Blue River catches errors costing thousands in sales tax revenues
Summit Daily News
The Town of Blue River nearly doubled sales tax revenues from 2008 to 2010 after correcting a coding error that had many Blue River residents paying sales taxes and fees on utility bills to the wrong town, Blue River trustees said.
Town officials say Blue River sales tax dollars have been mistakenly going to the Town of Breckenridge for years due to a confusion causing Blue River accounts to be assigned as Breckenridge accounts in the utility vendors’ computer systems based on the towns’ shared zip code.
At least 400 customers with Xcel energy have also been overpaying as a result of the coding error, by being charged for Breckenridge’s taxes and fees which are higher than Blue River’s.
In 2008 the coding errors were corrected with Colorado Natural Gas and Xcel Energy’s errors were corrected in October of last year. During that time frame Blue River’s annual sales tax revenues increased by more than $45,000, approximately 5 percent of the total town budget, according to Blue River Trustee Jon Warnick.
The Xcel energy customers who overpaid saw credits on their November and December bills going back two years following the correction.
Xcel representatives said the errors were a result of limitations in the company’s software.
“We just didn’t have the right way to calculate this because of the rural nature of the area,” said Xcel Energy spokesman Mark Stutz.
Town officials are still in the process of correcting sales tax coding mistakes with Comcast, some phone service providers and on items delivered into Blue River that should be taxed at the destination, Warnick said.
“The sales tax issues could have been corrected at any time in the past decades,” Warnick told the SDN in an e-mail. “But the town doesn’t have full-time staff to do the work.”
He said the problem came to his attention through a closer examination of the town’s sales tax revenues and conversations with Blue River residents.
Blue River operates on a budget of approximately $1 million, funded largely by property taxes. Sales tax revenues are primarily collected from utility and service bills.
The sales taxes in question are collected at the state level and distributed to the towns by the Colorado Department of Revenue.
“For the … tax to correctly be sent to the municipality, collected sales tax needs to be properly geocoded by the companies to show the location of collection,” Warnick stated.
Warnick said the errors occur when customers sign up with a vendor for a basic utility service, such as electric or gas. It seems vendors often assign the new account to the wrong municipality because of the common zip code 80424, which includes Blue River, Breckenridge and parts of unincorporated Summit County.
In an attempt to stem the problem, Blue River officials worked for three years to get a unique zip code for the town, with no success.
Thomas Hill, a Blue River trustee who led the efforts to secure a specific zip code, said appeals to the U.S. Postal Service as well as Congressman Jared Polis’s office were shut down or ignored.
“They basically said no,” Hill said.
Postal Service officials say zip codes were created specifically and solely for mail delivery purposes and are only changed when the post office needs them to be based on population growth.
“Our zip code system is established for efficiency of mail delivery,” Postal Service spokesman Al DeSarro said. “We can’t just assign a zip code for purposes other than what we use it for.”
Blue River has now given up efforts to secure a unique zip code.
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