For years, taxpayers have had the option to make voluntary charitable contributions via “checkoff” boxes on their Colorado tax return forms. The checkoffs have always been intended to make charitable contributions easier to make, but recently, bureaucrats inside the Department of Revenue (DOR) engaged in a heated debate as to how to allow those contributions to proceed.

At issue was whether the DOR should allow a taxpayer to make a contribution on occasions where they owe money, as opposed to instances where the taxpayer is due a refund. When a taxpayer makes a donation and is also owed a refund, the job is easily done because all monies needed for the donation are simply deducted from the refund. In other words, the cash is already “on hand.” However, when the taxpayer is donating and they owe money, it becomes the responsibility of the taxpayer to add on the charitable amount to the taxes owed. The problem then becomes: What if the taxpayer doesn’t add on the contribution?

“Wow, this seems to have hit a nerve. I agree that it makes little sense for the DOR to serve as a collection agency for these charities,” wrote John Vecchiarelli, senior director for taxation.

Vecchiarelli seemed to add more sarcasm in a later email, saying, “They [lawmakers] did not want us to do the work of the charities. Perhaps I should have our telephone collectors solicit donation [sic] instead of dunning debtors.”

Phillip Horwitz, director of tax policy analysis, chimed in on the agency’s ability to collect funds in the event the taxpayer did not add on their charitable contribution. “To the extent that the agency’s collection expertise increases the amount these recipients [charities] receive, that seems to have been the legislature’s objective. I recognize (as do you and Richard) that there is a high cost to such a system and that it is a poor use of state resources.”

Mark Couch, spokesman for the department, said the issue was eventually settled without having to consult the legislature or promulgate a rule inside the department. In the event a taxpayer makes a contribution when they owe, but they provide insufficient funds, the department will make an attempt to collect the balance. And for all of Colorado’s millions of taxpayers, he says the problem only comes up about one hundred times a year, thus not presenting a major time obstacle for the department’s work.

“Looking at these emails, what becomes apparent is there can still be a wide gulf between policy ideas and policy implementation, even for the simplest of tasks,” said Ben DeGrow, policy analyst with the Independence Institute.

Each tax checkoff fund must collect enough money in order to remain on the tax return. Oddly enough, the issue came to light when three board members of the “Pet Overpopulation Fund” apparently tried to make supplemental donations through the checkoff in order to keep the charity on the tax return for future years.

“I ask why did 3 Board members want to make check-off donations on their tax return, I think the answer may be that they wanted to keep their charity on the return even though the general taxpaying public did not make sufficient check-off donations to satisfy the statutory requirement to remain on the return,” said Vecchiarelli.