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ORDINANCE: O-2008-22
SUBJECT: Ordinance amending Chapter 3.01 of the Lakewood Municipal Code relating to sales and use tax, to include provisions of C.R.S. 39-26-105.3, authorizing businesses to be held harmless for collecting the incorrect amount of City of Lakewood sales and use tax due on a purchase when relying on a certified electronic database of addresses to determine whether tax is owed to the City of Lakewood.
RECOMMENDATION: Approval of the proposed amendments will include in the Lakewood Municipal Code the requirements and authorization to agree with the laws enacted by the Colorado General Assembly.
SUMMARY AND BACKGROUND OF SUBJECT MATTER: Sales and use taxes are collected and remitted based on the location where goods and services are exchanged. When businesses make sales deliveries, they often times rely on address data that is incorrect. This results in business inefficiencies, tax audits, and incorrect taxation.
On May 17, 2004, in an effort to streamline collection and remittance of sales and use tax between retailers and the State, the Governor of the State of Colorado signed into law an amendment to the C.R.S. Section 39-26-105.3, concerning the authorization for businesses to be held harmless for collecting the incorrect amount of State sales and use tax due on a purchase when relying on a certified electronic database of addresses to determine the jurisdictions to which tax is owed. The Amendment specifies that if a business uses the data contained in an electronic database certified by the State Department of Revenue, then the business shall be held harmless for any tax, charge, or fee liability to any taxing jurisdiction that otherwise would be due solely as a result of an error or omission in the database, provided the retailer could show they adhered to specific requirements contained in the Statute. The Amendment also includes certification procedures and requirements for database providers.
The Municipal Code does not currently contain a "hold harmless" provision with regards to taxation. The City Finance Department conducted testing of the two databases currently certified by the State, and found the results to meet or exceed the 95% accuracy requirement contained in the Statute, providing confidence in recommending the current action. The Amendment, as required, is presumed to be fiscally neutral to Lakewood.
DATE OF FIRST READING: August 11, 2008
DATE OF SECOND READING: August 25, 2008
ORIGINATED BY: Larry Dorr, Director of Finance, Department of Finance
STAFF PERSON RESPONSIBLE: Ken Martinez, Audit Supervisor, Department of Finance,
303-987-7531
DOCUMENTS ATTACHED: Ordinance O-2008-22
SUBMITTED BY:
Larry Dorr, Director of Finance
REVIEWED BY:
Joni Inman, Director, Mayor and City Manager's Office
Michael J. Rock, City Manager
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