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State backlog forces restaurant owner to wait 12-18 months for $24,000 tax refund

A restaurant owner in Longmont unknowingly paid sales tax he was exempt from. He filed a claim and learned he'd have to wait up to 18 months for a refund.

FIRESTONE, Colo. — Tim McCurry opened up his restaurant, Teriyaki Madness in Longmont, two weeks before the pandemic shutdown. As a new business owner, he filled out multiple forms. 

One form he filled out incorrectly, resulted in McCurry unknowingly paying sales tax on wholesale products that are exempt for restaurants. McCurry already owes sales tax on food sold, which he pays monthly to the Colorado Department of Revenue. 

"As a new business, there's so many forms we have to fill out, and so many things that we have to do. Things slip through the cracks, and you don't know what you don't know until you know it," said McCurry. 

His Sysco representative caught the mistake while they were reviewing his file. He overpaid in sales tax for roughly eight months, totaling $24,553.35. 

"Due to their review, they caught it and they were able to help me through the process," said McCurry. 

He promptly filed a claim with the Colorado Department of Revenue in October 2020. He was initially told to wait 21 weeks. He called thereafter and learned he would have to wait 12 months. 

When this October rolled around, he called again and learned he would have to wait longer. McCurry was told to expect his refund within 18 months from the date his claim was filed. 

"I believe it is unfair that the state could hold that money for a year plus. But the issue is that it’s not just me. What about all these other businesses that have made an honest mistake and overpaid their taxes?" said McCurry. 

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The Department of Revenue could not comment on McCurry's claim directly, but said the normal wait time is 12 to 18 months at this point. 

In an email to 9NEWS, a spokesperson for the Department wrote: 

We at the Colorado Department of Revenue, have a fiduciary responsibility to the people of Colorado and to local jurisdictions to closely review all refund claims. We must perform due diligence and ensure not only that taxpayers pay the correct amount, but also to ensure that local governments are not negatively impacted by incorrect refund claims... 

We are also seeing more and more of these refund claims while we work with limited resources. The department is on track to receive 8,000 claims this year which is about 2,500 more than in previous years.

“We recognize the impact this has on Colorado businesses,” said Department of Revenue Executive Director Mark Ferrandino. “We are committed to continuous improvement, and are actively working with stakeholders on legislative changes that would further improve this process.”

The Department of Revenue also added that up to 60% of claims are denied due to misunderstanding the tax code. Staff members have worked to internally streamline the process with department forms and correspondence, which are updated constantly to address common mistakes made by taxpayers.  

For instance, people filing claims previously only had the option to mail in their forms. A new online system now allows people to submit them digitally. 

McCurry feels like their timeline is a double standard when he must pay the sales tax due from his business every month. 

"It's about doing right by everybody - to sit and wait for 18 months or more and not have a good answer, that's not okay because if we don't pay, they come after us," said McCurry. "It is a tough position but something needs to change on the state level to take care of other businesses that are struggling during these times." 

Without the money, McCurry will hold off opening a third location. Thankfully, the money isn't critical to keeping his current stores open, but he is empathetic towards all the businesses that would otherwise need it to stay open. 

"That's thousands of dollars that could be used every month to help things roll," said McCurry. 

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