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Generally, a use tax is levied on the privilege of using or otherwise consuming tangible personal property within a city or county for which no sales or use tax has been previously paid. It is considered complementary to a sales tax, and is applied where the product or materials are used, regardless of where the property was purchased. For example, the Town of Vail’s construction use tax is levied on construction material used in Vail regardless of where the supplier is located.
A use tax may be applied generally to all tangible personal property used or consumed within a municipality or its application may be limited to vehicles and/or construction and building materials.
The Town of Vail use tax is limited to construction and building materials.
Over half the incorporated municipalities and counties in Colorado levy a use tax and the concept is well-supported by legislation and case law in Colorado. Examples of municipalities with use tax on building materials include Broomfield, Denver, Eagle, Glenwood Springs, Grand Junction, Gypsum, Lakewood, Mountain Village, and Steamboat Springs.
Colorado statutes authorize use taxes on construction materials and on vehicles used within the municipality or county imposing the tax. Since implementing a construction use tax is a change in tax policy and increases revenue, it must be approved by the town’s electorate in a TABOR election. The Town of Vail’s construction use tax was approved by voters in November 2007 effective January 1, 2008.
The Vail Town Code defines construction materials as “Tangible personal property which, when combined with other tangible personal property, loses its identity to become an integral and inseparable part of a complete structure or project including public and private improvements. Construction materials include, but are not limited to, such things as asphalt, bricks, builder’s hardware, caulking material, cement, concrete, conduit, electric wiring and connections, fireplace inserts, electrical heating and cooling equipment, flooring, glass, gravel, insulation, lathe, lead, line, lumber, macadam millwork, mortar, oil, paint, piping, pipe valves, and pipe fittings, plaster, plumbing fixtures, putty, reinforcing mesh, road base, roofing, sand, sanitary sewer pipe, sheet metal, site lighting, steel, stone, stucco, tile, trees, shrubs, and other landscaping materials, wallboard, wall coping, wallpaper, weather stripping, wire netting, and screen, water mains and meters, and wood preserver. The above materials, when used for forms, or other items which do not remain as an integral or inseparable part of a completed structure or project are not construction materials. Construction materials do not include such things as: carpeting, equipment, furniture, removable fixtures, window coverings, or similar items.”
Construction and building materials subject to the use tax are exempt from the town’s sales tax.
The Town’s use tax is collected at the time the building permit is issued.
The use tax amount is determined by multiplying the 4% use tax rate by the cost of the building materials. The cost of building materials is deemed to be fifty percent of the total valuation of the construction project as entered on the building permit by the town building inspector. An exemption is provided for the first $10,000 of material.
The Town’s use tax ordinance provides for an audit of the taxable value by either party within a reasonable period after construction is complete.
No. If the materials are delivered to Vail, the seller does not collect sales tax for the town or city where he/she is located, and only Vail’s use tax would apply. If the seller is located in Eagle County, he is required to collect Eagle County’s 1.5% sales tax. If he is located in Colorado, he is required to collect the state’s 2.9% sales tax.
If the purchaser picks up the material from a seller located in a town or city with a sales tax, the materials are generally exempt from the local sales tax if the purchaser presents to the seller a building permit or other documentation acceptable to the local government where the purchase takes place, showing that a use tax has been paid. This is required by state statute for both statutory and home rule municipalities. (Colorado Revised Statutes, Title 29).
The Town of Vail provides the same organizational exemptions for use tax as for sales tax: a. The United State government, the state, its departments and institutions, and the political subdivisions thereof in their governmental capacities only; b. charitable organizations in the conduct of their regular charitable functions and activities; and c. schools, other than schools held or conducted for private or corporate profit.
See the Vail Town Code on-line at www.vailgov.com or contact the Town of Vail Finance Director, Kathleen Halloran at 970-479-2116 or email@example.com.
Jacque M. Lovato
Sales Tax Manager