Mayor John Hickenlooper touts a book called “The Rise of the Creative Class.”
But here’s a tale I will call “The Tax Shakedown of the Creative Class.”
To my mind, Kevin Price, 38, fits squarely into this oft-lauded group of brainy, entrepreneurial people who are said to represent the future of this city.
At 26, Price started a company in his basement called AccuCode Inc., which sells scanning and wireless tracking systems to large companies, including airlines, grocers and manufacturers.
In 1999, Price moved his company from Castle Rock to Denver. Over the years, AccuCode made Deloitte & Touche’s and Inc 500’s lists of fastest-growing private companies. Today, it employs 40 people and generates more than $10.5 million in revenue a year.
Pretty creative, I’d say.
The term “creative class” comes from a book by urban scholar Richard Florida. He argues that cities thrive when they have a strong “creative index” based on things such as diversity, innovation and technology. They lure businesses, and then they can tax the heck out of them.
Price says he doesn’t mind paying the taxes his company owes. He doesn’t mind opening his books to government auditors – federal, state and local. “Getting audited by the government is part of doing business in America,” he told me.
But he’s so angry about his last audit by the city that he’s moving his company from an office near South Holly Street and East Evans Avenue to a building in the Denver Tech Center, just outside city limits.
“It’s not going to be as much fun to say we’re headquartered in Englewood or Centennial,” he said. “But I’ll never pay that Denver city and county tax again.”
Price said his dispute began last year when city tax collectors told him AccuCode was delinquent in paying its Occupational Privilege Tax, which is basically a head tax on employees. Price said his company paid the tax, but the city didn’t record it. “They always managed to cash our checks and spend the money,” he said, “but they’ve never actually given us credit for any of the payments.”
Just as he thought he’d resolved the matter, the city sent an auditor into AccuCode’s office for more than two weeks.
Soon, what began as a dispute over $9,000 swelled to more than $300,000.
The city now claims AccuCode didn’t pay all of its sales taxes and use taxes in addition to the occupational tax.
Price said that in several cases the city is trying to collect sales taxes on transactions that were not conducted in Denver. For instance, if AccuCode sells a system in Englewood, it’s Englewood that gets the sales taxes, not Denver.
Earlier this week, AccuCode filed for a hearing before the city’s revenue manager. Its next step may be state district court, Price said.
“Once you’re on their radar screen,” he said, “they are going to claim you owe some astronomical amount of money and then proceed to bully you into paying as much of it as possible.”
“Aggressive” collections
Steve Ellington, director of tax compliance for the city’s treasury, said his department audits up to 550 businesses a year. He said he can’t speak about individual cases, but confirmed the city received a petition from AccuCode’s attorney.
“The compliance function isn’t intended to encourage businesses to move out of Denver,” Ellington said. “We look at our compliance effort as an opportunity to educate businesses on what Denver’s tax laws are. We want to make sure that the taxes are being fairly and uniformly paid by all the businesses.”
A favorable tax climate is near the top of the list for companies considering a new location, said Tom Clark, executive vice president of the Metro Denver Economic Development Corp. Generally, Colorado’s relatively low taxes are a plus. But Clark said he’s heard similar complaints from entrepreneurs like Price.
“Denver has a reputation for being very aggressive in its tax collection policies,” he said. “Tax policy should encourage job growth, and when it doesn’t, that’s a detriment to the community.”
Price now bristles at the words economic development. “People have called on me for years asking, ‘What can we do to get you to hire more people in Denver?”‘ he said. “Well, here’s an idea: How about get your auditor off my (back).”
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to Lewis at, 303-954-1967 or alewis@denverpost.com.
