CITY OF COLORADO SPRINGS TAX GUIDE
CONTAINERS, LABELS, AND SHIPPING CASES
DEFINITION
Containers, labels and shipping cases are taxable unless specifically exempt by the City of
Colorado Springs Sales and Use Tax Ordinance.
Sales and purchases of tangible personal property for use as commercial packaging materials, i.e.
containers, labels, and shipping cases, etc. are exempt from sales and use tax when all three of
the following conditions are met:
A. The item is used by the manufacturer, compounder, wholesaler, jobber, retailer, packager,
distributor, or bottler to contain or label the finished product;
B. The item is transferred along with and as a part of the finished product to the consumer; and,
C. The item is not returnable for reuse.
Generally, containers and labels include boxes, crates, jars, bags, sacks, bottles, packing cases,
and gummed tapes and tags. The term also may include associated items such as twine, plastic
stuffing, wrapping materials and wire.
Returnable containers are taxable. If the retailer, for its convenience, collects sales tax on the
deposit for a returnable container, the tax must be refunded upon return of the container.
Any sale of a container or bag to a retailer or vendor of food, meals, or beverages, which is to be
furnished to a customer or user for the purpose of packaging or bagging the articles is exempt, if
such container or bag becomes the property of the consumer or user, together with the food,
meals or beverages purchased at retail.
Containers sold to firms performing services (e.g. a moving and storage company) are taxable
because they are used by the company and not sold to the customer.
Pallets for in-house use are taxable. Returnable pallets are subject to sales/use tax. A pallet is
exempt only when it is included with the merchandise as packaging and it is not returnable to the
seller.
EXAMPLES
1. ABC Speaker Company manufactures stereo speakers and speaker parts. After the speakers
are produced and tested, they are packed in a cardboard box, along with plastic stuffing, and
placed in inventory for sale. Neither the plastic stuffing nor the cardboard box are subject to
sales tax when they are sold by XYZ Box Company to ABC Speaker Company because they
meet all three conditions as a container:
A. they contain the finished product,
B. they are transferred by ABC Speaker Company to the purchaser as part of the product,
C. they are not returnable to the ABC Speaker Company for reuse.
2. U.S.A. Moving Company is a nationwide mover specializing in personal household moving.
U.S.A. is located in Colorado Springs and uses various size boxes to contain various items
during the moving process. The boxes in this case are subject to sales or use tax because
they do not meet all of the three conditions required to be an exempt container. U.S.A.
Moving Company is providing a service.
3. XYZ Company ships product to a warehouse for repackaging and delivery to XYZ’s retail
store. Containers, labels and packaging supplies are all taxable at this point because they are
used by XYZ internally.
CS Code Section 2-7-102: LEGISLATIVE INTENT
CS Code Section 2-7-104: WORDS & PHASES DEFINED: WHOLESALE SALES,
EXEMPT COMMERCIAL SALES PACKAGING MATERIALS
CS Code Section 2-7-201: IMPOSITION OF TAX
CS Code Section 2-7-312: TANGIBLE PERSONAL PROPERTY
CS Code Section 2-7-314: WHOLESALERS, RETAIL SALES
CS Code Section 2-7-408: CONTAINERS, LABELS
CS Code Section 2-7-443: WHOLESALE SALES
THE ABOVE INFORMATION IS A SUMMARY IN LAYMAN'S TERMS OF THE
RELEVANT CITY OF COLORADO SPRINGS TAX CODE FOR THIS INDUSTRY OR
BUSINESS SEGMENT. IT IS NOT INTENDED FOR LEGAL PURPOSES TO BE
SUBSTITUTED FOR THE FULL TEXT OF THE CITY OF COLORADO SPRINGS SALES
AND USE TAX ORDINANCE.
Revised 11/30/99