Group Urges Collection of Back Coal Severance Taxes

Colorado Ethics Watch is asking the Colorado Department of Revenue to try to collect $20 million in back coal severance taxes that have not been collected since 2004.

The Attorney General John Suthers recently ruled that Revenue had erred in its application of the coal severance tax rate since 1993. The rate is supposed to be increased or decreased by one percent for every 1.5 percent change in the federal commodity price index. But after the passage of the Taxpayers Bill of Rights (TABOR) in 1993, the department stopped adjusting the rate upward, freezing it at 54 cents a ton.The amount not collected over the  last six years was about $40 million. The figure was originally reported by Colorado Confidential. But since the statute of limitations has passed on any amounts not paid more than three years ago, the total the could conceivably be collected is about half that amount.

“For the past 14 years, Colorado coal companies have been underpaying the state in taxes. The Department of Revenue should take immediate steps to recover this lost revenue, which translates to millions of dollars for natural resource replenishment and conservation development,” says Ethics Watch director Chantell Taylor. “If the Department declines to collect these back taxes, it should explain to the people of Colorado why coal companies are not being required to pay their fair share in taxes.”

Colorado Mining Association president Stuart Anderson said last month that the industry opposes any attempt to collect the back taxes. He says that his groups analysis supports the Department of Revenue’s interpretation of the severance tax.

A release from Colorado Ethics Watch notes:

Of the total revenues generated from the collection of coal severance taxes, fifty percent is allocated to the state severance trust fund as a replacement for depleted natural resources and for the development and conservation of the state’s water resources and use in funding programs that promote and encourage sound natural resource planning, management, and development related to minerals, energy, geology, and water. The remaining fifty percent is credited to the local government severance tax fund.