HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/19/2021 - SECOND READING OF ORDINANCE NO. 127, 2021, AMENDIN Agenda Item 3
Item # 3 Page 1
AGENDA ITEM SUMMARY October 19, 2021
City Council
STAFF
Jennifer Poznanovic, Project and Revenue Manager
Ryan Malarky, Legal
SUBJECT
Second Reading of Ordinance No. 127, 2021, Amending Certain Sections of Chapter 25 of the Code of the
City of Fort Collins Relating to the Imposition, Collection and Enforcement of the City’s Sales and Use Tax and
Requiring Marketplace Sellers and Marketplace Facilitators to Collect Lodging Tax.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on October 5, 2021, amends four sections in Chapter
25 of the City Code to provide clarification of certain enforcement mechanisms for untimely or deficient sales
and use tax returns, and to establish that marketplace sellers and marketplace facilitators are required to
collect and remit the City’s lodging tax.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, October 5, 2021 (w/o attachments) (PDF)
2. Ordinance No. 127, 2021 (PDF)
Agenda Item 10
Item # 10 Page 1
AGENDA ITEM SUMMARY October 5, 2021
City Council
STAFF
Jennifer Poznanovic, Project and Revenue Manager
Ryan Malarky, Legal
SUBJECT
First Reading of Ordinance No. 127, 2021, Amending Certain Sections of Chapter 25 of the Code of the City of
Fort Collins Relating to the Imposition, Collection and Enforcement of the City’s Sales and Use Tax and
Requiring Marketplace Sellers and Marketplace Facilitators to Collect Lodging Tax.
EXECUTIVE SUMMARY
The purpose of this item is to amend four sections in Chapter 25 of the City Code to provide clarification of
certain enforcement mechanisms for untimely or deficient sales and use tax returns, and to establish that
marketplace sellers and marketplace facilitators are required to collect and remit the City’s lodging tax.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
The City Code changes being requested are as follows:
Chapter 25, Article III – Sales and Use Tax
Interest Calculation on Deficient Sales and Use Tax Remittances
Staff is requesting that Council amend the language in City Code Section 25-168 so that interest is only
calculated on the amount of tax deficiency owed, and not on the combined amount of the tax deficiency plus a
10% penalty. This revision will more closely align with the historical practice of the Sales Tax department, the
interest calculation for deficiencies due to negligence in the City’s lodging tax, and with generally accepted
practices of other home rule municipalities.
Applying Administrative Charge to Untimely Tax Returns
Staff is requesting that Council amend the Code to include a provision that a $25 charge will apply to untimely
filed tax returns. Currently, City Code Section 25-187 authorizes a $25 assessment charge that accompanies
the issuance of a notice of determination, assessment and demand for payment of taxes. This fee is imposed
to compensate the City for administrative costs in issuing the notice. The $25 charge for untimely filed tax returns
will also compensate the City for administrative costs associated with such untimely returns.
ATTACHMENT 1
Agenda Item 10
Item # 10 Page 2
Chapter 25, Article IV – Lodging Tax
Obligation of Marketplace Facilitators to Collect and Remit Lodging Tax
Staff is requesting that Council amend Article IV of Chapter 25 of the City Code to add provisions that require
marketplace facilitators and marketplace sellers engaged in business in the City to collect and remit lodging tax.
In general, a marketplace facilitator in this context is a person or entity that facilitates a transaction for a purchaser
and consumer of lodging accommodations. A marketplace seller is one that has an agreement with a
marketplace facilitator to sell lodging accommodations through the marketplace facilitator’s marketplace, which
is often a website or software application. A similar requirement exists in City Code Section 25-131 for the
collection and remittance of the City’s sales tax. That requirement went into effect November 1, 2020.
CITY FINANCIAL IMPACTS
The adjustment of the interest calculation will not have a financial impact on the City because it will align with
the City’s historical practices. The addition of a charge for untimely filed tax returns will result in additional
revenue that will offset administrative costs. The addition of the requirement for marketplace facilitators to collect
and remit sales tax is expected to result in an increase in lodging tax revenue.
ATTACHMENTS
1. Ordinance No. 111, 2020 (PDF)
2. Agenda Item Summary to Ordinance No. 111, 2020 (PDF)
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ORDINANCE NO. 127, 2021
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING CERTAIN SECTIONS OF CHAPTER 25 OF THE CODE OF THE CITY OF
FORT COLLINS RELATING TO THE IMPOSITION, COLLECTION AND ENFORCEMENT
OF THE CITY’S SALES AND USE TAX AND REQUIRING MARKETPLACE SELLERS
AND MARKETPLACE FACILITATORS TO COLLECT LODGING TAX
WHEREAS, Article XX, Section 6.g. of the Colorado Constitution grants to the City of
Fort Collins, as a home rule municipality, all powers necessary to levy and collect taxes for
municipal purposes, subject to any limitations in the Colorado Constitution; and
WHEREAS, on November 16, 1967, the City Council, in the exercise of its home rule
taxing powers, adopted Ordinance No. 058, 1967, to levy, collect and enforce beginning on
January 1, 1968, a sales and use tax on the purchase of tangible personal property sold at retail in
the City and on certain taxable services provided in the City (the “Sales and Use Tax Code”); and
WHEREAS, the Sales and Use Tax Code is currently found in Chapter 25, Article III of
the City Code, which has been significantly amended many times since its adoption in 1967; and
WHEREAS, City staff has reviewed the Sales and Use Tax Code and have recommend
revisions to provision concerning the administration and enforcement of the Sales and Use Tax
Code; and
WHEREAS, on February 21, 1984, the City Council, in the exercise of its home rule taxing
powers, adopted Ordinance No. 20, 1984, adding a new chapter to the City Code to levy, collect
and enforce a three percent (3%) tax on the price of lodging accommodations provided in the City
(the “Lodging Tax Code”); and
WHEREAS, the Lodging Tax Code is found in Chapter 25, Article IV of the City Code, as
amended since its adoption in 1984; and
WHEREAS, City staff has reviewed the Lodging Tax Code and have recommended
revisions to simplify the collections process by requiring marketplace facilitators and marketplace
sellers engaged in business in the City to collect lodging tax as is similarly required in the Sales
and Use Tax Code; and
WHEREAS, City Council hereby finds that amending the City Code as proposed in this
Ordinance is in the best interests of the City and its taxpayers and promotes the health, safety and
welfare of the community by providing for the accurate and efficient imposition, collection and
enforcement of the City’s taxes.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
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Section 2. That Section 25-168 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-168. Examination of returns; recomputation, credits, deficiencies.
As soon as practicable after a return is filed, the Financial Officer shall examine it. If it appears
that the correct amount of tax to be remitted may be greater or less than that shown in the return,
the tax shall be recomputed by the Financial Officer. If the amount paid exceeds that which is due,
the excess shall be refunded or credited against any subsequent remittance from the taxpayer. If
the amount paid is less than the amount due and any part of the deficiency is due to negligence or
intentional disregard of the provisions of this Article or of authorized rules and regulations of the
City with knowledge thereof but without intent to defraud, the amount of the deficiency together
with a penalty of ten (10) percent of the amount of the deficiency plus interest on the deficiency at
the rate imposed under § 25-188 from the date the return and the tax was due shall be due and
payable by the taxpayer within twenty-one (21) days after written notice of determination,
assessment and demand for payment is mailed to the taxpayer by the Financial Officer as provided
in § 25-186(b). If any part of the deficiency is due to fraud with the intent to evade the tax, then
there shall be added a penalty of one hundred (100) percent of the deficiency and in such case, the
amount of the deficiency, the penalty and interest calculated as stated above shall be due and
payable by the taxpayer within twenty-one (21) days after written notice of determination,
assessment and demand for payment is mailed to the taxpayer by the Financial Officer and an
additional amount of three (3) percent per month on such amount shall be added from the date the
return and tax was due until paid. The taxpayer may protest the notice of determination, assessment
and demand for payment issued under this section as provided in § 25-186.
Section 3. That Section 25-187 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-187. Recurring assessment charge and collection costs.
If any taxpayer has failed, neglected or refused to pay the tax imposed by this Article within the
time specified for payment, the Financial Officer may assess a twenty-five dollar ($25.) charge
upon the issuance of each notice of failure to file or notice of determination, assessment and
demand for payment in addition to the taxes, penalties and interest provided for elsewhere in this
Article. This charge is imposed to compensate the City for its administrative costs to issue the
notice. The City may include in any assessment against the taxpayer the collection costs the City
incurs in collecting the taxes, penalties, interest and other charges owed under this Article,
including, without limitation, the City's attorney fees.
Section 4. That Section 25-241 of the Code of the City of Fort Collins is hereby
amended to read as follows:
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Sec. 25-241. Definitions.
The following words, terms and phrases, when used in this Article, shall have the meanings
ascribed to them in this Section:
. . .
Lodging price shall mean the gross price paid in money, credit, property or other consideration
valued in money, exclusive of other taxes paid and charges separately stated including, without
limitation, pet fees, cleaning fees, security deposits and in-room charges for food, beverages, and
telephone and video services, by the lodging customer for the provision or sale and purchase of a
lodging accommodation.
Lodging provider shall mean any person furnishing a lodging accommodation or such person’s
authorized agent, and shall include any marketplace facilitator, or a marketplace seller engaged in
business in the City. Marketplace facilitator and marketplace seller shall have the same meaning
as in § 25-71, except that for purposes of this Article, marketplace seller shall only include those
engaged in business in the City.
. . .
Section 6. That Section 25-250 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-250. Payment of tax.
. . .
(f) The provisions set forth in § 25-131 governing collection of retail sales tax by a
marketplace facilitator or marketplace seller shall also apply to a marketplace facilitator or a
marketplace seller collecting the lodging tax except to the extent such provisions conflict with the
provisions of this Article.
Introduced, considered favorably on first reading, and ordered published this 5th day of
October, A.D. 2021, and to be presented for final passage on the 19th day of October, A.D. 2021.
__________________________________
Mayor
ATTEST:
_______________________________
Interim City Clerk
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Passed and adopted on final reading on the 19th day of October, A.D. 2021.
__________________________________
Mayor
ATTEST:
_______________________________
Interim City Clerk