Colorado billionaire Phil Anschutz and wife Nancy want a state appeals court to revive their nearly $ 8 million tax refund lawsuit.
Phil Anschutz, who controls a vast business empire, has an estimated net worth of more than $ 10 billion.
The Anschutzes argue that changes to federal tax law made by the CARES Act, the 2020 pandemic response bill, also changed Colorado’s tax law, entitling them to claim a refund of their 2018 income tax bill.
However, Denver District Judge J. Eric Elliff dismissed the case because he sided with the Colorado Department of Revenue in a judgment passed earlier this month. Elliff concluded that it is appropriate for state tax authorities to interpret state tax laws to incorporate changes in federal tax laws in a strictly forward-looking manner.
The Anschutz lawyers appealed last week. They want the Colorado appeals court to determine whether Elliff wrongly granted the state’s motion to dismiss the case.
Part of what influenced Elliff’s thinking was the implication that the state would have to send out numerous refund checks for previous tax years if it were to agree to the interpretation of the protection that the judge called “want”.
Elliff noted that “the inevitable reality of the plaintiffs’ interpretation is that the previous tax year refund would have to be borne by the person in which it was claimed. The plaintiffs demand a check and the money has to come from somewhere. “
Under the Colorado Taxpayer’s Bill of Rights, this could create “surprising cost burdens for years to come by draining available reserves and requiring reserve increases, thereby jeopardizing budget planning efforts by forcing the state to use part of its spending capacity to replenish the Refund reserve at the cost of other government projects. “
The judge also noted that over the past year, state lawmakers have relied on regulations from the Treasury Department, which explicitly interpret state law so that changes to federal tax laws are only prospectively incorporated into state tax laws. These rules challenged the Anschutzes in their lawsuit.
The Anschutzes claimed a business loss in their 2018 tax return, but federal tax law at that point limited the amount of business losses that could be deducted from a person’s taxable income.
However, the CARES law passed in March 2020 included changes to the federal tax law that suspended the limits for so-called “excessive corporate losses” not only for the 2020 tax year, but also for the 2018 and 2019 tax years.
Phil Anschutz has a wide range of shareholdings. These include oil and gas holdings in Colorado, Wyoming, and Utah through Anschutz Exploration Corporation. Through the Anschutz Entertainment Group, he also has stakes in events such as Coachella as well as various sports teams and arenas such as the Los Angeles Kings and the stadium they play in, the Staples Center.
In Colorado, Phil Anschutz owns The Broadmoor hotel and resort in Colorado Springs and several media companies, including The Gazette, based in Colorado Springs and Colorado Politics.
Although the $ 8 million refund is only a fraction of the Anschutz’s estimated assets, Elliff concluded that the total cost to the state of issuing refund checks for previous tax years could create tax problems.
“The importance of reimbursement expenses to anyone who would qualify appears highly problematic, consistent with the (protection) interpretation, compounded by the fact that neither the Colorado legislature nor the electorate have arranged these expenses. ”Elliff wrote.
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