THE CITY OF LAKEWOOD SALES AND USE TAX ORDINANCE TAXES: TANGIBLE PERSONAL PROPERTY ENUMERATED SERVICES:

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2 THE CITY OF LAKEWOOD SALES AND USE TAX ORDINANCE TAXES: TANGIBLE PERSONAL PROPERTY ENUMERATED SERVICES: ON THE ENTIRE AMOUNT PAID OR CHARGED FOR WARRANTY AND MAINTENANCE SERVICES RELATING TO TANGIBLE PERSONAL PROPERTY, WHETHER INCLUDED IN THE COST OF THE TANGIBLE PERSONAL PROPERTY RELATING THERETO OR SOLD SEPARATELY.

3 DEFINITION OF WARRANTY AND MAINTENANCE SERVICES: WHAT DOES THE WORD SERVICE MEAN?

4 DEFINITION OF WARRANTY AND MAINTENANCE SERVICES: CITY OF LAKEWOOD ORDINANCE IS SILENT ON THE DEFINITION OF WARRANTY AND MAINTENANCE SERVICES.

5 DEFINITION OF WARRANTY AND MAINTENANCE SERVICES: AMBIGUITY IN THE ORDINANCE ON THE ENTIRE AMOUNT PAID OR CHARGED FOR WARRANTY AND MAINTENANCE SERVICES RELATING TO TANGIBLE PERSONAL PROPERTY, WHETHER INCLUDED IN THE COST OF THE TANGIBLE PERSONAL PROPERTY RELATING THERETO OR SOLD SEPARATELY.

6 DEFINITION OF WARRANTY AND MAINTENANCE SERVICES: CITY OF LAKEWOOD REGULATIONS: IF A SEPARATE WARRANTY, SERVICE OR MAINTENANCE CONTRACT IS PURCHASED... THEN THE ENTIRE SALES PRICE OF THE WARRANTY, SERVICE OR MAINTENANCE CONTRACT IS SUBJECT TO SALES TAX. AUDIT ISSUES: NO COMPLIANCE AMONG SOME OF THE LARGEST DEALERSHIPS STATE DOES NOT TAX THESE PRODUCTS 3-4 ERP AND GL IMPLEMENTATIONS DURING THE LAST 20 YEARS.

7 TAXED WHEN SOLD? 100% OF VALUE LAKEWOOD BOULDER SOME % OF VALUE THORNTON MEDICAL EQUIP 50% TPP (INCL AUTOS) 30% TAXED WHEN USED OR INVOKED? ON PARTS ONLY? ON TOTAL COST OF SERVICE? ON SOME PERCENTAGE?

8 INSURANCE VS. WARRANTIES/CONTRACTS/AGREEMENTS INSURANCE TRANSFER OF THE RISK OF LOSS FROM ONE ENTITY TO ANOTHER, IN EXCHANGE FOR A PAYMENT (A SMALLER, KNOWN LOSS). DOES NOT COVER MANUFACTURING DEFECTS OR QUALITY ISSUES, BUT EVENTS SUCH AS ACCIDENTS, VANDALISM & THEFT. WARRANTIES/CONTRACTS/AGREEMENTS MALFUNCTION & BREAKDOWN MECHANICAL FAILURE FROM NORMAL USAGE QUALITY ISSUES EXCLUSIONS USUALLY INCLUDE NORMAL WEAR AND TEAR, AND INSURABLE EVENTS I.E. ACTS OF GOD

9 INSURANCE VS. WARRANTIES/CONTRACTS/AGREEMENTS C.R.S (6)(a) PORTABLE ELECTRONICS INSURANCE MEANS INSURANCE THAT PROVIDES COVERAGE FOR THE REPAIR OR REPLACEMENT OF PORTABLE ELECTRONICS THAT MAY PROVIDE COVERAGE AGAINST LOSS, THEFT, INOPERABILITY DUE TO MECHANICAL FAILURE OR MALFUNCTION, DAMAGE, OR OTHER SIMILAR CAUSES OF LOSS. DOES NOT INCLUDE: A SERVICE CONTRACT OR EXTENDED WARRANTY THAT PROVIDES COVERAGE LIMITED TO THE REPAIR, REPLACEMENT, OR MAINTENANCE OF PROPERTY FOR THE OPERATIONAL OR STRUCTURAL FAILURE OF PROPERTY DUE TO A DEFECT IN MATERIALS, WORKMANSHIP, ACCIDENTAL DAMAGE FROM HANDLING, POWER SURGES, OR NOMRAL WEAR AND TEAR.

10 INSURANCE VS. WARRANTIES/CONTRACTS/AGREEMENTS TAKE-AWAYS: GET A LIST OF THESE PRODUCTS AND THEIR DESCRIPTIONS. ANALYZE THESE PRODUCTS. READ THE AGREEMENTS AND FINE PRINT. FOR PRIVATE-SECTOR PARTNERS, ADVISE YOUR CLIENTS OR YOUR IN-HOUSE PURCHASERS TO ANALYZE THESE PRODUCTS FOR TAXABILITY STAY TUNED FOR THE STANDARD DEFINITIONS PROJECT.

11 TAXABLE Tangible Personal Property Moveable & Portable Not Installed Into Real Property Leased Or Rented to Retailers NOT TAXABLE True Object Of Lease Or Agreement is Real Estate Not Allowed To Be Moved Demarcate Real Estate Flee Market Analogy

12 Lakewood s Ordinance Is Silent On Complete Unit Special Regulation: Complete Unit, Not Made To Order, With Agreement For Installation, IS NOT A Building Contract Stoves Refrigerators Furnaces Air Conditioners Washing Machines Dryers Carpets Electrical Fixtures Ready-Made Cabinets Storm Doors Storm Windows Screens Sod Similar Items

13 On Such Sales, Sales Tax Must Be Collected From The Retailer-Contractor Separately Stated Installation Charges Exempt Repair Of Such Articles Not Considered Repair To Real Property (Not A Contract) Similar Items: Replacement Windows Solar Power Systems Gutters

14 ADDRESS TESTING DEMOS SOURCING DELIVERED SALES OF FLOWERS, PIZZAS, ETC. SOURCED TO SHOP OR TO DELIVERY POINT? BEST PRACTICES?? WORK PAPERS AUDIT PROCESSES SAMPLING CONCEPTS

15 Curt Osborne City of Lakewood