This information is prepared as an informational service only and should not be relied upon as an official record of action taken by the Colorado General Assembly.
Sixty-first General Assembly
LLS NO. 980119.01 MKH
HOUSE BILL 981214
STATE OF COLORADO
BY REPRESENTATIVE K. Alexander;
also SENATOR Ament.
REREVISED
FINANCE
A BILL FOR AN ACT
CONCERNING THE EXEMPTION OF FARM EQUIPMENT FROM STATE
SALES AND USE TAX.
Bill Summary
(Note: This summary applies to this bill as introduced
and does not necessarily reflect any amendments that may be subsequently
adopted.)
Creates a state sales and use tax exemption for farm equipment purchased and sold on or after July 1, 1998. Defines "farm equipment" as personal property used primarily and directly in any farming operation and having a purchase price of $1,000 or more, and baling wire and binders twine, regardless of its purchase price. Defines "farming operation" as a farming business operated for profit, including a business providing farming work for hire. Excludes the following from the definition of "farm equipment":
Provides that the right to continuous possession
or use for more than 3 years of any farm equipment under lease
or contract shall be exempt from state sales and use tax under
certain circumstances.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. 3926114, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SUBSECTION to read:
3926114. Exemptions disputes credits or refunds. (19) (a) (I) ALL SALES AND PURCHASES OF FARM EQUIPMENT SHALL BE EXEMPT FROM TAXATION UNDER THIS PART 1.
(II) (A) ANY FARM EQUIPMENT UNDER LEASE OR CONTRACT SHALL BE EXEMPT FROM TAXATION UNDER THIS PART 1 IF THE FAIR MARKET VALUE OF SUCH EQUIPMENT IS AT LEAST ONE THOUSAND DOLLARS AND THE EQUIPMENT IS RENTED OR LEASED FOR USE PRIMARILY AND DIRECTLY IN ANY FARM OPERATION.
(B) THE LESSOR SHALL OBTAIN A SIGNED AFFIDAVIT FROM THE LESSEE OR RENTER AFFIRMING THAT THE FARM EQUIPMENT WILL BE USED PRIMARILY AND DIRECTLY IN A FARMING OPERATION.
(b) FOR PURPOSES OF THIS SUBSECTION (19):
(I) "FARM EQUIPMENT" MEANS FARM TRACTORS, AS DEFINED IN SECTION 421102 (33), C.R.S., IMPLEMENTS OF HUSBANDRY, AS DEFINED IN SECTION 421102 (44), C.R.S., IRRIGATION SYSTEMS, AND OTHER TANGIBLE PERSONAL PROPERTY USED PRIMARILY AND DIRECTLY IN ANY FARMING OPERATION AND HAVING A PER UNIT OR, IN THE CASE OF IRRIGATION SYSTEMS, A PER SYSTEM PURCHASE PRICE OF AT LEAST ONE THOUSAND DOLLARS, AND BALING WIRE AND BINDERS TWINE THAT IS USED PRIMARILY AND DIRECTLY IN ANY FARMING OPERATION, REGARDLESS OF ITS PURCHASE PRICE. "FARM EQUIPMENT" DOES NOT INCLUDE:
(A) A VEHICLE, TRUCK, LADEN OR UNLADEN TRUCK TRACTOR, TRAILER, SEMITRAILER, OR PIPE TRAILER, AS DEFINED UNDER SECTION 421102, C.R.S.;
(B) MACHINERY, EQUIPMENT, MATERIALS, AND SUPPLIES USED IN A MANNER THAT IS INCIDENTAL TO FARMING;
(C) MAINTENANCE AND JANITORIAL EQUIPMENT AND SUPPLIES; AND
(D) TANGIBLE PERSONAL PROPERTY USED IN ANY ACTIVITY OTHER THAN FARMING, SUCH AS OFFICE EQUIPMENT AND SUPPLIES, EQUIPMENT AND SUPPLIES USED IN THE SALE OR DISTRIBUTION OF FARM PRODUCTS, RESEARCH, OR TRANSPORTATION.
(II) "FARMING OPERATION" MEANS THE PRODUCTION OF RAW AGRICULTURAL PRODUCTS, INCLUDING RAW DAIRY PRODUCTS, FOR PROFIT, INCLUDING BUT NOT LIMITED TO A BUSINESS THAT PROVIDES FARMING WORK FOR HIRE.
SECTION 2. 3926203 (1), Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW PARAGRAPHS to read:
3926203. Exemptions. (1) This part 2 is declared to be supplementary to the "Emergency Retail Sales Tax Law of 1935", part 1 of this article, and shall not apply:
(ff) TO THE STORAGE, USE, OR CONSUMPTION OF FARM EQUIPMENT. FOR PURPOSES OF THIS PARAGRAPH (ff):
(I) "FARM EQUIPMENT" MEANS FARM TRACTORS, AS DEFINED IN SECTION 421102 (33), C.R.S., IMPLEMENTS OF HUSBANDRY, AS DEFINED IN SECTION 421102 (44), C.R.S., IRRIGATION SYSTEMS, AND OTHER TANGIBLE PERSONAL PROPERTY USED PRIMARILY AND DIRECTLY IN ANY FARMING OPERATION AND HAVING A PER UNIT OR, IN THE CASE OF IRRIGATION SYSTEMS, A PER SYSTEM PURCHASE PRICE OF AT LEAST ONE THOUSAND DOLLARS, AND BALING WIRE AND BINDERS TWINE THAT IS USED PRIMARILY AND DIRECTLY IN ANY FARMING OPERATION, REGARDLESS OF ITS PURCHASE PRICE. "FARM EQUIPMENT" DOES NOT INCLUDE:
(A) A VEHICLE, TRUCK, LADEN OR UNLADEN TRUCK TRACTOR, TRAILER, SEMITRAILER, OR PIPE TRAILER, AS DEFINED UNDER SECTION 421102, C.R.S.;
(B) MACHINERY, EQUIPMENT, MATERIALS, AND SUPPLIES USED IN A MANNER THAT IS INCIDENTAL TO FARMING;
(C) MAINTENANCE AND JANITORIAL EQUIPMENT AND SUPPLIES; AND
(D) TANGIBLE PERSONAL PROPERTY USED IN ANY ACTIVITY OTHER THAN FARMING, SUCH AS OFFICE EQUIPMENT AND SUPPLIES, EQUIPMENT AND SUPPLIES USED IN THE SALE OR DISTRIBUTION OF FARM PRODUCTS, RESEARCH, OR TRANSPORTATION.
(II) "FARMING OPERATION" MEANS THE PRODUCTION OF RAW AGRICULTURAL PRODUCTS, INCLUDING RAW DAIRY PRODUCTS, FOR PROFIT, INCLUDING BUT NOT LIMITED TO A BUSINESS THAT PROVIDES FARMING WORK FOR HIRE.
(gg) (I) TO ANY FARM EQUIPMENT UNDER LEASE OR CONTRACT IF THE FAIR MARKET VALUE OF SUCH EQUIPMENT IS AT LEAST ONE THOUSAND DOLLARS AND THE EQUIPMENT IS RENTED OR LEASED FOR STORAGE, USE, OR CONSUMPTION PRIMARILY AND DIRECTLY IN ANY FARM OPERATION.
(II) THE LESSOR SHALL OBTAIN A SIGNED AFFIDAVIT FROM THE LESSEE OR RENTER AFFIRMING THAT THE FARM EQUIPMENT WILL BE STORED, USED, OR CONSUMED PRIMARILY AND DIRECTLY IN A FARMING OPERATION.
SECTION 3. 292105 (1) (d), Colorado Revised Statutes, is amended to read:
292105. Contents of sales tax ordinances and proposals. (1) The sales tax ordinance or proposal of any incorporated town, city, or county adopted pursuant to this article shall be imposed on the sale of tangible personal property at retail or the furnishing of services, as provided in paragraph (d) of this subsection (1). Any countywide or incorporated town or city sales tax ordinance or proposal shall include the following provisions:
(d) A provision that the tangible personal
property and services taxable pursuant to this article shall be
the same as the tangible personal property and services taxable
pursuant to section 3926104, C.R.S., and subject to
the same exemptions as those specified in section 3926114,
C.R.S., except the exemption allowed by section 3926114
(11), C.R.S., for purchases of machinery or machine tools, the
exemption of sales and purchases of those items in section 3926114
(1) (a) (XXI), C.R.S., the exemption for sales of food specified
in section 3926114 (1) (a) (XX), C.R.S., and
the exemption for occasional sales by a charitable organization
set forth in section 3926114 (18), C.R.S., AND THE
EXEMPTION FOR SALES AND PURCHASES OF FARM EQUIPMENT SPECIFIED
IN SECTION 3926114 (19), C.R.S. Sales of food, as
defined in section 3926102 (4.5), C.R.S., exempted
from the state sales tax pursuant to section 3926114
(1) (a) (XX), C.R.S., sales and purchases of those items exempted
from the state sales tax pursuant to section 3926114
(1) (a) (XXI), C.R.S., purchases of machinery or machine tools
as provided in section 3926114 (11), C.R.S., or
occasional sales by a charitable organization as provided in section
3926114 (18), C.R.S., OR SALES AND PURCHASES OF FARM
EQUIPMENT EXEMPTED FROM THE STATE SALES TAX PURSUANT TO SECTION
3926114 (19), C.R.S., may be exempted from said town,
city, or county sales tax only by the express inclusion of such
exemption either at the time of adoption of the initial sales
tax ordinance or resolution or by amendment thereto. Any such
amendment shall be adopted in the same manner as the initial ordinance
or resolution. In the absence of express provision for the exemption
for sales of food, as defined in section 3926102 (4.5),
C.R.S., or purchases of machinery or machine tools as provided
in section 3926114 (11), C.R.S., or exemption of sales
and purchases of those items in section 3926114 (1)
(a) (XXI), C.R.S., or exemption of occasional sales by a charitable
organization as provided in section 3926114 (18),
C.R.S., OR EXEMPTION OF SALES AND PURCHASES OF FARM EQUIPMENT
AS PROVIDED IN SECTION 3926114 (19), C.R.S., all sales
tax ordinances or resolutions, whether adopted prior to, on, or
subsequent to July 1, 1979, which provide in substance that the
tangible personal property and services taxed shall be the same
as the tangible personal property and services taxable pursuant
to section 3926104, C.R.S., or any predecessor statute,
and subject to the same exemptions as those specified in section
3926114, C.R.S., or any predecessor statute, shall
be construed as imposing or continuing to impose the town, city,
or county sales tax on food, as defined in section 3926102
(4.5), C.R.S., purchases of machinery and machine tools as described
in section 3926114 (11), C.R.S., sales or purchases
of those items described in section 3926114 (1) (a)
(XXI), C.R.S., and
occasional sales by a charitable organization as described in
section 3926114 (18), C.R.S., AND SALES AND PURCHASES
OF FARM EQUIPMENT AS DESCRIBED IN SECTION 3926114
(19), C.R.S. The regional transportation district may, in its
discretion, continue to levy a sales tax on purchases of machinery
or machine tools, as provided in section 3926114 (11),
C.R.S.
SECTION 4. 292106 (4) (a), Colorado Revised Statutes, is amended to read:
292106. Collection administration enforcement. (4) (a) The executive director of the department of revenue shall, at no charge, administer, collect, and distribute the sales tax of any home rule municipality, upon request of the governing body of such municipality, if the provisions of the sales tax ordinance of said municipality, other than those provisions relating to local procedures followed in adopting the ordinance and whether or not the ordinance applies the sales tax to the sale of food, as defined in section 3926102 (4.5), C.R.S., or purchases of machinery or machine tools as provided in section 3926114 (11), C.R.S., or sales or purchases of electricity, coal, wood, gas, fuel oil, or coke as provided in section 3926114 (1) (a) (XXI), C.R.S., OR SALES OR PURCHASES OF FARM EQUIPMENT AS PROVIDED IN SECTION 3926114 (19), C.R.S., correspond to the requirements of this article for sales taxes imposed by counties, towns, and cities and if no use tax is to be collected by the department except as provided in section 3926208, C.R.S. At the time of making such request, said governing body shall certify to the executive director of the department of revenue a true copy of said sales tax ordinance.
SECTION 5. Applicability. This act shall apply to leases and contracts entered into and sales and purchases of farm equipment that occur on or after July 1, 1998.
SECTION 6. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.