Some Routt County residents wrongly paying Steamboat sales tax
February 13, 2012
Steamboat Springs — Each month Rob Douglas pays a city sales tax on his Verizon Wireless bill — it was $2.55 in February. But there's a problem. He doesn't live in Steamboat Springs city limits.
Douglas lives in Tree Haus, just outside city limits where there isn't mail delivery.
Douglas is among an unknown number of county residents who, because they still have a Steamboat zip code, are assessed a sales tax it doesn't appear they should have to pay.
City officials acknowledge they've known about the issue for several years, and they say Verizon Wireless is responsible. No attempt has been made to notify county residents of the issue, but the city said it will issue refunds to anyone who has been improperly taxed.
"I don't think anyone is being malicious here, but at the same time, I think maybe this has just been going on for a while and hasn't been talked about," Douglas said.
Deputy City Manager Deb Hinsvark said the city found out about the issue in 2009 during a Verizon Wireless audit, and has issued some refunds to county residents. She said the city is not aware of the same tax issue with other cellphone carriers. AT&T, which also provides service in Steamboat, doesn't appear to charge city sales tax to customers who live outside Steamboat Springs limits but still carry an 80487 zip code.
Hinsvark said the city immediately reached out to Verizon to rectify the problem but was told the company's software bills customers based on zip code and can't differentiate between a customer located within city limits or outside its boundaries.
Hinsvark said the city wasn't sure how to alert county residents of the issue.
"We have talked to Verizon on behalf of the community," she said. "They have not indicated they will do anything to change."
Verizon spokespersons did not return calls seeking comment Monday.
Hinsvark said the city has no idea how many county residents are assessed a city sales tax on their Verizon bill and therefore doesn't know how much revenue it has generated as a result. Because the sales tax is proprietary, she declined to say how much revenue wireless service sales taxes generate for the city.
But the amount could add up to tens or even hundreds of thousands of dollars over a period of several years. If, for example, there were 1,000 Verizon customers like Douglas who were wrongly paying $2.55 a month in city sales tax, that would add up to $30,000 in tax revenues a year.
Because Steamboat is a home rule municipality in Colorado, it collects its own sales taxes, said Ro Silva, of the state Department of Revenue. She said the wireless companies remit those sales tax revenues directly back to the city instead of passing them through the state.
Silva said wireless taxes are remitted through the state for cities and towns that are not home rule municipalities, such as Oak Creek. She said any residents of non-home rule municipalities who think they have been taxed improperly would need to submit a claim for a refund through the Department of Revenue. Stagecoach residents, for example, have an Oak Creek zip code, meaning they could be paying Oak Creek sales tax on their monthly statements.
Hayden Finance Director Lisa Dowling said her town assesses a sales tax on wireless customers. Dowling said she wasn't aware of the town taxing county residents with Hayden zip codes but would address that issue with anyone who thought they were improperly assessed.
In addition to local taxes, wireless customers are assessed county and state sales taxes.
County residents who have been paying city of Steamboat sales taxes on their Verizon bills can take their bills to Centennial Hall for a refund for up to three years, the period of time permitted by city ordinance, Hinsvark said. She said including the monthly statements and a cover sheet that includes the amount of city wireless sales tax per month for each year would help expedite the refund process for city staff.
"We're happy to have the information out there because we shouldn't be receiving taxes we're not entitled to," Hinsvark said.
However, Verizon makes available online only the past 12 months of billing statements. A Verizon customer service representative said Monday that statements dating further back cost $5 each. For many residents, the cost to get copies of old statements would be more than the refund they're due.
After discovering, by chance, that he was being taxed incorrectly, Douglas called the city to inquire about a refund. And he called Verizon. Douglas said Verizon told him it couldn't stop assessing the city sales tax even though he provided his physical address that is outside of city limit. He's also waiting to hear back about his request to have the re-printing fees for his old bills waived or reduced.
Douglas thinks all parties share blame for the improper taxing issue, but he also believes it can — and should — be rectified.
"There clearly are software solutions that Verizon can do on its end," he said. "And on the city's end, it's an issue of notice. They know that they've been collecting this because they've been issuing refunds and they should be notifying county residents. And it's a cautionary tale. We all should be looking at how we're billed more closely than I am."
To reach Jack Weinstein, call 970-871-4203 or email jweinstein@SteamboatToday.com