A Denver sales tax exemption certificate is no longer something a 501(c)(3) organization applies for. Since January 1, 2021, qualifying charitable nonprofits are automatically exempt from Denver’s 5.15% sales tax, as well as the city’s use tax, lodger’s tax, tourism improvement district tax, and the business portion of the occupational privilege tax.1City and County of Denver. Exempt Organization Information The old Denver-issued Letter of Exemption is gone. In its place, you use your IRS determination letter together with a short point-of-sale form.
Who Qualifies Automatically
Two conditions have to be true for every exempt purchase. Your organization must hold an active, valid 501(c)(3) determination from the IRS, and the purchase must be paid directly from the organization’s own funds. An employee buying supplies with personal money and seeking reimbursement later does not qualify, even if the organization ultimately covers the cost.1City and County of Denver. Exempt Organization Information
If your organization previously held a Denver Letter of Exemption, you do not need to renew it. The letter is no longer required. Your IRS determination letter is now the primary document you present when making purchases.
Government buyers are also exempt. Under the Denver Revised Municipal Code, “government” covers departments, institutions, and political subdivisions of the United States and the State of Colorado, and those purchasers should still be prepared to show documentation at the register.2City and County of Denver. Tax Guide Topic 87 – Governmental Exemption
What to Give the Vendor at Checkout
Two things do the work of the old certificate:
- A copy of your IRS 501(c)(3) determination letter.
- A completed Standard Municipal Home Rule Affidavit of Exempt Sale.
The affidavit is not an application for exempt status. It is a point-of-sale document you fill out and hand to the vendor to certify that a specific purchase qualifies for exemption under DRMC 53-26, DRMC 53-97, and DRMC 53-172.3City and County of Denver. Standard Municipal Home Rule Affidavit of Exempt Sale Together, these two documents give the retailer the proof they need to justify not collecting sales tax on the transaction.1City and County of Denver. Exempt Organization Information
Download the affidavit from the Denver Treasury Division’s tax forms page on denvergov.org and keep blank copies on hand so you can complete one quickly anywhere. Fill out every field. The vendor is relying on that document as their audit trail, and some retailers who are not familiar with Denver’s automatic exemption may hesitate to sell tax-free without it. Carrying your IRS letter and a stack of blank affidavits makes the conversation short.
Denver Is Not the Same as the State Exemption
Denver collects and administers its own sales tax independently from the Colorado Department of Revenue. The state classifies Denver as “self-collected,” so Colorado’s sales tax rules do not automatically carry over to Denver’s municipal tax.4Colorado Department of Revenue. Local Government Sales Tax
In practice, a Colorado state sales tax exemption certificate (the numbers beginning with 98 or 098) does not exempt you from Denver’s 5.15% city tax. The reverse is also true: qualifying for Denver’s exemption does not cover the state’s 2.9% tax or taxes imposed by other overlapping districts. If your nonprofit also buys in other Colorado cities, check each one, because any home-rule municipality that self-collects can set its own rules.
What Counts as Misuse
Using the exemption for personal purchases or for items unrelated to the organization’s exempt purpose violates Denver municipal law. The city can revoke an organization’s exempt standing, and if an audit uncovers improper transactions, the Treasury Division will assess back taxes plus interest on every disqualified purchase.
Employees and volunteers cannot use the organization’s exempt status for personal buying. Even on official travel, a personal item rung up alongside organizational supplies does not get tax-free treatment. This is one of the most common compliance failures, and auditors look for it specifically.
Records to Keep
The exemption is automatic, but sloppy records can turn a legitimate exempt purchase into a costly problem during an audit. For every tax-free transaction, keep the completed Affidavit of Exempt Sale, the receipt, and documentation showing the purchase came from organizational funds. Organize the records by date so you can tie each exempt transaction to a legitimate organizational purpose.
Denver’s Treasury Division can request this documentation during a vendor or organizational audit. The city’s tax guides do not specify an exact retention period for exempt-purchase records, so a general best practice is to keep them at least three to four years, longer if you want extra margin for older transactions.
Where to Get Help
For questions about exempt status, the Affidavit of Exempt Sale, or any other Denver business tax matter, reach the Treasury Division at 720-913-9300 or Treasury.Information@denvergov.org. Written correspondence goes to the Wellington Webb Building, 201 W. Colfax Ave., Department 1009, Denver, CO 80202.5City and County of Denver. Treasury Contacts