RTD/SCFD Tax lawsuit

2Issue:

 Whether the General Assembly can circumvent TABOR by expanding the taxing authority of RTD and SCFD without voter approval.

Plaintiffs:

 TABOR Foundation and Penn Pfiffner

 Defendants:

 Regional Transportation District, Scientific and Cultural Facilities District, and the Colorado Department of Revenue

 Court:

 Colorado Court of Appeals

https://www.mountainstateslegal.org/cases/all-cases/tabor-foundation-v.-rtd#.VnhXrvkrK70

In the 2013 legislative session, the Colorado General Assembly enacted HB13-1272, which unlawfully authorizes the Regional Transportation District (“RTD”) and the Scientific and Cultural Facilities District (“SCFD”) to levy new sales and use taxes on food, beverages, cigarettes, advertising materials, and food containers. These new taxes will be levied by RTD and SCFD, beginning January 1, 2014.

Both RTD and SCFD lobbied in support of HB13-1272. To aid its lobbying efforts, RTD identified numerous projects that would receive the increased revenues generated by the HB13-1272 taxes.

RTD and SCFD are government districts as defined by the Taxpayers’ Bill of Rights (TABOR), and therefore their tax policies are subject to voter approval.  Colo. Const. art. X, § 20(2)(b). Prior to the passage of HB13-1272, RTD and SCFD had no authority to levy sales and use taxes on food, beverages, cigarettes, advertising materials, and food containers, as specified in HB13-1272. HB13-1272 unlawfully creates new authority for RTD and SCFD to taxes these items.

The food tax created by HB13-1272 applies to “candy” as defined by C.R.S. § 39-26-707(1.5)(b)(I):  “a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.  ‘Candy’ shall not include any preparation containing flour and shall require no refrigeration.”

The beverage tax created by HB13-1272 applies to “soft drinks” as defined by C.R.S. § 39-26-707(1.5)(b)(II):  “nonalcoholic beverages that contain natural or artificial sweeteners.  ‘Soft drinks’ do not include beverages that contain milk or milk products, soy, rice, or similar milk substitutes, or greater than fifty percent of vegetable or fruit juice by volume.”

The cigarette tax created by HB13-1272 applies to cigarettes as defined by C.R.S. § 39-28-202(4), which includes all tobacco products “likely to be offered to, or purchased by, consumers as a cigarette.”

The advertising tax created by HB13-1272 applies to “advertising materials that are distributed in Colorado by any person engaged solely and exclusively in the business of providing cooperative direct mail advertising.”  C.R.S. § 39-26-102(15)(a)(I).

The food container tax created by HB13-1272 applies to “nonessential” food and beverage related items, such as utensils, napkins, grocery bags, bags for bulk produce, carryout containers for leftover food, straws, toothpicks, stirring sticks, cup sleeves, etc.  C.R.S. § 39-26-707(1)(c)–(d), (2)(b)–(c); Colo. Dept. of Rev. Reg. 39-26-707.1(1)(a)(i).

On October 23, 2013, the TABOR Foundation filed its complaint, alleging that HB13-1272 unconstitutionally created new taxes in violation of TABOR and moved for a preliminary injunction.  On December 24, 2013, state defendants filed responses in opposition to the TABOR Foundation’s motion for a preliminary injunction. TABOR Foundation filed a reply on January 3, 2014.  On January 14, 2014, the district court heard argument on the motion for a preliminary injunction and denied the motion.

Defendants Department of Revenue and SCFD filed answers on January 30, 2014, and February 3, 2014, respectively.  Defendant RTD filed a motion to dismiss on January 30, 2014.  On February 20, 2014, TABOR Foundation filed an amended complaint.  On March 24, 2014, SCFD, RTD, and Revenue each separately filed their answers to the amended complaint.

On April 29, 2014, the parties exchanged initial disclosures.  On September 8, 2014, SCFD, RTD, and Revenue each filed separate motions for summary judgment.  On October 10, 2014, the TABOR Foundation filed a cross-motion for summary judgment and response to the pending motions for summary judgment.  On October 31, 2014, SCFD, RTD, and Revenue each filed their responses/replies.  On November 21, 2014, the TABOR Foundation filed its reply.  On February 2, 2015, the district court heard oral arguments on the cross-motions for summary judgment.  On February 25, 2015, the district court granted summary judgment in favor of SCFD, RTD, and Revenue.

On April 8, 2015, the TABOR Foundation and Penn Pfiffner filed a notice of appeal with the Colorado Court of Appeals.  On September 2, 2015, the TABOR Foundation and Penn Pfiffner filed their opening brief.

One thought on “RTD/SCFD Tax lawsuit

  1. Has there been any discussions or consideration about adding the various home rule cities that have adopted the non-essential food rules to their tax base without a ballet measure? We are being assessed by the City of Aurora for taxes on non-essential containers and condiments and those rules are not part of their municipal code. They adopted “guidance” in 2012 to start taxing those items without a ballot measure.

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