clock menu more-arrow no yes

Filed under:

Tax amnesty a “miserable failure”

Updated – Legislative proponents of the idea had hoped a tax amnesty would raise $9.7 million for Colorado’s tapped-out State Education Fund, but the Oct. 1-Nov. 15 effort fell far short.

The amnesty generated a total of only about $2.34 million, according to the Department of Revenue. (The department reported $1.5 million on Thursday but updated the figure on Friday.)

Sen. Pat Steadman, D-Denver and a prime sponsor of Senate Bill 11-184, called it a “miserable failure.”

The bill was among several ideas kicked around by Democratic lawmakers last spring to raise extra funding for schools. Statehouse wags referred to the effort as “looking for spare change in the sofa cushions.”

According to a fiscal analysis done by legislative chief economist Natalie Mullis, the amnesty was supposed to bring in a grand total of $12.6 million, of which $9.7 million would go to the State Education Fund, an account used to supplement state K-12 aid.

That fiscal note relied on a 2003 tax amnesty, which raked in $23 million. Mullis did write, “It should be noted that it is extremely difficult to predict the amount of revenue that would be generated by an amnesty program, and the actual amount could be below or above this amount,” referring to her $12.6 million estimate for 2011.

Mark Couch, Department of Revenue lobbyist and spokesman, Thursday gave three possible reasons for the low take:

  • The fact that the amnesty applied only to taxpayers who hadn’t yet been notified as delinquent by the department
  • The relatively short time lag between the 2011 amnesty and the 2003 version, which was the first in 17 years
  • Improved department collection programs since 2003

(Mullis also was prescient about that in her fiscal note, where she wrote, “The department has a computer system and other programs in place that are better at encouraging a higher level of compliance than in the past.”)

Steadman wasn’t happy about the amnesty results when EdNewscaught him in the lobby of the Legislative Services Building Thursday.

“I’m not completely pleased with the effort,” he said – grimacing – of the department’s marketing of the amnesty.

He also said he needs to look at whether the law needs to be amended to ensure that the education fund gets some cash.

As passed, the bill reserves $1 million in a Tax Amnesty Cash Fund to cover the department’s expenses and also to pay for a department study of how tax exemptions affect state revenues. After that, some $175,000 gets transferred to the Commission on Family Medicine. (Several legislators last spring made attempts to dip into the bill’s expected revenues, but most failed.)

The remainder is supposed to flow to the State Education Fund. Given the $2.34 million raised, that total looks to be about $1.16 million.

If there’s any money left in the Tax Amnesty Cash Fund on June 30, 2015, it goes to the state’s general fund.

Couch said the department spent $240,000 with an outside firm to publicize the amnesty. The bill allowed $483,895 for department expenses, plus $29,720 for computer programming.

The amnesty applied to income taxes and a variety of other state levies. Delinquent taxpayers who turned themselves in had to pay only half the normal interest but no other penalties. Couch said the amnesty covers 1,732 tax returns and produced a total of $2,344,356.01 as of Friday.

As Couch noted, some delinquent payers weren’t eligible. The law reads: “A taxpayer liable for the payment of any taxes specified in subsection (2) of this section shall not be permitted to satisfy such liability through the tax amnesty program if a notice of deficiency for the liability has been mailed to the taxpayer before October 1, 2011.”

The COVID-19 outbreak is changing our daily reality

Chalkbeat is a nonprofit newsroom dedicated to providing the information families and educators need, but this kind of work isn't possible without your help.