City and County of Denver, Colorado

TAX GUIDE

Topic No. 73

SPECIAL MOBILE MACHINERY AND EQUIPMENT

 

Special mobile machinery (SMM), a.k.a. special mobile equipment (SME), are of a design commonly used in the construction business. These vehicles, self-propelled or otherwise, are not generally designed to transport persons or cargo over public highways.

 

Motor vehicles redesigned or modified with the attachment of special equipment or machinery weighing over 500 pounds, which becomes essential to the operation of the vehicle in accomplishing the purpose for which such vehicle is being used, are also classified as SMM.

 

SMM requires a special State of Colorado issued license plate on which the letters "SMM" appear. If SMM is attached to a vehicle, such as to the "bed" of a truck, the SMM is required to be licensed with the SMM plate and the truck itself is licensed in the normal fashion with a vehicle license plate.

 

Examples of equipment which may qualify for the SMM plate include:

 

Air compressors, generators, welders, asphalt plant units, acoustic mixers, power brooms, towed tankers, tar pots, sweepers, concrete mixers, batchers and pavers, conveyors, crawler shovels, crawler backhoes, crawler cranes, truck cranes, hydraulic cranes, bottom dump and rear dump trailers, motor graders, loaders, straddle carriers, flood lighting units, roller/compactors, forklifts, motor scrapers, bulldozers, tractors, backhoes, trailers (storage, tool or office) and mobile hydraulic hammers/crawlers.

 

 

SALES AND USE TAX

 

New Special Mobile Machinery

 

All SMM purchased by a Denver business and stored in the City is subject to sales/use tax at 3.62%. This includes SMM used within Denver by a construction contractor domiciled outside of the City.

 

Used Special Mobile Machinery

 

SMM which has been used prior to being brought into Denver is subject to the 3.62% use tax on the fair market value only at the occasion of its first use in Denver. Credit is allowed for sales and use taxes previously paid to any municipality within the United States to the extent the tax paid does not exceed the Denver tax liability.

 

Note: The DRMC provides for a proportional use tax for construction equipment (including special SMM) located within Denver for a period of thirty (30) consecutive days or less, providing the taxpayer has complied with the equipment declaration procedures provided for in DRMC Section 53-106.2.

 

 

PERSONAL PROPERTY TAX (ALSO KNOW AS SMM AND SME TAX)

 

Unlicensed Special Mobile Machinery

 

If equipment qualifying as SMM will be used solely on property owned or leased by the owner of the equipment, such as a warehouse forklift, the equipment need not be licensed. In these instances, the SMM is included in the taxpayer's personal property tax schedule and personal property tax is due.

 

Licensed Special Mobile Machinery

 

For licensed SMM, a "specific ownership tax" is collected upon annual registration of the equipment, in lieu of personal property tax. The SMM is required to be registered in the county at the business address where the SMM is primarily operated, maintained, and stored. For registration purposes, business addresses do not include construction job sites.

 

Rental Special Mobile Machinery

 

Businesses engaged in renting SMM are allowed to register the SMM without paying the specific ownership tax. (The specific ownership tax is sometimes referred to as the "SMM Tax" or "SME Tax.") However, when SMM is rented, the rental vendor is required to collect SMM Tax or SME Tax at the rate of 2% of the rental charge. The 2% charged is not included in the taxable rental price for sales/use tax purposes.

 

Note: SMM towed on public highways in Colorado is sometimes stopped at "Port of Entry" stations and not allowed to continue until properly registered.

 

 

EXAMPLES

 

1.     Cindy's Construction Company brings a used grader into Denver for work on a new parking garage. The grader cost $30,000 when Cindy's purchased it, but the fair market value when first brought into Denver has depreciated to $10,000. In addition, a new backhoe is purchased for $10,000 from a Denver vendor and is delivered to the Denver job site.

Cindy's Construction Company owes $362 of Denver use tax on the grader ($10,000 x 3.62%) and $362 sales tax on the backhoe ($10,000 x 3.62%).

2.     Jerry's Construction Company rents a power broom from Randy Rents, a rental equipment vendor located in Denver. The rental charge is $10,000 per week and Randy Rents registered the power broom without paying the specific ownership tax. Randy Rents should collect $362 ($10,000 x 3.62%) of Denver sales tax and $200 specific ownership tax or SMM Tax ($10,000 x 2%).

 

 

* DRMC Section 53-25(1). Imposition of tax.

* DRMC Section 53-96(1). Imposition of tax.

* DRMC Section 53-106.2. Application to certain construction equipment.

* Rules Regarding The Assessment And Collection Of Sales And Use Tax On Sales And Use Of Tangible Personal Property Acquired By Construction Companies

 

 

 

 

 

 

 

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.

 

12/06

73 - 2 of 2