HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/21/2018 - ITEMS RELATING TO THE CITY'S VARIOUS TAX PROVISIONAgenda Item 5
Item # 5 Page 1
AGENDA ITEM SUMMARY August 21, 2018
City Council
STAFF
Peggy Streeter, Senior Sales Tax Auditor
Jennifer Poznanovic, Project and Revenue Manager
Ryan Malarky, Legal
SUBJECT
Items Relating to the City's Various Tax Provisions.
EXECUTIVE SUMMARY
A. Second Reading of Ordinance No. 097, 2018, Amending Article II of Chapter 25 of the Code of the City of
Fort Collins Concerning the City’s Tax Rebate Programs.
B. Second Reading of Ordinance No. 098, 2018, Amending Article III of Chapter 25 of the Code of the City of
Fort Collins Concerning the Imposition, Collection, and Enforcement of the City’s Sales and Use Taxes.
C. Second Reading of Ordinance No. 099, 2018, Amending Article IV of Chapter 25 of the Code of the City of
Fort Collins Concerning the City’s Lodging Tax.
D. Second Reading of Ordinance No. 100, 2018, Amending Article V of Chapter 25 of the Code of the City of
Fort Collins Concerning the City’s Telephone Occupation Tax.
These Ordinances, unanimously adopted on First Reading on July 17, 2018, amends City Code sections in
Chapter 25 to provide clarification for definitions and the application of various sections of the Code, and to
make clear the City may use a third-party auditor or collections service for delinquent accounts.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinances on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, July 17, 2018 (w/o attachments) (PDF)
2. Ordinance No. 097, 2018 (PDF)
3. Ordinance No. 098, 2018 (PDF)
4. Ordinance No. 099, 2018 (PDF)
5. Ordinance No. 100, 2018 (PDF)
Agenda Item 10
Item # 10 Page 1
AGENDA ITEM SUMMARY July 17, 2018
City Council
STAFF
Peggy Streeter, Senior Sales Tax Auditor
Jennifer Poznanovic, Project and Revenue Manager
Ryan Malarky, Legal
SUBJECT
Items Relating to the City's Various Tax Provisions.
EXECUTIVE SUMMARY
A. First Reading of Ordinance No. 097, 2018, Amending Article II of Chapter 25 of the Code of the City of Fort
Collins Concerning the City’s Tax Rebate Programs.
B. First Reading of Ordinance No. 098, 2018, Amending Article III of Chapter 25 of the Code of the City of Fort
Collins Concerning the Imposition, Collection, and Enforcement of the City’s Sales and Use Taxes.
C. First Reading of Ordinance No. 099, 2018, Amending Article IV of Chapter 25 of the Code of the City of Fort
Collins Concerning the City’s Lodging Tax.
D. First Reading of Ordinance No. 100, 2018, Amending Article V of Chapter 25 of the Code of the City of Fort
Collins Concerning the City’s Telephone Occupation Tax.
The purpose of this item is to amend City Code sections in Chapter 25 to provide clarification for definitions and
the application of various sections of the Code, and to make clear the City may use a third-party auditor or
collections service for delinquent accounts.
STAFF RECOMMENDATION
Staff recommends adoption of these Ordinances on First Reading.
BACKGROUND / DISCUSSION
The various Code changes being requested are as follows:
Chapter 25, Article II (Ordinance No. 097, 2018)
City Code Section 25-50 establishes that the amount of sales tax rebate for food is increased annually based on
the "Denver-Boulder-Greeley" Consumer Price Index (CPI) published by the federal Bureau of Labor Statistics.
In January 2018, the Bureau of Labor Statistics updated the geographic area sample for the CPI has changed it
to Denver-Aurora-Lakewood. Therefore, the Code is being updated to reflect this change. The City Code
contains other limited references to the CPI, and City staff will review whether additional Code changes are
appropriate to bring before Council at a later time.
City Code Chapter 25, Article II, Division 5 establishes the City’s use tax rebate program on manufacturing
equipment. City Code Section 25-66 sets forth the qualifications a qualifying manufacturer must meet to be
eligible for the use tax rebate. Use tax is owed by a consumer for using, storing, distributing, or otherwise
Agenda Item 10
Item # 10 Page 2
consuming tangible personal property or taxable services in the City. In general, a manufacturer owes use tax
to the City when City sales tax is not otherwise collected by a vendor. City staff desires to clarify in the Code
that the use tax rebate is not available when a vendor should have collected City sales tax from the manufacturer,
consistent with both the historical administration of the program and rules adopted by the Financial Officer.
Chapter 25, Article III (Ordinance No. 098, 2018)
The definition of charitable organization in Section 25-71 specifies an entity must have a current sales tax
exemption certification from the State of Colorado. City staff has determined the State does not issue a State of
Colorado sales tax exemption certificate to out-of-state organizations. As a result, out-of-state organizations
cannot qualify for exemption from the City of Fort Collins sales tax because they cannot obtain a State of
Colorado tax exemption certificate. The definition has been updated to allow for the exemption of out-of-state
organizations that would otherwise qualify for City of Fort Collins tax exemption.
The definition of Financial Officer and the requirements regarding confidentiality of tax information is being
changed to make clear City staff: (1) may continue to use the services of a third-party auditor for tax audits; and
(2) may have the option to utilize a third-party collection service to collect outstanding sales or use tax due in
cases of severe noncompliance with the City’s remittance requirements. The changes expand the definition of
Financial Officer slightly to allow for delegation of certain responsibilities to entities, rather than only individual
persons. The changes also allow the disclosure of otherwise confidential tax information to third parties, on the
condition that the third parties commit in a written agreement to non-disclosure.
Chapter 25, Article IV (Ordinance No. 099, 2018)
In Ordinance No. 098, 2018, City staff is recommending a change to the definition of charitable organization in
Section 25-71, located in the Sales and Use Tax Code as noted above. A similar definition is in Section 25-241
of the Lodging Tax Code. City staff is recommending the same change be made to the definition of charitable
organization in the Lodging Tax Code so that both codes are administered in substantially the same manner and
with the same requirements.
Chapter 25, Article V (Ordinance No. 100, 2018)
Article V, Division 2 establishes an occupation tax levied on telephone utility companies engaged in the business
of furnishing local exchange telephone service within the City. Since the establishment of the telephone
occupation tax in 1979, technological advances have occurred that allow telephone service to be provided over
the Internet, otherwise known as Voice over Internet Protocol (VoIP). The City currently collects, and VoIP
providers currently remit, the telephone occupation tax. City staff desires to make clear that VoIP service is
subject to said tax, and is recommending a change to Section 25-326 to make specific reference to VoIP.
CITY FINANCIAL IMPACTS
No known financial impacts.
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ORDINANCE NO. 097, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING ARTICLE II OF CHAPTER 25 OF THE CODE OF THE CITY
OF FORT COLLINS CONCERNING THE CITY’S TAX REBATE PROGRAMS
WHEREAS, Division 3 in Article II of City Code Chapter 25 authorizes a rebate on the
City’s sales tax charged on food purchases by low-income persons residing in the City (the “Sales
Tax Rebate Program”); and
WHEREAS, Division 5 in Article II of City Code Chapter 25 authorizes the rebate of the
City’s use tax imposed on manufacturing equipment paid by certain qualifying manufacturers (the
“Manufacturing Equipment Use Tax Rebate Program”); and
WHEREAS, the Sales Tax Rebate Program serves the public purpose of assisting certain
low-income individuals in better affording the necessities of life related to food; and
WHEREAS, the Manufacturing Equipment Use Tax Rebate Program serves the public
purpose of encouraging manufacturers to establish, continue and expand their manufacturing
activities within the City to benefit the local economy and provide manufacturing jobs within the
City; and
WHEREAS, City staff has reviewed the Sales Tax Rebate Program and is recommending
a revision to account for a geographical revision in the consumer price index published by the
Bureau of Labor Statistics; and
WHEREAS, City staff has reviewed the Manufacturing Equipment Use Tax Rebate
Program and is recommending a revision to clarify that the rebate is not available for purchases
for which City sales tax should have been collected by the vendor; and
WHEREAS, the City Council hereby finds that amending the Sales Tax Rebate Program
and the Manufacturing Equipment Use Tax Rebate Program as proposed in this Ordinance is in
the City’s and its taxpayers’ best interests and necessary for the public’s health, safety and welfare.
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.
Section 2. That Section 25-50 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-50. Amount of rebate.
The rebate amount for the 2017 tax year will be sixty-three dollars ($63.) per calendar year
for each person in the qualified household not to exceed eight (8) household members.
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This amount of the rebate will be increased annually according to the Denver-Aurora-
Lakewood Consumer Price Index for All Urban Consumers, as published by the Bureau of
Labor Statistics.
Section 3. That Section 25-66 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-66. Qualifications.
In order to qualify for a rebate under the provisions of this Division, the following
requirements must be met:
(1) The qualifying manufacturer must have a sales and use tax license from the City
and be classified as a "manufacturer" under the North American Industry Classification
System (NAICS), as amended;
(2) The qualifying manufacturer must certify compliance with all federal, state and
local laws and regulations applicable to a manufacturing facility located within the City
limits;
(3) The qualifying manufacturer must be current in all payments to the City and in
compliance with any contractual agreements with the City;
(4) Machinery and equipment must be tangible personal property when purchased; be
necessary for, and used directly in, the manufacturing of tangible personal property to be
sold; not be used in any activity other than the actual manufacturing process; not be merely
useful or incidental to the manufacturing operation; and be purchased in the year the rebate
is being applied for;
(5) The qualifying manufacturer must have paid the appropriate use tax when due and
not as a consequence of a tax audit conducted by the City; and
(6) The use tax paid by the qualifying manufacturer must not have been the result of a
vendor failing to collect City of Fort Collins sales tax as required by law.
Introduced, considered favorably on first reading, and ordered published this 17th day of
July, A.D. 2018, and to be presented for final passage on the 21st day of August, A.D. 2018.
__________________________________
Mayor Pro Tem
ATTEST:
_______________________________
City Clerk
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Passed and adopted on final reading on the 21st day of August, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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ORDINANCE NO. 098, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING ARTICLE III OF CHAPTER 25 OF THE CODE OF THE CITY
OF FORT COLLINS CONCERNING THE IMPOSITION, COLLECTION,
AND ENFORCEMENT OF THE CITY’S SALES AND USE TAXES
WHEREAS, Article XX, § 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 Article III of the City Code
Chapter 25, which has been significantly amended many times since its adoption in 1967; and
WHEREAS, City staff has reviewed Article III and has recommended revisions to clarify
the manner in which charitable organizations may qualify for a tax-exempt organization license
from the City; and
WHEREAS, City staff is recommending revisions to make clear the City’s Financial
Officer may use the services of a third-party auditor or collections service to ensure the proper
payment of tax owed to the City; and
WHEREAS, the City Council hereby finds that amending the Sales and Use Tax Code as
proposed in this Ordinance is in the City’s and its taxpayers’ best interests and necessary for the
public’s health, safety and welfare.
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.
Section 2. That Section 25-71 of the Code of the City of Fort Collins is hereby
amended to change the definition of “charitable organization” to read as follows:
Sec. 25-71. Definitions.
. . .
Charitable organization shall mean:
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(1) any entity that has and maintains a current sales tax exemption certificate
from the Colorado Department of Revenue; or
(2) any out-of-state entity that has been certified as a nonprofit organization
under Internal Revenue Code Section 501(c)(3) and maintains a current tax
exemption certificate from another state.
. . .
Section 3. That Section 25-71 of the Code of the City of Fort Collins is hereby
amended to change the definition of “Financial Officer” to read as follows:
Sec. 25-71. Definitions.
. . .
Financial Officer shall mean the Financial Officer of the City of Fort Collins or such other
person designated by the Financial Officer.
. . .
Section 4. That Section 25-94 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-94. Exempt organization license; application procedure.
. . .
(b) The application for an exempt organization license shall include copies of the
organization's current certificate of incorporation , bylaws, financial statements showing
sources of revenues and expenditures, the organization's current sales tax exemption
certificate from the Colorado Department of Revenue or from another state, and a copy of
the Internal Revenue Service's letter of determination recognizing the organization as a tax-
exempt organization under Section 501(c)(3) of the Internal Revenue Code.
. . .
Section 5. That Section 25-166 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-166. Preservation of returns and other records; confidentiality.
. . .
(f) Nothing in this Section shall be construed to prohibit the Financial Officer from
disclosing information to an individual with whom, or an organization with which, the
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Financial Officer has contracted or engaged to assist the City in examining or auditing tax
records or collecting taxes, provided that the individual or organization is required by
written agreement not to disclose any of said information to any person other than the
Financial Officer and the authorized agents and employees thereof.
Introduced, considered favorably on first reading, and ordered published this 17th day of
July, A.D. 2018, and to be presented for final passage on the 21st day of August, A.D. 2018.
__________________________________
Mayor Pro Tem
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 21st day of August, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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ORDINANCE NO. 099, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING ARTICLE IV OF CHAPTER 25 OF THE CODE OF THE
CITY OF FORT COLLINS CONCERNING THE CITY’S LODGING TAX
WHEREAS, Article XX, § 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 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”);
WHEREAS, the Lodging Tax Code is found in Article IV of City Code Chapter 25 and
has existed in substantially its current form since its adoption in 1984 with only minor amendments
since that time; and
WHEREAS, City staff has recommended to City Council for its consideration Ordinance
No. 098, 2018, which includes changes to the City’s sales and use tax provisions found in Article
III of City Code Chapter 25 (the “Sales and Use Tax Code”) to clarify the manner in which
charitable organizations may obtain a tax-exempt organization license from the City; and
WHEREAS, City staff has reviewed the Lodging Tax Code and is recommending a similar
revision to the definition of “charitable organization” so that the Sales and Use Tax Code and the
Lodging Tax Code will be administered in essentially the same manner and with the same
requirements; and
WHEREAS, the City Council hereby finds that collecting and enforcing the Sales and Use
Tax Code and the Lodging Tax Code in substantially the same manner is in the City’s and its
taxpayers’ best interests and necessary for the public’s health, safety and welfare.
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.
Section 2. That Section 25-241 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-241. Definitions.
. . .
Charitable organization shall mean:
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(1) any entity that has and maintains a current sales tax exemption certificate
from the Colorado Department of Revenue; or
(2) any out-of-state entity that has been certified as a nonprofit organization
under Internal Revenue Code Section 501(c)(3) and maintains a current tax
exemption certificate from another state.
. . .
Introduced, considered favorably on first reading, and ordered published this 17th day of
July, A.D. 2018, and to be presented for final passage on the 21st day of August, A.D. 2018.
__________________________________
Mayor Pro Tem
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 21st day of August, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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ORDINANCE NO. 100, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING ARTICLE V OF CHAPTER 25 OF THE CODE OF THE CITY OF
FORT COLLINS CONCERNING THE CITY’S TELEPHONE OCCUPATION TAX
WHEREAS, Article XX, § 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, since January 1, 1979, the City, through the City Council’s exercise of its
home rule taxing powers, has levied, collected and enforced a telephone occupation tax in the
amount of seventy cents ($0.70) per account for local exchange telephone service to customers in
the City (the “Telephone Occupation Tax”); and
WHEREAS, the City has been collecting, and Voice over Internet Protocol (“VoIP”)
providers have been remitting, the Telephone Occupation Tax; and
WHEREAS, City staff has reviewed the Telephone Occupation Tax and is recommending
a revision to state more clearly that VoIP is subject to the tax; and
WHEREAS, the City Council hereby finds that amending the Telephone Occupation Tax
as proposed in this Ordinance is in the City’s and its taxpayers’ best interests and necessary for the
public’s health, safety and welfare.
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.
Section 2. That Section 25-326 of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 25-326. Levy of tax.
There is hereby levied against every telephone utility company engaged in the business of
furnishing local exchange telephone service within the City a tax on the privilege of
engaging in such business. The amount of such tax shall be seventy cents ($0.70) per
account per month. For the purposes of this Division, account shall be defined as a billing
of a telephone utility company for service to a customer. For the purposes of this Division,
telephone utility company engaged in the business of furnishing local exchange telephone
service shall include Voice over Internet Protocol (VoIP) service.
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Introduced, considered favorably on first reading, and ordered published this 17th day of
July, A.D. 2018, and to be presented for final passage on the 21st day of August, A.D. 2018.
__________________________________
Mayor Pro Tem
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 21st day of August, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk