News
CARBONDALE, Colorado — Town officials continue to work with property owners and contractors to collect on more than $88,000 in back taxes related to new construction completed since 2006 that somehow went uncollected.
At the same time, building department staff is looking into ways to make sure that use taxes are collected when they're supposed to be, and avoid the problem surfacing again.
“We have talked to all but one of the building owners involved, and no one is balking,” Carbondale Town Manager Tom Baker said at the July 13 Town Council meeting. “We are explaining that we dropped the ball on this.”
In fact, in one of the 10 cases where it was discovered that use taxes had not been paid, those taxes have now been paid, he said.
After the problem surfaced in an audit of the town's finances, the building department did some more research and found that use taxes on 10 new residential and commercial buildings completed since 2006 had not been paid.
The unpaid taxes have ranged from a little more than $3,000 to more than $29,000 in one instance, for a total of about $88,500.
The town levies a 3.5 percent use tax, similar to a sales tax, on construction materials purchased outside town limits but used on projects in town.
The tax is typically paid at the time a certificate of occupancy (CO) is issued. However, in some cases a CO was not even issued for buildings or apartment units that are now being occupied.
The town is sending a certified letter to each of the property owners and contractors involved explaining the problem and requesting a meeting.
“At the meeting, we will apologize for the situation, explain how the use tax is calculated and why it is important to the town,” Baker wrote in a memo to the town trustees. “We will then review each person's situation and develop an acceptable approach for payment of the tax.”
He added at the meeting, “There's not going to be one solution that fits all of the cases.”
That may include setting up monthly payments, but requiring payment in full if the property sells. The town does not intend to charge interest or penalties for the period of time that has already elapsed.
The town is also evaluating whether it should change its procedure for collecting use taxes, from requiring it at the time of CO to instead requiring payment, or at least partial payment, at the time a building permit is issued.
“Many communities have implemented partial or complete use tax collection at building permit as a response to problems similar to what we are experiencing,” according to Baker's memo. “However, in Carbondale we have always been sensitive to the cost of development and as a result we have made fees due at CO when a project was able to be sold or financed.”
The town is also assessing the capabilities of the building department staff, and to see if it may have any recourse with past employees who may have been responsible for the oversight. That matter will be the subject of an executive session at an upcoming meeting.
While Trustee John Hoffmann suggested that the 10 cases of uncollected use taxes out of the 371 COs issued since 2006 isn't a major problem, Mayor Stacey Patch Bernot disagreed.
“It's tough for me to be flippant with almost $90,000 of the public's money,” she said. “When we as a town don't collect the money we use to provide services, we're not doing our job.”
jstroud@postindependent.com
At the same time, building department staff is looking into ways to make sure that use taxes are collected when they're supposed to be, and avoid the problem surfacing again.
“We have talked to all but one of the building owners involved, and no one is balking,” Carbondale Town Manager Tom Baker said at the July 13 Town Council meeting. “We are explaining that we dropped the ball on this.”
In fact, in one of the 10 cases where it was discovered that use taxes had not been paid, those taxes have now been paid, he said.
After the problem surfaced in an audit of the town's finances, the building department did some more research and found that use taxes on 10 new residential and commercial buildings completed since 2006 had not been paid.
The unpaid taxes have ranged from a little more than $3,000 to more than $29,000 in one instance, for a total of about $88,500.
The town levies a 3.5 percent use tax, similar to a sales tax, on construction materials purchased outside town limits but used on projects in town.
The tax is typically paid at the time a certificate of occupancy (CO) is issued. However, in some cases a CO was not even issued for buildings or apartment units that are now being occupied.
The town is sending a certified letter to each of the property owners and contractors involved explaining the problem and requesting a meeting.
“At the meeting, we will apologize for the situation, explain how the use tax is calculated and why it is important to the town,” Baker wrote in a memo to the town trustees. “We will then review each person's situation and develop an acceptable approach for payment of the tax.”
He added at the meeting, “There's not going to be one solution that fits all of the cases.”
That may include setting up monthly payments, but requiring payment in full if the property sells. The town does not intend to charge interest or penalties for the period of time that has already elapsed.
The town is also evaluating whether it should change its procedure for collecting use taxes, from requiring it at the time of CO to instead requiring payment, or at least partial payment, at the time a building permit is issued.
“Many communities have implemented partial or complete use tax collection at building permit as a response to problems similar to what we are experiencing,” according to Baker's memo. “However, in Carbondale we have always been sensitive to the cost of development and as a result we have made fees due at CO when a project was able to be sold or financed.”
The town is also assessing the capabilities of the building department staff, and to see if it may have any recourse with past employees who may have been responsible for the oversight. That matter will be the subject of an executive session at an upcoming meeting.
While Trustee John Hoffmann suggested that the 10 cases of uncollected use taxes out of the 371 COs issued since 2006 isn't a major problem, Mayor Stacey Patch Bernot disagreed.
“It's tough for me to be flippant with almost $90,000 of the public's money,” she said. “When we as a town don't collect the money we use to provide services, we're not doing our job.”
jstroud@postindependent.com
