Sales Tax, Collected or Not

Here is the abridged version of how the one percent county sales tax finds its way to the county coffers. 

(1) People purchase goods at any retailer in El Paso County. (2) Retail stores collect sales tax.  (3) The store sends the taxes to the Colorado Department of Revenue (4) The state sends the funds to the taxing entity - El Paso County, The City of Fountain, The Rural Transportation Authority (RTA), etcetera. This final transfer happens 60 to 90 days after the initial purchase.

With the formation of the Pikes Peak Rural Transportation Authority in 2005, the county, for the first time, had a similar enough organization to compare its sales tax revenue to that we could tell there was an abundance of irregularities. The commissioners approved hiring an additional employee in 2006 to research the collection data, including comparing the RTA and El Paso County revenue reports. It appears the county has been shorted a total of 2 to 5 million dollars in the past 3 years. The state, as the collecting agency, is responsible for, and in fact is the only agency that can contact and follow up on irregularities found on the 20,000 retail establishment’s remittances. It had become apparent the state needed some encouragement to perform that part of their duties.

During this time frame the Colorado Department of Revenue was in turmoil, with the director being accused of embezzlement and a high employee turnover rate.  After much persistence and being provided a list of the top several thousand “repeat offenders” by our county Finance Department, the state has hired a temporary employee to research our concerns.

So what happens if we find the county has been shorted funds? There are several scenarios that could play out; if the state collected the taxes and did not forward them we could expect remittance in fairly short order. If the retailer collected the taxes and did not forward them to the state, that will require individual collection efforts with some pretty severe penalties for non compliance. If the retailer did not collect the proper amount of taxes they still owe them, but establishing what they owe could be time consuming and once again, it is the state’s responsibility to monitor and collect the proper amount all we can do is provide as much information as is helpful.

Of course the money would come in handy right now, as we are preparing options to balance the books on 2007 and it appears the revenue is coming in about 4 million under budget. While the collection shortfall may not be resolved quickly, it is something we have been working on for some time.
If we can not get this resolved satisfactorily we may seek a legislative solution to allow the county to collect its own sales tax as Colorado Springs does, and would explore partnering with them to keep expenses to a minimum. 

CONTACT THE WRITER • HISEY4CD4@MSN.COM

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