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New Colorado law will benefit equipment rental businesses

By Brock Huffstutler and Connie Lannan

July 7, 2023

Colorado flagBeginning Aug. 6, 2023, rental operators in Colorado will benefit from a lower inventory threshold when it comes to registering for the “Special Mobile Machinery Registration Exemption.”

That is because SB23-049 pertaining to that exemption was signed into law in June by Colorado Gov. Jared Polis.

The law expands existing legislation that exempts equipment rental companies from the requirement of having to register Special Mobile Machinery (SMM) when certain inventory thresholds are met.

The Colorado Department of Revenue defines SMMs as “machinery that is pulled, hauled, or driven over a highway and is either; a vehicle or equipment that is not designed primarily for the transportation of persons or cargo over the public highways; or a motor vehicle that may have been originally designed for the transportation of persons or cargo over the public highways, and has been redesigned or modified by the addition of mounted equipment or machinery, and is only incidentally operated or moved over the public highways.”

Prior to the new law, equipment rental companies who paid a specific 2 percent monthly ownership tax would apply for a registration exemption fee. The Department of Revenue would issue the exemption if the rental owner regularly had more than 1,000 pieces of equipment in the state.

While this condition benefited large rental companies with more than 1,000 pieces of SMM, Colorado equipment rental companies with less than 1,000 pieces were still left with the hassle and expense of registering every piece of equipment.

The new law lowers the inventory threshold from 1,000 pieces to 250 pieces, paving the way for more equipment rental companies with SMMs to benefit from exemption.

Andrew Heesacker, ECP-SM, left, testified on behalf of SB23-049 in January 2023.

Andrew Heesacker, ECP-SM, left, testified on behalf of SB23-049 in January 2023.

“The machinery registration process has always been a challenge for rental people in terms of keeping track of all the units that need to have new stickers,” says Andrew Heesacker, ECP-SM, president and CEO, Arvada Rent-Alls, Arvada, Colo., and the American Rental Association’s (ARA) Region Seven director, who describes SMMs from an equipment rental perspective as “pretty much anything from a small walk-behind trencher to a 19-ft. scissor lift and up.”

Heesacker, who testified on behalf of SB23-049 before the Colorado Senate Committee on Finance in January alongside an ARA lobbyist and a lobbyist from The Home Depot, says the SMM registration requirement has been “like having the registration on your car, but with hundreds of items. And tracking them down if they’re out on rent [to complete the registration] has always been a challenge.”

“The new law is going to make life a lot easier for rental companies within the window for those kinds of pieces,” Heesacker says.

Jim Duke, president, Target Rental, Durango, Colo., agrees. “The time and effort required to go down to the clerk and recorder offices, and the cost of each sticker, all add up. We are right on the threshold of the 250 pieces, so this could impact us. Anything the state can do to ease the administration burden is welcome news. It also is great to see the ARA involved in the process,” he says.

Click here for more details on SB23-049.