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Dan Pilcher
CACI Senior Vice President
& Chief Operating Officer
Phone: 303.866.9600
E-Mail:
dpilcher@cochamber.com
Friday, October 2, 2009
EnCana to be Platinum Sponsor of CACI Annual Meeting Luncheon
October 27th Featuring Colorado Governor Bill Ritter
as Guest Speaker
The Platinum sponsor of CACI’s 44th Annual Meeting
Luncheon, to be held at the Denver Westin Tabor Center Hotel,
will be sponsored by EnCana, the oil and natural gas company:
http://www.encana.com/
Darrin Henke, Vice President, Business Unit Leader, South
Rockies, EnCana USA, is a member of the CACI Board of Directors.
Gold sponsors are AngloGold Ashanti North America, Inc. and
Miller Coors.
Silver sponsors are The Ball Corporation, Boeing, Centura
Health, CH2MHill, HealthONE, Lockheed Martin, Pinnacol
Assurance, Verizon Wireless, Wells Fargo and Xcel Energy.
CACI members interested in attending the Luncheon should contact
Denise Reeves, CACI Vice President of Events and Programs, at
303.866.9622 or via e-mail at
dreeves@COchamber.com.
CACI “Counterpoint” Column on Business Tax Incentives Runs in
Today’s Issue of The Denver Business Journal
Dropping tax incentives would harm state’s business climate
Eliminating six critical business-tax incentives — which some
legislators advocate to generate more revenue for state
government — would force businesses to pay millions of dollars
more in taxes, inhibit job retention and creation, and cramp
state and local economic development efforts, according to a
statewide survey of companies by the Colorado Association of
Commerce and Industry (CACI).
As the state chamber of commerce, CACI will strongly oppose any
legislative efforts to eliminate — even for a limited “time-out”
period of a couple of years — the key six tax incentives
identified by its survey.
“If the leaders of Colorado state government believe that they
need more revenue during this recession, they should ask the
voters to approve a general tax increase that would apply to all
Coloradans, and then let the voters decide if there needs to be
a tax increase,” CACI President Chuck Berry recently told the
CACI Board of Directors.
Through the years, the Colorado General Assembly passed these
incentives, with the goal of encouraging companies to make
investments in Colorado that create and retain jobs, and expand
the state’s tax base.
Compared to other states and countries, Colorado’s economic
development toolbox has been sparse. Consequently, eliminating
these incentives would deprive state and local economic
developers of vital tools they need for Colorado to compete in
the global economy for businesses and jobs.
In addition, eliminating the incentives would increase taxes on
companies during the worst economic downturn since the Great
Depression of the 1930s, perhaps threatening the survival of
some.
If this happens, the firms that responded to the survey (full
results are at www.COchamber.com) say they’ll be forced to take
such drastic steps as halt or delay planned expansion of
operations (63.4 percent); reduce workers’ wages or benefits, or
both (46.5 percent); institute a hiring freeze (46.5 percent);
lay off workers (43.7 percent); or relocate some or all
operations to another state or country (29.6 percent).
Last summer, the CACI Tax Council reviewed the Colorado’s
business tax incentives and determined that six tax incentives,
in particular, are vital to maintaining a healthy business
climate here.
The council is comprised of tax experts from law firms,
accounting firms and corporations.
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The 108 companies that responded to the survey said these
tax incentives are the most important to them:
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Tax deduction that allows businesses to carry net losses
forward to offset taxable income, 79.5 percent.
-
Tax exemption on the sales to, and purchase of, tangible
personal property that becomes a component part of a
manufactured product or service, 56.4 percent.
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Enterprise-zone credits, including credits for investment,
new employees, rural enterprise zones, workers’ health
insurance and other tax credits, 48.7 percent.
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Tax exemption on the sales of machinery and machine tools
used in the manufacturing process, 42.3 percent.
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Tax exemption on the sale and purchase of electricity, coal,
natural gas, fuel oil, coke or nuclear fuel for use in
processing, manufacturing, mining, refining, irrigation,
construction, transportation, telecommunications and other
industrial uses, 35.9 percent.
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Investment of property used in a Colorado enterprise zone
for the first year by the taxpayer, 30.8 percent.
A number of respondents described how elimination of various
incentives would affect them.
Here is a sampling:
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(1)
“As a small business owner, tax exemptions are a key
consideration and important to our capital expansion plans
and budgets to grow our business and employee base,” wrote
Don Fraley, president, Tharp Cabinet Corp., Loveland. Fraley
anticipates that Tharp Cabinet will pay $30,000 more in
taxes.
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(2)
The Ball Corp., based in Broomfield, said that ending the
tax exemptions “will put ALL manufacturing companies in
Colorado at a significant disadvantage.” Ball projects that
its tax bill would increase by about $23.6 million, based on
its four Colorado manufacturing facilities--Boulder
(aerospace), Broomfield (aerospace), Golden (packaging) and
Westminster (aerospace)--if manufactured product exemption,
machinery exemption and utility exemption are eliminated.
-
(3)
According to Ben Lutze, Evraz Rocky Mountain Steel, Pueblo,
“Elimination of these exemptions would create a significant
competitive disadvantage for our company. . . Evraz Rocky
Mountain Steel forecasts a negative financial impact of $2
million or more, and a 100 percent increase in sales and use
tax, if the tax exemptions for machinery and
processing/manufacturing are eliminated.”
CACI Launches Initiative to Oppose Efforts to Eliminate Tax
Incentives Critical to Colorado Manufacturers and Other
Businesses
In the 12 months ending July 2009, the Colorado manufacturing
sector lost 15,000 jobs, according to the U.S. Bureau of Labor
Statistics. Consequently, although manufacturing employment in
Colorado and in the U.S. in general, has been shrinking for
years, it nonetheless remains an important part of the state’s
economic foundation because it creates wealth within Colorado
with the export of goods and services out of the state, which
brings money back onto the state.
Because of this, manufacturing is often called a “primary jobs”
industry by state and local development officials because it
creates wealth and raises the standard of living of Coloradans.
States commonly target manufacturing with economic development
policies that seek to increase the competitiveness of this
economically critical sector.
As CACI has been publicizing for some weeks, some state
legislators are seeking to eliminate various tax exemptions to
increase revenue to help them balance the state budget because
the recession has severely decreased tax revenues. These
legislators, however, are actually in the position of throwing a
concrete block to a drowning man instead of a life preserver.
For two reasons, CACI has recently launched an initiative to
organize manufactures across the state into a coalition that
will fight proposals by legislators during the 2010 session to
eliminate these incentives:
-
(1)
In the mid-1960s, the state’s business leaders merged the
Colorado Manufacturers Association and the Colorado Chamber
of Commerce to create CACI. Since that time, CACI has
always had a special interest in the manufacturing sector;
-
(2)
CACI is the official Colorado affiliate of the National
Association of Manufacturers (NAM) and supports NAM efforts
to promote and strengthen manufacturing.
Under this new initiative, CACI manufacturers are reaching out
to their suppliers, customers and other manufacturers to urge
them to join CACI’s manufacturing coalition to help CACI fight
legislative efforts to do away with these important tax
incentives.
For more information on CACI’s manufacturing coalition, business
leaders should contact Dave Tabor, CACI Membership Vice
President, at 303.866.9650 or via e-mail at
dtabor@COchamber.com
CACI Submits Comments on Proposed Nexus and Corporation C
Regulations to Colorado Department of Revenue for Hearing on
Wednesday, October 7th
On Monday, Loren Furman, CACI Vice President of Governmental
Affairs, sent the following memo to Roxy Huber, Director of the
Colorado Department of Revenue:
Attn: Colorado Department of Revenue, Taxpayer
Services Division
From: Colorado Association of Commerce & Industry
Tax Council
Date: September 28, 2009
Re: DOR Proposed Tax Regulations 39-22-301.1
and 39-22-303-12 (c)
The Colorado Association of Commerce & Industry’s Tax Council
hereby submits its formal comments in response to the Colorado
Department of Revenue (DOR’s) proposed regulations referenced
above. The Tax Council represents the state and local taxation
interests of CACI’s multi-industry membership and the business
community. The comments below reflect concerns expressed by our
members and echoed by other organizations that represent
multiple business interests:
Proposed Regulation 39-22-301.1. – Doing Business in Colorado
This proposed regulation provides that a corporation that does
business in Colorado and has substantial nexus may be subject to
income tax even if the company does not have a physical presence
in the State. This regulation is troubling for the several
reasons. First, the decision by the DOR to define income tax
jurisdiction before such jurisdiction has been decided by the
Colorado General Assembly simply usurps the Legislature’s
authority. Currently, Colorado’s tax code does not explicitly
define “doing business in the state” and we believe that the
Legislature, instead of the DOR, should determine the extent of
Colorado’s tax jurisdiction by statute. Second, it is likely
that this proposed regulation would create a shift in revenue to
the State. With this in mind, a vote of the people may be
necessary to implement this tax policy change to comply with
Article X, Section 20 of the Colorado Constitution ("TABOR").
Finally, the DOR’s effort to implement this substantial tax
policy shift would be unprecedented as the U.S. Supreme Court
has yet to rule on a case determining whether anything less than
physical presence is sufficient to create “substantial nexus.”
Additionally, Congress has failed to adopt legislation to
regulate interstate commerce and establish nexus standards since
1959. We have significant concerns with this regulation and
question the fundamental fairness of imposing income taxes on
businesses that do not have a physical presence in Colorado. If
the DOR believes that Colorado’s tax jurisdiction should be
defined, we respectfully request that instead of issuing such a
radical regulation, it should submit a bill to be considered by
the Legislature.
Proposed Regulation 39-22-303-12(c) – Corporations Without
Property & Payroll
Section (1) of this proposed regulation states that the DOR will
utilize a taxpayer's sales factor for determining whether a C
corporation is an includible C corporation within the meaning of
C.R.S. 39-22-303(12)(c). Section (2) similarly indicates in
instances of a corporation with de minimis amounts of property
and payroll, such property and payroll will be excluded from the
factor calculations to determine if a corporation is includible
in the Colorado combined group.
Without action by the General Assembly, we submit that this
proposed regulation offers interpretive positions beyond the
authority of the statute. C.R.S. §39-22-303(12)(c) defines the
term “includible corporation” in a Colorado combined report as
“any C corporation which has more than twenty percent of the C
corporation’s property and payroll as determined by factoring
pursuant to section 24-60-1301, C.R.S., assigned to locations
inside the United States.” The current regulation
39-22-303.12(c) supports the statute by stating “since
corporations that have no property or payroll factors of their
own cannot have twenty percent or more of their factors assigned
to locations in the U.S., such corporations, by definition,
cannot be included in a combined report.” This was not the
original regulation the DOR promulgated for this section which
read as follows: “…A corporation without property and payroll,
which functions through the use of personnel services and/or
property of an includible corporation, shall also be an
includible corporation.” When the Office of Legislative Legal
Services reviewed the original regulation, it found that it
modified the definition of an "includible corporation" contained
in C.R.S. 39-22-303(12)(c). Although the Executive Director of
DOR disagreed with Legislative Legal Services on this
interpretation, the Legislature agreed with Legal Services and
allowed the original regulation to expire on June 1, 1991.
In addition, the referenced paragraphs of the proposed
regulation represent changes to published DOR tax policy.
According to its own definition, the Department issues Revenue
Bulletins to "reflect the current policy of the DOR on tax
issues of general interest and having a broad scope." The
Department issued Revenue Bulletin 92-10 in July 1992.
This Bulletin states “in those situations where a corporation
has no property or payroll of its own (e.g., Foreign Sales
Corporation), but which functions through the use of the
personnel services and/or property of an includible corporation,
it is the Department’s position that such corporations are not
to be included in a combined report.” This position was most
recently affirmed in the Colorado Executive Director’s Final
Determination DD-575 (April 2002), which determined a
corporation that did not have any property or payroll in the
U.S. but which had economic substance outside of the U.S. could
not be included in the Colorado combined report.
For these reasons, the current proposal attempts to repeat
history by modifying the Colorado statutory definition of an
"includible corporation." Absent specific legislative action,
we request the DOR abandon this proposed regulation in full and
leave the current regulation intact.
We appreciate the Department’s review of these comments on the
proposed regulations, and reiterate that these concerns have not
only been raised by CACI’s Tax Council, but have been echoed by
various business organizations. We encourage the DOR to
consider these comments and recommendations and look forward to
continuing to work with the Department. If you should have any
questions/concerns regarding this matter, please do not hesitate
to contact Loren Furman, Vice President of Government Relations,
CACI, at 303-866-9642 or
lfurman@cochamber.com.
Thank you.
cc: The Council on State Taxation
Colorado Bankers Association
Colorado Metro Denver Chamber
C3
Law Firm of Fairfield & Woods
Legislature’s Business Personal Property Tax Task Force
Schedules Next Three Meetings
Senator Joyce Foster (D-Denver) today announced the schedule for
the next three meetings of the legislature’s interim Business
Personal Property Tax Task Force, which she chairs. The
meetings will be from 9:00 a.m. to 1:00 p.m., October 13th,
28th and 29th in House Committee Room 112 at the
State Capitol. The Task Force has until November 1st
to hold six meetings and finish its work. The Task Force will
continue to receive testimony from businesses, municipalities,
special taxing districts, counties and from the community at
large. CACI members who would like to testify before the Task
Force should contact Loren Furman, CACI Vice President of
Governmental Affairs, at 303.866.9642 or via e-mail at
lfurman@COchamber.com
Three More Site Visits to CACI Members Planned for Legislators
to Learn About Business Concerns
This month, CACI has scheduled three more visits by state
legislators to visit CACI member companies in their legislative
districts to learn more about the concerns of the companies
pertaining to state laws, regulations and legislation:
·
Micro-Motion, Boulder, October 12th
·
Ice-O-Matic, Denver, October 13th
·
Roche Colorado Corp, Boulder, Oct. 30th
To date, legislators have visited the following CACI members:
Anheuser-Busch, Fort Collins; Rocky Mountain Natural Meats,
Henderson; Quest Diagnostics, Denver; and the AngloGold Ashanti
North America gold mine at Cripple Creek-Victor. CACI members
who want more information about the site visits should contact
Loren Furman, CACI Vice President of Governmental Affairs, at
303.866.9642 or via e-mail at
lfurman@COchamber.com
Local Chamber of Commerce Executives to Hold “Summit of the
Chambers” in Golden October 8th
The Colorado Chamber of Commerce Executives (CCCE) will hold a
“2009 Summit of the Chambers” in Golden on October 8th
at the Golden Hotel. Featured speakers will include Senate
Minority Leader Josh Penry (R-Grand Junction) and Representative
Andy Kerr (D-Lakewood), who will discuss likely business issues
before the 2010 session of the Colorado General Assembly as well
as how local chambers can influence policymaking at the State
Capitol.
Chuck Berry, CACI President, and Loren Furman, CACI Vice
President of Governmental relations, will provide an overview of
business issues at both the federal and state levels from CACI’s
perspective. They will discuss how local chambers can
collaborate with CACI on public policy advocacy and CACI’s use
of its Grassroots Program to mobilize business leaders across
the state to contact their legislators on specific bills.
CCCE is an organization of local chamber executives whose
purpose is to improve the professionalism of chambers, provide a
forum for the exchange of ideas and act as both a resource and a
liaison to CACI. It provides continuing education and
networking for local chamber executives. CCCE conducts two
conferences each year, one in the spring and one in the fall.
For more information on CCCE, which is housed under the CACI
umbrella, click on:
http://www.cochamber.com/ournetwork_chamberexecutives.asp |
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