Colorado DOR Clarifies Sales Tax on Auto Repairs, Distinguishes Parts from Labor

The Colorado Department of Revenue (DOR) has issued revised guidance clarifying the sales and use tax treatment of automotive repairs. The guidance establishes that auto repairs involve the sale of tangible personal property subject to both state and local sales and use taxes administered by the Department, with special rules distinguishing between taxable parts and accessories versus non-taxable labor charges. Key provisions include subcontract taxation rules requiring sub-repairpersons to charge sales tax unless instructed that the job is for resale, purchase requirements allowing repair shops to buy items for resale tax-free while owing use tax on inventory withdrawn for their ...