Colorado Provides Guidance on Sale-Leaseback Transactions

Monday, October 26th, 2015

Colorado Department of Revenue

The Colorado Department of Revenue (DOR) issued a general information letter discussing how tax applies to sale-leaseback transactions.

A sale-leaseback transaction occurs when a lessee purchases tangible personal property from a retailer, resells the property to a lessor, and then leases the property back from the lessor.

In Colorado, the initial purchase of the property from the retailer by the lessee is exempt from tax as a sale for resale if (1) the lessee purchases the property with the intent to resell the property and (2) the lessee resells it the property without using it.

The taxability of the lessor's purchase of the property depends on the terms of the lease. Colorado treats financing leases and leases of 36 months or more and as regular sales. For these leases, the lessor should purchase the property exempt for resale and charge tax to the lessee on each lease payment.

For leases of less than 36 months, the lessor must either (1) pay tax on its purchase of the property and then not collect tax on the lease payments or (2) get permission from the DOR to collect tax from the lessee on the lease payments instead of paying tax on its purchase.

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TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

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