How to Fill Out Colorado Form DR 5002: Wholesale or Entity Tax Exemption

Colorado Form DR 5002, the Declaration of Wholesale or Entity Sales Tax Exemption, is completed by the purchaser, signed, and handed to the seller to document a tax-exempt sale. The seller keeps it; you do not mail it to the Department of Revenue.¹ To fill it out, you enter your purchaser information on Line 1, complete the single exemption section that matches your situation (Line 2 for wholesale, Line 3 for entity, or Line 4 for other), and sign Line 5.

Who Fills Out This Form

Two broad groups use DR 5002. The first is wholesale purchasers: retailers buying inventory for resale, and manufacturers buying ingredients, component parts, or qualifying machinery. The second is exempt entities: qualifying 501(c)(3) charities, 501(c)(19) veterans’ organizations, federal and Colorado state or local governments, affordable housing projects, and tribal governments or enrolled members buying on or receiving delivery to a Colorado reservation.²

One completed form can cover repeated purchases from the same seller as long as the exemption you’re claiming is the same each time. It works as a blanket certificate for that relationship. A new form is needed when the exemption type changes or when you start buying from a different seller.¹

Line 1: Purchaser Information

Enter your legal business name, trade name if different, mailing address, and phone number. Abbreviations such as “Dept.” are fine, but avoid acronyms. Then provide your sales tax license or exemption certificate number, the issuing state, and its expiration date. For a Colorado sales tax license, use only the eight-digit Colorado account number, not the 12-digit location ID.²

A few situations change what goes on this line:

Federal, state, and Colorado local government purchasers do not need an exemption certificate or card. The government status itself is enough.
For tribal membership cards, enter “SU” for the Southern Ute Indian Tribe or “UM” for the Ute Mountain Ute Tribe as the state.
Diplomatic exemption cardholders enter “FM” for the U.S. Office of Foreign Missions as the state, then skip straight to Line 4.
Contractor exemption certificate holders also skip Lines 2 and 3 and complete Line 4.

Line 2: Wholesale Exemptions

Line 2 is for purchases you will resell or use in manufacturing. Check the one box that applies:

Purchase for Resale — you will resell the item in an unaltered or unused state in the ordinary course of business. You cannot use this box if you are the end user of the item.
Manufacturing — Ingredients and Component Parts — the property becomes an essential part of a finished product you manufacture, including containers, labels, and shipping cases for that product.
Manufacturing — Machinery, Machine Tools, and Parts — items used directly and predominantly to manufacture tangible personal property in Colorado for sale or profit.
Manufacturing — Testing, Modification, or Inspection — property used in manufacturing outside Colorado that is initially delivered into Colorado for testing, modification, or inspection for no more than 90 days.

Line 2 also asks you to describe the ordinary course of your business, including what you sell or manufacture. Be specific. “Retail sale of outdoor recreation equipment” is a better answer than “retail sales,” and specificity helps if the exemption is later questioned.²

Line 3: Entity Exemptions

Line 3 is for organizations that are themselves exempt. Check the box that matches your entity:

501(c)(3) Charitable Organization — the purchase must be used exclusively in the conduct of the organization’s regular charitable functions.
501(c)(19) Veterans’ Organization — same “used exclusively” standard.
U.S. or Colorado State or Local Government — federal agencies, the State of Colorado, and any Colorado county, city, school district, or special district, including their departments and institutions. Federal Credit Unions and Farm Credit Banks also qualify.
Affordable Housing Project — purchases by a qualifying entity for use in a qualifying project that the entity owns, leases, or constructs.
Tribe or Member — applies only to sales made on or delivered to a Colorado reservation. Qualifying purchasers include tribal governments, enrolled members, and entities owned by a tribe or member. Tribal entities also enter their total tribal ownership percentage.

Line 3 then asks how the purchase is being paid for. The options include a purchase authorization to be paid later, a check issued by the entity, a U.S. Government GSA SmartPay3 Card, a Colorado state or local government credit card, or a non-government credit card bearing the entity name. The payment must come directly from the funds of the exempt entity.²

Line 4: Other Exemptions

If your exemption doesn’t fit the wholesale or entity categories, use Line 4. Describe the exemption you’re claiming, citing the statute or rule if you can, and explain how you qualify, including how you’ll use the purchased items. Diplomatic cardholders and contractor exemption certificate holders complete this line instead of Lines 2 and 3.

Line 5: Sign and Deliver

Print your name and title, then sign and date the form. Your signature certifies that the information is accurate and the purchase qualifies. It also carries direct liability: if the exemption turns out not to apply, you owe the sales or use tax, plus interest and any penalties.¹

Once signed, hand the form to the seller. Do not send it to the Colorado Department of Revenue. The form’s instructions say so directly. There is no state processing step, no confirmation, and no submission portal. DR 5002 is documentation between the purchaser and the seller, and it lives in the seller’s records.¹

What the Seller Must Do

A seller who accepts an exempt sale carries the burden of proof that the exemption was valid. Collecting a completed DR 5002 is part of that, but only if the purchaser’s eligibility is verified first.¹

The form instructions give two ways to verify a Colorado-issued sales tax license or exemption certificate. You can go to Colorado.gov/RevenueOnline, click “Verify a License or Certificate,” and record the number and expiration date. Or you can inspect a physical copy, confirm it’s complete and unexpired, and keep a copy.² If you can’t resolve a doubt after those steps, collect the tax. A quick note on nonprofit certificates: valid Colorado nonprofit certificate numbers begin with 98 or 098, which is a fast first check.³

Colorado retailers must keep the books and records needed to determine the correct tax for a minimum of three years, and that includes retaining the DR 5002 or any Multistate Tax Commission certificate you accepted.⁴

Using the MTC Certificate Instead

Colorado also accepts the Multistate Tax Commission’s Uniform Sales & Use Tax Resale Certificate in place of DR 5002.² Two limits apply. Colorado does not allow the MTC certificate to claim a resale exemption on the purchase of a taxable service for resale; it works for tangible goods only.⁵ And self-collecting Colorado home-rule cities may not accept the MTC form, so sellers doing business in those cities should contact them directly.

What Happens If the Exemption Is Wrong

A purchaser who claims an exemption they don’t qualify for owes the unpaid sales or use tax, plus interest and any applicable penalties.² Civil penalties start at 10% of the unpaid tax with an additional 0.5% for each month the tax remains unpaid, up to a maximum of 18%. Additional penalties can be imposed for negligence or fraud.⁴

Sellers have their own exposure. A retailer who fails to collect required tax is liable for the full amount due on all sales, regardless of whether they hold a Colorado sales tax license. Accepting a DR 5002 without verifying the purchaser’s eligibility leaves the seller on the hook if the exemption is later disallowed.⁴

Where to Get the Form

Download DR 5002 from the Colorado Department of Revenue at tax.colorado.gov, under the “Sales Tax Exemption, Non-Profits & Government” section of the Sales & Use Tax forms page.¹ Nonprofits that still need a state exemption certificate number should first secure 501(c)(3) status from the IRS, then apply to the state using Form DR 0715. Colorado nonprofit exemption certificates are free and do not expire.³

1
Department of Revenue – Taxation. DR 5002 – Declaration of Wholesale or Entity Sales Tax Exemption
2
Colorado Department of Revenue. DR 5002 – Declaration of Wholesale or Entity Sales Tax Exemption
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Department of Revenue – Taxation. Certificates of Exemption
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Department of Revenue – Taxation. Sales Tax Guide
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Multistate Tax Commission. Uniform Sales and Use Tax Resale Certificate