Billionaire Phil Anschutz will get another chance to pursue an $8 million tax refund after the Colorado Court of Appeals on Thursday reversed a lower court judge’s dismissal of a lawsuit seeking the money from the Colorado Department of Revenue.
Anschutz and his wife, Nancy, argue that changes to the federal tax code made through the CARES Act, Congress’ 2020 COVID-19 response bill, entitle them to the big refund dating back to the 2018 tax year. The CARES Act changed the definition of federal taxable income, and they contended that since Colorado’s tax code follows federal definitions, they should get the money back.
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The Court of Appeals ruled Denver District Judge J. Eric Elliff erred when he dismissed the case at the state’s request and ordered him to take another look at the matter.
Further, the appellate court said it agrees with the Anschutzes’ interpretation of how changes to the federal tax code should affect Colorado’s tax code, especially in regard to the CARES Act.
“The CARES Act provisions applied to the 2018 tax year and nothing in the state income tax code limited that modification,” the ruling said. “Accordingly, the district court erred by granting the department’s motion to dismiss”
The case could have big implications for taxation and government revenue in Colorado, as others could file for refunds if a ruling is eventually issued in the Anschutzes’ favor. In dismissing the case, Elliff highlighted how the Anschutzes’ interpretation could represent a big hit to state government funding.
The CARES Act suspended limits for the 2018, 2019 and 2020 tax years on “excessive business losses.” That’s the change under which the Anschutzes are seeking their refund.
The Anschutzes are some of the most prominent business and philanthropic leaders in Colorado. They have an estimated net worth of more than $10 billion.
The couple’s Colorado assets include The Broadmoor hotel and resort in Colorado Springs, as well as several media outlets, including The Gazette, based in Colorado Springs, The Denver Gazette and Colorado Politics.
“We are pleased that the Court of Appeals applied Colorado law as written, and confirmed the longstanding understanding that Colorado tax law automatically incorporates changes to federal tax law,” Ken Rossman, one of the Anschutzes’ lawyers, told The Colorado Sun on Thursday.
The Colorado Attorney General’s Office, which is representing the Colorado Department of Revenue in the case, said it was reviewing the opinion and had no comment.
During arguments earlier this month before the Colorado Court of Appeals, Rossman argued that the state has historically adopted federal tax laws on a rolling basis and that the court needs only to look at the phrase “as amended” in the state’s tax law to confirm that.
“It was not until after receiving the refund claim that the department first announced that it had a view that Colorado law actually incorporates only some amendments to federal law,” Rossman said. “Taxpayers should be able to rely on clear established law and should not be subjected to ad hoc regulatory decisions based on budgetary concerns.”
The state argued that if the court were to side with the Anschutzes, the result could disrupt how the state collects and refunds tax revenue.
“If in fact we are incorporating retrospective changes this statute would then change the settled expectations of taxpayers regarding prior year’s filings — filings they thought were closed and finished,” said Russell Johnson, senior assistant attorney general.
It’s unclear when the case will be heard again in Denver District Court.