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) "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(2) (a) Except in accordance with a judicial order or as
Page 3, Line 12otherwise provided in subsections (2)(b)(I) to (2)(b)(IV) or (3) of
Page 3, Line 13this section, a third-party auditor shall not divulge or make
Page 3, Line 14known in any way any information obtained from a sales or use
Page 3, Line 15tax investigation conducted by the third-party auditor on
Page 3, Line 16behalf of a local taxing jurisdiction, or disclosed in any
Page 3, Line 17document, report, or return filed in connection with any of the
Page 3, Line 18taxes or fees within the scope of this part 2. A third-party
Page 3, Line 19auditor charged with the custody of such investigatory
Page 3, Line 20information, documents, reports, and returns shall not be
Page 4, Line 1required to produce any such information or documentation in
Page 4, Line 2any action or proceeding in any court except in an action or
Page 4, Line 3proceeding under the provisions of this part 2 or part 3 of this
Page 4, Line 4article 2 to which the local taxing jurisdiction authorizing the
Page 4, Line 5sales or use tax investigation is a party, in which event the
Page 4, Line 6court may require the production of, and may admit in evidence,
Page 4, Line 7so much of the information and documentation as is pertinent to the action or proceeding.
Page 4, Line 8(b) Notwithstanding subsection (2)(a) of this section, a third-party auditor may:
Page 4, Line 9(I) Disclose the contents of any report prepared by the
Page 4, Line 10third-party auditor, and any information, documents, reports,
Page 4, Line 11and returns relied upon in preparing the report, to an official,
Page 4, Line 12employee, hearing officer, attorney, or other public agent of
Page 4, Line 13the local taxing jurisdiction authorized to receive such
Page 4, Line 14information in connection with the local taxing jurisdiction's
Page 4, Line 15sales or use tax investigation performed by the third-party auditor;
Page 4, Line 16(II) Deliver to a taxpayer or the taxpayer's duly
Page 4, Line 17authorized representative a copy of any return or report filed
Page 4, Line 18in connection with the taxpayer's taxes or fees within the scope of this part 2;
Page 4, Line 19(III) Provide information to the department for the
Page 4, Line 20publication by the department of statistics in accordance with section 39-21-113 (5); and
Page 4, Line 21(IV) Provide information to the department and the
Page 4, Line 22federal internal revenue service as necessary and pertinent to
Page 5, Line 1a taxpayer's compliance or failure to comply with state or federal tax law.
Page 5, Line 2(3) A taxpayer who filed a document, report, or return
Page 5, Line 3with the state or a local taxing jurisdiction may waive the
Page 5, Line 4confidentiality protections set forth in subsection (2)(a) of this
Page 5, Line 5section as to such document, report, or return. Such waiver
Page 5, Line 6must be voluntary, in writing, and signed by the taxpayer or the taxpayer's duly authorized representative.
Page 5, Line 7(4) Any third-party auditor, including any official,
Page 5, Line 8employee, attorney, or other agent of a third-party auditor,
Page 5, Line 9who willfully violates any of the provisions of this section is
Page 5, Line 10guilty of a misdemeanor and, upon conviction thereof, shall be
Page 5, Line 11punished by a fine of not more than one thousand dollars per violation.
Page 5, Line 12SECTION 2. In Colorado Revised Statutes, 39-21-113, amend as it will become effective July 1, 2025, (35) as follows:
Page 5, Line 1339-21-113. Reports and returns - rule - repeal.
Page 5, Line 14(35) Notwithstanding the confidentiality requirements in this section, the
Page 5, Line 15executive director has the authority to share taxpayer information as
Page 5, Line 16necessary pursuant to
section 29-2-208Page 5, Line 17SECTION 3. Effective date. This act takes effect July 1, 2025.
Page 5, Line 18SECTION 4. Safety clause. The general assembly finds,
Page 5, Line 19determines, and declares that this act is necessary for the immediate
Page 5, Line 20preservation of the public peace, health, or safety or for appropriations for
Page 5, Line 21the support and maintenance of the departments of the state and state
Page 5, Line 22institutions.