Montrose - Daily Press

MONTROSE — Mixed signals abound concerning sales tax collection, commissioners say, and the county must adopt a position on enforcement.

Among issues cropping up is whether small nonprofits with occasional sales need to collect the 1 percent sales tax and the 0.75 percent public safety tax voters approved last November.

“We’re just having a terrible time with the Department of Revenue,” Commissioner Bill Patterson said. “There are questions as to what is and is not exempt. Montrose County decided long ago against any exemptions that were not mandated by the state already.”

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But there was a lack of clarity about nonprofits with fewer than 12 events or with an annual intake of less than $25,000.

These “occasional sales” are exempted from state sales tax; however, that exemption is classified as “optional” and Montrose County did not incorporate any of the state’s optional exemptions into its new taxes.

The issue already came up concerning certain agribusiness operations, which are exempt at a state level, but are considered optional rather than mandatory.

Patterson said the county nonetheless understood occasional sales were exempt and had been approached collection accordingly.

“The state came back and said they were mistaken before and since we had no exemptions, we could not exempt the small nonprofits and we would have to collect taxes on the Girl Scouts’ cookies. That’s crazy,” he said.

Dave Laursen, chair of Citizens for Funding Our Future — the group that made sales tax recommendations last year — said his committee is attempting to get clarification on a variety of issues in advance of a March 24 public meeting.

“What the statute says is that for the state itself, they consider occasional sales. But if you read further down, it says it is for the state, and counties can locally exempt or not, and we decided not to,” he said. “We need to clarify in our minds where that’s at.”

After lengthy discussions last year, FOF decided against any of the state’s optional exemptions, including occasional sales, so that there could be a “level playing field,” Laursen said. He said he had to tell the DOR it was mistaken in its initial advice to the county concerning occasional sales.

Steve Asbell, DOR employee, said the county hadn’t opted to exempt occasional sales and he wasn’t sure who had given the county advice about that particular exemption.

“It’s confusing. The statute for all of this optional stuff is in a very messy subsection. It’s hard to work through it, for sure,” Asbell said.

Laursen said the issues being raised underscore that confusion, part of which was due to where sales were being made.

He said one nonprofit group at a recent event incorrectly charged a 25-cent tax, mistakenly believing it had to apply all sales taxes, instead of just the county taxes.

There was “total confusion” at the event, Patterson said. If an event is being held in the city limits, both city and county sales taxes apply. But if it is held in an unincorporated part of the county, only county tax applies.

Friendship Hall sits on land that was not incorporated into the Montrose city limits, and Patterson said that is causing confusion.

Laursen also said a sales tax license is required to remit a sales tax. “The question is whether they need a sales tax license and that’s part of what needs clarified,” he said.

“The committee is committed to coming back together and looking at some of these things to see where we can help.”

Patterson said the consensus was there would be no exemptions, but it was still the county’s prerogative to determine how sales tax collection would be enforced. Though strictly speaking some nonprofits should have a sales tax license, practically speaking, it wasn’t “worth the hassle,” he said.

Commissioner Allan Belt said he was “very disillusioned” with the state, while Commissioner Gary Ellis said some of its information had been unreliable and inconsistent.

“We’re getting conflicting answers on the same question, out of the same department. It makes us look bad. What we’ve decided is, we’re going to do the very best we can and we’re going to move forward,” Belt said, adding the occasional sales issue still needed ironed out.

“We’re not looking to tax the little old lady on the street corner selling pencils. We’ll work it out fairly, but we have to remain within the law. Therein lies one of the things we’re wrestling with. We’re not going to sit around and wait for additional, conflicting legal opinions. We are going to get all of the issues cleared up.”

“We need to run this like we want it to be run,” Patterson said. “We get three different interpretations if we ask three different lawyers about what is right and what is wrong. If the state doesn’t like it (what the county decides), it can come and arrest me.”

Patterson said small nonprofits, such as the Lions Club or Girl Scouts, were not commercial enterprises trying to turn a profit, whereas other entities, such as agribusiness, were.

“We’re going to go round and round on this,” he said. “We need to say what we think is right and that’s what we enforce.”

Ellis said the county probably could not arbitrarily ignore occasional sales. “We’re looking at ways we can deal with it that’s fair to everybody but that will not cause injury to these smaller groups,” he said.

“The bottom line is, we want to be fair across the board.”

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