39-26-102(15) - Tangible Personal Property

Basis and Purpose. The statutory bases for this rule are sections 39-21-112(1), 39-26-102(15), and 39-26-122, C.R.S. The purpose of this rule is to provide clarification on the definition of tangible personal property.

(1) Tangible personal property embraces all goods, wares, merchandise, products and commodities, and all tangible or corporeal things and substances which are dealt in, capable of being possessed and exchanged, except newspapers excluded by the law.

(2) Tangible personal property does not include:

(a) real property, such as land and buildings, nor tangible personal property that loses its identity when it becomes an integral and inseparable part of the realty, and is removable only with substantial damage to the premises. Property severed from real estate becomes tangible personal property.

(b) intangible personal property constituting mere rights of action and having no intrinsic value, such as contracts, deeds, mortgages, stocks, bonds, certificates of deposit or membership, or uncancelled United States postage or revenue stamps sold for postage or revenue purposes.

(c) water in pipes, conduits, ditches or reservoirs, but does include water in bottles, wagons, tanks or other containers.

(d) computer software that does not meet the criteria enumerated in section 39-26-102(15)(c), C.R.S.

(3) An advertising supplement included in a newspaper is considered part of the newspaper and is exempt. See Special Rule 32, Newspapers, Magazines and Other Publications.

(4) 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, the following: compact disc, electronic download, and internet streaming.

(a) Example 1: Purchaser buys a movie on a VHS tape. Sales tax is due on the purchase price of the movie.

(b) Example 2: Purchaser buys a movie on a compact disc. Sales tax is due on the purchase price of the movie.

(c) Example 3: Purchaser buys a movie through the internet, and then downloads the movie to the purchaser's computer. Sales tax is due on the purchase price of the movie.

(d) Example 4: Purchaser buys a movie, which purchaser accesses through an internet browser. Purchaser does not save a copy of the movie to purchaser's computer. Sales tax is due on the purchase price of the movie.

(e) Example 5: Purchaser pays a monthly subscription fee, which allows purchaser to select and stream movies and television shows from a library of available titles. Sales tax is due on the monthly fee.

(5) Whether a purchase that includes tangible personal property and services, and/or other types of property, is subject to tax is determined by application of the true object test. If the true object of the purchase is the tangible personal property, then sales tax is due on the purchase price.

Notes

39-26-102(15)

37 CR 18, September 25, 2014, effective 10/15/2014 38 CR 02, January 25, 2015, effective 2/14/2015 39 CR 10, May 25, 2016, effective 6/14/2016 40 CR 12, June 25, 2017, effective 7/15/2017 40 CR 23, December 10, 2017, effective 1/1/2018 41 CR 13, July 10, 2018, effective 7/30/2018 41 CR 14, July 25, 2018, effective 8/14/2018 42 CR 02, January 25, 2019, effective 12/18/2018, expires 4/17/2019. 42 CR 02, January 25, 2019, effective 12/18/2018 42 CR 06, March 25, 2019, effective 4/14/2019 43 CR 04, February 25, 2020, effective 3/16/2020 43 CR 17, September 10, 2020, effective 9/30/2020 44 CR 01, January 10, 2021, effective 1/30/2021 44 CR 07, April 10, 2021, effective 4/30/2021 44 CR 08, April 25, 2021, effective 5/15/2021 45 CR 04, February 25, 2022, effective 3/17/2022 45 CR 23, December 10, 2022, effective 12/30/2022 46 CR 08, April 25, 2023, effective 5/15/2023