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1. If I pre-paid use tax on my building project, how do I get exempt from paying sales tax?

When a contractor/home owner purchases building material to be used in a licensed project, a copy of the RBC Sales and Use Tax Exemption Certificate should be presented to the vendor showing that a tax has already been paid or is going to be paid. State sales tax should always be paid, since it is never collected on a building permit.

2. We are a contractor for an exempt organization, how do I prove the exemption?

If you a contractor building for an exempt organization, you should submit a DR0172 Contractor Application for Exemption Certificate. Once you receive the certificate from the State, present a copy to the Rio Blanco County Sales and Use Tax Department in conjunction with the building permit so no use tax is assessed. Also, when purchasing materials, give a copy to the vendor to exempt the purchase. The Exemption Certificate from the Department of Revenue is only valid for State and County taxes. If building or purchasing materials within a Town or City, please contact the jurisdiction to determine their exemption requirements.

DR0172 Contractor Application for Exemption (PDF)

3. If I have a County building permit, can I use it to purchase materials in other counties?

The exemption given in conjunction with the building permit is valid for all counties in Colorado except the City and County of Denver and the City and County of Broomfield. If you present a copy of your building permit and/ or your Use Tax Certificate at the time of purchase, you will be exempt from any local sales tax.

4. Why do we have to pay use tax? Why can't we just pay sales tax on the materials at the time of purchase?

The use tax was put in place because many materials are not available in our county. This means many contractors and consumers have to purchase in other jurisdictions. Even though we may lose the sale, with a use tax at least we can retain the sales tax revenue for our own jurisdiction. And most of the other jurisdictions have a higher tax rate, so on larger projects, it will save you quite a bit of money.

5. I had a subcontractor that gave one price for both labor and materials. How do I determine the material cost?

With a lump sum contractor, where there is no breakdown of labor and material, use a 50-50 breakdown. You can ask you subcontractor to provide the actual breakdown to you or they can email or fax it directly to the Sales and Use Tax office.