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DR 1191 (10/26/17)
COLORADO DEPARTMENT OF REVENUE
Denver CO 80261-0009
*DO=NOT=SEND* Colorado.gov/Tax
DR 1191 Instructions
General Information
Purchases of machinery or machine tools and parts Local Taxes
thereof are exempt from state sales and use tax Cities, counties and special districts may or may not
when the machinery will be used in manufacturing. exempt manufacturing equipment from local sales taxes.
39-26-709(1)(g), C.R.S. Refer to publication DR 1002 for a list of localities that
To qualify the machinery must be: exempt this equipment from local tax.
Used in Colorado,
Claiming The Exemption
Used directly and predominantly to manufacture
tangible personal property for sale or profit. Complete the DR 1191, Sales Tax Exemption on Purchases of
Machinery and Machine Tools. Give one copy of the completed
Of a nature that would have qualified for the federal form to the seller of the machinery and a second copy to the
investment tax credit under the definition of section Department of Revenue. The purchaser must also keep a copy.
38 property found in the Internal Revenue Code of An exemption cannot be claimed for sales tax paid in another
1954, as amended. This includes tangible personal state which is credited against Colorado sales or use tax.
property with a useful life of one year or more and limits
qualifying purchases of used equipment to a maximum For further information regarding the manufacturing
of $150,000 annually, exemption, see FYI Sales 10 available on our
Included on a purchase order or invoice totaling more Taxation Web site at Colorado.gov/Tax , or call
than $500, (303) 238-SERV (7378).
Capitalized.
Enterprise Zones
The manufacturing exemption is expanded to exempt additional
purchases from sales and use tax when machinery is used
solely and exclusively in an enterprise zone. Equipment that is
used both within and outside an enterprise zone only qualifies
for the regular statewide exemption, as is equipment used at a
location prior to that location’s designation as an enterprise zone.
[C.R.S. 39-30-106(1)]
Machinery used solely and exclusively in a designated
enterprise zone may be capitalized or expensed to
qualify for the exemption.
Materials for construction or repair of machinery or
machine tools are exempt from the state sales and
use tax if the machinery is used exclusively in an
enterprise zone.
Mining operations are included in the definition of
manufacturing when performed in an enterprise zone.
For further information, see FYI Sales 69, “Enterprise
Zone Exemption for Machinery and Machine Tools Used
in Mining.”
