Denver District Judge hears arguments on business licensing fees

Denver District Judge hears arguments on business licensing fees

Are business license fees a tax subject to TABOR? Denver District Judge will decide

Sep 11, 2015, 2:53pm MDT Updated Sep 11, 2015, 3:11pm MDT

Monica Mendoza Reporter Denver Business Journal

Supreme Court to 10th Circuit: Take another look at the TABOR case

Denver District Court Judge Bruce Jones will decide if the money collected from business owners is a fee or a tax, an answer that “will affect policy for years to come,” said Tony Gagliardi, Denver director of the National Federation of Independent Business.

The Colorado Secretary of State’s office since 1983 has collected fees from businesses and used the money to pay for all of the activities run by the office, including elections. The funding structure of the office, which is unique in the state, was set up long before the first utterance of Colorado’s Taxpayer’s Bill of Rights, which was voter-approved in 1992 and says voters get to decide on new taxes and tax increases.

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Denver District Court Judge Bruce Jones will decide if the money collected from business… more

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NFIB, on behalf of its members, filed a lawsuit in 2014 against Colorado Secretary of State Scott Gessler. The office is now held by Wayne Williams, who was in court Friday for a hearing where Judge Jones heard arguments of the fee/tax issue.

Will TABOR reach back and affect a funding formula set up before TABOR was a law? If the judge rules in favor of NFIB, the Legislature will be forced to find about $17 million a year to pay for elections and other services provided by the Secretary of State’s office.

At the heart of NFIB’s argument is that fees, which are not subject to TABOR, are intended to defray the costs of a particular government service like processing business licenses. A tax is designed to raise revenues to defray the general expense of government.

The Secretary of State’s office collects about $20 million a year in fees from businesses that are filing required forms, but only about 11 percent of that is needed to oversee the business-licensing program. The rest of the money pays for elections, bingo and raffle regulation and other functions that aren't related to business, said Jason Dunn, attorney with Brownstein Hyatt Farber Schreck who represents NFIB.

Judge Jones put it this way: “At what point did you wake up and realize this was not a fee?” directing his questions to Dunn. “What was the clarion call?”