I have gone to Colorado's web page to try to determine if freight is taxable in the State of CO and cannot find the answer. We have a plant in Golden, CO In setting up the tax rates within PeopleSoft, I need to know if freight is taxable


In Colorado, freight charges are taxable in some scenarios and not in others, according to the Colorado Department of Revenue. But freight's taxability in Colorado is a bit trickier than in many states, where if freight is listed separately, it would not be taxable.

The Colorado Department of Revenue says shipping charges are tax exempt if the charges are separable from the sales transaction and stated separately on the invoice. The question is what is separable?

Shipping charges are separable if the vendor gives the purchaser the option to choose the vendor's transportation service or secure their own alternative method (including allowing the buyer to pick up the items themselves).

If the buyer has no option other than the vendor's shipping service, the freight charges are not separable and are subject to sales tax.

In addition, the shipping charges must also be stated separately from the purchase on the vendor's invoice. However, listing the price separately does not guarantee the shipping charges are exempt. The charge must be separable and listed separately. Both conditions must be met for the shipping charges to be exempt.

This information can be found in the Colorado Special Regulation SR-18.

A summary can also be found at the Colorado Department of Revenue's Frequently Asked Questions section. For a summary of freight charge taxability, go to this link: https://revenuestateco.custhelp.com and type "freight" in the search window.

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