arrangements with
third parties, collects the payment from the purchaser and transmits the payment
to the marketplace seller.
(b) A marketplace facilitator does not include a person that exclusively
provides internet advertising services or lists products for sale, and that does not
otherwise meet the definition set forth in subsection (5.9)(a) of this section.
(6) Marketplace seller means a person, regardless of whether the person is
doing business in this state, who has an agreement with a marketplace facilitator
and offers for sale tangible personal property, commodities, or services through a
marketplace owned, operated, or controlled by a marketplace facilitator.
(6.1) Medical marijuana has the same meaning as set forth in section 44-10-103 (34).
(6.2) Multichannel seller means a retailer that offers for sale tangible
personal property, commodities, or services through a marketplace owned,
operated, or controlled by a marketplace facilitator, and through other means.
(6.3) Person includes any individual, firm, limited liability company,
partnership, joint venture, corporation, estate, or trust or any group or combination
acting as a unit, and the plural as well as the singular number.
(6.4) Packing and crating means tangible personal property furnished to
prepare tangible personal property purchased at retail for delivery to a location
designated by the purchaser.
(6.5) Photocopying means the sale of a document rendered on paper or
other similar material by a machine that creates an accurate reproduction of the
original. Photocopying does not include the provision of a photocopy in
connection with services if the purchaser is not charged separately for
photocopying.
(6.6) Precious metal bullion means any precious metal, including, but not
limited to, gold, silver, platinum, and palladium, that has been put through a process
of refining and is in such a state or condition that its value depends upon its
precious metal content and not its form.
(6.7) Pre-press preparation printing materials means those tangible
products converted to use for a specific print job that are subsequently saved but
can only be reused for that same print client on rerun. Title to such pre-press
preparation printing materials must pass to an independent customer with the sale
of the printed materials, and they must be reusable for their original purpose or a
similar purpose after the press run. Examples of pre-press preparation printing
materials include, but are not limited to, photos, color keys, dies, engravings, light
sensitive film or paper, masking sheets of any material, plates, rotogravure
cylinders, and proofing samples of any material. No disposable materials or
materials consumed to a significant degree are pre-press preparation printing
materials for the purposes of this article. Examples of disposable or consumable
materials include, but are not limited to, tape, alcohol, glues, adhesives, washes,
silicon solutions, pens, markers, and cleaners.
(6.8) Public school means a public school of a school district in this state or
an institute charter school.
(7) (a) Purchase price means the price to the consumer, exclusive of any
direct tax imposed by the federal government or by this article 26, exclusive of any
retail delivery fee and enterprise retail delivery fees imposed or collected as
specified in section 43-4-218, and, in the case of all retail sales involving the
exchange of property, also exclusive of the fair market value of the property
exchanged at the time and place of the exchange, if:
(I) Such exchanged property is to be sold thereafter in the usual course of
the retailer's business; or
(II) Such exchanged property is a vehicle and is exchanged for another
vehicle and both vehicles are subject to licensing, registration, or certification
under the laws of this state, including, but not limited to, vehicles operating upon
public highways, off-highway recreation vehicles, watercraft, and aircraft.
(b) In the case of the sale or transfer of wireless telecommunication
equipment as an inducement to a consumer to enter into or continue a contract for
telecommunication services that are taxable pursuant to this part 1, purchase
price means and shall be limited to the monetary amount paid by the consumer
and shall not reflect any sales commission or other compensation received by the
retailer as a result of the consumer entering into or continuing a contract for such
telecommunication services. Nothing in this paragraph (b) shall be construed to
define purchase price as it applies to the amount a retailer collects from a
consumer who defaults or terminates a contract for telecommunication services.
(c) With respect to the purchase price of a heavy truck, trailer, or tractor, the
price to the consumer shall also be exclusive of the federal excise tax on the first
retail sale of the heavy truck, trailer, or tractor for which the retailer is liable.
(7.5) Qualified purchaser means a person domiciled in Colorado who has
been issued a direct payment permit number pursuant to section 39-26-103.5.
(7.6) and (7.7) Repealed.
(8) Retailer or vendor means a person doing business in this state known
to the trade and public as such, and selling to the user or consumer, and not for
resale. The term includes a marketplace facilitator, a marketplace seller, and a
multichannel seller doing business in this state.
(9) Retail sale includes all sales made within the state except wholesale
sales.
(10) Sale or sale and purchase includes installment and credit sales and
the exchange of property as well as the sale thereof for money; every such
transaction, conditional or otherwise, for a consideration, constituting a sale; and
the sale or furnishing of electrical energy, gas, steam, telephone, or telegraph
services taxable under the terms of this article. Neither term includes:
(a) A division of partnership or limited liability company assets among the
partners or limited liability company members according to their interests in the
partnership or limited liability company;
(b) The formation of a corporation by the owners of a business and the
transfer of their business assets to the corporation in exchange for all the
corporation's outstanding stock, except qualifying shares, in proportion to the
assets contributed;
(c) The transfer of assets of shareholders in the formation or dissolution of
professional corporations;
(d) The dissolution and the pro rata distribution of the corporation's assets to
its stockholders;
(e) The transfer of assets from a parent corporation to a subsidiary
corporation or corporations which are owned at least eighty percent by the parent
corporation, which transfer is solely in exchange for stock or securities of the
subsidiary corporation;
(f) The transfer of assets from a subsidiary corporation or corporations which
are owned at least eighty percent by the parent corporation to a parent corporation
or to another subsidiary which is owned at least eighty percent by the parent
corporation, which transfer is solely in exchange for stock or securities of the
parent corporation or the subsidiary which received the assets;
(g) A transfer of a limited liability company or partnership interest;
(h) The transfer in a reorganization qualifying under section 368 (a)(1) of the
Internal Revenue Code of 1986, as amended;
(i) The formation of a limited liability company or partnership by the transfer
of assets to the limited liability company or partnership or transfers to a limited
liability company or partnership in exchange for proportionate interests in the
limited liability company or partnership;
(j) The repossession of personal property by a chattel mortgage holder or
foreclosure by a lienholder;
(k) The transfer of assets between parent and closely held subsidiary
corporations, or between subsidiary corporations closely held by the same parent
corporation, or between corporations which are owned by the same shareholders in
identical percentage of stock ownership amounts, computed on a share-by-share
basis, when a tax imposed by this article was paid by the transferor corporation at
the time it acquired such assets, except to the extent provided by subsection (12) of
this section. For the purposes of this paragraph (k), a closely held subsidiary
corporation is one in which the parent corporation owns stock possessing at least
eighty percent of the total combined voting power of all classes of stock entitled to
vote and owns at least eighty percent of the total number of shares of all other
classes of stock.
(11) Sale or sale and purchase, in addition to the items included in
subsection (10) of this section, includes the transaction of furnishing rooms or
accommodations by any person, partnership, limited liability company, association,
corporation, estate, receiver, trustee, assignee, lessee, or person acting in a
representative capacity or any other combination of individuals by whatever name
known to a person who for a consideration uses, possesses, or has the right to use
or possess any room in a hotel, apartment hotel, lodging house, motor hotel,
guesthouse, guest ranch, trailer coach, mobile home, auto camp, or trailer court and
park, under any concession, permit, right of access, license to use, or other
agreement, or otherwise.
(12) Except as otherwise provided in this subsection (12), the sales tax is
imposed on the full purchase price of articles sold after manufacture or after
having been made to order and includes the full purchase price for material used
and the service performed in connection therewith, excluding, however, such
articles as are otherwise exempted in this article. In connection with the
transactions referred to in paragraph (k) of subsection (10) of this section, the sales
tax is imposed only on the amount of any increase in the fair market value of such
assets resulting from the manufacturing, fabricating, or physical changing of the
assets by the transferor corporation. Except as otherwise provided in this
subsection (12), the sales price is the gross value of all materials, labor, and service,
and the profit thereon, included in the price charged to the user or consumer.
(13) School means an educational institution having a curriculum
comparable to grade, grammar, junior high, high school, or college, or any
combination thereof, requiring daily attendance, having an enrollment of at least
forty students, and charging a tuition fee.
(13.5) (Deleted by amendment, L. 2011, (HB 11-1293), ch. 299, p. 1437, � 4,
effective July 1, 2012.)
(14) State treasurer or treasurer means the state treasurer of the state of
Colorado.
(15) (a) (I) Tangible personal property means corporeal personal property.
The term embraces all goods, wares, merchandise, products and commodities, and
all tangible or corporeal things and substances that are dealt in and capable of
being possessed and exchanged, except as set forth in this subsection (15). The
term shall not be construed to include newspapers, as legally defined by section
24-70-102, preprinted newspaper supplements that become attached to or inserted
in and distributed with such newspapers, or direct mail advertising materials that
are distributed in Colorado by any person engaged solely and exclusively in the
business of providing cooperative direct mail advertising; except that, commencing
March 1, 2010, for purposes of the state sales or use tax, tangible personal
property shall include direct mail advertising materials that are distributed in
Colorado by any person engaged solely and exclusively in the business of providing
cooperative direct mail advertising.
(II) No funding received from revenues received as a result of the passage of
House Bill 10-1189, enacted in 2010, shall be used to fund additional full-time
equivalent state employees.
(b) (Deleted by amendment, L. 2011, (HB 11-1293), ch. 299, p. 1437, � 4,
effective July 1, 2012.)
(b.5) (I) Tangible personal property includes digital goods. The method of
delivery does not impact the taxability of a sale of tangible personal property.
Examples of methods used to deliver tangible personal property under current
technology include but are not limited to compact disc, electronic download, and
internet streaming.
(II) As used in this subsection (15)(b.5), digital good means any item of
tangible personal property that is delivered or stored by digital means, including
but not limited to video, music, or electronic books.
(c) (I) Tangible personal property, commencing July 1, 2012, shall include
computer software if the computer software meets all of the following criteria:
(A) The computer software is prepackaged for repeated sale or license;
(B) The use of the computer software is governed by a tear-open
nonnegotiable license agreement; and
(C) The computer software is delivered to the customer in a tangible
medium. Computer software is not delivered to the customer in a tangible medium
if it is provided through an application service provider, delivered by electronic
computer software delivery, or transferred by load and leave computer software
delivery.
(II) As used in this paragraph (c), unless the context otherwise requires:
(A) Application service provider or ASP means an entity that retains
custody over or hosts computer software for use by third parties. Users of the
computer software hosted by an ASP typically will access the computer software
via the internet. The ASP may or may not own or license the computer software, but
generally will own and maintain hardware and networking equipment required for
the user to access the computer software. Where the ASP owns the computer
software, the ASP may charge the user a license fee for the computer software or a
fee for maintaining the computer software or hardware used by its customer.
(B) Computer software means a set of coded instructions designed to
cause a computer or automatic data processing equipment to perform a task.
(C) Electronic computer software delivery means computer software
transferred by remote telecommunications to the purchaser's computer, where the
purchaser does not obtain possession of any tangible medium in the transaction.
(D) Load and leave computer software delivery means delivery of computer
software to the purchaser by use of a tangible medium where the title to or
possession of the tangible medium is not transferred to the purchaser, and where
the computer software is manually loaded by the vendor, or the vendor's
representative, at the purchaser's location.
(E) Prepackaged for repeated sale or license means computer software
that is prepackaged for repeated sale or license in the same form to multiple users
without modification, and is typically sold in a shrink-wrapped box.
(F) Tangible medium means a tape, disk, compact disc, card, or comparable
physical medium.
(G) Tear-open nonnegotiable license agreement means a license
agreement contained on or in the package, which by its terms becomes effective
upon opening of the package and accepting the licensing agreement. Tear-open
nonnegotiable license agreement does not include a written license agreement or
contract signed by the licensor and the licensee.
(III) The internalized instruction code that controls the basic operations, such
as arithmetic and logic, of the computer causing it to execute instructions
contained in system programs is an integral part of the computer and is not
normally accessible or modifiable by the user. Such internalized instruction code is
considered part of the hardware and considered tangible personal property that is
taxable pursuant to section 39-26-104 (1)(a). The fact that the vendor does or does
not charge separately for such code is immaterial.
(IV) If a retailer sells computer software to a Colorado purchaser that is
considered tangible personal property taxable pursuant to section 39-26-104 (1)(a)
and the Colorado purchaser pays the retailer for a quantity of computer software
licenses with the intent to distribute the computer software to any of the
purchaser's locations outside of Colorado, the measure of Colorado sales tax due is
the total of the license fees associated only with the licenses that are actually used
in Colorado. The Colorado purchaser shall provide a written statement to the
retailer, attesting to the amount of the license fees associated with Colorado and
with points outside of Colorado. The written statement shall relieve the retailer of
any liability associated with the proration.
(16) Tax means either the tax payable by the purchaser of a commodity or
service subject to tax, or the aggregate amount of taxes due from the vendor of
such commodities or services during the period for which he is required to report his
collections, as the context may require.
(17) Taxpayer means any person obligated to account to the executive
director of the department of revenue for taxes collected or to be collected under
the terms of this article.
(18) Wholesaler means a person doing a regularly organized wholesale or
jobbing business, and known to the trade as such and selling to retail merchants,
jobbers, dealers, or other wholesalers, for the purpose of resale.
(19) (a) (I) Wholesale sale means a sale by wholesalers to retail merchants,
jobbers, dealers, or other wholesalers for resale and does not include a sale by
wholesalers to users or consumers not for resale, and the latter sales shall be
deemed retail sales and subject to the provisions of this article 26.
(II) The purpose of the wholesale sale exemption from the tax levied
pursuant to section 39-26-104 (1)(a) is to ensure that sales tax is levied and
collected only on a final end sale to a retail consumer and not on wholesale sales to
avoid a single product being taxed multiple times before it is sold to a consumer.
(III) The effectiveness of the wholesale exemption from the tax levied
pursuant to section 39-26-104 (1)(a) is measured by the number of taxpayers
claiming the wholesale exemption from tax and the amount of tax liability not paid.
(b) Wholesale sale includes sales of all pre-press preparation printing
materials, as defined in subsection (6.7) of this section, that are used by a printer
for a specific printing contract where the printed product is sold at retail to a
customer accepting delivery within this state.
(c) (I) Wholesale sale includes sales of agricultural compounds and spray
adjuvants to be consumed by, administered to, or otherwise used in caring for
livestock and all sales of semen for agricultural or ranching purposes.
(II) For purposes of this paragraph (c), agricultural compounds means:
(A) Insecticides, fungicides, growth-regulating chemicals, enhancing
compounds, vaccines, and hormones;
(B) Drugs, whether dispensed in accordance with a prescription or not, that
are used for the prevention or treatment of disease or injury in livestock;
(C) Animal pharmaceuticals that have been approved by the food and drug
administration.
(III) For purposes of this paragraph (c), spray adjuvants means products
that are used to increase the effectiveness of a pesticide.
(d) Wholesale sale includes sales of pesticides that are registered by the
commissioner of agriculture for use in the production of agricultural and livestock
products pursuant to the Pesticide Act, article 9 of title 35, C.R.S., and offered for
sale by dealers licensed to sell such pesticides pursuant to section 35-9-115, C.R.S.
(e) Wholesale sale includes sales of fertilizer for use in the production of
agricultural commodities. For purposes of this subsection (19)(e), fertilizer means
fertilizer as defined in section 35-12-103 (12), but not including specialty fertilizer as
defined in section 35-12-103 (30).
(f) Wholesale sale includes sales of spray adjuvants for use in the
production of agricultural commodities. For purposes of this subsection (19)(f),
spray adjuvants means products that are used to increase the effectiveness of a
pesticide.
(f.5) Wholesale sale includes sales of agricultural compounds for use in
the production of agricultural commodities. For purposes of this subsection
(19)(f.5), for income tax years commencing on or after January 1, 2026, agricultural
compounds means soil conditioners, plant amendments, plant growth regulators,
mulches, compost, soil used for aboveground production of agricultural
commodities, manure, fish for non-stocking purposes, fish embryos, and fish eggs.
(g) (I) (A) For purposes of this subsection (19), before July 1, 2025,
agricultural commodities does not include products regulated under article 10 of
title 44.
(B) This subsection (19)(g)(I) is repealed, effective July 1, 2026.
(II) For purposes of this subsection (19), on or afer July1, 2025, agricultural
commodities includes products regulated under article 10 of title 44.
(20) (a) Sales to and purchases of tangible personal property by a person
engaged in the business of manufacturing, compounding for sale, profit, or use, any
article, substance, or commodity, which tangible personal property enters into the
processing of or becomes an ingredient or component part of the product or service
which is manufactured, compounded, or furnished, and the container, label, or the
furnished shipping case thereof, shall be deemed to be wholesale sales and shall be
exempt from taxation under this part 1.
(b) As used in paragraph (a) of this subsection (20) with regard to food
products, tangible personal property enters into the processing of such products
and is therefore exempt from taxation when:
(I) It is intended that such property become an integral or constituent part of
a food product which is intended to be sold ultimately at retail for human
consumption; or
(II) Such property, whether or not it becomes an integral or constituent part
of a food product, is a chemical, solvent, agent, mold, skin casing, or other material;
is used for the purpose of producing or inducing a chemical or physical change in a
food product or is used for the purpose of placing a food product in a more
marketable condition; and is directly utilized and consumed, dissipated, or
destroyed, to the extent it is rendered unfit for further use, in the processing of a
food product which is intended to be sold ultimately at retail for human
consumption.
(21) (a) Sales and purchases of electricity, coal, gas, fuel oil, steam, coke, or
nuclear fuel, for use in processing, manufacturing, mining, refining, irrigation,
construction, telegraph, telephone, and radio communication, street and railroad
transportation services, and all industrial uses, and newsprint and printer's ink for
use by publishers of newspapers and commercial printers shall be deemed to be
wholesale sales and shall be exempt from taxation under this part 1.
(b) Repealed.
(22) Should a dispute arise between the purchaser and seller as to whether
or not any such sale is exempt from taxation, nevertheless the seller shall collect
and the purchaser shall pay such tax, and the seller shall thereupon issue to the
purchaser a receipt or certificate, on forms prescribed by the executive director of
the department of revenue, showing the names of the seller and purchaser, the
items purchased, the date, price, amount of tax paid, and a brief statement of the
claim of exemption. The purchaser thereafter may apply to the said executive
director for a refund of such taxes, and it is the executive director's duty to
determine the question of exemption, subject to review by the courts, as provided in
section 39-21-105. If any seller fails to collect or purchaser fails to pay the tax
levied by this article 26 and on sales on which exemption is disputed, the seller or
purchaser commits:
(a) A petty offense if the amount is less than three hundred dollars;
(b) A class 2 misdemeanor if the amount is three hundred dollars or more but
less than one thousand dollars;
(c) A class 1 misdemeanor if the amount is one thousand dollars or more but
less than two thousand dollars;
(d) A class 6 felony if the amount is more than two thousand dollars but less
than five thousand dollars;
(e) A class 5 felony if the amount is five thousand dollars or more but less
than twenty thousand dollars;
(f) A class 4 felony if the amount is twenty thousand dollars or more but less
than one hundred thousand dollars;
(g) A class 3 felony if the amount is one hundred thousand dollars or more
but less than one million dollars; and
(h) A class 2 felony if the amount is one million dollars or more.
(23) Except as provided in section 39-26-713 (1)(a), when right to continuous
possession or use for more than three years of any article of tangible personal
property is granted under a lease or contract and such transfer of possession would
be taxable if outright sale were made, such lease or contract shall be considered
the sale of such article, and the tax shall be computed and paid by the vendor upon
the rentals paid.