Table of Contents
The Colorado DR 1191 form is a crucial document for businesses looking to take advantage of sales tax exemptions on machinery and machine tools used in manufacturing. This form serves as a certification that the purchaser is entitled to the exemption, provided that the machinery is used directly and predominantly to manufacture tangible personal property for sale or profit within the state. To qualify, the equipment must meet specific criteria, such as being capitalized, having a useful life of one year or more, and being part of a purchase order totaling over $500. Additionally, businesses located in designated enterprise zones can benefit from expanded exemptions, allowing for even greater savings on purchases. The form requires essential information, including the seller's and purchaser's Colorado Sales Tax Account Numbers, the date and amount of purchase, and a description of the machinery. It is important for purchasers to submit copies of the completed form to both the seller and the Colorado Department of Revenue, while also retaining a copy for their records. Understanding the nuances of the DR 1191 form can significantly impact a business's tax obligations and overall financial strategy.
Key takeaways
Here are some key takeaways about filling out and using the Colorado DR 1191 form:
- The DR 1191 form is used to claim a sales tax exemption on machinery and machine tools purchased for manufacturing.
- Both the seller and purchaser must have a Colorado Sales Tax Account Number to complete the form.
- The machinery must be used directly in manufacturing tangible personal property for sale or profit to qualify for the exemption.
- Purchases must exceed $500 to be eligible for the exemption.
- Equipment used solely in designated enterprise zones may have expanded exemption benefits.
- It is important to keep a copy of the completed form for your records.
- Sales tax paid in another state cannot be credited against Colorado sales or use tax.
- Once the seller accepts the completed form, they are not liable for sales tax on that transaction.
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Dos and Don'ts
When filling out the Colorado DR 1191 form, it's important to ensure accuracy and compliance. Here are some essential dos and don'ts to guide you through the process:
- Do provide complete information about both the seller and purchaser, including names, addresses, and sales tax account numbers.
- Do specify the date of purchase and the amount accurately to avoid delays.
- Do clearly describe the item(s) being purchased, including machine parts and their intended use in manufacturing.
- Do ensure that the machinery qualifies for the exemption by meeting the criteria outlined in the instructions.
- Don't forget to keep a copy of the completed form for your records after submission.
- Don't assume that all machinery is exempt; verify that it meets the specific requirements for exemption.
- Don't submit the form without the authorized signature of the purchasing firm.
- Don't overlook local tax regulations, as some areas may have different exemptions for manufacturing equipment.
File Specs
| Fact Name | Details |
|---|---|
| Form Purpose | The DR 1191 form is used to claim a sales tax exemption on purchases of machinery and machine tools in Colorado. |
| Governing Law | This form is governed by Colorado Revised Statutes (C.R.S.) 39-26-114(11) and 39-30-106(1). |
| Eligibility Criteria | To qualify for the exemption, machinery must be used directly in manufacturing tangible personal property for sale or profit. |
| Location Requirement | The machinery must be used in Colorado to be eligible for the sales tax exemption. |
| Capitalization Requirement | Purchases must be capitalized and included in a purchase order or invoice totaling more than $500. |
| Enterprise Zones | Additional exemptions apply for machinery used solely in designated enterprise zones, expanding eligibility. |
| Filing Instructions | Complete the form and provide copies to the seller and the Colorado Department of Revenue while keeping one for your records. |