The Colorado Department of Revenue (DOR) has released guidance discussing the taxability of beetle wood products. Wood from salvaged trees that were killed or infested in Colorado by mountain pine beetles or spruce beetles is exempt from sales and use tax. The exemption applies to sales and use taxes imposed by the State of Colorado and certain special districts within the state. However, the exemption does not apply to city or county sales tax administered by the DOR, unless the city or county has adopted the exemption by ordinance or resolution.
Exempt products made from these salvaged trees include lumber, furniture, wood chips, and pellets. Wholesalers of these products must certify that the products are made from salvaged trees killed or infested by the beetles. Certification is accomplished by submitting Form DR 1240 to the DOR and to each retailer that purchases tax-exempt beetle wood products for resale.
The exemption for beetle wood products is set to expire on June 30, 2026.