Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Motor vehicles are tangible personal property and are

therefore subject to Colorado sales and use taxes.

However, special rules apply to the taxation of motor

vehicles in Colorado. Additionally, the manner in which

a motor vehicle is taxed varies depending on whether it

is leased or purchased. This publication describes the

various rules governing the taxation of motor vehicles

in Colorado.

This publication is designed to provide general guidance

regarding sales and use taxes on motor vehicles and to

supplement the guidance provided in the Colorado

Sales Tax Guide. Nothing in this publication modifies or

is intended to modify the requirements of Colorado’s

statutes and regulations. Taxpayers are encouraged to

consult their tax advisors for guidance regarding specific

situations.

The information in this publication applies generally to

all state and local sales and use taxes administered by

the Department. The information in this publication

does not apply to any city sales and use taxes

administered by any self-collecting home rule cities.

Please contact these home-rule cities directly for

information about their sales and use taxes.

The taxing requirements discussed in this publication

apply to motor vehicles that are subject to registration

requirements in Colorado. These registration

requirements apply to every self-propelled vehicle that

is designed primarily for travel on public roads and is

generally and commonly used to transport people or

property. Cars, trucks, and motorcycles are all

generally subject to these requirements.

This publication does not address the taxation of low-

powered scooters, farm tractors, and any other vehicle

that is not subject to vehicle registration requirements.

Motor vehicle sales

Motor vehicle sales in Colorado are subject to state and

state-administered local sales and use taxes. Which

local taxes apply depends on the city, county, and

special district(s) in which the vehicle will be

registered, the purchaser’s residence, and the location

of the sale.

In general, a motor vehicle sale is subject to all state

and state-administered local sales taxes that apply to

the location of the sale. For sales tax purposes, a motor

vehicle sale generally takes place at the location the

purchaser takes possession of the vehicle. If the seller

delivers the vehicle to the purchaser at the purchaser’s

location, the sale takes place at that location.

However, a motor vehicle sale is exempt from any sales

tax imposed by the city, county, and/or special

district(s) in which the sale takes place if both:

➢ the purchaser is a nonresident of the city, county,

and/or special district(s) or has their principal

place of business outside of the city, county,

and/or special district(s); and

➢ the vehicle is registered or required to be

registered outside of the city, county, and/or

special district(s).

If the vehicle sale is exempt from any city, county, or

special district sales tax, as described above, the

purchaser must pay any applicable use tax imposed by

the city, county, and/or special district in which the

vehicle is registered or required to be registered. Any

applicable use tax for motor vehicles must be paid to

the county clerk prior to titling and registration.

Examples illustrating the appropriate collection and

payment of sales and use tax on motor vehicle sales

appear in the table on the following page.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Delivery to the purchaser’s location

In the event that an auto dealer or other licensed retailer

delivers a motor vehicle to a purchaser at the purchaser’s

location, the seller is generally required to collect all

state and state-administered local sales taxes, not use

taxes, applicable to the purchaser’s location. Please see

Motor vehicle sales, earlier in this publication, for

additional information about local tax collection if the

vehicle will be registered in a different city, county, or

special district than the point of delivery.

Tax calculation on motor vehicle sales

State and state-administered local sales and use taxes

are calculated on the full purchase price of the motor

vehicle. The purchase price includes the full amount

paid, or promised to be paid, excluding only any direct

federal tax and any state and local sales tax imposed

on the sale. Any fees the seller charges that are not

optional for the purchaser are included in the taxable

purchase price. All applicable state and state-

administered local sales and/or use taxes must be paid

prior to titling and registering the vehicle, regardless of

whether the seller or a third-party provides financing

for the sale.

In the case of a manufacturer’s rebate, the tax is

calculated on the full purchase price of the vehicle,

without reduction for the rebate. The taxable purchase

price includes all amounts received by the seller for

the purchase of the vehicle, regardless of whether such

amounts are paid by the purchaser, the manufacturer,

a lender, or any other party.

If the purchaser trades in a motor vehicle they own as

part of a transaction to purchase another motor

vehicle, the fair market value of the trade-in is

excluded from the taxable purchase price, so long as

the motor vehicle the purchaser trades in is subject to

licensing, registration, or certification.

Examples of Sales and Use Tax on Motor Vehicle Sales

Example #1

Example #2

Example #3

Location of sale

(see Motor vehicle

sales, earlier in

this publication

City: Erie

County: Boulder

Special district: RTD and SCFD

City: Erie

County: Boulder

Special district: RTD and SCFD

City: Erie

County: Boulder

Special district: RTD and SCFD

Purchaser’s

residence and

location for

registering vehicle

City: Erie

County: Boulder

Special district: RTD and SCFD

City: Superior

County: Boulder

Special district: RTD and SCFD

City: Berthoud

County: Larimer

Special district: none

Sales taxes the

seller must collect

➢ Colorado state sales tax

➢ Erie city sales tax

➢ Boulder County sales tax

➢ RTD and SCFD sales taxes

➢ Colorado state sales tax

➢ Boulder county sales tax

➢ RTD and SCFD sales taxes

➢ Colorado state sales tax

Use taxes

collected by the

county clerk

(none)

➢ Superior city use tax

➢ Berthoud city use tax

➢ Larimer County use tax

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Sales between private parties or at auction

If the party selling a motor vehicle is not a retailer who

is required to obtain a sales tax license, the seller may

not be required to collect the state and state-

administered sales taxes applicable to the sale.

Additionally, an auctioneer who has not been licensed

by the Auto Industry Division is not required to collect

state and state-administered local sales taxes on motor

vehicle sales, even if the auctioneer holds a sales tax

license.

If the seller is not required to collect sales taxes, the

purchaser generally must pay all applicable state and

local sales taxes to the county clerk at the time of

registration. Please see Motor vehicle sales, earlier in

this publication, for rules for determining the

applicable local sales and use taxes.

Vehicles purchased outside of Colorado

Motor vehicle sales made outside of Colorado are not

subject to Colorado sales tax. Generally, a vehicle sale

occurs at the location where the purchaser takes

possession of the vehicle.

If anyone, including any individual or business,

purchases a motor vehicle outside of Colorado and

registers it in Colorado, the purchaser must pay

Colorado use tax and any applicable local use tax at

the time of registration. If the purchaser paid any

sales, use, or other similar tax legally imposed by the

state in which the sale took place, the purchaser is

allowed a credit against the use tax due for the sales

tax paid.

If a nonresident moves into Colorado and acquires

Colorado residency, no use tax applies to any motor

vehicle they acquired outside of Colorado and brought

into the state when acquiring residency. However,

please see Sourcing periodic lease payments, later in

this publication, for information about motor vehicles

leased by persons who move into Colorado.

Motor vehicles relocated within Colorado

If a Colorado resident or Colorado business relocates a

motor vehicle within Colorado, the resident or business

may owe use tax imposed by the jurisdiction(s) into

which the vehicle is moved. If use tax is due for the

jurisdiction(s) into which the vehicle is relocated, the

motor vehicle owner will generally be allowed a credit

for sales or use taxes legally imposed by any local

jurisdiction(s) in which the vehicle was previously

maintained.

Motor vehicles transferred as a gift or prize

If a motor vehicle is transferred as a gift or prize, the

recipient is not liable for either sales or use tax for the

vehicle. However, the business, person, or other party

that makes the gift or grants the prize is liable for sales

and/or use tax on their acquisition of the vehicle and

must pay the applicable tax prior to the registration of

the vehicle by the recipient. The county clerk cannot

receipts showing payment of the applicable tax by the

business, person, or other party that made the gift or

granted the prize.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Motor vehicle leases

In general, motor vehicle leases are considered retail

sales and are subject to Colorado sales tax. However, a

lease for a term of 36 months or less is tax-exempt if

the lessor has paid Colorado sales or use tax on the

acquisition of the leased vehicle. A lessor may request

permission from the Department to acquire motor

vehicles tax-free on the condition that the lessor

agrees to collect sales tax on all lease payments

received on motor vehicle leases.

The application of sales and use taxes to leased motor

vehicles is described in the following sections and

illustrated with the table titled Examples of Sales and

Use Tax on Leased Motor Vehicles, later in this

publication.

Leases of 36 months or less

If the lease term is 36 months or less, the lessor must

pay sales and/or use taxes, as applicable, on the full

purchase price the lessor paid for the acquisition of the

vehicle, unless the lessor has received permission from

the Department to collect all applicable state and

state-administered local sales taxes on all payments

made by the lessee pursuant to the lease. The lessor

may request such permission from the Department

when filing the Lessor Registration for Sales Tax

Collection (DR 0440). If a lessor receives permission to

collect sales tax on lease payments and chooses to do

so, the lessor must collect sales tax on all leases made

by the lessor for terms of 36 months or less.

A lessor who has received permission from the

Department to collect sales tax on leases of 36 months

or less will owe no sales or use tax on the acquisition of

motor vehicles for lease. If the lessor has not received

this permission, the sale of the motor vehicle from the

dealer to the lessor is subject to sales and/or use tax in

the manner described in the section titled Motor

vehicle sales, earlier in this publication.

Leases greater than 36 months

If a motor vehicle lease is for a term of greater than 36

months, the lease is subject to state and state-

administered local sales taxes. The lessor’s acquisition

of the vehicle is considered a wholesale sale and is not

subject to sales tax. The lessor is required to collect all

state and state-administered sales taxes from the lessee

on all payments made pursuant to the lease.

Sourcing periodic lease payments

If the lessor collects sales tax on periodic (e.g.

monthly) lease payments, the lessor must collect all

state and state-administered local sales taxes

applicable to the primary property location for the

vehicle. The primary property location is the location

indicated by an address for the property provided by

the lessee that is available to the lessor from its

records maintained in the ordinary course of business,

when use of this address does not constitute bad faith.

The locations of the auto dealer and the lessor do not

affect the sourcing of the periodic lease payments.

If the primary property location for the vehicle changes

during the lease term, the state and state-administered

local sales taxes due on subsequent lease payments will

be based upon the new location for the vehicle. Please

see 1 CCR 201-4, Rule 39-26-104-2(6) for lease or rental

agreements executed prior to June 1, 2019.

If a nonresident moves into Colorado and brings a

leased vehicle with them, changing the primary

property location for the vehicle to Colorado as a result

of the move, any lease payments made after the

change will be subject to Colorado state and state-

administered local sales taxes.

If a Colorado resident moves out of Colorado and takes

a leased vehicle with them, moving the primary

property location for the vehicle out of Colorado, no

Colorado state or state-administered local sales taxes

will be due on any lease payments made after the

primary property location is moved out of Colorado.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Leases requiring only one payment

Certain motor vehicle lease agreements do not require

periodic (e.g. monthly) payments over the duration of the

lease, but instead require only one payment from the

lessee. The taxability of the lease payment is determined

under the general rules applicable to leases (based upon

the duration of the lease, whether the lessor paid sales or

use tax on the acquisition of the vehicle, and whether the

lessor has received permission to collect sales tax), but

the applicability of state-administered local sales and/or

use taxes is determined under rules similar to those

governing motor vehicle sales.

If the lease term is greater than 36 months or the lessor

has received permission from the Department to collect

sales tax on leases of 36 months or less, the lessor is

required to collect all applicable sales and/or use taxes

on the one lease payment made by the lessee. If the

dealer accepts payment on behalf of the lessor, the

dealer is required to collect the applicable taxes.

The single lease payment is subject to all state and

state-administered local sales taxes applicable to the

location where the lessee takes possession of the

vehicle, except for any sales tax imposed by a

jurisdiction in which the lessee is not a resident and in

which the vehicle will not be registered. If the city,

county, and/or special district in which the vehicle will

be registered imposes a use tax, the lessee must pay the

applicable use tax(es) prior to titling and registration.

Please see Motor vehicle sales, earlier in this

publication, for rules governing the application of

state-administered local sales and use taxes.

If the lessor or dealer collects any local use taxes due on

the single lease payment, such use taxes must be

remitted to the county clerk along with Standard Sales

Tax Receipt for Vehicle Sales (DR 0024).

Amounts paid at signing or delivery

If a lease requiring periodic payments is treated as a

taxable sale, either because it is greater than 36 months

or because the lessor has received permission from the

Department to collect sales tax on leases of 36 months or

less, all payments made by the lessee pursuant to the

lease agreement are subject to sales tax.

Commonly, lease agreements require an initial payment

at the time of signing or delivery. This initial payment

may include a capitalized cost reduction, the first

monthly payment, a refundable security deposit, and/or

titling and registration fees. Sales tax generally applies to

and must be collected on the entire amount of this initial

payment, whether paid by the lessee to the dealer or the

lessor. If any part of the required initial payment is

satisfied by the trade-in of a vehicle owned by the lessee,

the fair market value of the trade-in is excluded from the

taxable purchase price.

Associated service charges included in the amount paid

at signing are subject to tax unless both the service is

separable from the sale of the property and the service

charge is separately stated from the price of the

property sold on the invoice or receipt. Please see Part

3: Calculation of Tax in the Colorado Sales Tax Guide

for additional information regarding associated service

charges.

Lease buy-outs

If the lessee purchases the leased vehicle, either before

or at the end of the lease term, the lessee’s purchase of

the vehicle is subject to sales and/or use tax. The seller is

required to collect the applicable state and state-

administered sales taxes, regardless of whether the seller

is the lessor, an auto dealer, or any other retailer.

For the purpose state and state-administered local sales

taxes the sale takes place at the location where the

purchaser takes possession of the vehicle. If the purchaser

maintains possession of the vehicle continuously, both

before sale as the lessee and after the sale as the

purchaser, the sale takes place at the location where the

purchaser maintains the vehicle both before and after the

sale. Please see Motor vehicle sales, earlier in this

publication, for additional information about the taxation

of motor vehicle purchases.

Since a lease buy-out transfers the ownership of the

vehicle to the lessee, the lessee who purchases the vehicle

must apply for a new title for the vehicle in their name.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Examples of Sales and Use Tax on Leased Motor Vehicles

Example #1

Example #2

Example #3

Example #4

Lease duration

24 months

48 months

Number of lease payments

Lessor has permission to

collect sales tax?

Yes

Lessors must collect tax on

any lease over 36 months

Lessors must collect tax on

any lease over 36 months

Location of dealership

City: Erie

County: Boulder

Special district: RTD/SCFD

City: Erie

County: Boulder

Special district: RTD/SCFD

City: Erie

County: Boulder

Special district: RTD/SCFD

City: Erie

County: Boulder

Special district: RTD/SCFD

Primary property location

and lessee’s address for

vehicle registration

City: Superior

County: Boulder

Special district: RTD/SCFD

City: Superior

County: Boulder

Special district: RTD/SCFD

City: Berthoud

County: Larimer

Special district: none

City: Berthoud

County: Larimer

Special district: none

Sales taxes dealer must

collect and remit

Colorado, Boulder County, RTD,

and SCFD sales tax - collected

from the lessor on the full

purchase price paid by the

lessor for the acquisition of the

vehicle, presuming the lessee

takes possession of the vehicle

at the dealer’s location

Colorado, Superior, Boulder

County, RTD, and SCFD sales

tax – collected from the

lessee on any payment

made to the dealer at the

time of signing and delivery

Colorado, Berthoud, and

Larimer County sales tax -

collected from the lessee on

any payment made to the

dealer at the time of signing

and delivery

Colorado sales tax - collected

from the lessee by the dealer

on the single payment made

pursuant to the lease

agreement, received by the

dealer on the lessor’s behalf

Dealer remittance of sales

tax collected

All sales taxes remitted to the

Department with monthly sales

tax return (DR 0100)

Superior sales tax remitted

to county clerk with

DR 0026; all other sales

taxes remitted to the

Department with monthly

sales tax return (DR 0100)

Berthoud and Larimer County

sales tax remitted to county

clerk with DR 0026; state

sales tax remitted to the

Department with monthly

sales tax return (DR 0100)

State sales tax remitted to

the Department with monthly

sales tax return (DR 0100)

Use taxes collected by

county clerk

Superior city use tax

None

Berthoud and Larimer County

Sales taxes lessor collects

and remits from lessee on

periodic lease payments

None

Colorado, Superior, Boulder

County, RTD, and SCFD

Colorado, Berthoud, and

Larimer County

If the lessee makes the one

payment required by the

lease to the dealer, the

lessor will receive no

payments and collect no tax

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Exempt motor vehicle sales & leases

In a variety of circumstances, a motor vehicle sale or

lease may be exempt from all state and state-

administered local sales taxes. Some of the more

common exemptions are detailed in the following

sections. Additional information regarding exemptions

can also be found in the Colorado Sales Tax Guide.

Motor vehicles acquired for resale

The acquisition of a motor vehicle by a licensed auto

dealer for resale is generally not subject to state and

state-administered sales or use taxes. Sales and use tax

are imposed only with respect to retail sales. The

acquisition of a motor vehicle by an auto dealer for the

purpose of resale is considered a wholesale sale, rather

than a retail sale, and therefore is not subject to either

sales or use tax. Additionally, a use tax exemption

applies to any motor vehicle that meets all three of the

following conditions:

1) The manufacturer’s certificate of origin or

certificate of title for the motor vehicle is

assigned to the auto dealer.

2) The motor vehicle is included in a current list of

vehicles for retail sale that is prepared by the auto

dealer in the ordinary course of business.

3) At any given time, the motor vehicle is available

to be purchased and delivered to a retail customer

within three business days.

Governmental entities

State and state-administered sales and use taxes do not

apply to motor vehicles purchased or leased by the

U.S. government, the State of Colorado, its

departments and institutions, and the political

subdivisions thereof. This exemption applies only if the

purchase or lease is made directly by the governmental

entity with governmental funds. Please see Department

publication Sales & Use Tax Topics: Governmental

Entities for additional information.

Charitable organizations

State and state-administered sales and use taxes do not

apply to motor vehicles purchased or leased by

charitable organizations in the conduct of their regular

charitable functions and activities. Charitable

organizations that qualify for exemption are generally

those organizations that qualify for 501(c)(3) status

with the IRS. Please see Department publication Sales

& Use Tax Topics: Charitable Organizations for

additional information about charitable organizations.

Tribes and tribal members

Any motor vehicle purchased or leased by the Southern

Ute Indian Tribe, the Ute Mountain Tribe, or enrolled

members of either tribe who reside on a reservation in

Colorado is exempt from state and state-administered

local sales and use taxes if the vehicle is to be registered

to an address on a reservation. The exemption applies

regardless of whether the purchaser or lessee takes

possession of the vehicle on or outside of the

reservation. A seller may reasonably rely on a tribal

member’s certification of his or her enrolled

membership status and residence.

Nonresidents

Any motor vehicle purchased by a nonresident of

Colorado is exempt from state and state-administered

local sales and use taxes if such vehicle is purchased

for use outside of Colorado.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Certain heavy vehicles

State sales and use taxes do not apply to certain heavy

vehicles that either:

➢ have a gross vehicle weight rating (GVWR) greater

than 26,000 pounds and an engine or motor that

has been certified by the U.S. Environmental

Protection Agency (EPA) for compliance with

federal emissions standards; or

➢ have a gross vehicle weight rating (GVWR) greater

than 10,000 pounds and operate on compressed

natural gas (CNG), liquefied petroleum gas (LPG),

liquefied natural gas (LNG), electricity, or

hydrogen fuel cells.

State-administered local jurisdictions have the option

to allow sales and use tax exemptions for the heavy

vehicles described above. See Department publication

Colorado Sales/Use Tax Rates (DR 1002) for information

about the exemptions allowed for any particular state-

administered local jurisdiction.

Farm close-out sales

Any motor vehicle purchased as part of a farm close-

out sale is exempt from state and state-administered

local sales and use taxes. A farm close-out sale is a sale

by auction or private contract of all tangible personal

property of a farmer or rancher that the farmer or

rancher previously used in carrying on their farming or

ranching operations. A sale is considered a farm close-

out sale only if the farmer or rancher is making, or

attempting to make, full and final disposition of all

property used in their farming or ranching operations

and is abandoning all operations on the farm or ranch.

The auctioneer or licensed owner conducting a farm

close-out sale must provide the purchaser of any motor

vehicle sold a copy of the owner's or owner's agent's

written declaration acknowledging the sale met the

requirements of a farm close-out sale. The declaration

must include a description of each item of property

offered for sale (regardless of whether such property is

actually sold) in such detail as to allow the specific

property to be identified by a third-party. The

declaration must also attest that:

➢ the property was used in the owner's farming or

ranching operation;

➢ the owner/owner's agent is making or attempting

to make a full and final disposition of all property

used in the farming or ranching operation;

➢ the owner is abandoning the operation on the

premises whereon the farming or ranching

operation was previously conducted; and

➢ if the statement is signed by the owner's agent, a

declaration that the owner's agent has personal

knowledge of the facts supporting the statements

or has confirmed with a person (whose name and

address are set forth in the declaration) who has

such personal knowledge, that such statements

are true.

The purchaser of a motor vehicle sold as part of a farm

close-out sale must present a copy of the declaration to

the county clerk when the purchaser registers the

motor vehicle to verify the exemption. If a purchaser of

a motor vehicle does not have a copy of a declaration,

the purchaser must pay all applicable state and state-

administered local sales and/or use tax to the county

clerk and may thereafter file a claim for refund with

the Department of Revenue.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Tax collection and reporting

Anyone engaged in the business of selling, leasing, or

delivering motor vehicles in Colorado, including any auto

dealer, is a retailer and is required to obtain a sales tax

license and collect all applicable state and state

administered sales taxes on any taxable sale or lease. See

the Colorado Sales Tax Guide for general information

about sales tax licensing, collection, and filing.

Additionally, any lessor who collects or is required to

collect sales tax on lease payments must also file a Lessor

Registration for Sales Tax Collection (DR 0440). Please

see Lessor registration requirements, later in this

publication, for additional information.

For each motor vehicle sold, the retailer must prepare

either a Standard Sales Tax Receipt for Vehicle Sales

(DR 0024) or a Tax Statement for Leased Motor Vehicle

(DR 0026). In either case, the retailer must submit a

copy of the completed form along with titling

paperwork to the county clerk for the county in which

the vehicle will be registered.

The retailer must prepare a Standard Sales Tax Receipt

for Vehicle Sales (DR 0024) for each motor vehicle sold,

unless the vehicle is sold to a lessor who will be

collecting sales tax on lease payments. For any motor

vehicle sold to a lessor who will be collecting all

applicable state and state-administered sales taxes on

lease payments, the retailer must prepare a Tax

Statement for Leased Motor Vehicle (DR 0026).

Lessor registration requirements

Any lessor that will be collecting state and state-

administered sales taxes in Colorado must apply for and

maintain an active sales tax license and file a completed

Lessor Registration for Sales Tax Collection (DR 0440).

The lessor must submit with their completed DR 0440 an

attachment listing the location/jurisdiction codes for

each jurisdiction for which the lessor will be collecting

sales tax. Please see Lessor Registration for Sales Tax

Collection (DR 0440), Location/Jurisdiction Codes for

Sales Tax Filing (DR 0800), and Tax.Colorado.gov/sales-

tax-account-license for additional information.

The lessor must apply for a sales tax license and file a

DR 0440 prior to acquiring any motor vehicles that is to

be leased. If the lessor has not obtained a sales tax

license and filed a DR 440 prior to the acquisition of a

motor vehicle that will be leased for a term of 36

months or less, the lessor must pay any applicable state

and state-administered sales tax to the seller at the

time of acquisition or use tax to the clerk at the time of

titling and registration. If immediately thereafter, the

lessor obtains a license and files a DR 0440, the lessor

may apply for a refund of sales tax paid.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Tax collection and reporting on vehicle sales

State and state-administered local sales and use taxes

are calculated on the full purchase price of the motor

vehicle. All applicable state and state-administered

local sales and/or use taxes must be paid prior to

titling and registering the vehicle, regardless of

whether the seller or a third-party provides financing

for the sale. Please see Tax calculation on motor

vehicle sales, earlier in this publication, for additional

information.

The taxes a retailer must collect on motor vehicle sales

depend in part on the purchaser’s residence, where the

vehicle will be registered, and the location where the

purchaser takes possession of the vehicle.

If the purchaser takes possession of the motor vehicle in

the same city, county, and/or special district(s) as they

reside or in which the vehicle will be registered, the

retailer must collect the applicable sales tax for each of

those jurisdictions. If the retailer delivers the vehicle to

the purchaser’s location, the retailer must collect the

state-administered local sales taxes that apply to that

location. The retailer must remit all applicable state and

state-administered local sales taxes with the retailer’s

monthly Colorado Retail Sales Tax Return (DR 0100).

The retailer should not collect sales tax for any city,

county, or special district unless the purchaser is a

resident of that local jurisdiction and will be registering

the vehicle in that local jurisdiction. Instead, any use

tax imposed by the city, county, or special district in

which the purchaser resides and in which the vehicle will

be registered must be paid to the county clerk prior to

titling and registration. If a retailer elects to collect any

applicable local use taxes, the retailer must remit such

taxes to the county clerk with the Standard Sales Tax

Receipt for Vehicle Sales (DR 0024).

Please see Motor vehicle sales, earlier in this

publication, and the table titled Examples of Sales and

Use Tax on Motor Vehicle Sales, for additional

information about local sales and use taxes on motor

vehicle sales.

Tax collection and reporting on vehicle leases

As discussed in Motor vehicle leases, earlier in this

publication, the taxation of leased vehicles depends on

the duration of the lease and possibly on whether the

lessor has received permission to collect sales tax on

the lease payments. In general, the lessor must collect

sales tax on all lease payments for leases of greater

than 36 months, but for vehicles leased for 36 months

or less, the lessor must pay sales and/or use taxes, as

applicable, on acquisition of the vehicle, unless the

lessor has received permission from the Department to

collect tax on the lease payments. Please see Motor

vehicle leases, earlier in this publication, for specific

rules governing the taxation of leased vehicles.

Taxes on the lessor’s acquisition of the vehicle

If the lessor’s acquisition of the vehicle is subject to sales

tax, the dealer must collect sales and/or use tax from the

lessor in the same manner as any other vehicle sale.

Please see Tax collection and reporting on vehicle sales,

earlier in this publication, for additional information.

If the lessee or lessor takes possession of the motor

vehicle in the same city, county, and/or special

district(s) in which they reside or in which the vehicle

will be registered, the dealer must collect the

applicable sales tax for each of those jurisdictions. The

dealer must remit all applicable state and state-

administered local sales taxes with the dealer’s

monthly Colorado Retail Sales Tax Return (DR 0100).

The dealer should collect the state-administered city,

county, or special district sales taxes applicable to the

location where the lessee or lessor takes possession

only if the lessee is a resident of that jurisdiction and

will be registering the vehicle in that jurisdiction.

Otherwise, any use tax imposed by the city, county, or

special district in which the vehicle will be registered

must be paid to the county clerk prior to titling and

registration. If a dealer elects to collect any applicable

local use taxes, the dealer must remit such taxes to the

county clerk with the Standard Sales Tax Receipt for

Vehicle Sales (DR 0024).

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Sales tax on lease payments

If the lessor is required to collect sales tax on the lease

payments, all payments made by the lessee pursuant to

the lease agreement are subject to any state and state-

administered local sales taxes applicable to the primary

property location for the leased vehicle. The lessor

must collect all applicable state and state-administered

local sales taxes and remit the collected taxes with the

lessor’s monthly Colorado Retail Sales Tax Return

(DR 0100).

Additionally, if the lessor is required to collect sales

tax on the lease payments, any amount paid by the

lessee to the dealer at the time of signing and delivery

is also subject to any state and state-administered

local sales taxes, except as discussed in Amounts paid

at signing or delivery, earlier in this publication. The

dealer must collect all state-administered local sales

taxes imposed by any city, county, and special district

in which the vehicle will be registered. The required

method for remitting the collected taxes depends on

whether the vehicle will be registered in the same local

taxing jurisdictions as the dealer’s location.

➢ The dealer must remit to the Department with its

monthly Colorado Retail Sales Tax Return

(DR 0100) any state-administered city, county,

and/or special district sales taxes for any local

taxing jurisdictions common to both the dealer’s

location and the address at which the vehicle is

registered.

➢ The dealer must remit to the county clerk with the

Tax Statement for Leased Motor Vehicle (DR 0026)

any state-administered city, county, and/or

special district sales taxes for any local taxing

jurisdictions applicable to the address at which

the vehicle is registered, but not the dealer’s

location.

Leases requiring only one payment

If a lease requiring only a single payment is taxable,

the lessor or dealer who receives the payment must

collect sales and/or use taxes as described in Leases

requiring only one payment, earlier in this publication.

Any state and state-administered sales taxes collected

by the lessor or dealer must be remitted with the lessor

or dealer’s Colorado Retail Sales Tax Return (DR 0100).

Any local use taxes collected by the lessor or dealer

must be remitted with a Standard Sales Tax Receipt for

Vehicle Sale (DR 0024).

Tax collection by county clerks

County clerks in Colorado cannot register or issue title

for any motor vehicle until all applicable sales and/or

use taxes for the vehicle have been paid. All applicable

state and local sales and/or use taxes must be paid prior

to titling and registering the vehicle, regardless of

whether the seller or a third-party provides financing for

the sale. Anyone applying for a motor vehicle title in

Colorado must provide a receipt from the seller

showing any state and local sales or use taxes paid at

the time of the sale. The county clerk must collect

from the applicant, prior to issuing title or registration,

any applicable sales or use taxes that have not already

been paid.

Sale & Use Tax Topics: Motor Vehicles

Revised November 2021

Additional resources

The following is a list of statutes, regulations, forms,

and guidance pertaining to sales and use tax on motor

vehicles. This list is not, and is not intended to be, an

exhaustive list of authorities that govern the tax

treatment of every situation. Individuals and businesses

with specific questions should consult their tax advisors.

Statutes and regulations

➢ § 29-2-105, C.R.S. Contents of sales tax ordinances

and proposals.

➢ § 29-2-109, C.R.S. Contents of use tax ordinances

and proposals.

➢ § 39-26-102, C.R.S. Definitions.

➢ § 39-26-103, C.R.S. Licenses.

➢ § 39-26-104, C.R.S. Property and services taxed.

➢ § 39-26-105, C.R.S. Vendor liable for tax.

➢ § 39-26-106, C.R.S. Schedule of sales tax.

➢ § 39-26-113, C.R.S. Collection of sales tax – motor

vehicles.

➢ § 39-26-202, C.R.S. Authorization of [use] tax.

➢ § 39-26-208, C.R.S. Collection of use tax – motor

vehicles.

➢ § 39-26-713, C.R.S. Tangible personal property.

➢ Rule 39-26-102(7)(a).

➢ Rule 39-26-113.

➢ Rule 39-26-713-1.

Forms and guidance

➢ Tax.Colorado.gov

➢ Tax.Colorado.gov/sales-use-tax

➢ Standard Sales Tax Receipt for Vehicle Sale (DR 0024)

➢ Tax Statement for Leased Motor Vehicle (DR 0026)

➢ Lessor Registration for Sales Tax Collection (DR 0440)

➢ Colorado Retail Sales Tax Return (DR 0100)

➢ Colorado Sales Tax Guide