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Colorado supreme court sides with travel companies over Breckenridge in taxation case

The Colorado Supreme Court and Colorado Court of Appeals building is pictured in Denver.
Photo by Cliff Grassmick / Boulder Daily Camera

Online travel companies aren’t required to pay accommodation and sales taxes in the town of Breckenridge, the Colorado Supreme Court ruled earlier this month.

Since 2016, the town of Breckenridge has been engaged in litigation against 16 online travel companies, including major players in the industry like Expedia, Hotels.com and Hotwire. The town claimed that OTCs are required to collect and remit accommodation and sales taxes associated with hotel reservations in town and sought monetary relief for unpaid taxes. The district court sided with the OTCs, and Breckenridge brought the case to the Colorado Court of Appeals.

In January 2018, the court of appeals issued an opinion on the case affirming the district court’s decision that OTCs aren’t required to pay the taxes — largely on the basis of specific language in the town code, noting that the OTCs are just intermediaries between customers and hotels and not considered “renters” or “lessors” of hotel rooms in town.



Breckenridge issued a certiorari petition last year, and in August the Colorado Supreme Court agreed to hear the case.

Following a hearing May 9, the state Supreme Court decided to affirm the appellate court’s decision in a split 3-3 vote. Justice Melissa Hart didn’t take part in the decision because Breckenridge had previously hired her as an expert witness before her appointment to the court in December 2017. According to the opinion, an equally divided court affirms the decision of the court of appeals by operation of law.



“We’re disappointed in the decision and that we lost because of a tie because one judge was recused,” the town’s finance director Brian Waldes said. “The court did recently side with Denver in a similar case, and our ordinance’s language is close to theirs. We’re considering altering the ordinance in light of the decision. It’s on the table.”

Waldes is referring to another Colorado Supreme Court case in which the court decided that Denver’s lodger’s tax article imposed a duty on OTCs to collect and remit prescribed taxes on the purchase price of any lodging they sell. While it may seem like Denver’s argument was substantially similar to Breckenridge’s, as asserted by the town’s attorneys, the court wasn’t persuaded.

The difference comes in the language used within each entity’s tax codes. According to the appellate court’s decision, Denver’s lodger’s tax requires “vendors” to pay the prescribed taxes. Breckenridge’s accommodation tax code instead focuses in on “lessors” and “renters,” and the court of appeals decided that because OTCs are not the “rightful possessors” of the rooms, they’re essentially just brokers and not subject to the tax under Breckenridge’s laws.

Breckenridge’s current code states: “(The) legislative intent of the town council in enacting this chapter is that every person who, for consideration, leases or rents any hotel room, motel room, or other accommodation located in the town shall pay and every person who furnishes for lease or rental any such accommodation shall collect the tax imposed by this chapter.”

Breckenridge imposes a 3.4% accommodation tax on the price paid for the leasing or renting of any hotel room.

In theory, the town could pass a new ordinance to update the code’s language to better mirror Denver’s, though the Taxpayer Bill of Rights would require it to go before the town’s voters in the form of a ballot question.

“Staff believes, and has believed all along, if we didn’t prevail in the litigation, the ultimate remedy is to amend the ordinance, which would require a TABOR election,” town attorney Tim Berry said at the town’s regular council meeting Tuesday night. “We have a template that worked for Denver. So we’re going to consider if we can amend our ordinance to draft it into the decision that Denver won.”

Berry noted that there’s also a chance the OTCs, as the prevailing party, could seek to recover costs from the case from the town, but he said it’s unlikely. Additionally, Berry said that because the town didn’t win, the law firm the town hired to handle the case, Lewis Roca Rothgerber Christie LLP, wouldn’t be paid because they took the case on contingency.

“They’re almost as disappointed as we are,” Berry said.

Neither the firm representing Breckenridge nor the firm representing the online travel companies on the case, Connelly Law LLC, returned calls for comment on the decision.


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