Colorado Revised Statutes Title 29. Government Local § 29-2-302. Deficiency notice and dispute resolution for locally collected sales or use tax--legislative declaration

(2)(a) When a local government asserts that sales or use taxes are due in an amount greater than the amount paid by a taxpayer, the local government shall mail a deficiency notice to the taxpayer. The deficiency notice must state the additional local sales or use taxes due. The deficiency notice must contain notification, in clear and conspicuous type, of the time limit to file a protest to the notice and that the taxpayer has the right to elect a hearing on the deficiency pursuant to subsection (3) of this section. Any protest to the deficiency notice must be filed with the local government within thirty days after the date of the notice.

(b) The taxpayer shall also have the right to elect a hearing pursuant to subsection (3) of this section on a local government's denial of the taxpayer's claim for a refund of sales or use tax paid.

(c) The taxpayer shall request the hearing pursuant to subsection (3) of this section within thirty days after the taxpayer's exhaustion of local remedies. For purposes of this subsection (2)(c), “exhaustion of local remedies” means that one of the following events has occurred:

(d) If the taxpayer has timely requested in writing a hearing before the local government and none of the events described in subsection (2)(c) of this section have occurred, the taxpayer may request a hearing pursuant to subsection (3) of this section at any time after the period prescribed in subsection (2)(c)(I) of this section.

(e) Any hearing before a local government is informal and no transcript, rules of evidence, or filing of briefs is required; but the taxpayer may elect to submit a brief, in which case the local government may submit a brief. By agreement of all parties to the hearing, the hearing may be canceled and the matter may be determined by the local government official upon written briefs submitted by the parties in the same manner as provided in section 39-21-103(7) and (8).

(3)(a) If a taxpayer satisfies the requirements of subsection (2)(c) of this section, the taxpayer may request that the executive director conduct a hearing on the deficiency notice or claim for refund, and if requested, the hearing must be conducted in the same manner as set forth in section 39-21-103. Any local government to which the deficiency notice being appealed claims taxes are due, or, in the case of a claim for refund, the local government that denied the claim, must be notified by the executive director that a hearing is scheduled and must be allowed to participate in the hearing as a party.

(c) If the taxpayer appeals the decision issued pursuant to this subsection (3) in the manner provided in section 39-21-105, then the taxpayer shall pay the tax to or post a bond with the local government whose decision is being appealed in the manner provided in that section.

(d) Any hearings before the executive director or the executive director's delegate must be de novo, without regard to the decision of the local government and the taxpayer has the burden of proof.

(5)(a) Except as provided in subsection (5)(d) of this section, if the taxpayer asserts that all or part of a sales or use tax which is the subject of the hearing pursuant to this part 3 has been paid to or is due to another local government, then such other local government shall be joined as a party to the hearing. Neither the taxpayer nor the assessing local government needs to file a claim for refund with such other local government in order to pursue the remedy provided by this subsection (5)(a). If the executive director determines that the disputed tax was paid, but to the wrong local government, then the taxpayer shall be relieved of the tax due up to the amount paid by the taxpayer to the wrong local government together with an abatement of interest thereon and all penalties; except that, the taxpayer is not entitled to the automatic abatement of interest and penalties described in this subsection (5)(a) for an error that would not have occurred if the taxpayer had used the GIS database described in section 39-26-105.2 to determine the tax rate and the jurisdictions to which the sales or use tax is due. Nothing in this subsection (5)(a) prohibits a local government from waiving interest or penalties for good cause shown.

(b) Notwithstanding section section 29-2-209, the periods open or closed to assessment or refund under the ordinances of the local governments, under sections 39-26-210, 39-21-107(1), 39-26-125, and 39-26-703, or under an intergovernmental transfer agreement may not bar any of the remedies set forth in subsections (5)(a) and (6) of this section.

(d) If all parties to a hearing described in this subsection (5) arrive at settlement prior to the hearing, the parties may agree in writing to cancel the hearing. A local government to which the taxpayer asserts it paid the sales or use tax in error may participate in a settlement conference and agreement described in this subsection (5)(d). After canceling the hearing, no party has a further right to a hearing before the executive director and neither party may appeal the decision in the manner provided in section 39-21-105.

(6)(a) If the amount paid exceeds the tax found to be due, then the government in receipt of the payment shall refund the overpayment to the taxpayer within thirty days of the executive director's decision, together with interest thereon from the date the taxpayer made the payment until the date the overpayment is refunded, unless a timely appeal is taken by the government pursuant to subsection (7) of this section. If the amount paid is found to be less than the taxes due, then the taxpayer shall pay the deficiency, less any amount paid in lieu of bond, to the appropriate local government within thirty days of the executive director's decision with interest from the date full payment was due until the date that the deficiency is paid, unless a timely appeal is taken by the taxpayer pursuant to subsection (7) of this section. A local government which is found to have erroneously received payment from the taxpayer shall forward such payment to the appropriate local government within thirty days of the executive director's decision with interest from the date the amount was received from the taxpayer until the date the amount was forwarded to the appropriate local government, unless a timely appeal is taken pursuant to subsection (7) of this section by a local government which is found to have erroneously received payment from the taxpayer. The executive director may affirm, reverse, or modify the decision regarding the deficiency notice or claim for refund.

(b) All interest payable pursuant to this subsection (6) must be at the same rate that applies to deficiency payments.

(a) If the appellant is a local government the taxpayer has the burden of proof as to all factual matters, and the appellant has the burden with respect to any legal determination of the executive director that the appellant seeks to reverse;

(b) The local government always has the burden of proof with respect to the issue of whether the taxpayer has been guilty of fraud with intent to evade tax and with respect to the issue of whether the taxpayer is liable as a transferee of property of another taxpayer;

(c) The local government does not have the burden of proof to show that the transferor taxpayer was liable for the tax; and

(d) The executive director may, at the executive director's request, be a party to the appeal.

(8)(a) If a deficiency notice or claim for refund involves only one local government, in lieu of requesting a hearing pursuant to subsection (3) of this section, the taxpayer may appeal the deficiency or denial of a claim for refund to the district court.

(b) The taxpayer shall appeal to the district court pursuant to this subsection (8) within thirty days after the taxpayer's exhaustion of local remedies. For purposes of this subsection (8), “exhaustion of local remedies” means that one of the following events has occurred:

(c) If the taxpayer has timely requested in writing a hearing before the local government and none of the events described in subsection (8)(b) of this section have occurred, the taxpayer may appeal such deficiency or denial of a claim for refund to the district court at any time after the period set forth in subsection (8)(b)(I) of this section.

(d) An appeal pursuant to this subsection (8) must be conducted in the same manner as provided in section 39-21-105; except that venue is in the district court of the county where the local government whose decision is being appealed is located, and any deposit made pursuant to section 39-21-105(4), (5), or (8)(a)(III), must be made with the local government whose decision is being appealed.