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i_taxtask_2017a_2017-07-11t10:06:11z4 Hearing Summary

Date: 07/11/2017

Location: RM 271

Final

Overview from the Colorado Department of Revenue



SALES AND USE TAX SIMPLIFICATION TASK FORCE


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11:09 AM



The task force reconvened.



11:09 AM -- Overview from the Colorado Department of Revenue



Brendon Reese and Eric Myers, Colorado Department of Revenue, spoke about the sales and use tax system in Colorado. A copy of their presentation can be found in Attachment A. Two handouts were provided to the task force (Attachments B and C).



Attachment A.pdfAttachment A.pdf Attachment B.pdfAttachment B.pdf Attachment C.pdfAttachment C.pdf



Throughout the presentation, a 2013 report from the Colorado Department of Revenue looking into a uniform sales and use tax base throughout the state was referenced. The report can be found here: https://www.colorado.gov/pacific/sites/default/files/Uniform%20Sales%20and%20Use%20Tax%20Base.pdf



Mr. Reese and Mr. Myers discussed the various taxing jurisdictions in the state.



Task force members requested information related to:

  • how many businesses actually have to remit to multiple jurisdictions (e.g. X% of business have to remit to 10+ jurisdictions) to help understand the impact of the current sales and use tax system on businesses;
  • how many taxing jurisdictions collect their own sales and use taxes versus having it collected by the state; and
  • understanding how Colorado compares to other states in terms of complexity related to the number of and overlapping of taxing jurisdictions.



Mr. Reese and Mr. Myers related several sections of state statute related to the authority to collect sales tax by the state, home rule jurisdictions, and local taxing jurisdictions.



State sales tax. The state sales tax rate is 2.9 percent. State sales tax returns are due on the 20th day of each month for taxes collected on sales during the previous month. Vendors are responsible for the payment of sales tax, and those that file returns on time are authorized to retain 3.33 percent of revenue to offset the administrative costs of collecting the tax.



Home rule jurisdictions. Article XX, Section 6, of the Colorado Constitution grants home rule jurisdictions with autonomy over their own sales taxes. They are allowed to determine their own tax base, tax rate, definition of taxable sales, vendor fees, and audit coverage and frequency.



Local taxing jurisdictions (“statutory” jurisdictions). Most control over sales taxes assessed by these jurisdictions is derived from Title 29 of the Colorado Revised States. Many state sales tax exemptions are extended to these jurisdictions by default, however the General Assembly has excluded many exemptions from the requirement in Section 29-2-105 (1), C.R.S.



Mr. Myers explained that there are 209 local taxing jurisdictions in Colorado, including counties, municipalities, and special districts. The state collects sales taxes for 50 counties; Denver and Broomfield collect their own taxes; and 12 counties (Baca, Cheyenne, Conejos, Dolores, Gilpin, Kiowa, Kit Carson, Las Animas, Montezuma, Morgan, Yuma, and Weld counties) do not collect a sales tax. For cities, the state collects sales taxes for 152 cities; 71 cities collect their own sales taxes; and 48 cities have not enacted a sales tax.



Mr. Myers continued with a discussion of taxation by special districts. Mr. Myers explained that there are 740 tax rate combinations across the state. As an example, Mr. Myers presented different taxes that exist in the City of Lakewood. Taxes in Lakewood are levied by the state, Jefferson County, the City of Lakewood, the Regional Transportation District, the Scientific and Cultural Facilities District, and a local improvement district. For example, zip code 80123, which includes areas of Denver, Lakewood, and unincorporated Jefferson County, has at least eight geographic areas with different total tax rates.



Mr. Myers and task force members discussed a 2015 audit of the Colorado Department of Revenue’s administration of local sales tax, which can be found here: https://leg.colorado.gov/sites/default/files/1422p_local_sales_taxes_performance_audit_november_2015.pdf



Mr. Myers explained that as a result of the audit, the department developed several tools to help businesses understand the various taxing jurisdiction boundaries. Mr. Myers and task force members also discussed past efforts by the legislature to address issues related to business liability for incorrect sales tax collection, including the hold harmless bill from 2016 (Senate Bill 16-050).



Task force members requested to hear from someone representing special districts at a future meeting.



Mr. Myers continued the presentation with a discussion of additional variances between state and local sales taxes, including different exemptions from the tax rate, multiple tax rates, the vendor discount/allowance, and jurisdictional boundary changes, including annexations.



Mr. Myers discussed a pilot project that was started with the City and County of Denver and difficulties the project ran into. The project was paused due to the creation of the task force. Mr. Myers also discussed other past simplification efforts at the state and federal level.



Mr. Reese discussed the two handouts that were provided to the task force: the DR 0099 and the DR 1002.