City and County of Denver, Colorado
Topic No. 36
Items of tangible personal property purchased by organizations involved in fund raising for use as prizes, premiums, and/or gifts, are subject to sales/use tax on the total purchase price paid. The purchase or use of these items by the fund raising organization is subject to taxation. If the organization is not charged sales tax, use tax would be due on such purchases.
Purchases of food, beverages and other supplies from caterers, hotels, and restaurants are normally taxable because the organization holding the event seldom will have a resale license and collect the tax from the people attending the banquet. The tax is collected by the vendor at the rate of 4% on food, beverages, and any mandatory gratuities.
Purchases of food and beverages by charitable and otherwise exempt organizations are subject to the tax if the final recipient reimburses the organization in any way, such as the purchase of a ticket, payment of a registration fee or membership fee, or making an involuntary contribution to attend such event.
An exempt organization which makes retail sales of tangible personal property for fund raising purposes is required to be licensed to collect sales tax on the sales price of the tangible personal property.
Organizations holding fund raising auctions in which tangible personal property is sold to the highest bidder are required to collect sales tax on the sales amount.
1. Good Charity organizes a fund raiser for the purpose of helping children. As a way to increase participation in the fund raiser, Good Charity sells raffle tickets for door prizes. Sales/use tax is due from Good Charity on the purchase price it paid for each door prize.
2. Great Charity has recently arranged to hold a catered fund raising dinner at a local auditorium. The public may attend this fund raiser by paying $40 per plate. The caterer will charge Great Charity $25 per plate. If licensed to collect Denver sales tax, the caterer would collect sales tax on its sales to Great Charity ($25 x # of meals). If sales tax is not collected by the caterer, use tax must be remitted by Great Charity on the purchase of catered food and beverage ($25 x # of meals).
RELATED TAX GUIDE TOPIC
Charitable, Religious, and Governmental Exemption
* DRMC Section 53-24(9). Definitions.
* DRMC Section 53-25(1),(5). Imposition of tax.
* DRMC Section 53-95(10). Definitions.
* DRMC Section 53-96(1). Imposition of tax.
* CRS 39-26-114.1(a)II. Exemptions.
* State of Colorado Sales and Use Tax Special Regulation - Gifts, Premiums, and Prizes.
THE ABOVE INFORMATION IS A SUMMARY IN LAYMAN'S TERMS OF THE RELEVANT DENVER TAX LAW FOR THIS INDUSTRY OR BUSINESS SEGMENT. IT IS NOT INTENDED FOR LEGAL PURPOSES TO BE SUBSTITUTED FOR THE FULL TEXT OF THE DRMC AND APPLICABLE RULES AND REGULATIONS.