BY FREDA MIKLIN
The current language of the Cherry Hills Village municipal code only imposes a duty to collect the city’s 3½% municipal sales tax on businesses that have a physical location within the city. The city has determined it needs to update its policies. It is not proposing a tax increase.
In a town hall meeting with residents on June 21, CHV Mayor Russell Stewart pointed out that there were only a handful of businesses actually located in the city that provide sales tax revenue to city coffers. Consistent with the decision by the U.S. Supreme Court in South Dakota vs. Wayfair, Inc. 138 S.Ct.2080 (2018), many remote sellers, including internet companies like Amazon and national retailers, are collecting local sales tax and remitting it to the city regularly. Because the language in the city’s code does not specifically provide for remote collection, TABOR (Taxpayer Bill of Rights) requires a vote of the people to fix this inconsistency. Not doing so, Mayor Russell explained, could cost CHV $1.2 million annually, which he said is 13% of the city’s revenue. The city plans to ask voters to approve the change as part of the ballot on November 8.
Another purpose of the language change in the city’s code is to modernize it so as to allow CHV to participate in a statewide sales tax collection system designed to significantly ease the administrative burden on remote sellers. Unlike most states, Colorado has 103 home rule cities, towns and counties. Many of those that impose a local sales tax have historically collected it themselves, causing sellers to have to remit to each one separately. For a remote seller that does business in multiple jurisdictions, that can be extremely burdensome.
So as to address that problem, the general assembly passed and Governor Polis signed into law on April 12, 2019, SB19-006 that instructed the Colorado Department of Revenue and the Office of Information Technology to create a system through which remote sellers could remit all state and city sales tax for Colorado to one central location.
The Sales and Use Tax System (SUTS) was created to accomplish that goal and most Colorado home rule municipalities have passed or are in the process of passing the required local ordinances to participate in it. SUTS uses a remittance portal and even contains a Geographic Information System (GIS) that allows businesses to determine the correct tax jurisdiction and rate for a specific address, notwithstanding shared five-digit zip codes (e.g., Englewood, Greenwood Village and unincorporated Arapahoe County all share the 80111 zip code.) The GIS feature of the SUTS system ensures that sales tax is correctly calculated and remitted to the proper jurisdiction.
Currently, 57 out of 69 cities and towns that collect local sales tax have joined the SUTS system. In order for CHV to do so, to make it easier for remote sellers to remit the tax, its code language needs to be updated by this ballot issue.
CHV residents can get more information on this subject by watching the video recording of the June 21 town hall on the city’s website or reading the Mayor’s Report in the July issue of The Village Crier.