Colorado promotes its biotechnology industries by providing them with a taxpayer-friendly means to recover the sales and use previously-paid tax expenses on equipment and supplies used for research and development. Qualified taxpayers may seek a refund every year for all Colorado sales and use taxes they paid on purchases of tangible personal property used directly in research and development of biotechnology. This includes property such as microscopes, chemical reagents and software.

Taxpayers have only a short period to claim the biotechnology refund – you must submit a refund claim between January 1st and April 1st within the following calendar year.

Requirements for the Refund

The refund applies to Colorado’s 2.9 percent state sales or use taxes.

  1. The tax was paid within the eligible calendar year. The refund for biotechnology is not an exclusion or exemption from sales or use taxes. To take advantage of the refund, the taxpayer first must pay any sales or use taxes owed, and then seek a refund.
  2. The tax was paid by a qualified taxpayer.
  3. The tax was paid in the calendar year immediately preceding the brief mandated filing period (that is, the period eligible for the refund).
  4. The tax was paid for the sale, storage, use, or consumption of (a) tangible personal property (b) for use in Colorado; and
  5. The tangible property was directly and predominately used in (a) research and development (as defined in the federal tax code) (b) of biotechnology.

Qualified taxpayers must submit a refund application to the Colorado Department of Revenue.

To consult the Sales and Use Tax Refund for Biotechnology statute, visit the state statutes and search for 39-26-401 and 402.