Capital One, N.A. v. Department of Revenue.

2022 COA 16. No. 20CA0818.  Sales and Use Tax—Taxpayer—“Act as a Unit.”

February 10, 2022

Plaintiff financed purchases using various retailers’ private label credit cards. When some of those purchasers defaulted, plaintiff filed claims with defendant seeking a refund of the sales tax remitted by the retailers. Defendant denied the claims, and plaintiff appealed the denial to the district court. The district court dismissed the petition for failure to state a claim on which relief could be granted.

On appeal, plaintiff contended that its petition states a cognizable claim because in financing certain sales, it acted as a “unit” with the retailers and therefore qualified as a “taxpayer” entitled to a refund of the sales tax paid on behalf of the defaulting purchasers. Under Colorado law, if a retailer pays sales tax on a credit sale and later writes off the debt as uncollectible, the amount of sales tax remitted may be credited against the retailer’s subsequent tax obligation. At a minimum, constituent members must “act as a unit” for purposes of paying sales tax. Here, plaintiff and the retailers are separate and distinct entities and do not act “as a unit” for any purpose other than issuing private label credit cards. Therefore, the entities do not constitute a single “person,” and plaintiff is not a “taxpayer.” Accordingly, plaintiff was not eligible for relief under CRS § 39-26-102(5).

The judgment was affirmed.