A Bill for an Act
Page 1, Line 101Concerning local government sales or use tax
Page 1, Line 102investigations, and, in connection therewith,
Page 1, Line 103establishing uniform confidentiality standards for the
Page 1, Line 104protection of taxpayer information.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov/.)
Sales and Use Tax Simplification Task Force.Section 1 of the bill establishes uniform confidentiality standards for the protection of taxpayer information used or obtained in connection with a sales or use tax investigation performed by a third-party auditor on behalf of a local taxing jurisdiction. Third-party auditors are generally prohibited from divulging or making known in any way to any person information that is obtained from a sales or use tax investigation on behalf of a local taxing jurisdiction or disclosed in any document, report, or return filed in connection with local sales or use taxes. Third-party auditors are permitted to disclose taxpayer information in certain limited circumstances, including disclosure to:
- An official, employee, hearing officer, attorney, or other public agent of the local taxing jurisdiction who is authorized to receive such information in connection with the local taxing jurisdiction's sales or use tax investigation performed by the third-party auditor;
- A requesting taxpayer, or the taxpayer's authorized agent, of the taxpayer's own tax filings;
- The department of revenue (department) for purposes of statistical analysis and publication as authorized by current law; and
- The department and the federal internal revenue service as necessary and pertinent to a taxpayer's compliance or failure to comply with state or federal tax law.
Violation of the confidentiality provisions in section 1 is a misdemeanor punishable by a fine of not more than $1,000 per violation.
Section 2 clarifies the authority of the executive director of the department to share taxpayer information with statutory local governments, special districts, and requesting home rule jurisdictions as necessary to facilitate dispute resolution, coordination, intergovernmental agreements, and information sharing between the department and such local governments consistent with current law, which prohibits the disclosure of any such shared information to any third party.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. In Colorado Revised Statutes, add 29-2-217 as follows:
Page 2, Line 329-2-217. Local taxing jurisdictions sales or use tax
Page 2, Line 4investigations - confidentiality requirements - limitations -
Page 2, Line 5enforcement - definitions. (1) As used in this section, unless the context otherwise requires:
Page 2, Line 6(a) "Local taxing jurisdiction" has the same meaning as set forth in section 39-26-802.7 (1)(b) and includes a:
Page 3, Line 1(I) Statutory local government;
(II) Special district;
Page 3, Line 2(III) Requesting home rule jurisdiction; and
(IV) Self-collecting home rule jurisdiction.
Page 3, Line 3(b) "Sales or use tax" includes all local sales or use taxes and all taxes described in section 29-2-201 (8).
Page 3, Line 4(c) "Self-collecting home rule jurisdiction" means a home rule jurisdiction that is not a requesting home rule jurisdiction.
Page 3, Line 5(d) "Taxpayer" has the same meaning as set forth in
Page 3, Line 6section 39-21-101 (4). "Taxpayer" includes a "retailer" or "vendor" as defined in section 39-26-102 (8).
Page 3, Line 7(e) (I) "Third-party auditor" means a private individual or
Page 3, Line 8entity that is not an official, employee, hearing officer, or
Page 3, Line 9attorney, or otherwise a public agent of a local taxing
Page 3, Line 10jurisdiction, that conducts a sales or use tax investigation of a taxpayer on behalf of a local taxing jurisdiction.
Page 3, Line 11(II) For purposes of this subsection (1)(e), "public agent of a local taxing jurisdiction" includes:
Page 3, Line 12(A) An official, employee, or agent of the department of
Page 3, Line 13revenue who conducts a sales or use tax investigation of a
Page 3, Line 14taxpayer on behalf of a local taxing jurisdiction in accordance with this part 2 and article 21 of title 39; and
Page 3, Line 15(B) An official, employee, or agent of the multistate tax
Page 3, Line 16commission, established in section 24-60-1301, who conducts a
Page 3, Line 17sales or use tax investigation of a taxpayer on behalf of a local
Page 3, Line 18taxing jurisdiction pursuant to section 24-60-1306, and in
Page 4, Line 1accordance with the multistate tax compact, set forth in part 13 of article 60 of title 24.
Page 4, Line 2(2) (a) Except in accordance with a judicial order or as
Page 4, Line 3otherwise provided in subsections (2)(b)(I) to (2)(b)(IV) or (3) of
Page 4, Line 4this section, a third-party auditor shall not divulge or make
Page 4, Line 5known in any way any information obtained from a sales or use
Page 4, Line 6tax investigation conducted by the third-party auditor on
Page 4, Line 7behalf of a local taxing jurisdiction, or disclosed in any
Page 4, Line 8document, report, or return filed in connection with any of the
Page 4, Line 9taxes or fees within the scope of this part 2. A third-party
Page 4, Line 10auditor charged with the custody of such investigatory
Page 4, Line 11information, documents, reports, and returns shall not be
Page 4, Line 12required to produce any such information or documentation in
Page 4, Line 13any action or proceeding in any court except in an action or
Page 4, Line 14proceeding under the provisions of this part 2 or part 3 of this
Page 4, Line 15article 2 to which the local taxing jurisdiction authorizing the
Page 4, Line 16sales or use tax investigation is a party, in which event the
Page 4, Line 17court may require the production of, and may admit in evidence,
Page 4, Line 18so much of the information and documentation as is pertinent to the action or proceeding.
Page 4, Line 19(b) Notwithstanding subsection (2)(a) of this section, a third-party auditor may:
Page 4, Line 20(I) Disclose the contents of any report prepared by the
Page 4, Line 21third-party auditor, and any information, documents, reports,
Page 4, Line 22and returns relied upon in preparing the report, to an official,
Page 4, Line 23employee, hearing officer, attorney, or other public agent of
Page 4, Line 24the local taxing jurisdiction authorized to receive such
Page 5, Line 1information in connection with the local taxing jurisdiction's
Page 5, Line 2sales or use tax investigation performed by the third-party auditor;
Page 5, Line 3(II) Deliver to a taxpayer or the taxpayer's duly
Page 5, Line 4authorized representative a copy of any return or report filed
Page 5, Line 5in connection with the taxpayer's taxes or fees within the scope of this part 2;
Page 5, Line 6(III) Provide information to the department for the
Page 5, Line 7publication by the department of statistics in accordance with section 39-21-113 (5); and
Page 5, Line 8(IV) Provide information to the department and the
Page 5, Line 9federal internal revenue service as necessary and pertinent to
Page 5, Line 10a taxpayer's compliance or failure to comply with state or federal tax law.
Page 5, Line 11(3) A taxpayer who filed a document, report, or return
Page 5, Line 12with the state or a local taxing jurisdiction may waive the
Page 5, Line 13confidentiality protections set forth in subsection (2)(a) of this
Page 5, Line 14section as to such document, report, or return. Such waiver
Page 5, Line 15must be voluntary, in writing, and signed by the taxpayer or the taxpayer's duly authorized representative.
Page 5, Line 16(4) Any third-party auditor, including any official,
Page 5, Line 17employee, attorney, or other agent of a third-party auditor,
Page 5, Line 18who willfully violates any of the provisions of this section is
Page 5, Line 19guilty of a misdemeanor and, upon conviction thereof, shall be
Page 5, Line 20punished by a fine of not more than one thousand dollars per violation.
Page 5, Line 21SECTION 2. In Colorado Revised Statutes, 39-21-113, amend as it will become effective July 1, 2025, (35) as follows:
Page 6, Line 139-21-113. Reports and returns - rule - repeal.
Page 6, Line 2(35) Notwithstanding the confidentiality requirements in this section, the
Page 6, Line 3executive director has the authority to share taxpayer information as
Page 6, Line 4necessary pursuant to
section 29-2-208Page 6, Line 5SECTION 3. Effective date. This act takes effect July 1, 2025.
Page 6, Line 6SECTION 4. Safety clause. The general assembly finds,
Page 6, Line 7determines, and declares that this act is necessary for the immediate
Page 6, Line 8preservation of the public peace, health, or safety or for appropriations for
Page 6, Line 9the support and maintenance of the departments of the state and state institutions.