What do nonprofits need to know about sales tax?

Is my organization automatically exempt from paying sales tax?

No, even though you’ve obtained tax-exempt status with the IRS, you’ll still need to apply for sales tax exemption with the State of Colorado to receive a Colorado exemption certificate. However, the application is for state-collected sales tax only, and does not apply to home-rule cities (see below for more information on home-rule cities).

Organizations that are exempt from federal income tax under 501(c)(3) will generally be approved for a sales tax certificate of exemption in Colorado.

If seeking exemption in a home-rule city, you must contact the city for further information.

View the Colorado Sales/Use Tax Application

What purchases are exempt from state-collected sales tax?

Purchases made to conduct regular charitable functions and activities from the organization’s funds. Purchases made by the organization that will be reimbursed by any person does not qualify as a tax-exempt purchase.

Again, this only applies to state-collected sales tax. Home-rule cities make their own tax regulations and must be contacted for further information (see below).

How do I purchase items that are exempt from sales tax?