A Denver District Court judge Thursday dismissed a lawsuit filed by billionaire Phil Anschutz and his wife, Nancy, seeking a nearly $8 million tax refund from the Colorado Department of Revenue.
The Anschutzes argued that changes to federal tax law made as part of Congress’ 2020 pandemic response bill, the CARES Act, changed Colorado’s tax law, too, entitling them to claim a refund on their 2018 state income tax bill.
However, Judge J. Eric Elliff, in an 18-page ruling, sided with lawyers representing the state. Elliff found that it was reasonable for Colorado tax officials to interpret the state’s tax laws as only incorporating changes to federal tax laws on a forward-looking basis while the Anschutzes’ interpretation “and thus, the foundation of their claims, is wanting.”
Part of what influenced his thinking, Eliff wrote, were the implications of the state having to cut numerous refund checks for prior tax years if he were to agree with the Anschutzes’ argument. He noted “the unavoidable reality of plaintiffs’ interpretation is that the refund associated with the prior tax year would have to be borne by the one in which it was claimed. Plaintiffs are asking for a check, and that money has to come from somewhere.”
Because of Colorado’s Taxpayer’s Bill of Rights, that could “create surprise cost burdens for future years by draining available reserves and necessitating reserve increases, jeopardizing budgetary planning efforts by forcing the state to dedicate a portion of its spending capacity on replenishing the refund reserve at the expense of other state projects.”
The judge also disclosed just how much money the Anschutzes were seeking: nearly $8 million — a fact that the Anschutzes had tried to keep secret.
In a footnote, Elliff explained that the Anschutzes “have availed themselves of a public forum, and given the issues raised in the briefs, the court concludes that whatever privacy interest (the Anschutzes) may have in protecting the amount of the refund request is outweighed by the public’s right to know.”
The sum is just a tiny fraction of Phil Anschutz’s fortune. Forbes ranked him 50th on its 2020 list of wealthiest Americans, with an estimated net worth of more than $10 billion, though it could be higher after he sold his minority stake in the Los Angeles Lakers last month. He owns The Broadmoor hotel and resort in Colorado Springs, as well as several Colorado media outlets, including The Gazette, based in Colorado Springs, and Colorado Politics.
He’s also part owner of the Los Angeles Kings, and owns the arena where they play, the Staples Center in downtown Los Angeles, through his Anschutz Entertainment Group.
Though the value of the refund may be small in proportion to the Anschutzes’ wealth, the judge concluded that the total cost to the state for issuing refund checks for prior tax years could cause fiscal trouble.
“The significance of the expenditure associated with issuing refunds, consistent with (the Anschutzes’) interpretation, to all those who would qualify seems highly problematic, compounded by the fact that it was neither the Colorado legislature nor the voters who mandated this expenditure,” Elliff wrote.
Elliff also pointed out that when lawmakers made changes to Colorado’s tax laws during this year’s legislative session, they relied on the Department of Revenue’s rules last year that explicitly interpret state law to mean that changes to federal law apply only on a prospective basis. Those rules are what the Anschutzes were challenging in their lawsuit.
“Going beyond merely failing to repeal the agency’s interpretation, the General Assembly affirmatively legislated in accordance with it,” he wrote.
Lawyers for the Anschutzes did not immediately respond to questions about whether they plan to appeal the ruling.