Dillon weighs new sales tax collection system
May 10, 2013
A change may be coming to the way sales tax is collected in the town of Dillon.
At its meeting Tuesday, the town council discussed the possibility of switching to a self-collect system.
Currently, the Colorado Department of Revenue collects the sales tax on behalf of the town. While Dillon is the only town in the county that does not self-collect its sales taxes, it does self-collect on its lodging tax. Silverthorne, Frisco and Breckenridge all have a self-collect sales tax system in place.
After the discussion, the town council voted to approve hiring Whitestone Strategies, a consulting firm out of Denver, to conduct a business case analysis of the town of Dillon to determine any current licensing and revenue gaps, estimate potential new revenues, analyze administrative alternatives and costs and perform preliminary research on data collection systems. The decision, which comes with a $6,000 price tag, was unanimously approved. Council member Tim Westerberg was absent.
"We've considered it on and off for several years, but we've started to think about it more seriously in the last year," said town of Dillon finance director Carri McDonnell. "As a home rule municipality, we have the authority to do this. We wanted to look at ways to bring those collections in-house to be able to help our business community receive the money a little faster than we receive it from the state."
While the business case analysis will represent the last word, there are potential advantages to moving to the self-collect sales tax system.
"It is something that we have identified as being an additional asset, not just for the town but also for the community," said town manager Joe Wray.
In addition to a quicker turnaround in receiving tax revenues, Wray continued, self-collection will provide a local face for businesses to deal with, giving them an easy connection for any questions or assistance needed.
Something else that the analysis might reveal is if the town is currently missing out on any sales tax collections. This would mainly involve businesses from out of the county. For example, if someone ordered furniture from a store in Denver and it was delivered to their home in Dillon, the business may owe remuneration to the town. With the sales tax collection being handled by the state, the town is limited in its knowledge of the details and therefore in its enforcement of audits and collections. The results of the business case analysis will reveal if such situations currently exist and if the town would benefit from turning to a self-collection system.
Both Wray and McDonnell said that changes seen by local businesses would be minimal if the system were to be adopted. For example, a business would likely need to fill out a second remittance form, as well as perform an annual license renewal at a local level. The sales tax rate will remain unchanged.
"We'll try to make it as easy as we can," McDonnell said.
Once the business case analysis is finished, the results will be presented to the town council. Council will then have until July 1 to make its decision, at which time it must notify the state if it plans to make the switch to the self-collect system.
If the system is adopted, the town will need to update its finance software and hire another person to help take on the extra workload.
"The biggest issue is making sure that the staffing costs … are more than covered by the additional revenue that's being collected," McDonnell said.
If approved, the new system would go into effect at the beginning of next year.
"It's going to be an interesting process," McDonnell said of the analysis. "It will be interesting to see how the numbers play out."
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