County winds another major tax decision

County winds another major tax decision

Sept. 22, 2001

By Jim Mimiaga
Journal Staff Writer

The Colorado Supreme Court has ruled in favor of Montezuma and Denver counties in a property-tax dispute over whether big businesses were enjoying larger exemptions than allowed under state law.

In a unanimous ruling last week, the state supreme court said companies that had valuable property spread among numerous different locations were not exempt from paying personal property taxes. The decision affirmed four appellate-court judgments on the matter.

Corporate challengers seeking to reduce their tax burden had appealed those decisions to the high court and the cases were combined into one involving Montezuma County vs TCI Satellite Entertainment, and the City and County of Denver vs. three petitioners — Coca-Cola, BFI of Colorado (a waste-collection service) and Coors Brewing Company.

The case, initiated by Montezuma County attorney Bob Slough, forced the state’s top taxing board to reverse its loose interpretation of a law regarding exemptions on personal property worth less than $2,500.

The statute gives business a personal-property-tax break on items, such as office equipment, that have a total value at or less than the cap. Anything above the $2,500 is subject to property taxes under Colorado law.

But in 1996, industry lobbyists successfully requested that the property-tax administrator, Mary Huddleston, expand the exemption by honoring it on a "per-location" status, rather than strictly "per-business" as before. The new interpretation was granted with the support of Attorney General Ken Salazar.

Overnight, each Coors sign, Coca-Cola vending machine and BFI dumpster across the state, plus every TCI customer box and satellite dish in Montezuma County, could be listed on separate tax schedules as a separate location.

And since the "per-location" equipment is individually worth less than $2,500, each piece of property qualified separately for the exemption from property taxes, giving corporations with substantial property outside their headquarters a hefty tax break.

But Montezuma County successfully argued that, collectively, the property does have a value above the exemption cap. And, the county asserted, nothing in the statute’s language allows for the per-location interpretation.

Earlier this year, Montezuma County won a state-supreme-court decision concerning corporations that use public lands, such as the concessionaire at Mesa Verde.

"We were again fighting the state and the deals they give to corporations," Slough said.

"It’s like David and Goliath, with little ol’ Montezuma County as the underdog when forced to comply with these state orders that don’t make sense based on statute. We saw a good case to go to court on."

Slough said that most small businesses did not get the exemption, but that certain big companies with operations that fit the interpretation were unfairly benefiting from it.

"It is question of being fair and equitable. Per-location is not in the statute and should never have been allowed for," he said. "It’s a solid, fair decision that I am really happy about."

The battle began when the Montezuma County assessor’s office refused to implement the "per-location" decision handed down by the property-tax administrator in 1997. TCI was levied property taxes on $220,950 worth of personal property by the county, despite orders from the state to reduce it to zero.

"We never changed from the "per-business" schedule to a separate one for every location. We believe this decision gets us back to the original intent of the law. It’s a victory for the little guy," said Bob Cruzan, Montezuma County assessor.

TCI began an appeal process that went to the State Board of Assessment Appeals, which ruled in the company’s favor. But Montezuma and soon after, Denver County, challenged that decision in several appeal courts, and won in each case.

The high court agreed, stating in a September decision, that "statute (39-3-119.5) did not contemplate separate exemptions for property at different business locations. (A)nd does not delegate to the Property Tax Administrator the discretion to determine which personal property would otherwise have to be listed on a single schedule."

The court ruled that the listing of a taxpayer’s property in a single county will treated as a single schedule, and that property value of a business be figured "in its entirety" when applying for the exemption.

The tax amount owed by TCI in Montezuma County was only between $1,000 and $2,000 per year, Cruzan said.

But the ramifications statewide are significant, and will result in higher taxes for companies with equipment spread among different locations. Cruzan said the law was intended to help small businesses anyway.

TCI has paid up, Cruzan said, and the others will have to do so retroactively since 1997.