Are EV charging fees subject to Colorado state sales tax?

No, according to a Colorado Department of Revenue (DOR) information letter, EV charging fees are not subject to the state’s sales tax.

What type of electricity sales are considered taxable in Colorado?

Colorado sales tax applies to “electric services,” which the DOR defines as the continuous supply of electricity to real property—not occasional or one-time electricity sales.

Does the DOR’s information letter apply to all EV charging stations in Colorado?

The letter only addresses statewide sales tax and is non-binding. Local sales tax rules may still apply depending on the charging station’s location.

Is the DOR information letter binding for all taxpayers in Colorado?

No, the information letter is non-binding and applies only to the general guidance provided. Taxpayers in similar situations should request their own ruling.

Can EV charging station operators rely on this letter for tax compliance?

While the letter offers useful insight, it's recommended that operators seek a formal ruling or consult with the DOR to ensure full compliance, especially with local tax laws.

What is the difference between a DOR information letter and a private letter ruling?

An information letter provides general guidance and is non-binding, whereas a private letter ruling is binding and tailored to a specific taxpayer's situation.

Colorado EV Charging Fees Exempt from Sales Tax | DOR Info Letter Explained

Understanding the application of sales and use tax rules and requirements can sometimes be difficult, and taxable persons often seek additional clarification and guidance from state governing bodies, in this case, the Colorado Department of Revenue (DOR).

While in some cases, the DOR may issue a private letter ruling binding for the Department, on this occasion, following the taxable person's request, it published an information letter providing an overview of relevant tax issues.

Taxable Person Request and DOR’s Response

The DOR responded to the request for a general information letter filed by the taxable persons regarding the sales tax on electricity sold at electric vehicle (EV) charging stations. The company that submitted the request is a subsequent supplier of EV charging to its customers for a fee.

Although the EV charging stations are not subject to Colorado sales and use tax, the state imposes a sales tax on electric services, where the sales tax statutes do not define electric services. The DOR analyzed the common meaning of the term electric services. It concluded that it refers to an electric grid's regular or ongoing electricity supply to customers' real estate property.

Therefore, the term electric services does not include occasional electricity sales but a constant supply. That means that one-time sales do not fall under the definition of electric services. Consequently, the fee charged for the provided services does not fall under the scope of the Colorado sales tax.

Conclusion

The information letter published by the Colorado DOR is non-binding and refers only to the statewide sales tax rules and regulations. Therefore, depending on the location of the charging station, local sales and use tax requirements may differ.

Moreover, due to the non-binding nature of the letter, other taxable persons who find themselves in a similar situation should request that DOR issue an information letter or private letter rulings to explain applicable sales tax rules.

Source: Colorado Department of Revenue Letter