City and
TAX GUIDE
Topic No. 6
AUTOMOTIVE VEHICLES - SHORT-TERM RENTAL
TAX
RATE
The
additional tax over the general sales tax rate of 3.5% is legally pledged to
retire the Convention Center bonds. Tax collected on automotive vehicle rentals
must be separately reported on Line 5B of the sales tax return.
TYPES
OF VEHICLES SUBJECT TO THE SPECIAL RATE
The
special tax rate of 7.25% applies to short-term (30 days or less) rentals of
automotive vehicles of the type required to be registered with Denver Motor
Vehicle Division and includes:
Aircraft
Automobiles
Dump
Truck
Trucks
Trailers
Semi-Trailers
Motor
Homes
Motorcycles
Motor
Scooters (excluding mopeds);
and
all other vehicles defined as automotive vehicles in DRMC Sections 53-24(1) and
53-95(1).
The
special tax rate does not apply to vehicles, self-propelled or otherwise, which
are not designed primarily for the transportation of persons or cargo over the
public highways. This includes wheeled vehicles commonly used in the
construction, maintenance, and repair of roadways, such as:
Cranes
Office Trailers
Concrete
Pumpers
Off-Highway Trucks
Air
Compressors
Special
Mobile
Welders
The
tax rate (3.62%) applies to the rental of this type of equipment.
TAXABLE
VERSUS NON-TAXABLE CHARGES
The
following is a list of common charges appearing on an automotive vehicle rental
invoice. Included is a summary describing the taxability of the charge and the
appropriate tax rate:
A.
Time & Mileage: Taxable (7.25%)
B.
Additional Driver: Taxable (7.25%)
C.
Collision Damage Waiver (CDW) or Loss Damage
Waiver (LDW): Taxable (7.25%). This is not a charge for insurance. It is
a fee imposed by the rental company, at the renter’s option, that eliminates
or reduces the monetary liability the renter would otherwise be subject to when
damage occurs to the vehicle.
D.
Personal Accident Insurance (PAI), Personal
Effects Coverage (PEC), and other optional insurance charges: Not taxable
if the charge is actually for insurance, such as the rental company contracting
with a third party insurance company to provide this service.
E.
Refueling Charge: Not taxable if the
rental contract imposes a refueling charge when the vehicle is returned with
less than a full tank of gas. Taxable (7.25%) if the rental contract
imposes a mandatory fuel charge, regardless of whether the vehicle is returned
with a full tank of gas or not.
F.
Optional Rental Items (e.g., cellular phone,
baby seat, ski rack): Taxable at 7.25% rate if not separately stated on
the invoice. Otherwise, Taxable at 3.62% rate (the general tax rate) if
separately stated.
G.
Port Fee: Taxable (7.25%). This fee
is imposed on the receipts of vehicle rental companies at
In
addition to the above charges, the State of
EXAMPLE
Eddie
rents an RV from Bob’s RV Rental at the following daily rates:
A.
Base daily rental $69.95
B.
Additional driver 5.00
C.
CDW 11.95
D.
VIC (flat rate) 12.00
E.
Barbecue Grill; TV; Chairs 15.00
The VIC charge (Vacation Interruption Charge) is an insurance charge when
Bob’s RV Rental collects the premiums on behalf of a third party insurance
company. The barbecue grill, TV, and chairs charge is identified as a separate
item on the invoice.
In
this example, charges for A, B, and C are taxable at 7.25%; the charge for D is
not taxable; and the charge for E is taxable at 3.62%.
*
DRMC Section 53-24(1). Definitions.
*
DRMC Section 53-27. Retailers to collect tax.
*
DRMC Section 53-33. Tax on rentals.
*
DRMC Section 53-95(1). Definitions
*
DRMC Section 53-98. Retailers to collect tax.
*
DRMC Section 53-103.1. Tax on rentals.
*
CRS 42-1-102(43). Definitions.
THE ABOVE
INFORMATION IS A SUMMARY IN LAYMAN'S TERMS OF THE RELEVANT