Use Tax is a tax imposed by government to be paid by consumers for the privilege of storing, using or consuming tangible personal property. In El Paso County, purchasers that acquire tangible personal property without paying sales tax at the time of the sale, they must pay consumer use tax directly to the county.

Sales & Use Tax in El Paso County increased to the rate of 1.23% effective as of January 1, 2013.

The difference between the Sales and Use tax:

• • Sales tax is paid to the seller of the item, with the seller remitting the tax collected.
  • Use Tax is paid directly to Pikes Peak Regional Building Regional Building Department by the purchaser.

Colorado Department of Revenue Consumer Use Tax Guide

Use tax is due to El Paso County when no sales tax was paid at the time Construction Material was purchased at a retailer and no taxes were prepaid at the time the permit was pulled with Pikes Peak Regional Building Department. Use tax applies to the same type(s) of transactions as the sales tax and at the same tax rate of 1.23%.

El Paso County only collects Use Tax on construction and building materials and motor vehicles. El Paso County Motor Vehicle Taxes & Fees

The term “construction and building materials” means any tangible personal property which is stored, used, or consumed in the County, and which is intended to become part of, attached to, or a component of any building, structure, road, or appurtenance in the County.

All construction materials and fixtures that become part of real property during a permitted project approved by the Pikes Peak Regional Building Department (PPRBD) located in El Paso County are subject to Use Tax as are all supplies, taxable services, and equipment used, stored, or consumed while doing business in El Paso County.

Pikes Peak Regional Building Department

Whenever a building permit is issued for construction related work within the jurisdiction of the PPRD the permit applicant shall choose either, “Project Material Valuation Method” or “Project Affidavit Method” to ensure the payment of the El Paso County Use Tax.

The two methods are as follows:

Payment Option 1 – Permitted Project Material Valuation Method:

When Permit applicant selects to pay Use Tax by the Material Valuation Method, a payment estimate of Use Tax of building and construction materials will be collected at time permit is issued. The estimate methodology is based on 40% of the total permitted project cost valuation will be considered construction materials cost. Therefore, when Pikes Peak Regional Building Department issues permits, the 40% that is considered total estimate of construction cost will have the 1.23% El Paso County Use Tax applied. The permit receipt shall serve as the exemption certificate for permit applicants when purchasing building and construction materials from suppliers.

Example:

• • • Total permitted project valuation equals $180,000.
    • Estimated construction material coat at 40% of total project equals $72,000
    • EL Paso County Use Tax rate of 1.23% will be applied to estimated construction material cost $72,000 at 1.23% = $885.60

• • In this example Use Tax amount of $885.60 will be collected with Permit Fees.

Note: The permit owner is responsible for insuring subcontractors receive a copy of the permit receipt for use when purchasing building and construction materials.

When the permit owner believes the material cost for the project is less than the 40% estimated cost using the job material valuation method, the permit owner may submit a Reconciliation Report containing a list of all receipts and contract amounts associated with the project. The Reconciliation Report must be submitted within (180) calendar days of Certificate of Occupancy or final inspection, whichever occurs later. El Paso County will provide a written decision within (30) calendar days whether a refund will or will not be issued. During this (30) day period the County may request from the permit owner or subcontractors some or all the receipts listed on the Reconciliation Report.

Payment Option 2 – Permitted Project Affidavit Method:

The permit applicant who selects the Affidavit Method shall agree when permit issued by Pikes Peak Regional Building Department it is stated that regardless from where construction and building materials are purchased, it is agreed and understood that all applicable County Sales and Use Taxes will be paid by the permit applicant. The applicant shall maintain records demonstrating payment of the applicable Sales and Use Taxes; any construction and building materials purchased in which El Paso County Sales Tax was not paid is subject to Use Tax which must be submitted using a separate Consumer Use Tax Remittance Form (Permitted) for each permit; and they further agree and understand that they may be subject to an audit of these records.

In addition to the payment methods paid at Pikes Peak Regional Building Department, a permitted project Use Tax payment can be submitted directly to El Paso County using the Consumer Use Tax Remittance Form (Permitted) and mail to the address on the form.

If you wish to review the Agreement in its entirety, please follow the link below.
Intergovernmental Agreement.

Some improvements and repairs to real property that are not covered by a building permit. Materials in these types of projects are to be considered a sale of tangible personal property, and sales tax should be collected on such transactions. If non-taxable service/labor is not separately stated on the invoice provided to the purchaser, the entire transaction is taxable.

If you need to submit Use Tax for a project for which the Regional Building Department does not require a permit, please use the required form, Consumer Use Tax Remittance (Not Permitted). If your portion of the project does not require a permit, but it is part of a larger project that does, obtain a copy of the permit from the general contractor and submit use tax along with the Consumer Use Tax Remittance (Permitted). If the general contractor paid Use Tax when the permit was issued and the permit contains an exempt certificate, materials may be purchased using this permit exempt from El Paso County’s 1.23% Sales Tax and no additional remittance of Use Tax would be required. If you have questions about this process, send an email to fin_sales-use_tax@elpasoco.com or call 719-520-6475.

El Paso County does recognize and acknowledge the State Contractors Exempt certificates (State Issues #89 Certificate) for construction on properties holding tax exempt certificates, such as affordable housing, tax exempt charitable organizations, government, schools, and churches to have sales and/or use tax exemption for project.

Complete the Use Tax Exemption Request Form and email: fin_sales-use_tax@elpasoco.com to obtain El Paso County exemption letter that is needed to present to Pikes Peak Regional Building Department prior to issuance of the building permit.

All related construction records are subject to audit by the County following project completion. Such an audit is designed to determine the actual taxable cost of the project and may be conducted any time within 18 months after the Certificate of Occupancy or final inspection, whichever occurs later. The audit will reconcile the Use Tax deposit paid against the actual tax due on the materials. It is important that you keep complete and accurate records of each project. A copy of the contract including change orders, all invoices, receipts, and cost reports pertaining to the construction project shall be kept for at least (3) years after the certificate of occupancy or final inspection, whichever occurs later.

If a formal audit by the County reveals an underpayment of the Use Tax, the remainder of the unpaid Use Tax, along with any interest and penalties, will be assessed to the permit applicant.

A complete audit is performed by the County on all refund requests initiated by the contractor.

The interest and penalty interest rate for underpayment of the amount due and owing Use Tax (“Underpayment”), regardless of the method of payment chosen, will be paid by the customer to the County. The amount of the underpayment shall be the same as allowed under §39-26-207, C.R.S., 2008, as amended. The amount of interest shall accrue from the date due, which is the date Certificate of Occupancy is issued or final inspection, whichever occurs later, and shall continue to accrue until paid. Upon written notification by the County of the amount of the underpayment, the customer may immediately pay the amount of the underpayment to stop interest from accruing while an appeal is undertaken.