A Colorado tax exempt certificate lets qualifying nonprofits, religious bodies, veterans’ groups, and government entities buy goods and services without paying state sales or use tax on purchases made for their regular charitable or governmental work. You apply by submitting Form DR 0715 and supporting documents through Revenue Online. There is no application fee, the certificate does not expire, and the governing statute is C.R.S. § 39-26-718.1Justia Law. Colorado Revised Statutes Title 39 Section 39-26-718 One significant catch: Colorado’s home-rule cities set their own sales tax rules and may not honor the state certificate at all.
Who Qualifies
Form DR 0715 lists the eligible organization types:2Colorado Department of Revenue. Application for Exempt Entity Certificate
- Charitable organizations organized and operated exclusively for religious, charitable, scientific, literary, educational, public-safety testing, amateur sports competition, or prevention-of-cruelty purposes. The criteria closely track federal 501(c)(3) requirements.
- Veterans’ organizations registered under Section 501(c)(19) of the Internal Revenue Code, which Colorado treats as charitable for sales tax purposes.3Cornell Law Institute. Colorado Regulation 39-26-718 – Charitable and Other Exempt Organizations
- Entities that own, lease, or construct qualifying affordable housing projects.
- Federal credit unions and farm credit banks.
- Colorado political authorities and districts.
- Federal, state, and local government entities, which are exempt under a separate statute, C.R.S. § 39-26-704.4Justia Law. Colorado Revised Statutes Title 39 Section 39-26-704
Worth clearing up at the outset: the exempt entity certificate is not a resale certificate. A resale certificate lets a business buy inventory tax-free because it will collect sales tax on resale. The exempt entity certificate removes the tax because of who the buyer is.
Religious Organizations Without a 501(c)(3) Letter
The IRS does not require churches and religious bodies to apply for a 501(c)(3) determination letter. Colorado accommodates this. A religious organization without one can submit an IRS “No Record of Exempt Organization” letter together with Colorado Form DR 0716, a statement specific to nonprofit churches and synagogues.3Cornell Law Institute. Colorado Regulation 39-26-718 – Charitable and Other Exempt Organizations An affiliate of a national organization that already holds a Colorado exemption can instead submit documentation from the national body proving the affiliation.
How to Apply Using Form DR 0715
The application is Form DR 0715, “Application for Exempt Entity Certificate.”5Department of Revenue – Taxation. Application for Exempt Entity Certificate It asks for your organization’s legal entity name, Federal Employer Identification Number, trade name if different, phone number, principal Colorado address, and mailing address.2Colorado Department of Revenue. Application for Exempt Entity Certificate You check a box identifying your organization type and describe your organization’s purpose and function.
Supporting documents depend on what you are:
- Charitable organizations submit the IRS determination letter showing 501(c)(3) status along with articles of incorporation or organization that spell out the organization’s specific purpose.
- Veterans’ organizations submit the IRS determination letter showing 501(c)(19) status.
- Religious organizations without a 501(c)(3) letter submit the IRS “No Record” letter and completed Form DR 0716.
- Government entities submit documentation establishing governmental status.
There is no application fee.6Department of Revenue – Taxation. Certificates of Exemption Make sure every detail on the form matches your legal records exactly. A name mismatch between the application and your articles of incorporation is a common reason reviews stall.
Submit the completed form and PDF attachments through the Colorado Department of Revenue’s Revenue Online portal. You’ll electronically sign to affirm the information is accurate. Processing time varies with Department workload. Approval or denial comes through standard mail or Revenue Online’s secure messaging, and an approved organization receives a certificate with a unique exemption number vendors will ask to see.
How to Use the Certificate
Having the certificate is only half of it. Colorado puts conditions on how exempt purchases actually have to happen, and this is where organizations most often slip up.
The purchase must be part of your organization’s regular charitable functions and activities.1Justia Law. Colorado Revised Statutes Title 39 Section 39-26-718 Office supplies for the food bank qualify. A television for a board member’s living room does not, even if the organization’s credit card paid for it.
For purchases of $250 or more, payment has to come directly from the organization’s own funds, by check or credit card in the organization’s name.7Department of Revenue – Taxation. Sales Tax Guide Cash, personal checks, and personal credit cards do not qualify, even with a planned reimbursement. The same rule binds government entities, which must use a government purchase order, warrant, check, or credit card in the agency’s name.8Colorado Department of Revenue. FYI Sales 63 – Government Purchases Exemptions An employee paying out of pocket and seeking reimbursement is making a taxable purchase.
Present a copy of your certificate to the vendor at the time of sale. The vendor keeps it on file to justify not collecting tax if the state audits them later.
Home-Rule Cities Can Still Charge You Sales Tax
This is the piece most organizations overlook. Colorado has dozens of home-rule cities that collect and administer their own local sales tax independently from the state. Your state-issued certificate covers state sales tax and state-collected local taxes, but it does not automatically exempt you in a self-collected home-rule jurisdiction.9Colorado Department of Revenue – Taxation. Local Government Sales Tax
Self-collected cities set their own rules about what’s taxable and which exemptions they recognize. Some honor the state certificate, some require a separate local application, and some may not grant the exemption at all for your entity type. If you regularly make purchases in Denver, Colorado Springs, Aurora, Boulder, Fort Collins, Lakewood, or another self-collected city, contact each city’s tax office directly to find out what they want.
Counties that impose sales tax are almost all state-collected, with Denver County and Broomfield County as exceptions, so the state exemption certificate works automatically for county-level taxes in most places.9Colorado Department of Revenue – Taxation. Local Government Sales Tax
When a Vendor Asks for Form DR 5002
Vendors carry their own compliance burden. A seller has to be able to prove that an otherwise taxable sale was properly exempted, which means they need documentation. Colorado provides Form DR 5002, the “Declaration of Wholesale or Entity Sales Tax Exemption,” as a standardized way for sellers to verify and document a buyer’s eligibility.10Colorado Department of Revenue – Taxation. Declaration of Wholesale or Entity Sales Tax Exemption The seller keeps the form in their own records. It does not get sent to the Department of Revenue. A single DR 5002 can cover multiple purchases from the same buyer under the same exemption.
Don’t be surprised when a vendor asks you to complete a DR 5002 in addition to showing your certificate. It protects both sides if the state audits.
Keeping the Certificate Valid
The Colorado exempt entity certificate does not expire and does not require periodic renewal.6Department of Revenue – Taxation. Certificates of Exemption It does need to reflect your current information. If your legal name, address, or operational purpose changes, update your records through Revenue Online. An outdated address means you miss Department correspondence, and a name change that doesn’t match the certificate can cause vendors to reject it.
If your organization loses federal tax-exempt status with the IRS, the Colorado certificate becomes invalid regardless of what the paper says. Organizations that fail to file Form 990 for three consecutive years lose their 501(c)(3) designation automatically, and the Colorado exemption falls with it. Keep the IRS determination letter current.
Penalties for Misusing the Certificate
Using the certificate for personal purchases or for transactions outside your organization’s charitable functions can cost you the certificate and more. The Department of Revenue can revoke your exempt status, and intentional misuse falls under Colorado’s criminal tax evasion statute.
Under C.R.S. § 39-21-118, willfully attempting to evade or defeat a tax administered by the Department is a class 6 felony.11FindLaw. Colorado Revised Statutes Title 39 Section 39-21-118 – Criminal Penalties For individuals, that carries one to eighteen months in prison and a fine between $1,000 and $100,000. For corporations, the fine can reach $500,000.12Justia Law. Colorado Revised Statutes Title 18 Section 18-1.3-401 Those are statutory maximums, and prosecutions for certificate misuse are less common than audits and revocations, but the risk is real for anyone treating the certificate as a personal discount card.