House Committee on Finance (02/26/2014)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON FINANCE

Date:	02/26/2014	ATTENDANCE

Time:	01:35 PM to 06:04 PM	Becker	X
		DelGrosso	X
Place:	LSB A	Foote	X
		Joshi	X
This Meeting was called to order by		Kagan	X
	Representative Court	Melton	X
		Pabon	X
This Report was prepared by		Priola	X
	Matt Kiszka	Saine	*
		Swalm	X
		Wilson	X
		Labuda	X
		Court	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB14-1201 HB14-1269 HB14-1119		Postponed Indefinitely Laid Over Amended, Referred to Appropriations

01:36 PM -- HB14-1201

Representative Court, Chair, called the meeting to order.

Representative Priola distributed a bill summary to the committee (Attachment A). He summarized why the bill was necessary, and provided information on the changes that it would make to current statute. He responded to questions on Senate Bill 10-001, which is currently being litigated in the Supreme Court.

14HseFin0226AttachA.pdf

01:42 PM -- Mark Ruzzin, representing Boulder County and the Boulder County Commissioner's Office, spoke against the bill. Mr. Ruzzin stated that the bill would weaken the county's ability to attract and keep talented employees, and that Boulder county was requesting a no vote on the bill. He responded to questions on Boulder County hiring and how it is affected by the Public Employees' Retirement Association (PERA), and the sustainability of PERA in the long-term.

01:56 PM

Representative Priola made some closing comments and encouraged the committee to follow discussions surrounding PERA in the coming years. Committee discussion of the merits of the bill ensued. Representative Priola responded to a question on the stakeholders he had met with while drafting the bill.


BILL:	HB14-1201
TIME:	02:14:20 PM
MOVED:	Priola
MOTION:	Refer House Bill 14-1201 to the Committee on Appropriations. The motion failed on a vote of 5-8.
SECONDED:	Saine
		VOTE
	Becker	No
	DelGrosso	Yes
	Foote	No
	Joshi	Yes
	Kagan	No
	Melton	No
	Pabon	No
	Priola	Yes
	Saine	Yes
	Swalm	Yes
	Wilson	No
	Labuda	No
	Court	No

YES: 5 NO: 8 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	HB14-1201
TIME:	02:15:09 PM
MOVED:	Melton
MOTION:	Postpone House Bill 14-1201 indefinitely. The motion passed on a vote of 8-5.
SECONDED:	Pabon
		VOTE
	Becker	Yes
	DelGrosso	No
	Foote	Yes
	Joshi	No
	Kagan	Yes
	Melton	Yes
	Pabon	Yes
	Priola	No
	Saine	No
	Swalm	No
	Wilson	Yes
	Labuda	Yes
	Court	Yes

YES: 8 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:16 PM -- HB14-1269

Representative Labuda took over as chair of the meeting.

Representatives Court and Williams came to the table to present House Bill 14-1269. They distributed Amendments L.001 (Attachment B), L.002 (Attachment C), L.003 (Attachment D), and L.004 (Attachment E). Representative Williams explained that the bill expands the definition of "nexus" for sales tax purposes, broadening the types of business activities that create taxable sales. Specifically, this bill expands the definition of nexus to include certain methods of delivering a taxable good or providing services through an agreement with an in-state company. In addition, the bill creates a presumption that an out-of-state retailer has substantial nexus, and requires an out-of-state retailer to collect and remit sales taxes if that retailer contracts with the state. She stated that the bill is good for small businesses and for Colorado. Representative Court stated that online businesses currently have an unfair advantage, and that the bill would make things fairer for small businesses. She also explained that Amendment L.001 removes affiliates from the parameters of the bill. Representative Court responded to questions on Amendment L.001 and the fiscal note for the bill.

14HseFin0226AttachB.pdf

14HseFin0226AttachC.pdf

14HseFin0226AttachD.pdf

14HseFin0226AttachE.pdf

02:29 PM

Larson Silbaugh, Colorado Legislative Council Staff, came to the table to respond to a question on the fiscal note for the bill. Representative Court distributed a chart showing estimated sales tax revenue not currently collected from out-of-state retailers (Attachment F). Representative Court responded to a question on the definition of affiliates.

14HseFin0226AttachF.pdf

02:34 PM

Phil Horwitz, Department of Revenue (DOR), came to the table to respond to a question on whether the bill will create sales tax collection compliance problems for smaller online retailers. Committee discussion of sales tax collection enforcement and affiliates ensued. Mr. Silbaugh responded to a further question on the fiscal note for the bill. The committee discussed the presumptions of the fiscal note for the bill and the expansion of nexus that the bill creates. Mr. Horwitz stated that the Department of Revenue does not have a position on the bill.

02:47 PM

Mr. Horwitz responded to a question on whether the bill will invite litigation based upon pertinent court cases in California and New York. Committee discussion of litigation and tax collection enforcement ensued.

02:57 PM

Esther van Mourik, Office of Legislative Legal Services, came to the table to discuss the exclusion of affiliates from the bill. Committee discussion of taxpayers and cases filed against them by the DOR ensued.

03:01 PM

Mr. Horwitz and Representative Court responded to questions on the removal of affiliates from the bill, who the bill targets, and what additional powers the bill will give the DOR if it passes.

03:15 PM

Mr. Horwitz responded to a question on the new nexus laid forth in the bill. Further committee discussion of the removal of affiliates from the bill ensued.

03:25 PM

Mr. Silbaugh and Mr. Horwitz responded to a question on how the bill might target taxpayers, and committee discussion ensued. Mr. Horwitz responded to a question on how the bill would affect Amazon.com.

03:37 PM -- Chris Howes, representing the Colorado Retail Council, came to the table to speak in favor of the bill. Mr. Howes addressed ongoing congressional legislation surrounding this issue, why the bill is important to Colorado, and how current sales tax policy protects retailers outside of the state.

03:42 PM -- Tom Clark, representing the Metro Denver Economic Development Corporation, spoke in favor of the bill. Mr. Clark stated that the bill would result in good tax policy for the state.

03:47 PM -- Dick Kaufman, representing ShopAtHome.com, spoke in favor of the bill. He stated that the company is an affiliate in Colorado, and that the amended bill is a huge improvement for affiliates in the state.

03:48 PM -- Bill Mueldener, representing the Colorado Technology Association, spoke against the bill. Mr. Mueldener stated that the association had significant concerns about the bill, and that it was not clear to him which companies the bill will affect. Mr. Mueldener outlined additional concerns of the association.

03:56 PM -- Michael Christensen, representing himself, spoke against the bill. Mr. Christensen stated that the bill would harm affiliates, and that further language was needed to specifically exempt affiliates. The bill sponsors agreed to work with Mr. Christensen to incorporate such language.

04:00 PM -- Jeannine Crooks, representing herself, spoke against the bill. She stated that the bill would heavily affect affiliates in the state and hurt smaller businesses. Ms. Crooks responded to questions on her business and how the bill would affect her and other affiliates.

04:20 PM

Ms. Crooks and the committee further discussed how the bill could negatively affect affiliates.

04:24 PM -- Doug Hurst, representing himself, spoke against the bill. He stated that he had attended the hearing to make sure that the legislation makes sense from a business point of view, and raised numerous concerns he had with the language of the bill and what it could mean for businesses. Mr. Hurst responded to questions.

04:37 PM -- Jen Goode, representing herself, spoke against the bill. She outlined her concerns with the language of the bill as an owner of an online retailer affiliate company. Ms. Goode also read a letter from a fellow affiliate business owner who could not attend the hearing.

04:48 PM

The committee went into a brief recess.

05:00 PM -- Ashley Coombe, representing herself, spoke against the bill. She emphasized the importance of removing any ambiguity surrounding affiliates from the bill. Ms. Goode responded to a question on the business relationship between an affiliate and a retailer. Committee discussion and questioning ensued.

05:14 PM

The committee and Ms. Goode further discussed affiliates in the state and how the bill could impact them.

05:18 PM -- Mathew Frary, representing himself, spoke against the bill. He stated that the bill could stifle innovation and affiliate business in Colorado.

05:24 PM

The bill was laid over to a future meeting, to be heard for action only.

05:24 PM

House Bill 14-031 and Senate Bill 14-024 were laid over to a future date.

05:25 PM -- HB14-1119

Representative McLachlan came to the table to present House Bill 14-1119. He explained that the bill creates an income tax credit for individual and corporate taxpayers who donate food to hunger-relief charitable organizations. The credit in the bill is available to all taxpayers who, in the same year in which they claim the credit, also submit a federal Schedule F tax form indicating profit or loss from farming. The credit applies to food usable for consumption by human beings, including specifically livestock, eggs, milk, grains, fruits, and vegetables. The value of the credit is equal to 25 percent of either the wholesale market price or the most recent sale price of the contributed food. The value of the credit is capped at $5,000 per taxpayer each year.

05:28 PM -- Linda King, representing Feeding Colorado and the Adams County Food Bank, and Bob Boswell, representing Feeding Colorado and the Weld County Food Bank, spoke in favor of the bill. Ms. King told the committee that the bill would allow her food bank to supply more fresh produce, which is currently lacking, to low income individuals in the area that it serves. Mr. Boswell stated that the bill will allow the Weld County Food Bank to access more fresh produce as farmers will be able to donate more food in Colorado. They responded to questions on how the bill will help food banks in Colorado.

05:34 PM -- Nick Colglazier, representing the Colorado Farm Bureau, spoke in favor of the bill. Mr. Colglazier said that the bill will help farmers and companies donate to a good cause and that it will provide a healthier diet to low income individuals in need of food.

05:37 PM

Greg Sobetski, Colorado Legislative Council, came to the table for a question on the fiscal note for the bill. Mr. Colglazier responded to a question on the definition of a "farmer" under the bill, and who would qualify for the tax credit.

05:43 PM

Representative McLachlan explained Amendment L.005 (Attachment G), which adds a provision for big game animals to be included within the list of authorized donations laid out by the bill. Esther van Mourik, Office of Legislative Legal Services, came to the table to speak to the amendment. Committee discussion ensued.

14HseFin0226AttachG.pdf

05:57 PM

The committee took a brief recess.


BILL:	HB14-1119
TIME:	06:02:22 PM
MOVED:	Court
MOTION:	Adopt amendment L.005 (Attachment G). The motion passed without objection.
SECONDED:	Pabon
		VOTE
	Becker
	DelGrosso
	Foote
	Joshi
	Kagan
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Labuda
	Court

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

06:02 PM

Representative McLachlan made his closing comments, and the committee discussed the merits of the bill.


BILL:	HB14-1119
TIME:	06:02:56 PM
MOVED:	Court
MOTION:	Refer House Bill 14-1119, as amended, to the Committee on Appropriations. The motion passed on a vote of 10-2, with 1 member excused.
SECONDED:	Kagan
		VOTE
	Becker	Yes
	DelGrosso	Yes
	Foote	Excused
	Joshi	Yes
	Kagan	Yes
	Melton	Yes
	Pabon	Yes
	Priola	Yes
	Saine	No
	Swalm	No
	Wilson	Yes
	Labuda	Yes
	Court	Yes

YES: 10 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

06:03 PM

The committee was adjourned.