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House committee advances bill to limit disclosure in local sales-tax audits
Summary
The House Finance Committee advanced Senate Bill 46 to the Committee of the Whole after sponsors said the measure protects taxpayer confidentiality during local audits of online retailers who remit state but not local sales taxes.
Representative Chris Taggart, sponsor of Senate Bill 46, told the House Finance Committee that the measure narrows who may be notified or consulted when a municipality conducts a sales- and use-tax audit of an online retailer.
The bill responds to situations in which online retailers remit the state portion of sales tax but not the local or special-district portions, and municipalities hire auditors to determine whether the local share has been paid. Taggart said the bill would prevent an auditor hired by one municipality from contacting other local governments about a particular taxpayer, which he described as a breach of confidentiality.
"That auditor by this bill is not allowed to call the city of Durango, the city of Montrose, the city of Delta and say, ‘Hey, I'm doing an audit on behalf of the city of Grand Junction on this particular online retailer, wouldn't you like to be a part of it?' That breaches confidentiality. It should not occur," Representative Taggart said.
Vice Chair Tutone asked whether the state knows how many companies are failing to remit local taxes. Taggart answered that the number is unknown: "I wish I could tell you that we know, we don't know, how many are in fact, abiding by, the laws of the state of Colorado and our municipal local government. I just don't know."
Michael Gifford, advocacy director for AGC Colorado and a member of the Simplify Colorado Sales and Use Tax Coalition, testified in support of the bill. He told the committee the confidentiality provision is important to contractors and suppliers who are concerned that audit information can spread across jurisdictions and create duplicated compliance burdens.
Gifford said the coalition has worked with the legislature's interim committee on sales-tax simplification for several years and described the bill as another step in that work.
The committee moved Senate Bill 46 to the Committee of the Whole with a favorable recommendation. The motion was made by Vice Chair Tutone and seconded by Representative Hartzook; the roll call was held and the chair announced the measure would advance.
Next steps: The bill will be considered by the Committee of the Whole, where additional debate and amendments are possible.
