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Dan Pilcher
CACI Senior Vice President
& Chief Operating Officer
Phone: 303.866.9600
E-Mail:
dpilcher@cochamber.com
Friday, February 12, 2010
Bills Imposing $231.3 Million in Additional Taxes on Businesses
Await Final House Action
This morning, the House did not take up the question of
concurrence with the Senate versions of the following nine House
tax bills, which leaves the bills on the House Calendar for
action on Monday, February 15th. If the House concurs, the
bills will then go to Governor Bill Ritter for his signature.
HB-1189
Eliminates the sales-and-use tax exemption for direct-mail
advertising materials.
HB-1190
Removes the exclusion for energy used by industry and
manufacturers from being subject to the state sales tax.
HB-1191
Eliminates the sales-tax exemption on sales of candy and soft
drinks.
HB-1192
Expands sales-and-use tax for standardized software.
HB-1193
Requires an Internet retailer that has a “bricks-and-mortar”
store in Colorado--but which does not collect sales tax for
business conducted through a Web site that is incorporated as a
separate entity outside of Colorado--is presumed to have
Colorado tax nexus and is required to collect and remit Colorado
sales tax. Requires retailers in Colorado that do not collect
and remit sales tax—such as Internet retailers that do not have
bricks-and-mortar stores in Colorado--to notify their customers
that the customer has to pay use tax since the retailer is not
collecting and remitting sales tax.
HB-1194
Eliminates the sales-and-use tax exemption on nonessential food
containers and related materials.
HB-1195
Suspends exemption from state sales-and-use tax for certain
items used in agricultural production.
HB-1196
Disqualifies the purchase of “Type 7” alternative-fuel vehicles
for a tax credit.
HB-1199
Places a temporary limit of $250,000 on the net-operating loss (NOL)
carry-forward for the state corporate income tax deduction.
For coverage by The Denver Post of the Senate’s Third
Reading debate and vote, click on:
http://www.denverpost.com/search/ci_14378147
HB-1263: “Businesses Not Welcome in Colorado!”
CACI is strongly opposed to HB-1263, which would limit taxpayer
and corporate income tax benefits. The bill is sponsored by
Representative Jack Pommer (D-Boulder) and Senator Betty Boyd
(D-Lakewood).
If this bill becomes law, Colorado will become widely known as
anti-business. At a time when Colorado should be focused on
attracting more businesses to Colorado and retaining the ones
that are now here, this bill discourages those efforts.
This bill sends a clear message to
business leaders:
“Corporate
Headquarters Are Not Welcome in Colorado!”
The bill has been assigned to the House Finance Committee, but
it has not yet been scheduled for its first hearing. A fiscal
note has not yet been made public.
The bill limits the amount of a state income-tax deduction for
wages or benefits from being claimed by a corporation as a
deduction under Federal law. The bill also increases as
Colorado taxable income any compensation exceeding $250,000 that
is claimed as a federal deduction by an individual.
The Federal tax code has certain limits ($1 million) on the
amount of compensation that a corporation can deduct, but it
only applies to publicly-traded corporations for the five most
highly compensated employees and to businesses that have
received Federal bail-out funds. Both of those situations are
very specific in terms of oversight by and accountability to
investors.
HB-1263, however, places an arbitrary limit on the deduction for
compensation paid by any business (incorporated or not, public
or private) or taxpayer.
While state and local economic developers are trying to attract
businesses-- especially high technology “green” jobs--to
Colorado, this bill, should it become law, would clearly
discourage companies from locating corporate headquarters and
high-paying jobs to Colorado because it will limit compensation
deductions in computing taxable income for both executives and
the corporations.
This bill is very far-reaching in that neither the corporation
nor the executive needs to be resident or even present in
Colorado for the limitation to apply. For example, a
corporation that is headquartered in, say, London, that has
business activity in Colorado and is required to file a state
tax return would be subject to these limits on compensation
deductions. The cost of living in those cities is much higher
than in Colorado, so salaries are typically higher than an
equivalent position in Colorado.
This bill as introduced also includes 1099 non-employee
compensation. For example, a business pays $500,000 for
janitorial services and would only be entitled to deduct
$250,000. Because businesses in general purchase “personal
services” that are not considered “salaries & wages,” this bill
would place a huge cost burden on businesses that use such
services;
This bill also imposes
double
taxation on services’ income paid by a business; such
income is already taxed more heavily than any other income,
factoring in payroll or self-employed taxes.
And where did this clever idea come from? Well, it appears that
the Colorado Fiscal Policy Institute, which seems to be a part
of the Colorado Center on Law and Policy, may be claiming
parentage:
Limiting the Business Deduction for Excess Compensation
February 09, 2010
Colorado taxpayers do not need to subsidize businesses that pay
their employees excess compensation. The state can limit how
much a business can deduct for employee compensation to $250,000
per employee.
The Colorado Fiscal Policy Institute estimates that the bill
will force individuals to pay $14.5 million more in taxes and
companies would be forced to pay $10.6 million for a total of
$25.1 million in new state tax revenue.
http://www.cclponline.org/ccs/cfpi_tax_budget.php
Big Brother at the Door: CACI Opposes Radical “Disposal of
Records” Bill
CACI strongly opposes HB-1056, which
prohibits a public or private entity from
disposing a document or electronic record containing personal
identifying information unless it is (a) shredded if on paper or
(b) erased or rendered indecipherable and irretrievable if the
record is electronic.
The bill creates a civil penalty of $500 per page or record
for violation and requires enforcement by the Attorney
General or District Attorney. The bill also requires that
the entity have a policy outlining the destruction or proper
disposal of paper or electronic documents and records.
The bill was assigned to the House Judiciary Committee.
The sponsor in the House is Representative Jerry Frangas
(D-Denver); the Senate sponsor is Senator Morgan Carroll
(D-Aurora), an attorney. According to the Web site of Senator
Carroll’s law firm:
“Bradley & Carroll, P.C.
has over forty (40) years of successful legal experience and
deep dedication to protecting the legal rights of people. We
are committed to helping people understand and pursue their
rights in a legal system that can often be overwhelming and
unjust.”
Here are the reasons why CACI opposes this bill:
I. Current law already requires a public or private entity to
have a policy on the destruction of documents;
II. HB-1056 requires a method of destruction by a public or
private entity that is too prescriptive. Such organizations
should have flexibility of disposal based on their assessment of
the risk of the documents or records.
III. Current Federal regulations already effectively address
the disposal of personal information held by public or private
organizations. Such regulations include:
·
The Fair and Accurate Credit Transactions Act (FACTA)
already addresses document destruction. The Act required
federal agencies to promulgate rules regarding “the proper
disposal of consumer report information and records.” Those
rules became effective on June 1, 2005 (16 CFR 682). Subsection
682.3(a) provides that: “Any person who maintains or otherwise
possesses consumer information for a business purpose must
properly dispose of such information by taking reasonable
measures to protect against unauthorized access to or use of the
information in connection with its disposal;”
·
The Gramm-Leach-Bliley Act (1999) requires financial
institutions, including insurance companies and agencies, to
protect all confidential client information;
·
The Payment Card Industry Security Standards Council (PCI)
compliance regulation requires all companies that accept credit
cards to protect and properly dispose of customer’s information.
IV. HB-1056 creates civil penalties of $500 per document or
record that are highly excessive and not commensurate with the
violation.
V. HB-1056 does not address a situation of a “rogue” or
dissatisfied employee who avoids proper disposal of a document
or electronic record to retaliate against an employer.
Bill to Resolve Disputes over Sales-and-Use Taxes Paid to Local
Governments Set for First Hearing
Last summer, the CACI Tax Council began work on a proposal to
resolve disputes on sales-and-use taxes paid by taxpayers to
local governments. This proposal has been turned into SB-142,
which is sponsored by Representative Cheri Gerou (R-Evergreen)
and Senator Joyce Foster (D-Denver). The bill has been assigned
to the Senate Local Government and Energy Committee, where it is
set to be heard when the Committee meets at 2 p.m., Tuesday,
February 16th, in Senate Committee Room 353.
This bill amends current statute 29-2-106.1 (2)(a), C.R.S., to
provide that the protest period for notice of deficiencies be
standardized by municipalities to 30 days. Current law
requires a local government to issue a deficiency notice to a
taxpayer when sales-and-use taxes are due. Since current law
does not provide a uniform period that a protest must be filed
with a local government, the filing time varies broadly among
municipalities For example, some cities provide 20 days while
others provide 30 days.
CACI’s Tax Council and the Colorado Municipal League cooperated
on this proposal based on an agreement by the two organizations
that this change will help both taxpayers and municipalities in
the following ways:
·
SB-142 ensures that taxpayers are on notice that a standard
number of days (30) are allowed by each municipality for a
taxpayer to protest a notice of deficiency.
·
Many cities have a 20-day protest period, or less, which is too
short for a taxpayer to receive an assessment, evaluate the
assessment, consult with outside advisors if necessary, prepare
a protest, and get it filed. This bill establishes a
time-certain of 30 days for a protest period.
·
The bill aligns with the State of Colorado, which allows 30 days
to protest assessments.
·
SB-142 creates consistency for taxpayers who are filing a
protest to a deficiency notice when sales and use taxes are due.
Bill to Reduce the Severance Tax Credit--and Increase Tax
Revenues $148 million--Dies in Committee Tuesday on a Bipartisan
Vote
HB-1174, sponsored by Representative Jerry Frangas (D-Denver),
would have increased state tax revenue to the tune of $148
million for the current and next two fiscal years and then
earmark it for two new, specific purposes. CACI strongly
opposed the bill.
Taxpayers who pay oil and gas severance taxes now claim a tax
credit of 87.5 percent of the local property taxes that they pay
on the value of their gas and oil production. HB-1174 would
have reduced the amount of the credit by half for tax years 2011
and 2012.
The amazing thing about this bill is that it would have spent
the new tax revenue in the following ways:
·
90 percent would have gone to a new Teacher Retention Cash Fund
administered by the Colorado Department of Education; and
·
10 percent would have gone to a new Small Business Credit Cash
Fund administered by the Colorado Economic Development
Commission.
The bill died in the House Business Affairs and Labor Committee
on an overwhelming bipartisan nine-to-two vote. Only two
Democratic representatives voted for the bill: Edward Casso
(Commerce City) and Sara Gagliardi (Arvada). The four
Democratic representatives who voted against the bill
were Committee Chair Joe Rice (Littleton), Andy Kerr (Lakewood),
Karen Middleton (Aurora) and John Soper (Thornton). The five
minority Republican representatives voted against the bill.
CACI contract lobbyist Donnah Moody testified in opposition to
the bill. Here’s an edited summary of Donnah’s remarks:
·
The bill would use a property tax credit against the severance
tax on oil and gas to fund an entirely new program to retain
K-12 teachers;
·
There is no nexus--or traditional connection--between the source
of the increased tax revenues (i.e. owners of oil-and-gas
producing properties) and this new purpose.
·
The oil-and-gas industry is an important driver of the Colorado
economy, especially on the Western Slope, and this bill would
place a substantial new tax burden on this sector as Colorado’s
economy struggles to recover from the recession’
For a recent article on job losses on the Western Slope, click
on:
http://www.denverpost.com/search/ci_14378212
Governor, Democratic Legislators Unveil Health-Care Package
Yesterday, Governor Bill Ritter and majority Democratic
legislative leaders unveiled a package of health-care proposals
consisting of ten bills and one executive order. Click here for
the press release issued by the Governor’s Office:
http://www.colorado.gov/cs/Satellite?c=Page&childpagename=GovRitter%2FGOVRLayout&cid=1251570956196&pagename=GOVRWrapper
Among the proposals are the following:
·
Ban health-insurance companies from charging women more than men
for insurance premiums;
·
Offer incentives for more nurses and doctors to work in rural
areas;
·
Reduce administrative duplication and fraud in the state’s
Medicaid system;
·
Mandate that health-insurance companies write policies in “plain
English”:
·
Require insurers to cover breast-cancer screening; and
·
Create a database on the Internet providing information on
patients’ outcomes by doctors.
The CACI HealthCare Council will discuss these proposals, along
with other health-care legislation, when it meets next Thursday,
February 18th, at 12 Noon at the CACI Office For
more on this story, click on today’s The Denver Post
article:
http://www.denverpost.com/legislature/ci_14387328
For information on health-care bills, contact Dan Anglin, CACI
Governmental Affairs Representative, at 303.866.9641 or via
e-mail at
danglin@cCOchamber.com
Upcoming CACI Council Meetings
Council meetings will be held at the CACI Office beginning at 12
Noon. Council members who would like to sponsor lunches for
Council meetings should contact Misty Fox, CACI Office Manager,
at 303.866-9652 or via e-mail at
mfox@COchamber.com
·
HealthCare Council,
Thursday, February 18th; lunch sponsored by David
Rivera, Climax Molybdenum, whose website is
www.fcx.com
·
Governmental Affairs Council,
Tuesday, February 23rd; lunch sponsored by
Chris Howes, The Howes Group, whose
website is:
http://chrishowes.com/
·
Labor and Employment Council,
Wednesday, February 24th; guest is Representative
Larry Liston (R-Colorado Springs), ranking minority member,
House Business Affairs and Labor Committee; Gary Estenson,
Deputy Director, Colorado Department of Labor and Employment;
Ben Curtiss-Lusher, Office of the Governor; lunch sponsored by
Mark Moses, Outback Steakhouse, whose website is:
www.outback.com
·
Tax Council,
Friday, March 5th, invited guest is Senator Keith
King (R-Colorado Springs), member of the Senate Finance
Committee; lunch sponsored by
Bill Schroeder, IREA, whose website is
www.intermountain-rea.com
For the complete meeting schedule of CACI Councils during the
legislative session, please visit the CACI Web site:
http://www.cochamber.com/newsandevents_calendar.asp |
