In a recent General Information Letter, the Colorado Department of Revenue addressed the application of sales and use tax to gift wrapping services. In the Department’s view, the “ultimate purpose” in paying for gift wrapping is to obtain decorative packaging for a product. The decorative packaging (e.g., wrapping paper, bows) is tangible personal property. The Department noted that although the taxpayer charged a “service fee” and expended labor to manipulate the materials to create the final packaging, this did not transform the transaction into a service. For more information on GIL-19-003, please contact Stephen Metz at 303-382-7177.
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