(1) The following shall be exempt
from taxation under the provisions of part 1 of this article 26:
(a) Any right to the continuous possession or use for three years or less of
any article of tangible personal property under a lease or contract, if the lessor has
paid to the state of Colorado a sales or use tax on such tangible personal property
upon its acquisition. The department of revenue may permit a lessor of tangible
personal property leased for a period of three years or less to acquire the property
free of sales or use tax if the lessor agrees to collect sales tax on all lease
payments received on the property.
(b) Repealed.
(c) The sale of tangible personal property for testing, modification,
inspection, or similar type of activities in this state if the ultimate use of the
property in manufacturing or similar type of activities occurs outside of this state
and if the test, modification, or inspection period does not exceed ninety days; and
(d) All sales and purchases of tangible personal property by a manufacturer
that uses the property as a component part of goods that it manufactures,
including, but not limited to, high technology goods, and that donates such goods to
the United States government; the state of Colorado or any department, institution,
or political subdivision thereof; or any organization exempt from federal income
taxes pursuant to section 501 (c)(3) of the Internal Revenue Code of 1986, as
amended, to the extent that the aggregate value of the goods included in a single
donation exceeds one thousand dollars.
(2) The following are exempt from taxation under part 2 of this article 26:
(a) The storage, use, or consumption of any tangible personal property the
sale of which is subject to the retail sales tax imposed by part 1 of this article,
including transactions that are exempt from taxation under section 39-26-704 (5);
(b) (I) The storage, use, or consumption of any tangible personal property
purchased for resale in this state, either in its original form or as an ingredient of a
manufactured or compounded product, in the regular course of a business.
(II) For purposes of this subsection (2)(b), any motor vehicle purchased and
held for resale in this state by a licensed motor vehicle dealer, as defined in section
44-20-102, who meets the eligibility requirements to receive a full-use dealer plate
set forth in section 42-3-116 (6)(a)(I) shall be considered to be in the regular course
of business and shall not be subject to taxation under part 2 of this article 26. A
motor vehicle shall be considered to be purchased and held for resale if:
(A) The manufacturer's certificate of origin or certificate of title for the
motor vehicle is assigned to the motor vehicle dealer;
(B) The motor vehicle is included in a current list of vehicles for retail sale
that is prepared by the motor vehicle dealer in the ordinary course of business; and
(C) At any given time, the motor vehicle is available to be purchased and
delivered to a retail customer within three business days.
(c) The storage, use, or consumption of tangible personal property brought
into this state by a nonresident for his or her own storage, use, or consumption
while temporarily within this state;
(d) The storage, use, consumption, or loan of tangible personal property by
or to the United States government, the state of Colorado or its institutions or
political subdivisions in their governmental capacities only, or any charitable
organization in the conduct of its regular charitable functions and activities;
(e) (I) The storage, use, or consumption of tangible personal property by a
person engaged in the business of manufacturing or 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 that is manufactured, compounded, or furnished, and the
container, label, or the furnished shipping case.
(II) As used in subparagraph (I) of this paragraph (e) with regard to food
products, tangible personal property enters into the processing of such products
and is therefore exempt from taxation when:
(A) It is intended that such property become an integral or constituent part
of a food product that is intended to be sold ultimately at retail for human
consumption; or
(B) 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 that is intended to be sold ultimately at retail for human consumption.
(f) The storage, use, or consumption of any article of tangible personal
property the sale or use of which has already been subjected to a tax equal to or in
excess of that imposed by part 2 of this article. A credit shall be granted against
the use tax imposed by part 2 of this article with respect to a person's storage, use,
or consumption in this state of tangible personal property purchased by the person
in another state. The amount of the credit shall be equal to the tax paid by the
person to another state by reason of the imposition of a similar tax on the purchase
or use of the property. The amount of the credit shall not exceed the tax imposed
by part 2 of this article.
(g) The storage, use, or consumption of tangible personal property and
household effects acquired outside of this state and brought into it by a
nonresident acquiring residency;
(h) The storage, use, or consumption of tangible personal property
purchased by a resident of Colorado while outside the state in amounts of one
hundred dollars or less; and
(i) Repealed.
(j) The testing, modification, inspection, or similar type activities of tangible
personal property acquired for ultimate use outside of this state in manufacturing
or similar type of activities if the test, modification, or inspection period does not
exceed ninety days.