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Posted: February 17, 2011

Sales-and-use tax appeals

The legislature is looking at fixing the process

A bill to amend the current statute regarding local appeals when a taxpayer files a protest against sales-and-use taxes is moving through the State Senate.

The Senate Local Government Committee passed SB-86, sponsored by Sen. Joyce Foster (D-Denver) and advocated by the CACI Tax Council. Representing the CACI Tax Council, Neil Pomerantz, a Partner with Silverstein and Pomerantz LLP, testified in support of the bill before the Senate Local Government Committee.

Currently, when a taxpayer files a protest against sales-and-use taxes, the person is assessed, and the taxpayer requests a hearing by the local government. The local government has 180 days to inform the taxpayer whether the request for a hearing has been approved;

Taxpayers have experienced situations in which their hearing rights have been denied after the 180 days have lapsed because they were unaware of the deadline for a hearing to be granted. This situation has created a statutory "trap" for taxpayers who seek to appeal their tax assessment.

This bill cures the circular dilemma created in statute by ensuring that a taxpayer still has 180 days for a hearing, but it also allows for additional exhaustion of remedies to include:

• If the taxpayer requests a hearing but agrees with local government agree that no hearing will be held and that the taxpayer has exhausted all remedies, the taxpayer would continue to be allowed 30 days to pursue further review of the case by the Executive Director of Colorado Department of Revenue (DOR) as provided in current statute;

• If the 180 days has expired, the local government will notify the taxpayer in writing that it will not conduct a hearing and that the taxpayer has exhausted all local remedies. The taxpayer would to continue to be allowed 30 days to pursue further review by the DOR Executive Director at as provided in current statute;

This bill provides taxpayers the ability to protest their tax assessment without getting caught in a statutory trap that limits their appeal rights. The bill also provides important notice to taxpayers by local governments who may rightfully decide to deny a hearing.
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