City and County of Denver, Colorado

TAX GUIDE

Topic No. 6

AUTOMOTIVE VEHICLES - SHORT-TERM RENTAL

 

TAX RATE

 

As part of the funding for the bonds issued to finance construction and expansion of the Colorado Convention Center, a special tax rate is imposed upon the short-term rental of automotive vehicles. Effective January 1, 2000, that rate is 7.25%.

 

The additional tax over the general sales tax rate of 3.62% 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 Trucks

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 Equipment (SME)

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 renterís 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 Denver International Airport, and may be passed on to the customer as an additional rental charge.

 

In addition to the above charges, the State of Colorado allows automotive vehicle rental companies, at their option, to pass the ownership tax to the renter, by adding a 2% ownership tax to the rental billing. This charge is not subject to the sales or use tax.

 

EXAMPLE

 

Eddie rents an RV from Bobís 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 Bobís 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 DENVER TAX LAW FOR THIS INDUSTRY OR BUSINESS SEGMENT. IT IS NOT INTENDED FOR LEGAL PURPOSES TO BE SUBSTITUTED FOR THE FULL TEXT OF THE DRMC AND APPLICABLE RULES AND REGULATIONS.

 

Revised 12/06