By Chris Michlewicz

There is something simple that residents in the City of Castle Pines can do to make sure the money they spend on sales tax goes back into their community.

The proliferation of online sales, while convenient, has somewhat muddied the financial waters for online sales tax revenue collection.  Although the issue is not believed to be widespread, when a consumer in the 80108 ZIP code enters their address on a retailer’s website for billing and home delivery purposes, the retailer’s locator services sometimes show the address as being in Castle Rock.  That means that the sales tax dollars generated from that sale go to the Town of Castle Rock and not the City of Castle Pines, and residents are being charged a higher sales tax rate.

While Castle Rock does account for a small portion of the 80108 area, the ZIP code is mostly made up of unincorporated Douglas County and the City of Castle Pines.  In short, it is up to the online retailer to get it right, but savvy consumers can do a little bit of homework, and if they find that the sales tax they are paying is going to the wrong place, they should bring it to the attention of the finance department for the city or county they live in.  The finance department can then contact the retailer to make sure their records reflect the correct place to send sales tax money, according to Mike Farina, finance director for the City of Castle Pines.

“It’s nice when a resident cares and says, ‘if I’m spending this money, I want these sales tax dollars to go to the community where I live,’” Farina said.

Buyers can double-check their account – whether it’s Amazon or another online retailer – to verify that their city is correct.  Consumers can also check their receipts and make sure that the sales tax rate is consistent with where they live; the Town of Castle Rock charges a 4% sales tax (the cumulative total is 7.9% including county, state and special district taxes) whereas the City of Castle Pines has a 2.75% sales tax rate (6.75% cumulative total).

Confusion can also happen, for example, when someone from the 80108 area buys a car.  Sales tax revenue from those big-ticket purchases can add up quickly.  If the dealer’s locator mistakenly shows Castle Rock as the purchaser’s place of residence, the difference between 2.75% and 4% can be thousands of dollars.  A few years ago, a savvy Castle Pines resident noticed they were charged at the higher Castle Rock sales tax rate and they contacted Farina who then contacted the dealer, and it was resolved.

Farina also issued a letter in 2019 when a resident living in unincorporated Douglas County, which charges 1% sales tax, believed he and his neighbors were mistakenly being charged city sales tax.  Farina issued the letter so The Village at Castle Pines residents could provide it to the retailer to show that they are not in Castle Pines and therefore not subject to city sales tax.

Though rare, the City of Castle Pines can also conduct an audit if its finance department notices a marked month-to-month dip in sales tax revenue collected from a specific retailer.

Because it is difficult to determine the scope of the online sales tax issue, it is impossible to put a monetary value on how much is mistakenly being redirected.

“My gut is it’s not that much.  Our sales tax is doing well, and if there’s any leakage, it’s very minor compared to the sales tax we do collect,” Farina said, adding that all brick and mortar stores in the City’s boundaries direct sales tax revenue to Castle Pines.

Other municipalities like Castle Rock do not have a means of determining if they have received revenue in error because the sales tax payments to the city from retailers like Amazon do not come with address details from each sale.

Sales tax revenue funds a multitude of public projects and services, including road construction and maintenance, public safety, recreation and more.

Questions specific to the City of Castle Pines sales tax revenue can be directed to Farina at mike.farina@castlepinesco.gov. Questions specific to unincorporated Douglas County can be directed to the Douglas County Finance Department at 303-660-7430.