Boulder Revisits Construction Use Tax

Contact:
Patrick von Keyserling, Media Relations, 303-441-4959
www.bouldercolorado.gov

City delays audit enforcement, pending code review

BOULDER – City of Boulder officials today announced the city would suspend actions resulting from the recent Construction Use Tax audits. The city plans to re-examine the City Code before taking action to collect any delinquent taxes.

The Construction Use Tax, part of the City Code for more than 25 years, recently came under scrutiny when audits uncovered discrepancies in the amount of taxes owed to the city for construction projects dating back to 2006. 

According to City Tax Code, contractors pay an estimated tax based on the construction permit and then must reconcile the estimate with actual costs upon completion of the project. Traditionally, project estimates and actual costs have been similar.

The results this year were different, raising questions about errors in the system and inequities among those companies who were audited and those who weren’t. The larger than usual number of discrepancies prompted the city to send letters urging voluntary compliance with the code.

Approximately 1,000 contractors were to be notified to reconcile estimated construction values with actual project costs. The city had waived fines and penalties for those who comply before Dec. 31. The city now is delaying that compliance period pending a full review of the Construction Use Tax Code, and associated collection and enforcement processes.

According to City Manager Jane Brautigam, the large number of companies uncovered by the audit prompted the city to seek a review of the Construction Use Tax process and how estimates are calculated. She said the discrepancies between estimated and actual costs are higher than in previous years, causing burdens on some contractors caught off guard.

“This is a challenging economy, and a lot of companies are impacted,” said Brautigam. “While compliance audits are a routine practice in Boulder, we heard concerns about this process and the financial impact of paying the delinquent taxes. As a result, an outside firm will conduct a thorough review of the Code and its application to make sure the system is clear and the process is equitable across the industry.”

Brautigam said the review should be completed within 60 days, and the city will not enforce the audit findings until the city is confident the process is clear and the proper system is in place.

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Last Updated on Friday, 02 October 2009 16:00