Colo. Code Regs. 39-26-102(1.3)
Current through Register Vol. 47, No. 11, June 10, 2024
Rule 39-26-102(1.3) - Auctioneers(1)Auctioneer's Duty to Collect Tax.(a)Definitions.(i)Auction Sale. An auction sale is a sale conducted by an auctioneer who solicits offers to purchase tangible personal property or services until the highest offer is made.(ii)Auctioneer. An auctioneer is a person who sells an interest in tangible personal property or taxable services owned by the auctioneer or another person at an auction sale. An auctioneer has the legal authority to accept on behalf of the seller an offer to buy. An interest in property or services includes a lease and license. A person selling goods on consignment for another is an auctioneer if the sale is made at an auction sale. An auctioneer includes a person who is a lienholder, such as storageman, pawnbroker, motor vehicle mechanic, or artisan, and is selling the property at an auction sale to foreclose such lien.(b)General Rule. An auctioneer is a retailer and, therefore, must collect, report, and remit Colorado sales tax and state-administered local sales taxes to the Department, even if the auctioneer is a disclosed agent of the owner.(c)Calculation of Tax. Sales tax is calculated on the gross price paid by the buyer for the purchase of taxable tangible personal property or a taxable service, including any non-optional fee that only successful bidders must pay in order to purchase taxable goods or services, even if the non-optional fee is separately stated from the bid price paid for the auctioned item. (i)Examples.(A) Auctioneer sells restaurant equipment at auction for $10,000 and charges a fee of ten percent of the selling price, which is deducted from the total sale proceeds paid by the purchaser(s). Sales tax is calculated on the selling price paid by a successful bidder ($10,000), which includes the ten percent auctioneer's fee. Similarly, the fee is included in the sales tax calculation if the purchaser is required to pay the fee in addition to the successful bid price (i.e., tax calculated on $11,000) because the fee is included in the overall purchase price of the item.(B) Auctioneer charges owners or bidders a flat "entrance" fee which compensates auctioneer for its cost to rent the auction facilities, advertising, insurance, and/or auctioneer's administrative overhead. The fee is collected from sellers and bidders regardless of whether the owner's good(s) sells or the bidder purchases auctioned property or a service. The fee is not included in the calculation of sales tax because the fee is charged regardless of whether there is a taxable sale of goods or services. However, the fee is included in the calculation of sales tax if the fee (whether a flat or percentage fee) is due and payable only when goods or services are sold.(C) Auctioneer charges buyer a fee for additional services that buyer has the option, but is not required, to purchase as part of buyer's purchase of auctioned property or services, such as an optional fee for auctioneer's or seller's service of delivering the auctioned goods to buyer. The optional fee paid by buyer is not included in the sales tax calculation if, and only if, the fee is separately stated on the buyer's invoice.(d)Local Sales Taxes. Auctioneers must collect any applicable state-administered local sales taxes. For motor vehicles sold at auction, an auctioneer, who is required to collect sales tax (see paragraph (2)(b), below), must collect any applicable state-administered local sales taxes, unless the motor vehicle is exempted from such local sales tax by § 29-2-105(1)(e), C.R.S.(2)Exceptions to Auctioneer's Duty to Collect.(a)Licensed Owners. An auctioneer is not required to collect sales tax if the auctioneer sells taxable tangible personal property or services on behalf of a seller who, at the time of the sale, holds a current Colorado sales tax license issued by the Department. The licensed owner is responsible for collecting, remitting, and filing a sales tax return, even if the auctioneer was contractually obligated to the owner to collect the sales tax from the purchaser(s) and report and remit the tax to the Department, or if the auctioneer was contractually required to remit such collected tax to the licensed owner. An auctioneer, who is not legally required to collect tax because the owner is a licensed retailer but is collecting such tax on behalf of the owner, must disclose to the successful bidder the owner's name and owner's retail license number. An auctioneer who is not legally responsible to collect sales tax because the owner is a licensed retailer, but who nevertheless collects sales tax from a purchaser must hold the same in trust on behalf of the State of Colorado, and is liable for such tax if the tax is not remitted to the licensed seller or the Department.(b)Sales of Motor Vehicles. An auctioneer is not required to collect sales taxes due on the sale of a motor vehicle, unless the auctioneer is licensed by Colorado as an automotive dealer pursuant to § 44-20-101, et seq., C.R.S and the sale or use of the vehicle is subject to tax. §§ 39-26-113(7)(a) and (b), C.R.S.(c)Property Exempt from Sales Tax. An auctioneer does not collect sales tax if the property is exempt from sales tax, such as an exempt farm close-out sale.(d)Burden of Proof. An auctioneer has the burden of establishing with objective, verifiable documentation an exception or exemption from collecting, reporting, and remitting sales tax. An auctioneer selling on behalf of a licensed seller or to a purchaser with a sales tax exemption certificate must obtain a copy of the owner's sales tax license or, in the case of an exempt sale, the sales tax license number or the purchaser's sales tax exemption certificate, and verify that such license or certificate is valid at the time of the sale.37 CR 18, September 25, 2014, effective 10/15/201438 CR 02, January 25, 2015, effective 2/14/201539 CR 10, May 25, 2016, effective 6/14/201640 CR 12, June 25, 2017, effective 7/15/201740 CR 23, December 10, 2017, effective 1/1/201841 CR 13, July 10, 2018, effective 7/30/201841 CR 14, July 25, 2018, effective 8/14/201842 CR 02, January 25, 2019, effective 12/18/2018, expires 4/17/2019.42 CR 02, January 25, 2019, effective 12/18/201842 CR 06, March 25, 2019, effective 4/14/201943 CR 04, February 25, 2020, effective 3/16/202043 CR 17, September 10, 2020, effective 9/30/202044 CR 01, January 10, 2021, effective 1/30/202144 CR 07, April 10, 2021, effective 4/30/202144 CR 08, April 25, 2021, effective 5/15/202145 CR 04, February 25, 2022, effective 3/17/202245 CR 23, December 10, 2022, effective 12/30/202246 CR 08, April 25, 2023, effective 5/15/2023 1. See 1 CCR 201-4, Rule 39-26-716.4(a) regarding an auctioneer's duties for an exempt farm close-out sale. 2. See 1 CCR 201-4, Rule 39-26-718 for information on charitable entities conducting fundraising by auction sales.