CITY OF COLORADO SPRINGS TAX GUIDE AUTOMOTIVE VEHICLES VEHICLES PURCHASED BY INDIVIDUALS Any motor vehicle purchased by a Colorado Springs resident must be registered at the address of the owner's residence in Colorado Springs unless the vehicle is permanently operated and maintained at a different address. Colorado Springs sales or use tax is due on the net purchase price of the vehicle (total purchase price less any amount allowed by a licensed motor vehicle dealer for a trade-in). The purchaser must pay sales tax to the seller if the seller is licensed and authorized to collect and remit the tax to Colorado Springs. If the seller is not licensed and authorized, then the purchaser must pay City use tax directly to the City or to the El Paso County Motor Vehicle Division. Until the tax is paid, no certificate of title or registration certificate or license plates will be issued for the vehicle. VEHICLES PURCHASED BY BUSINESSES Any motor vehicle purchased by a business must be registered at the address from which the vehicle is principally operated and maintained. If that address is in the City of Colorado Springs, City sales or use tax is due on the purchase. Tax is applied to the purchase of a vehicle by a business in the same manner that it is applied to the purchase of a vehicle by an individual. LEASED VEHICLES A motor vehicle leased for 30 or more days by a Colorado Springs resident (lessee) must be registered in the same manner as a vehicle purchased by a Colorado Springs resident. Colorado Springs residents include businesses located in Colorado Springs even though the business owners may not be Colorado Springs residents. Colorado Springs sales tax must be collected by the vehicle leasing company (lessor) on each lease payment. If at the start of a lease the lessee was not a Colorado Springs resident, and the lessee subsequently becomes a Colorado Springs resident, the vehicle must be reregistered in Colorado Springs at the lessee's new address within 30 days of becoming a Colorado Springs resident. The lessor must then begin collecting Colorado Springs sales tax on the lease payments. If the lessor is not licensed or fails to collect Colorado Springs sales tax, the lessee is required to pay City use tax on the lease payments directly to the City of Colorado Springs. However, if the sales tax on these payments is legally required to be paid to a previous jurisdiction, the City will allow a credit for comparable taxes paid. A Colorado Springs lessor may apply to the Director of Finance for permission to pay one lump sum tax payment on the entire purchase price of the property to be leased in lieu of computing and paying tax upon each lease charge.

VEHICLES RECEIVED AS A GIFT Vehicles claimed as gifts between family members that are truly gifts without consideration are not subject to the City tax. However, assumption of a debt (lien) between family members is consideration and causes the transaction to be subject to the Colorado Springs tax. The taxable value of the vehicle is the debt plus any other consideration given. The donor and the recipient are considered family members if one of the following relationships exists: A. Spouse C. Child, grandchild B. Parent, grandparent D. Brother, sister Claimed gifts between parties not included in these family relationships are presumed to be with consideration and subject to Colorado Springs tax. The exchange of a vehicle is taxed at fair market value as determined using the Kelley Blue Book average wholesale value. If unrelated parties insist the change of ownership is a bona fide gift, without consideration, the new owner may appeal to the Sales Tax Division for review and evaluation. If the claimed gift is in fact a gift without consideration, it is not subject to Colorado Springs tax. EXAMPLES 1. Donald decides to give his old Buick to his granddaughter. Donald holds free and clear

title to the vehicle. He completes an El Paso County Bill of Sale Form or submits a notarized statement to the County declaring the transfer of title to be a gift. The form is accepted at face value; thus, the transfer of title and registration to his granddaughter is considered to be a tax-free gift.

2. Joe, the owner of an RV, was recently laid-off from his job and finds himself unable to

make the loan payments. Joe offers to transfer the title to his brother, Harry, if Harry will assume the loan payments. Harry accepts. Because consideration is involved, Colorado Springs tax is due on the value of consideration given (the loan balance).

RESIDENCY GUIDELINES A person’s residence for motor vehicle registration purposes shall be his/her principal or primary home or place of abode to be determined in the same manner as residency for voter registration purposes. Residency considers such circumstances as: children's school registration, the address shown on the vehicle insurance policy as the location where the vehicle is kept, work location, telephone directory address, drivers license address, address from which income taxes are filed, address used to receive insurance, credit card, utility, and other bills, address used to receive Social Security, dividends and interest, pensions, or other income, and public records. Active members of the U.S. Armed Forces temporarily living in Colorado Springs may elect to register a vehicle in their state of residence. If they do not elect to register the vehicle in their state of residence, they must register the vehicle at their residence in Colorado Springs.

EXAMPLES 1. Harvey owns a home in Colorado Springs and a ranch in the mountains. He works in

Colorado Springs and votes in El Paso County. Last month, after purchasing a new car, Harvey properly paid the Colorado Springs sales tax to the dealer and registered his vehicle in Colorado Springs.

2. Harvey also buys a 4-wheel-drive vehicle that is permanently operated and maintained at

his ranch in the mountains. This vehicle is properly registered in the mountain county, and no sales or use tax is due to Colorado Springs.

3. Jerry lives in Colorado Springs and owns a business in Widefield outside of the City of

Colorado Springs in El Paso County. He purchases a truck for his business and registers it at the business address. Since the truck is principally operated and maintained from his business outside of the City, it is properly registered at the business address, and no Colorado Springs tax is due on the purchase.

4. Jerry also registered his personal vehicle at his business address in Widefield outside of

the City of Colorado Springs. When he purchased the vehicle, he paid no City tax because the address he used to register it was outside the City. Jerry’s vehicle is illegally registered outside the City of Colorado Springs because his personal residence is inside the City. Jerry will pay penalties and interest in addition to the City tax when the City discovers the illegal registration.

5. Sam is an active member of the U.S. Air Force living in Colorado Springs. Sam buys a

new car and decides to register it in Texas, his state of residence. Sam is not required to pay State of Colorado or Colorado Springs sales taxes on the purchase of the vehicle. If Sam had elected not to register his vehicle in Texas, he must register the vehicle at his address in Colorado Springs and pay all applicable State of Colorado and Colorado Springs sales taxes.

Note: Automotive parts and accessories are taxable when purchased at retail or sold as part of a repair service in Colorado Springs, regardless of where the vehicle is registered. RELATED TAX GUIDE TOPICS Common Carriers Leases and Rentals Trade-Ins

CS Code Section 2-7-104: WORDS & PHRASES DEFINED: AUTOMOTIVE VEHICLE CS Code Section 2-7-104: WORDS & PHRASED DEFINED: PRICE OR PURCHASE PRICE CS Code Section 2-7-104: WORDS & PHRASED DEFINED: PURCHASE OR SALE CS Code Section 2-7-302: AUTOMOTIVE VEHICLES CS Code Section 2-7-312: TANGIBLE PERSONAL PROPERTY CS Code Section 2-7-402: AUTOMOTIVE VEHICLES CS Code Section 2-7-434: SALES OF USE TAX PAID TO ANOTHER CITY CS Code Section 2-7-435: SALES AND USE TAX PAID TO ANOTHER STATE CS Code Section 2-7-442: TRADED IN OR EXCHANGED PROPERTY CS Code Section 2-7-606: REGISTRATION OF AUTOMOTIVE VEHICLES THE ABOVE INFORMATION IS A SUMMARY IN LAYMAN'S TERMS OF THE RELEVANT CITY OF COLORADO SPRINGS TAX CODE FOR THIS INDUSTRY OR BUSINESS SEGMENT. IT IS NOT INTENDED FOR LEGAL PURPOSES TO BE SUBSTITUTED FOR THE FULL TEXT OF THE CITY OF COLORADO SPRINGS SALES AND USE TAX ORDINANCE. Revised 11/17/99