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i_taxtask_2017a_2017-09-15t09:02:53z5 Hearing Summary

Date: 09/15/2017

Location: RM 271

Final

Public Comment



SALES AND USE TAX SIMPLIFICATION TASK FORCE


Votes: View--> Action Taken:
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01:30 PM -- Public Comment



01:31 PM --
Laura Williams, Martin Marietta Materials, spoke to the task force about the experience related to sales tax licensing. Ms. Williams discussed the large number of sales tax licenses that her company, and their customers, must obtain and how these licenses must each be renewed in odd-numbered years. Her suggestion is to have the licenses valid for longer periods of time. Ms. Williams next discussed how Martin Marietta works with contractors who have projects with contractor exempt certificates, issues related to the timeliness for receiving these tax exempt certificates, and how this creates additional administrative work for Martin Marietta which has to later correct taxes initially invoiced through adjustments or refunds after an exemption certificate is issued. Her suggestion is to have the state exemption review focus on whether the customer is an exempt entity and whether the work fits the exemption requirements, and then have the exemption certificate be active for the life of the project. Additionally, Ms. Williams spoke about how the Department of Revenue's tax hotline is understaffed and how it is difficult to get answers to specific questions. Ms. Williams also suggested creating an online portal where contractors could complete their application for tax exemption online that would also include access to necessary documents. Ms. Williams next discussed issues related to the challenges her company's customers face in providing the documentation necessary to exempt sales tax, including the variety of forms and receipts used by cities and counties for building permits and the inability to print documents online. Ms. Williams suggested creating a separate form for use tax collection that would be standard across jurisdictions to make processing building permits more efficient. Finally, Ms. Williams discussed the challenges she has experienced with address locator databases, including the daily limits on address verification requests and new construction sites that have not been updated in the address locator system. Additionally, tracking down location information from each jurisdiction can be difficult. Her suggestion is to have several approved databases at the state level that are regularly reviewed and verified.



Ms. Williams responded to task force questions related to being able to contact home rule cities and the accuracy of information received.



01:43 PM --
Mayor Jackie Millet, City of Lone Tree and the Metro Mayor's Caucus, discussed Lone Tree's reliance on sales taxes and talked about the city's relationship with the business community. Mayor Millet discussed the potential negative impacts of moving towards a centralized administration system. Mayor Millet responded to questions from task force members related to the number of businesses registered in Lone Tree, the impact of exemptions on Lone Tree's sales tax base, Lone Tree's efforts to adopt the standardized definitions ordinance, and efforts Lone Tree has undertaken to simplify the sales tax system.



01:56 PM --
Mayor Cathy Noon, City of Centennial and the Metro Mayor's Caucus, spoke about her experience with the sales tax system as a business owner, issues experienced with the Department of Revenue, the ability of home rule municipalities to quickly respond to business needs, and how Centennial uses sales tax revenue to provide services to its citizens and to incentivize economic development. Mayor Noon responded to questions from the task force related to her perspective on the complexity of the sales tax system and discussed her experience with her business, the difficulty in determining taxability between jurisdictions, determining how to address TABOR issues, the necessity to retain the ability to audit, the need to keep address databases up-to-date in real time.



Task force members discussed the need for detailed information if collection is centralized.



02:08 PM --
Edward Rothschild, Alphagraphics franchisee, spoke about his experience dealing with the sales tax system and the current cost of compliance. Mr. Rothschild also discussed the fines and interest associated with not being able to easily comply and the difficulty in complying with all of the individual jurisdictions cumulatively. He discussed difficulties he's encountered due to audits, including inconsistency in the rules and the rulings, and the cost of training his staff that work across multiple taxing jurisdictions. Mr. Rothschild discussed his desire to have a centralized system that would include a standard form, one place to submit the form, one place for payment, but that would maintain the municipalities' ability to perform audits. Mr. Rothschild emphasized the role businesses play as tax collectors and asked for the system to be made easier for them to comply with.



02:13 PM --
Tommy Skul, Sport Clips franchisee, spoke about his experience as a franchisee dealing with the sales tax system. Mr. Skul spoke about the difficulty he's had in managing the sales tax system as a new small business owner and the time it takes him to navigate the system. Mr. Skul discussed the potential benefits that he would personally experience with a more simplified system.



02:17 PM



Mr. Rothschild and Mr. Skul responded to questions from the task force related to the experiences of other franchisees in other states with their sales tax systems.



02:18 PM --
Steven Steele, Keesen Landscape Management and Associated Landscape Contractors of Colorado, spoke about his experience with the current sales and use tax system. He spoke about the difficulty in navigating individual websites for each taxing jurisdiction and the time it takes his business to remain compliant. He discussed the difficulty in managing all of the different home rule municipalities' sales tax systems in particular and recommended having a single point of entry and uniform tax forms as a good start. Mr. Steele spoke about the monthly vendor allowance and how this allowance does not cover the time and effort it takes to collect and remit sales taxes. He spoke about how each home rule municipality looks for different information and the difficulty creates for his business.



02:23 PM --
Lynn Hollibaugh, Encore Electric, spoke about the time required to file correctly with each of the taxing jurisdictions. Ms. Hollibaugh spoke about their desire to do the right thing, but how challenging the system is to comply with and understand all of the different rule variations across multiple taxing jurisdictions. She spoke about her desire for uniform forms, standardized definitions, one place to submit taxes online, and creating thresholds for sales tax remittance.



02:25 PM



Mr. Steele and Ms. Hollibaugh responded to questions from the task force about manually updating rates and rules.



A letter from 1st Electric Contractors was provided to the task force (Attachment D).



170915 AttachD.pdf170915 AttachD.pdf



02:26 PM --
Jeff Hansen, City of Golden, offered several potential solutions based on suggestions that had been discussed throughout the meeting. This includes partnering with a third party that could provide address locator services, a taxability matrix, and a single point for remittance and licensing that businesses could choose to utilize. He suggested that a request for information (RFI) be issued to gather information related to what businesses exist, what they can provide, how they would charge for it, and who would pay for it. He also suggested that the Department of Revenue, the Colorado Municipal League, and a subset of home rule municipalities could convene a subcommittee that would gather this information and report back to the task force. Mr. Hansen spoke about how these areas would not impose on home rule authority, would make the system easier for businesses, and would make things more efficient for the cities as long as the information is vetted properly and remittance occurs in a timely fashion.



Mr. Hansen responded to task force member questions related to who would oversee the issuance and specifications of the RFI and who would manage the on-going relationship. Mr. Hansen suggested a voluntary use of the centralized system by businesses. Mr. Hansen voiced a preference for having a third party vendor provide the centralized service instead of the Department of Revenue. Task force member discussion continued related to the potential for municipalities to collect additional revenue that could result from simplification of the administrative system. Mr. Hansen responded to task force questions with information that there are about 8,000 to 9,000 total businesses licensed in Golden, with approximately 3,000 to 3,500 of those being located in the city.



02:33 PM --
Alan Smith, Sales Tax Colorado, LLC., spoke about the work of his company in sales and use tax consulting. Mr. Smith spoke about the helpfulness of staff in home rule cities and his involvement with various taxpayer education efforts. He spoke about how difficult it is for the businesses he works with to fully comply with the current system, including understanding what is taxable and what is not in all of the various taxing jurisdictions. He spoke about the helpfulness of Westminster's website in outlining what is taxable and how helpful it would be to have a taxability matrix similar to what is produced by the Streamlined organization. He also spoke about the difficulty in determining when a business has to collect state-collected local taxes through the Department of Revenue. Mr. Smith recommended that the task force look at the model used by Alabama where one portal is used for state and local collection. The portal also includes the ability to remit a one-time return if a business does not have a sales tax license in a local jurisdiction. He also discussed the need for the Department of Revenue to increase awareness related to use tax.