CO HB1270

Codifies the Department of Revenue's special regulation regarding sales and use tax treatment of computer software into Colorado Revised Statutes Section 39-26-102(15).

Classifies computer software as tangible personal property subject to sales tax only when it meets all three criteria: prepackaged for repeated sale or license, governed by a tear-open nonnegotiable license agreement, and delivered in a tangible medium (tape, disk, compact disc, card, or comparable physical medium).

Excludes from tangible medium classification software provided through application service providers, delivered electronically by remote telecommunications, or transferred by load and leave delivery where the vendor retains title to the tangible medium.

Establishes that computer internalized instruction code integral to the computer's basic operations is part of the hardware and taxable as tangible personal property regardless of whether vendors charge separately for such code.

Allows Colorado purchasers buying software for distribution to out-of-state locations to prorate sales tax to only the license fees associated with Colorado usage, provided the purchaser furnishes a written statement to the retailer relieving the retailer of liability for the proration.