Sales tax can be one of the most confusing topics in regards to buying building materials. It is often not factored into the budget, which will turn out to be a very unfortunate mistake since sales tax will add 4-8% to the materials total. As a general rule of thumb, Front Range Lumber charges for the tax rate for the location where you take possession of the material. Therefore, picking up supplies at Front Range Lumber’s store results in being charged the Lakewood, CO, tax rate (as of 2015, 7.5%). However, if we deliver to Vail, we would not collect the county, RTD, cultural or city sales tax, just the base 2.9% state sales tax. We take great pains to ensure that the tax rate we charge you is correct and we are in compliance with the law.
Tax rates vary be region and since we deliver to a variety of regions that rate can/will change by the specific job location on which you are working. As an illustration, if a delivery is made within the City of Lakewood (or you pick it up at our store), you will be charged the current total “Lakewood” sales tax (7.5%). This tax is a breakdown of the following individual jurisdiction taxes for this “Lakewood” example:
|City of Lakewood:||3%|
|State of Colorado:||2.9%|
|Scientific& Cultural District:||.1%|
Under the special circumstances of building permits, you may have already paid “use” (sales) tax of the estimated value of the construction. If this is the case, by supplying us with a copy of the permit with EACH sale, you can avoid paying sales tax twice. The City/County of Denver does NOT collect sales/use tax at the time of permitting; therefore the full Denver 7.65% tax will be applied on any/all purchases.
Businesses are charged the responsibility to monitor purchases made by resale businesses. Any purchase made that is exempt from sales tax should be reasonably evaluated as an item used by the purchasing company in their normal line of business. For example, a sign company uses posts to install their signs. Conversely, Boeing Airplanes does not use house paint in 747s and therefore we would charge sales tax on those types of items. At best, the house paint would be used for maintenance of one of Boeing’s buildings, making the paint a taxable purchase for maintenance.
Due to sales tax rules and regulations, we will require additional documentation of your exempt status.
To be exempt, purchases made by a qualifying government entity must be billed to the government and paid for directly from funds of the government. A “petty cash” purchase must be authorized by an official purchase order from the government. A copy of that purchase order must be kept as part of our records as a basis for exempting the sale from taxation. In addition, a written statement of tax exempt status will be required.
Note: Construction contractors who perform a construction contract for a government entity are considered to be the ultimate user of the purchased material and will be generally subject to sales and use tax when buying materials used to perform the contract.
Any purchases made by an exempt organization – school, church, club, etc., must be paid for out of that organization’s own funds (i.e., check). As a general rule, payment by cash is not an acceptable means of payment as the source of the funds cannot be directly tied to that exempt organization. Due to sales tax rules and regulations, we will require additional documentation of your exempt status.
- City & County of Denver:
(see Charitable & Religious Exemptions - Topic No. 10; Sales Tax - Topic No. 70)
- Please refer to particular jurisdiction’s specific rules, rates and guidelines.