Understanding the specifics of Colorado's DR 1191 form is crucial for businesses and individuals aiming to navigate the complexities of tax exemptions on machinery and machine tool purchases. This document, issued by the Colorado Department of Revenue, holds significant value for those in the manufacturing sector, enabling them to claim exemption from state sales and use tax under specified conditions. To be eligible, machinery must be utilized within Colorado, directly and predominantly in the manufacturing of tangible personal property intended for sale or profit, and meet certain criteria akin to federal investment tax credit specifications. Notably, this exemption also extends to purchases made specifically for enterprise zones, offering broader benefits under this scheme. Moreover, the form outlines specific instructions for claiming these exemptions, including both the buyer's and seller's responsibilities, and emphasizes the importance of keeping a copy of the completed form for record-keeping. With local tax jurisdictions having the autonomy to exempt or impose taxes on manufacturing equipment, it is essential to consult publication DRP1002 for guidance. Hence, filling out and understanding the DR 1191 form is not merely a procedural step but a strategic move for businesses looking to leverage tax exemptions to optimize their operations and financial planning.
| Question | Answer |
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| Form Name | Colorado Form Dr 1191 |
| Form Length | 2 pages |
| Fillable? | No |
| Fillable fields | 0 |
| Avg. time to fill out | 30 sec |
| Other names | dr 1191, 1954, expensed, DRP1002 |
DR 1191 (12/02)
COLORADO DEPARTMENT OF REVENUE
TAXPAYER SERVICE
1375 SHERMAN ST. DENVER, CO 80261 (303)
SALES TAX EXEMPTION ON
PURCHASES OF MACHINERY AND MACHINE TOOLS
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THIS SECTION IS FOR BUSINESSES LOCATED IN ENTERPRISE ZONES
(SEE INSTRUCTIONS ON REVERSE SIDE)
Amount of Purchase for Machinery, Machine Tools and Parts
Materials used in the construction of machinery and machine tools (after 06/07/89)
I hereby certify that __________________________________________________________________ is
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(Name of Purchasing Firm or Person) |
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entitled to the exemption on purchases of machinery or machine tools. |
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By (Authorized Signature of Purchasing Firm) |
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DR 1191 INSTRUCTIONS
GENERAL INFORMATION
Purchases of machinery or machine tools and parts thereof are exempt from state sales and use tax when the machinery will be used in manufacturing. [C.R.S.
To qualify the machinery must:
•Be used in Colorado,
•Be used directly and predominantly to manufacture tangible personal property for sale or profit.
•Be of a nature that would have qualified for the federal investment tax credit under the definition of section 38 property found in the Internal Revenue Code of 1954, as amended. This includes tangible personal property with a useful life of one year or more and limits qualifying purchases of used equipment to a maximum of $150,000 annually,
•Be included on a purchase order or invoice totaling more than $500,
•Be capitalized.
ENTERPRISE ZONES
The manufacturing exemption is expanded to exempt additional purchases from sales and use tax when machinery is used solely and exclusively in an enterprise zone. Equipment that is used both within and outside an enterprise zone only qualifies for the regular statewide exemption, as is equipment used at a location prior to that location’s designation as an enterprise zone. [C.R.S.
•Machinery used solely and exclusively in a designated enterprise zone may be capitalized or expensed to qualify for the exemption.
•Materials for construction or repair of machinery or machine tools are exempt from the state sales and use tax if the machinery is used exclusively in an enterprise zone.
•Mining operations are included in the definition of manufacturing when performed in an enterprise zone. For further information, see FYI Sales 69, “Enterprise Zone Exemption for Machinery and Machine Tools Used in Mining.”
LOCAL TAXES
Cities, counties and special districts may or may not exempt manufacturing equipment from local sales taxes. Refer to publication DRP1002 for a list of localities that exempt this equipment from local tax. Special districts that impose sales tax on manufacturing equipment cannot impose use tax on the equipment.
CLAIMING THE EXEMPTION
Complete Form DR 1191 Sales Tax Exemption on Purchases of Machinery and Machine Tools. Give one copy of the completed form to the seller of the machinery and a second copy to the Department of Revenue. The purchaser must also keep a copy. An exemption cannot be claimed for sales tax paid in another state which is credited against Colorado sales or use tax. NOTE: Acceptance of this certificate by the seller removes any sales tax liability from the seller and the purchaser is liable for any subsequent sales or use tax liability for the purchase.
For further information regarding the manufacturing exemption, see FYI Sales 10 available on our Website at WWW.TAXCOLORADO.COM, or call (303)