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