Charitable Organization Sales Tax Exemption Clarification

Detected April 1st, 2026

Summary

Colorado legislators are considering SB26-009 to establish that organizations with IRS 501(c)(3) determination letters are presumed to be charitable organizations for purposes of state sales and use tax exemption. The bill would shift from requiring a separate state determination to accepting federal tax-exempt status as sufficient evidence. The change affects all nonprofit organizations seeking sales and use tax exemptions in Colorado.

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What changed

SB26-009 would amend Colorado law to create a presumption of charitable status for state sales and use tax purposes when an organization presents a valid IRS 501(c)(3) determination letter. Under current law, the definition of charitable organization for sales tax exemption includes criteria that mirror the federal definition but does not automatically accept the federal determination. The bill requires the Colorado Department of Revenue to accept 501(c)(3) status as sufficient evidence of charitable organization status.

Nonprofits with federal 501(c)(3) status seeking state sales tax exemptions should prepare to present their IRS determination letters to the Department of Revenue. Organizations currently undergoing separate state charitable organization determinations may benefit from the streamlined presumption once enacted. The bill is scheduled for House Third Reading on April 1, 2026, and is under consideration in both Senate and House Finance committees.

What to do next

Gather IRS 501(c)(3) determination letter documentation for presentation to Colorado Department of Revenue
Review current charitable organization registration status with the state
Monitor bill progress through House Finance committee and final passage

Source document (simplified)

SB26-009

Charitable Organization State Sales & Use Tax

| Type | Bill |
| --- | --- |
| Session | 2026 Regular Session |
| Subjects | Fiscal Policy & Taxes |
Concerning the determination of whether an entity is a charitable organization for purposes of state sales and use tax.

Recent Bill (PDF) Recent Fiscal Note (PDF) Bill Summary:

Charitable organizations are exempt from state sales and use tax. Under current law, the definition of charitable organization for purposes of state sales and use tax includes criteria that mirror the federal definition of a 501(c)(3) organization. The bill requires the department to presume that an organization that presents the department with a 501(c)(3) determination letter from the internal revenue service is a charitable organization for purposes of state sales and use tax. (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

Prime Sponsors

Senator

William Lindstedt
Senator

Marc Snyder
Representative

Julie McCluskie
Representative

Rebekah Stewart

Committees

Senate

Finance

House

Finance

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Status

Under Consideration

Introduced

Under Consideration

Upcoming Schedule

1 meeting

Wed

Apr 1

House Third Reading of Bills - Final Passage

9:00 AM House Chamber

Related Documents & Information

| Date | Version | Documents |
| --- | --- | --- |
| 03/31/2026 | Revised | PDF |
| 02/10/2026 | Reengrossed | PDF |
| 02/09/2026 | Engrossed | PDF |
| 01/14/2026 | Introduced | PDF |

| Date | Version | Documents |
| --- | --- | --- |
| 03/06/2026 | PA1 | PDF |

| Date | Version | Documents |
| --- | --- | --- |
| 01/22/2026 | Initial Fiscal Note | PDF |

| Activity | Vote | Documents |
| --- | --- | --- |
| Adopt amendment L.001 | The motion passed without objection. | Vote summary |
| Refer Senate Bill 26-009, as amended, to the Committee of the Whole. | The motion passed on a vote of 8-3. | Vote summary |
Hearing Summary | Committee Report: PDF
| Activity | Vote | Documents |
| --- | --- | --- |
| Refer Senate Bill 26-009 to the Committee of the Whole. | The motion passed on a vote of 9-0. | Vote summary |
Hearing Summary | Committee Report: PDF
| Date | Calendar | Motion | Vote | Vote Document |
| --- | --- | --- | --- | --- |
| 02/10/2026 | Third Reading | BILL | 26 AYE 6 NO 3 OTHER | Vote record |

| Date | Amendment Number | Committee/ Floor Hearing | Status | Documents |
| --- | --- | --- | --- | --- |
| 03/31/2026 | L.010 | Second Reading | Passed [] | PDF |
| 03/31/2026 | L.008 | Second Reading | Lost [] | PDF |
| 03/31/2026 | L.009 | Second Reading | Lost [] | PDF |
| 03/31/2026 | L.007 | Second Reading | Lost [] | PDF |
| 03/31/2026 | L.005 | Second Reading | Lost [*] | PDF |
| 03/05/2026 | L.001 | HOU Finance | Passed [] | PDF |
* Amendments passed in committee are not incorporated into the measure unless adopted by the full House or Senate.

** The status of Second Reading amendments may be subsequently affected by the adoption of an amendment to the Committee of the Whole Report. Refer to the House or Senate Journal for additional information.

| Date | Location | Action |
| --- | --- | --- |
| 03/31/2026 | House | House Second Reading Special Order - Passed with Amendments - Committee, Floor |
| 03/10/2026 | House | House Second Reading Laid Over Daily - No Amendments |
| 03/05/2026 | House | House Committee on Finance Refer Amended to House Committee of the Whole |
| 02/11/2026 | House | Introduced In House - Assigned to Finance |
| 02/10/2026 | Senate | Senate Third Reading Passed - No Amendments |
| 02/09/2026 | Senate | Senate Second Reading Passed - No Amendments |
| 02/06/2026 | Senate | Senate Second Reading Laid Over to 02/09/2026 - No Amendments |
| 02/03/2026 | Senate | Senate Committee on Finance Refer Unamended to Senate Committee of the Whole |
| 01/14/2026 | Senate | Introduced In Senate - Assigned to Finance |
Prime Sponsor

Sen. W. Lindstedt | Sen. M. Snyder

Rep. J. McCluskie | Rep. R. Stewart

Sponsor

Sen. C. Kipp

Co-Sponsor