Sales tax push not hit with art buyers
A local gallery owner has complained that the Colorado Department of Revenue sales tax division is harassing Aspen visitors with an aggressive push to collect sales taxes.
The division has sent “aggressive and threatening” letters to gallery customers, according to Joel Soroka. “As you might imagine, my many clients who received this letter are irate,” he said in a letter to The Aspen Times (the letter appears on page 11-A).
Soroka sells vintage and contemporary photographs from a Hyman Avenue gallery which bears his name. His gallery was audited in September by agents from the Colorado Department of Revenue, who, Soroka said, were looking for records of transactions in which art was shipped to customers’ homes out of state.
Due to interstate commerce regulations, no city, county or state sales tax is charged on items shipped directly out of state from a retailer. But what the tax inspectors were looking for, Soroka said, were instances in which an item was shipped to a client’s primary residence out of state to avoid sales tax, then brought back to the client’s second home in Colorado.
The tax could be significant, as purchases sometimes total thousands of dollars, Soroka said.
Early this month, Soroka said, a number of his clients received letters from Colorado tax examiner Doris Romero. These letters told Soroka’s customers the department would inform their home state of their purchase. If no Colorado tax was due, the customer, in some cases, could be subject to a use tax in his or her home state, the letter said.
The letter asked the clients to call or write the Department of Revenue within 30 days and indicated they would be liable for any taxes due, plus penalties and interest.
“I was under the perhaps naive assumption that they had some way of correlating who had purchased something and who was a second-home owner,” Soroka said.
But the letters were sent to all of his out-of-state clients, including those who stay in hotels when they visit Aspen, and even those who purchased prints from him at an art fair in upstate New York, he said.
“The state’s been really aggressive,” Soroka said. Numerous customers have called him complaining about the letters, threatening not to return to Colorado as a result.
“What’s so onerous about this first letter is that every person has to explain these sales to the state,” Soroka said. That should be unnecessary, he contended, because he provided the state with that information in the audit.
Dorothy Dahlquist, a senior public information specialist for the Department of Revenue, said the letter was not intended to be intimidating. The department is trying to make certain that taxes which are owed are paid, she said.
“We’re responsible for collecting sales tax on behalf of the citizens of Colorado,” Dahlquist said. “If we don’t, it’s not fair to other taxpayers.”
Dahlquist said the audit of Soroka’s gallery was not prompted by any reports of impropriety. The state has simply been more conscious of the possibilities of such activities since the conclusion of a case a few years ago involving Hyde Park Jewelry, a Denver retailer, she said.
Hyde Park’s management in Denver pleaded guilty to charges resulting from the store’s practice of recommending that customers have their purchases shipped out of state to avoid the sales tax, Dahlquist recalled.
Dahlquist hastened to make it clear she was not implying that Soroka had done anything of the sort.
“I’m not equating Mr. Soroka to Hyde Park,” she said. She said Soroka’s gallery was not singled out, and that the department is auditing other Aspen retailers, as well.
“This is one of the projects we’ve taken on to try to ensure that taxes are collected uniformly,” she said.
After Soroka complained to the department about the letters and their tone, another letter was sent to the same customers on Dec. 10, explaining that the first letter was not intended to be threatening, but continuing to press for information.
“We felt Mr. Soroka had a point about the first letter,” Dahlquist said, “and we were trying to soften the message to a degree.”
But Soroka was not mollified. “The damage was done, as far as I’m concerned,” he said.
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