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The Crestone Eagle is a nonprofit monthly newspaper serving Crestone and the San Luis Valley

Sales tax fix creates new sales tax error

By Anya Kaats

Baca Grande residents received news about Amazon’s sales tax fix. That same fix created new woes for the Town of Crestone. 

On March 1, Amazon removed the erroneous 3.5% sales tax that was being charged for deliveries in the Baca Grande. An intervention by Brandon A. Davis, Local Government Liaison at the Colorado Department of Revenue (CDOR), helped lead to the correction. However, in the process of trying to correct their mistake, Amazon also incorrectly removed the 3.5% sales tax charged for deliveries made within the town of Crestone.

The correct sales tax rate for purchases delivered to addresses in the Baca Grande is 5.4%. Within the town of Crestone, the correct sales tax rate is 8.9%. For four years, both Baca and town of Crestone residents were being charged 8.9% for orders placed on Amazon. Now, residents of the Baca and the town are both being charged 5.4%.

In February 2023, Amazon officials explained that its third-party tax software “calculates tax based on zip code plus four-digit extension,” even though zip code boundaries are based on mail routes and delivery points, not tax jurisdictions. Since the Baca Grande and the town of Crestone share a zip code without any four-digit extensions — short of replacing their third-party tax software — Amazon has no way of distinguishing orders delivered to the Baca Grande versus the town of Crestone. 

Deliveries to P.O. boxes at the Crestone post office are still being charged 8.9%, but deliveries to residences and businesses within the town of Crestone are now being undercharged.

Based on the past four years of budgets published online by the town of Crestone, and calculations presented to the board in August 2022 by former treasurer Lisa Cyriacks, the town of Crestone has received an estimated $200-$300k per year in excess sales tax since 2020, totaling an estimated $1,077,361 to date.

Many online retailers use software that correctly calculates sales tax for Baca and town residents, but Amazon and AirBnB do not. 

Davis explained “AirBnB is…already being worked with and I anticipate we are in the final stages of a correction on (it’s) part as well. Amazon simply responded slightly faster.”

The Town of Crestone stands to lose an estimated $300k in annual revenue, due to the online retailers’ adjustments. Another $30k per year is collected from online purchases delivered within town limits. If Amazon doesn’t correct this new error the town could lose some of that revenue as well.

“Slightly discouraging news that the Amazon fix may have gone forth with a flaw, but we will put it on their radar ASAP so they can properly adjust,” explained Davis.

According to a Facebook post by Crestone Trustee Adam Kinney, the majority of excess sales tax revenue collected by the town since 2020 “was spent on staff, personnel, and contract workers, including our bookkeeper, treasurer, public works, attorney, and interim admin. Some of the excess sales tax was (also) used to purchase lots in town, across the street and down the hill from the school. This land has the potential to be used for community services, low-income houses, or any number of awesome ideas.”

In January 2024, the board made a decision to place $140,000 (annually) in sales tax revenue into a savings account to protect against any future liability until the problem was corrected.

The Crestone Board of Trustees has been notified of this development, and as of this publication, has not released an official statement. 

The next Crestone Board of Trustees regular meeting is scheduled for Monday, March 11, 9:30 a.m. Residents of both the town and the Baca Grande can attend in person at Town Hall or via Zoom. 

Email to receive Zoom links and agendas for upcoming meetings. 

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