May 23, 2018

HB 11-1300: Waiving the Hearing Process and Allowing Direct Appeal to a District Court in Disputes with Department of Revenue over State Income Tax Credits for Perpetual Conservation Easements

On April 18, 2011, Rep. Marsha Looper, R-Calhan, and Sens. Kevin Grantham, R-Canon City, and Jeanne Nicholson, D-Gilpin, introduced HB 11-1300 – Concerning the resolution of a disputed claim for a state income tax credit for a donation of a perpetual conservation easement that includes a process that allows a taxpayer to waive an expedited administrative hearing for the purpose of appealing directly to a district court. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Taxpayers are currently allowed to claim a state income tax credit for a portion of the value of a perpetual conservation easement that the taxpayer donates. If the executive director of the department of revenue disputes the claim of the credit, a notice of deficiency, notice of rejection of refund claim, or notice of disallowance is mailed to the taxpayer, and the tax matters representative may request a hearing on the deficiency, rejection, or disallowance.

Under current law, a tax matters representative may not appeal such a notice to a district court until the hearing has been held and a final determination has been made by the executive director. Additionally, under current law, it is difficult to consolidate related claims in the administrative process for efficient and equitable resolution of conservation easement tax credit claims. There are currently a large number of disputes regarding conservation easement credit claims awaiting hearing and final determination by the executive director.

As introduced, the bill allows the tax matters representative to waive the hearing process and appeal directly to a district court. The bill further:

  • Establishes venue for the appeals in a manner that allows cases to be consolidated regionally;
  • Eliminates surety bond requirements for taxpayers who appeal directly to a district court;
  • Suspends the imposition of additional interest and penalties during the appeal for taxpayers who appeal directly to a district court;
  • Provides clearer and more effective procedures for the administrative process in order to facilitate an efficient and equitable process for all parties;
  • Establishes a process for courts to publish notices to taxpayers who cannot be located;
  • Allows claims to be consolidated and settled, and allows additional parties to intervene at the discretion of the court;
  • Specifies procedures related to discovery, case management conferences, the disclosure of information by the parties, trial management orders, and the phasing of issues to be resolved by the court.

The bill allows a tax matters representative for a currently backlogged case who does not waive the hearing process before the executive director to request a hearing and final determination by the executive director by a certain date. In the case of a tax matters representative who elects to remain in the hearing process, the executive director has the authority to consolidate related cases. The executive director is required to issue a final determination on any remaining disputes by a subsequent date. If the executive director does not make a final determination by the dates specified, the authority of the executive director to dispute the allowance of the credits shall be waived and the amount of the credit claimed by the taxpayer will be allowed. If a taxpayer fails to appear at a hearing with the executive director or fails to participate in the hearing process, the executive director may issue a final determination without further proceedings. Interest and penalties are waived for taxpayers who continue with the hearing process and pay an amount agreed upon for taxes owed by a certain date.

The executive director is further required to:

  • Provide notice to the tax matters representative and the public regarding the provisions of the bill; and
  • Report to the general assembly regarding the status of disputed conservation easement tax credits.

The state court administrator is required to report to the general assembly on the appeals brought as a result of the bill.

The bill requires the conservation easement oversight commission to review and advise the department of revenue regarding credits referred to it by the executive director by a specified date. The commission is further required to report to the general assembly regarding the conservation easements for which it has provided advice to the executive director. The bill specifies that members of the commission are immune from liability in accordance with the “Colorado Governmental Immunity Act”. On April 20, the Finance Committee amended the bill and referred it to the Appropriations Committee.

Summaries of other featured bills can be found here.

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