Fun Facts About Home Rule City VDAs

by | Dec 16, 2024 | State and Local, Tax News | 0 comments

Tax amnesty programs offer a unique chance for taxpayers to settle outstanding liabilities with reduced penalties and interest but not all programs are created equally.

By Connie Zoerink

I had the privilege of participating in a panel discussion at this year’s Colorado Government Finance Officers Association (CGFOA) Conference alongside city tax auditors Jeff Edwards from Aurora and Quintin Hilburn from Denver. I walked away with a host of interesting insights about our home rule cities, where VDA program preferences, lookback periods, and policies vary widely.  

Here are some key takeaways: 

  • Home Rule City VDA Participation: Both Aurora and Denver reported increasing VDA participation and revenues over the past few years, in part due to greater visibility to home rule city taxes through the Colorado SUTS program. VDA programs are generally beneficial for both the cities and the taxpayers, as the cities gain new taxpayers (and collect some past revenues), while the taxpayers can become fully compliant with the cities at a lower cost and without the stress of an audit. 
  • VDA Program Preferences: One city (unspecified) mentioned they did not want to implement a VDA program. However, all other cities represented either had a program or were interested in starting one. Most cities permit the anonymous disclosure of a taxpayer to enter into a VDA. This is not the case for Denver, but in Denver, VDAs that meet the qualification requirements will be approved regardless of the taxpayer or the taxpayer’s facts. For Denver, the upfront disclosure of the taxpayer is intended to level the playing field and prevent favorable treatment for certain taxpayers. 
  • Lookback Periods: Most cities have a three-year lookback period except in cases where the taxpayer collected sales tax but did not remit it. The cities will keep the VDA period open to audit and may open prior periods if fraud is discovered. Some exceptions to the three-year lookback are Colorado Springs and Denver. Colorado Springs has a five-year lookback period, while Denver has a seven-year lookback for fixed assets (use taxes). Having a longer lookback period may not be a deterrent to a VDA, particularly given the favorable settlement terms such as the waiver of penalty and in some cases, interest. 
  • Website Analytics: VDAs are getting more attention on the home rule city websites! In fact, recent analytics for Colorado Springs indicated that “VDA” was the most searched term. 

If you need assistance with Colorado Home Rule cities, the TaxOps’ SALTovation team is here to help. We’ve been actively involved with Colorado’s arcane — but improving — sales tax system and working with city authorities for 25 years. We actively advocate for simplification to promote voluntary compliance and have been part of the Coalition to Simplify Colorado Sales Tax. In addition, TaxOps’ lead SALT partner Judy Vorndran is on the Governor’s task force, where she works alongside legislators, business owners, tax practitioners and other stakeholders to support laws that will simplify sales tax licensing, remittance and reporting in the state of Colorado.  

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