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CITY OF COLORADO SPRINGS TAX GUIDE

AUTOMOBILE RENTAL TAX - SHORT-TERM RENTAL(Article 9 Lodgers, Campgrounds and Automobile Rental Tax)

TAX RATE

ANY AUTOMOBILE RENTAL OF LESS THAN 30 CONSECUTIVE DAYS IS TAXED AT1% ABOVE THE GENERAL SALES TAX RATE OF 2.5%.

The 1% Automobile Rental Tax collected on automotive vehicle rentals must be separatelyreported on Line 5C of the sales tax return.

TYPES OF VEHICLES SUBJECT TO THE SPECIAL RATE

The special tax rate of 1% applies to short-term (less than 30 consecutive days) rentals ofautomotive vehicles commonly recognized as passenger cars.

The special tax rate does not apply to vehicles commonly used in the construction, maintenance,and repair of roadways, such as:

Cranes Office TrailersConcrete Pumpers Off-Highway Trucks

Air Compressors Special Mobile Equipment (SME)Mobile Welders

The special tax rate does not apply to recreational vehicles (travel trailers, collapsible campingtrailers, truck campers, pickup campers, and other vehicles used for overnight accommodations),unless they are licensed as passenger vehicles. The general sales tax rate (2.5%) applies to therental of this type of equipment and recreational vehicles.

THE SPECIAL 1% TAX DOES NOT INCLUDE ANY RENTAL OF A VEHICLE TO APERSON WHO ENTERS INTO A WRITTEN AGREEMENT FOR A PERIOD OF AT LEAST30 CONSECUTIVE DAYS NOR DOES THE TAX APPLY TO ANY VEHICLES LICENSEDAS TRUCKS, TRAILERS OR MOTORCYCLES.

TAXABLE VERSUS NON-TAXABLE CHARGES

The following is a list of common charges appearing on an automotive vehicle rental invoice.Included is a summary describing the taxability of the charge and the appropriate tax rate:

A. Time & Mileage: Taxable at 3.5% City rate (2.5% Sales, 1.0% Auto Rental)

B. Additional Driver: Taxable at 3.5% City rate (2.5% Sales, 1.0% Auto Rental)

C. Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW): Taxable at3.5% City rate (2.5% Sales, 1% Auto Rental). This is not a charge for insurance.It is a fee imposed by the rental company, at the renter's option, that eliminates orreduces the monetary liability the renter would otherwise be subject to when

damage occurs to the vehicle.D. Personal Accident Insurance (PAI), Personal Effects Coverage (PEC), and other

optional insurance charges: Insurance will be taxable if provided by the rentalcompany as part of the rental agreement, but not taxable if provided by a thirdparty.

E. Refueling Charge: Not taxable if the rental contract imposes a refueling chargewhen the vehicle is returned with less than a full tank of gas.

F. Optional Rental Items (e.g., cellular phone, baby seat, ski rack): Taxable at 3.5%City rate if not separately stated on the invoice. Otherwise, Taxable at 2.5% rate(the general sales tax rate) if separately stated.

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G. Airport Fee: Taxable at 3.5% City rate (2.5% Sales, 1.0% Auto Rental). This feeis imposed on the receipts of vehicle rental companies at the Colorado SpringsAirport, and may be passed on to the customer as an additional rental charge.

In addition to the above charges, the State of Colorado allows automotive vehicle rentalcompanies, at their option, to pass the ownership tax to the renter, by adding a 2% ownership taxto the rental billing. This charge is not subject to the City sales or use tax.

THE TAX CHARGED MAY ALSO INCLUDE THE STATE OF COLORADO SALES TAXOF 2.9%, THE EL PASO COUNTY SALES TAX OF 1% AND THE PIKES PEAK RURALTRANSPORTATION AUTHORITY SALES TAX OF 1%.

EXAMPLE

Eddie rents an automobile from Airport Rent A Car at the following daily rates:

A. Base daily rental $69.95B. Additional driver 5.00C. CDW 11.95D. Refueling Charge 22.00E. Car Phone 15.00F. Airport Fee 10.00

In this example, charges for A, B, C, and F are taxable at 3.5% City rate (2.5% Sales, 1% AutoRental); the charge for E is taxable at 2.5% (Sales); the charge for D is not taxable.

Note: Short Term Automobile Rental Tax is currently 10.4%, as follows:

State of Colorado Sales Tax 2.9%Colorado Springs Sales Tax 2.5%Colorado Springs Auto Rental Tax 1.0%El Paso County Sales Tax 1.0%El Paso County Ownership Tax 2.0%Pikes Peak Rural Transportation Authority Sales Tax 1.0%

PURCHASES BY RENTAL CAR COMPANY

Automobile parts and fluids (example: tires, motor oil, washer fluid, etc.) that are used tomaintain and operate the rental fleet may be purchased by the rental car company tax-free.Optional items that are rented to the customer (e.g. baby seat, ski racks) may also be purchasedtax-free. Purchases of parts and fluids for business vehicles that are not part of the rental fleet aretaxable. Purchases of parts reimbursed by a consumer or insurance company are taxable.

CS Code Section 2-7-104: WORDS AND PHRASES DEFINED: AUTOMOTIVE VEHICLECS Code Section 2-7-104: WORDS AND PHRASES DEFINED: PURCHASE OR SALECS Code Section 2-7-309: PERSONAL PROPERTY RENTALSCS Code Section 2-7-312: TANGIBLE PERSONAL PROPERTYCS Code Section 2-7-102: PURPOSE

CS Code Section 2-9-103: DEFINITIONSCS Code Section 2-9-104: LEGISLATIVE INTENTCS Code Section 2-9-108: APPLICABILITY OF CITY SALES AND USE TAX ORDINANCECS Code Section 2-9-109: EXEMPTIONS

THE ABOVE INFORMATION IS A SUMMARY IN LAYMANS TERMS OF THE RELEVANTCITY OF COLORADO SPRINGS TAX CODE FOR THIS INDUSTRY OR BUSINESS SEGMENT. ITIS NOT INTENDED FOR LEGAL PURPOSES TO BE SUBSTITUTED FOR THE FULL TEXT OFTHE CITY OF COLORADO SPRINGS SALES AND USE TAX ORDINANCE.

Revised 01/01/05