City of Aurora v. Colorado Department of Revenue.

2023 COA 17. No. 21CA1423. Taxation—Cigarette Sales—CRS § 39-22-623(1)(a)(II)(A).

February 16, 2023

Following 2019 amendments to CRS § 39-22-623(1)(a)(II)(A), the City of Aurora (Aurora) imposed a local sales tax on cigarettes. The Colorado Department of Revenue (DOR) determined that this tax disqualified Aurora from receiving a share of the state income tax revenue, so it discontinued such payments to Aurora. Aurora sued DOR for declaratory and injunctive relief. On cross-motions for summary judgment, the district court ruled for DOR.

On appeal, Aurora argued that the district court erred in interpreting CRS § 39-22-623(1)(a)(II)(A). It maintained that the 2019 amendments to CRS § 39-22-623(1)(a)(II)(A) made only occupation taxes disqualifying for purposes of receiving a share of the state income tax revenue. However, the legislative history of the 2019 amendments clearly establishes that the General Assembly intended to make all taxes on cigarettes, not just occupation taxes, disqualifying. Here, Aurora imposed a sales tax on cigarettes, so it disqualified itself from receiving a share of the state income tax revenue under CRS § 39-22-623(1)(a)(II)(A). Accordingly, the district court did not err.

The judgment was affirmed.