Small business group asks high court to review filing fee ruling

A small business advocacy group has asked the Colorado Supreme Court to review a lower court ruling on whether or not business filing fees charged in the state are actually a tax subject to state constitutional limits.

A writ filed by the National Federation of Independent Business asks the high court to review a decision by the Colorado Court of Appeals and determine filing fees charged by the secretary of state’s office are actually taxes illegally imposed under the Taxpayer Bill of Rights.

According to the NFIB writ, the secretary of state’s office collects more than $20 million a year in business filing fees. But as much as 90 percent of revenue from the fees has been used to fund unrelated functions with the office, among them administering elections.

Money raised and spent on the general expenses of government are in reality a tax, which the state constitution requires that voters approve, the writ stated.

“Because a significant portion of the business licensing charges are appropriated to defray the secretary of state’s general expenses, the business licensing charges are a tax and not a fee,” said Karen Harned, executive director of the NFIB Small Business Legal Center.  “Thus, the state is imposing an illegal tax on small businesses to fund obligations. That should be a cost shared by everyone rather than just Colorado’s entrepreneurs.”

Secretary of State Wayne Williams and the state of Colorado also filed writs asking the Supreme Court to take the case. Williams argued that his office had authority to charge business filing fees before voters approved constitutional tax limitations in 1992.

The case was first heard in a Denver District Court in 2014, which declined to rule on the matter. It was later taken up by the appeals court, which held the increased business filing fees potentially could be justified.