Colorado billionaire Phil Anschutz and his wife, Nancy, want a state appeals court to revive their lawsuit seeking a nearly $8 million tax refund.
Phil Anschutz, who controls a vast business empire, has an estimated net worth of more than $10 billion.
The Anschutzes argue that changes to federal tax law made through the CARES Act, Congress’ 2020 pandemic response bill, also changed Colorado’s tax law, entitling them to claim a refund on their 2018 state income tax bill.
However, Denver District Judge J. Eric Elliff dismissed the case as he sided with the Colorado Department of Revenue in a ruling issued earlier this month. Elliff concluded that it was reasonable for state tax officials to interpret the state’s tax laws as incorporating changes to federal tax laws strictly on a forward-looking basis.
Attorneys for the Anschutzes filed notice of their appeal last week. They want the Colorado Court of Appeals to determine if Elliff was wrong to grant the state’s motion to dismiss the case.
Part of what influenced Elliff’s thinking were the implications of the state having to send out numerous refund checks for prior tax years if he were to agree with the Anschutzes’ interpretation, which the judge described as “wanting.”
Elliff 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 pointed out that state lawmakers relied on the Department of Revenue’s rules last year that explicitly interpret state law to mean that changes to federal tax laws are only incorporated into state tax laws on a prospective basis. Those rules are what the Anschutzes have challenged in their lawsuit.
The Anschutzes claimed a business loss in their 2018 tax return, but federal tax law at the time limited the amount in business losses that could be deducted from someone’s taxable income.
However, the CARES Act, passed in March 2020, included changes to federal tax law that suspended the limits on so-called “excess business losses,” not just for the 2020 tax year, but also the 2018 and 2019 tax years.
Phil Anschutz’s business holdings are wide-ranging. They include oil and gas interests in Colorado, Wyoming and Utah through Anschutz Exploration Corporation. He also has ownership interest through Anschutz Entertainment Group in events like Coachella as well as various sports teams and arenas, like the Los Angeles Kings, and the stadium they play in, the Staples Center.
In Colorado, Phil Anschutz owns The Broadmoor hotel and resort in Colorado Springs, as well as several media outlets, including The Gazette, based in Colorado Springs, and Colorado Politics.
Though the $8 million refund is just a fraction of the Anschutzes’ estimated wealth, Elliff 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.