COCPA NewsAccount - July/August 2020 by Colorado Society of Certified Public Accountants

NEWSACCOUNT COLORADO SOCIETY OF CPAs • JULY/AUGUST 2020

Industry Impact: COVID-19 in Colorado PAGE 14

Why You Shouldn’t Be the Same Leader After COVID-19 PAGE 22

Mental Health: A Workplace Priority PAGE 24

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NewsAccount | July/August 2020

Contents

Features 5

Colorado General Assembly Passes Tax Fairness Act On June 15, the Colorado General Assembly passed House Bill 20-1420 to generate additional revenue for the state’s Education Fund. The resulting tax changes could have been much more draconian.

Voters to Consider Gallagher Amendment Repeal One of the last actions the Colorado General Assembly took before adjourning, June 15, was passage of SCR20-001, “Repeal Property Tax Assessment Rates,” submitting to Colorado voters repeal of the Gallagher Amendment this November.

CPAs and the PPP: Stories from the Trenches In the days leading up to the passage of the Payroll Protection Program (PPP) on March 27, and in the weeks following, things went a little crazy. Three COCPA members talk about life on the PPP front lines.

Industry Impact: COVID-19 in Colorado Experts from various industries that have a large impact on the Centennial State’s economy share their stories about what’s going on in their sectors.

Colorado Sales and Use Tax: Changes and Continuities Colorado may have the most complicated sales and use tax compliance system in the U.S., thanks to Wayfair, home rule, and more.

Why You Shouldn’t Be the Same Leader After COVID-19 When Gov. Jared Polis sent Coloradans home in March 2020, little did we know how much more we would learn about each other. John Garrett encourages us to embrace the “and.”

Mental Health: A Workplace Priority Lisa Hackard shares her journey and the events that led her to become a passionate promoter of mental health.

24 Departments 2 33

Chair Column Movers & Shakers, In Memoriam, Classified Ads

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July/August 2020 | www.cocpa.org

CHAIR COLUMN

NEWSACCOUNT

A bimonthly publication of the Colorado Society of Certified Public Accountants Vol. 66, No. 2 July/August 2020

How a Pandemic Changed the Way We Work

Officers

Sharon S. Lassar, Chair Randy L. Watkins, Vice Chair Peter J. Derschang, Treasurer Benjamin T. Hrouda, Immediate Past Chair Mary E. Medley, Secretary

Directors

Jim Brendel, Toby Clary, Audra Dixon, Renny Fagan, Mary-Margaret Henke, Kelly Kozeliski

Editorial Board

Jack Allgood, Steve Corder, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO Natalie G. Rooney, Contributing Writer Ariana Cassard, Blue Ocean Ideas, Design NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 7887 E. Belleview Ave., Suite 200, Englewood, CO 80111. NewsAccount is published in January, March, May, July, September, and November and reports information, news, and trends in the accounting profession. The Colorado Society of CPAs assumes no liability for readers’ business decisions in reference to advertisements or other information included in this publication. Membership dues include a $12.00 one-year subscription to NewsAccount. Periodical postage paid in Englewood, CO, and additional mailing offices. POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111 Net press run = 6,388 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 6,312; free distribution by mail = 0; free distribution outside the mail = 20; total free distribution = 20; total distribution = 6,332; office use, leftovers, spoiled = 56; returns from news agents = 0; total sum = 6,388; percent paid and/or requested circulation = 99%. 303-773-2877 • 800-523-9082 Fax: 303-773-6344

NewsAccount is available online at www.cocpa.org.

BY SHARON S. LASSAR, PHD, CPA (FLORIDA)

Even as the world begins to open back up in the wake of COVID-19, we know life won’t go back to what it was before. We’ve changed personally and professionally. The accounting profession has been making its way toward a more technologically focused environment for quite a while, but our clients were lagging behind. Then the stay-at-home orders forced all of us to pick up the pace toward a more agile, technologically enabled approach to work.

f we ever go back to having teams of auditors at work on client sites now that we’ve figured out how to audit from a distance remains to be seen. What will it look like when we don’t work as we did before? How do we adapt to this new environment and stay engaged? THINKING FORWARD The AICPA’s Spring Council meeting, which would normally take place in person over two days, was held virtually this year. The Institute worked closely with our nation’s legislators and policy makers as a driving force to develop the Paycheck Protection Program (PPP) legislation. The thinking that drove the PPP to approval so quickly was not to let perfect be the enemy of the good; the AICPA knew speed was paramount, and America’s citizens and their businesses needed the PPP out there and working rather than a perfect piece of legislation. Yes, there has been some ambiguity and confusion surrounding the PPP, but our own small businesses and our small business clients desperately needed this assistance sooner rather than later. During the Council meeting, the AICPA applauded our profession for the vital work

As a profession, we helped create and build agility in an uncertain environment. we have been doing during the COVID-19 crisis which was to help our clients or the organizations we work for apply for PPP loans; manage their cash; make intelligent cost reduction decisions as needed; come up with communications strategies for clients, employees, and customers – especially if it involves bad news or salary cuts; navigate remote work; and keep data available and secure. As a profession, we helped create and build agility in an uncertain environment. Even while meeting virtually, the AICPA Council was able to approve the CPA Evolution initiative and continue steering the accounting profession into the future. This initiative is critical to equipping the

CPAs make a DIFFERENCE

accounting profession’s most important pipeline – our future workforce – with the skills to address the business needs of tomorrow. Other important resources the AICPA has produced for members during the pandemic include: a PPP forgiveness calculator, a series of COVID-19 response webinars, and Town Halls addressing PPP and legislative and regulatory developments. You can find these valuable tools on the AICPA website at aicpa.org. MITIGATING RISK Unfortunately, this pandemic means we are moving into a future where CPAs will need to have a heightened awareness of fraud activity. The seeds of fraud are sown in desperation or from trying to cover a mistake. In these uncertain times, it would be easy for companies to have either of these situations arise, especially as many continue to work at a distance. I encourage accounting professionals to tune into this increased possibility for fraud and misstatements and be prepared to help your clients and organizations negotiate new terms with lenders and figure out ways to automate processes so that there is less opportunity for human error. As our state and federal legislators are back in action, there will be efforts from both sides of the aisle for increased worker protection, with mandatory sick leave policies pushed down on smaller-sized employers than in the past. There will also be a push for legislation that would allow states to declare bankruptcy and restructure their debt. When things get difficult, there are audit failures or companies that push the envelope to survive. We may see more bankruptcies, fraud, and perhaps forced mergers and acquisitions as we did during the financial crisis. We’ll need to continue thinking about how we can increase our level of professional skepticism and help companies transition as they close down or merge. In Colorado, the accounting profession is in the unique position to help Colorado legislators craft legislation that makes sense. The changes

The COVID-19 pandemic will have long lasting effects on the global economy that will manifest through legislative and regulatory changes. made to House Bill 20-1420, in the closing days of the 2020 legislative session, are just one example of how CPAs can help. The COVID-19 pandemic will have long lasting effects on the global economy that will manifest through legislative and regulatory changes. As a profession, we need to remain alert and advocate on behalf of our clients and organizations. Email Sharon Lassar at slassar@du.edu.

2020 HEROES & HEROINES SOUGHT Nominations Deadline:

September 21, 2020 Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We will honor those contributions with the 2020 Everyday Heroes and Heroines Awards. If you know a CPA who should be considered, please submit a nomination. Send a narrative, not to exceed three pages, explaining why you believe the candidate should be recognized and detailing his or her accomplishments. Nominees must hold a CPA certificate and be a COCPA member. They should be “everyday” heroes and heroines who haven’t been recognized widely for their contributions. Nominees should demonstrate significant service in one or more areas: INVOLVEMENT: Describe the nominee’s level(s) of involvement, length of involvement, and time devoted to nonprofit organizations and community activities. LEADERSHIP: Describe the nominee’s position(s) held and substantial accomplishments achieved in one or more community organizations, including taking the lead in identifying and solving a problem, founding or rescuing an organization, or developing an innovative program. IMPACT: Describe how the nominee’s actions benefited the community, improved the overall quality of life, helped others overcome adversity, or served as a role model for CPAs exemplifying the profession’s core values of integrity, competency, and objectivity. For more information and to submit your nomination electronically, contact Terry Cervi, terry@cocpa.org, 303-741-8610. July/August 2020 | www.cocpa.org

Standing With, Not Standing By

ver since the news broke of George Floyd’s senseless death, and following the senseless deaths of so many others, I have reflected on how many times I’ve been in this same place, feeling deeply sad, angry, and powerless to eradicate the racism that has gripped this country and our world for centuries. I’ve struggled, as a white woman, to know what to say, what to do, and how to be an ally when I cannot possibly understand how it is to be a black woman, man, or child. What I know, nonetheless, is this: We must stand with our brothers and sisters of color. We must stand against racism and social injustice. We must not stand by.

powerful workshop we hosted in 2018 with Dr. Nita Mosby-Tyler of The Equity Project, www.theequityprojectllc.com.

No excuses. We must do more and better. Personally, I am taking the first step by educating myself. I encourage you to do the same. Watch for educational opportunities the COCPA will offer. Contact me if you’re willing to help shape COCPA diversity and inclusion strategy. Check out CEO Act!on for Diversity and Inclusion at www.ceoaction.com, AICPA Diversity and Inclusion

initiatives and resources at www.aicpa. org/career/diversityinitiatives.html, and McKinsey & Company’s new report, Diversity wins: How inclusion matters, released May 19, 2020, at www.mckinsey.com/featured-insights/diversity-and-inclusion/ diversity-wins-how-inclusion-matters. And, if you are a person of color, I see you, and I stand with you. Mary E. Medley, CEO mary@cocpa.org

THE ACCOUNTING INCLUSION MATURITY MODEL

For decades, the accounting profession writ large has pursued diversity and inclusion initiatives to address the issues and create opportunities for all to feel welcome, valued, and critical to serving the public interest. Yet, progress has been inconsistent at best. And, our efforts locally have been almost nonexistent in recent years but for the

The AICPA recommends the Accounting Inclusion Maturity Model (AIMM), www.aicpainclusion.com/SignUpPage.aspx, as the first step an accounting-related organization should complete to begin its Diversity and Inclusion (D&I) journey. The free, online assessment measures where a firm’s diversity and inclusion efforts stand in the four core areas of Workplace, Workforce, Marketplace, and Supplier & Community. Implementing a long-term strategy is the best way to address a firm-wide D&I effort - which starts with conducting a self-assessment.

10 Reasons to Focus on Diversity & Inclusion

Advance Performance

In a study performed by McKinsey and Company, companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. 1

Foster Innovation & Creativity

Companies with two-dimensional (2-D) diversity (inherent and acquired) out-innovate others. Leaders who give diverse voices equal attention unleash value-driving insights, and employees in a “speak up” culture are 3.5 times as likely to contribute their full innovative potential. 2

Firm Success Story: ATKearny

4 Evolve Productivity

A McKinsey report that covered 366 public companies in a variety of countries and industries found that those which were more ethnically and gender diverse performed significantly better than others. Firm Success Story: RSM

Firm Success Story: Marcum

Competitive Advantage Companies with a diverse leadership team are 45% more likely to report a growth in market share over the previous year. Companies with a diverse leadership team are 70% more likely to capture a new market. 2

Firm Success Story: EY

Demographic Shifts

Social Responsibility

Market Demand

Talent Acquisition

Generation Z is on track to be the nation’s most diverse and best-educated generation yet. Today, nearly half (48%) are non-white. 4 A CNBC article states that, “the traditional 9-to-5 office job doesn’t adequately support the lives millennials and Gen Zs want to live. They are flexible-work natives…”

An increasing number of millennials believe that organizations have a moral obligation to give back to the society in ways that create an inclusive environment for everyone to participate and thrive.5

A study of more than 1,300 full-time employees found that an inclusive culture is key to both hiring and retaining talent. 80% of respondents said that inclusion is an important factor in choosing an employer.

While 74% of executives view D&I as crucial to the success of their organization, most companies do not take advantage of D&I to attract top talent .7

Firm Success Story: Deloitte

Nearly a quarter of all respondents left jobs due to lack of diversity and inclusion. An inclusion strategy is key to retaining a diverse workforce. 6

By failing to embed D&I into talent strategies, companies not only miss out on exceptional talent, but also on the benefits realized by diverse talent and an inclusive culture. 7

Firm Success Story: Baker Tilly

Firm Success Story: Carr, Riggs, & Ingram

Firm Success Story: Crowe

Grow Intellectually

Diverse groups are 58% more accurate in problem solving as compared to homogenous groups. Collective and individual intelligence increases in diverse groups. 3

Firm Success Story: Plante Moran

Cultivates Engagement 40% of people say that they feel isolated at work, and the result has been lower commitment and engagement. Belonging is linked to a 56% increase in job performance, a 50% drop in turnover risk, and a 75% reduction in sick days.8 Firm Success Story: KPMG

1 Delivering through diversity, McKinsey and Company, 2018 2 How Diversity Can Drive Innovation, Harvard Business Review, 2013. 3 Diversity Makes You Brighter, New York Times, 2015. 4 Pew Social Trends, 2018 5 Institute for Public Relations, 2017. 6 Deloitte Inclusion Pulse Survey, 2017 7 Russell Reynolds D&I Pulse Survey, 2017 8 The Value of Belonging at Work, HBR, 2019. Firm Success Story sources: “actions” contributed by firms who have signed the CEO Action for Diversity & Inclusion™ pledge, and stories from Harvard Business Review, Journal of Accountancy, Plante Moran, Strategy+Business

NewsAccount | July/August 2020

COLORADO LEGISLATIVE UPDATE

Colorado General Assembly Passes Tax Fairness Act BY DAVID TAYLOR, CPA

Editor’s Note: Thank you to all who reached out to members of the Colorado General Assembly about the issues and problems created by House Bill 20-1420 as originally written. We especially thank David Taylor, CPA, ACM LLP, Denver, and Kevin D. Gibson, CPA, Dalby Wendland & Co., P.C., Grand Junction, for their technical advice; and Pamela M. Feely, CPA, Lakewood, for her legislative outreach. Their efforts and those of many business groups and organizations made significant improvements to the bill as passed.

n June 15, the Colorado General Assembly passed, via House Bill 20-1420, the following temporary tax law changes to generate additional revenue for the state’s Education Fund. As a result of the tax changes, $113M will be added to the Education Fund in 2021, with an additional $23M added to the Education Fund in 2022.

Additionally, for tax years beginning after Jan. 1, 2021, and before Jan. 1, 2023, there will be an addition to federal taxable income of individuals, estates, and trusts of the qualified business income deduction under I.R.C. Section 199A if federal adjusted gross income exceeds $1,000,000 for joint filers, or $500,000 for single filers.

For tax years ending after March 27, 2020, and before Jan. 1, 2021 there will be an addition to federal taxable income of individuals, estates, and trusts for:

For tax years beginning after Dec. 31, 2017, the NOL deductions of C corporations will continue to be subject to the 80% limitation contained in I.R.C. Section 172(a) regardless of Section 2303 of the CARES Act. Note: The legislation originally proposed that corporate NOL’s be limited to $400,000 per year. This limitation was removed in the final bill, thanks to extensive input from the COCPA, Colorado Chamber of Commerce, and many other business organizations.

• An amount equal to the difference between the taxpayer’s net operating loss (NOL) deduction before the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the taxpayer’s NOL deduction after applying Section 2303 of the CARES Act Note: Prior to enactment of the CARES Act, I.R.C. Section 172(a) limited the use of NOL’s to 80% of the taxpayer’s current taxable income, and Section 2303 of the CARES Act removed this limitation. As such, for purposes of Colorado NOL’s, the 80% limitation continues to apply. • An amount equal to the taxpayer’s excess business loss deduction under I.R.C. Section 461(l) without regard to Section 2304 of the CARES Act • An amount equal to the taxpayer’s interest expense deduction under I.R.C. Section 163(j) without regard to Section 2306 of the CARES Act

For tax years beginning on or after Jan. 1, 2021, and before Jan. 1, 2022, a Colorado resident who claims a federal earned income credit (EIC) will be allowed a Colorado EIC equal to 10% of the federal EIC. For years beginning Jan. 1, 2022, a Colorado EIC equal to 15% of the federal EIC is allowable. If a federal EIC is not allowable because a spouse or dependent does not have a social security number, a Colorado EIC is nonetheless allowable based on the federal EIC that would have been allowable if the spouse or dependent has a social security number. Read the bill at https://leg.colorado.gov/ bills/hb20-1420.

In addition, the Colorado General Assembly passed House Bill 20-1024 concerning modification to the state’s net operating loss deduction. Read the bill at https://leg. colorado.gov/bills/hb20-1024. On June 2, 2020, the Colorado Department of Revenue (CDOR) adopted temporary emergency rules to clarify that the term “internal revenue code” incorporates changes to federal statutes only on a prospective basis. Read the rules at https:// www.colorado.gov/pacific/tax/changes-federal-statutes-apply-prospectively. On June 30, the Colorado Department of Revenue issued guidance on the emergency rules. A hearing to consider final adoption is scheduled for July 16. To track all rule-making and for information on how to participate, go to www.colorado.gov/pacific/tax/ tax-rules. David Taylor, CPA, is a tax partner with ACM LLP, Denver, and a member of the COCPA/CDOR Working Group which meets with the Colorado Department of Revenue to address issues and provide input on processes and proposed rules. To participate in the Working Group, email Mary E. Medley, mary@cocpa.org. July/August 2020 | www.cocpa.org

THE NOVEMBER BALLOT

Voters to Consider Gallagher Amendment Repeal BY PAMELA M. FEELY, CPA, MBA, AF

he 2020 abbreviated Colorado legislative session came to an end, June 15. One of the last actions the General Assembly took was passage of SCR20-001, thereby referring to Colorado voters this November proposed repeal of the Gallagher Amendment. Enacted in 1982, the amendment sets forth the guidelines for determining the actual value of property and the valuation for assessment of such property - in the Colorado Constitution. To be placed on the ballot, the measure had to pass both houses by more than 2/3 of the members voting in favor. SCR20-001, Repeal Property Tax Assessment Rates, submits “to the registered electors of the state of Colorado an amendment to the Colorado constitution to repeal the requirement that the general assembly periodically change the residential assessment rate in order to maintain the statewide proportion of residential property as compared to all other taxable property valued for property tax purposes and repeal the nonresidential property tax assessment rate of twenty-nine percent.”

Budget pressures created by decreased tax collections and increased expenses due to COVID-19 led legislators to place repeal on the November ballot. Property taxes are collected by school districts, county governments, fire protection districts, and other special districts. The state backfills shortfalls to school districts, thus creating added pressure on the state budget. In addition, budget pressures created by decreased tax collections and increased expenses due to COVID-19 led legislators to place repeal on the November ballot. BACKGROUND Prior to 1983, residential property taxes were rising rapidly and impacting the ability of senior citizens to pay them and remain in their homes. Statewide, each county had its own process and timeline for re-evaluating property, and the valuations were inconsistent. In 1982, the legislature referred to the voters the Gallagher Amendment to the Colorado constitution. It set up the following statewide: • Established commercial property assessment at 29% of market value

• Established a statewide percentage of commercial property bearing 55% of the total property tax liability • Established a two-year re-evaluation process • Established the residential assessment rate (RAR) at 21% • Allowed the RAR to go up or down every two years to maintain the 45%/55% split • Required the RAR to be adjusted by the legislature every two years Voters overwhelmingly supported the Gallagher amendment, and it became law in 1983. Since passage of the Taxpayers Bill of Rights (TABOR) in 1992, the RAR has never gone up to maintain the required split. TABOR requires a vote of the people to increase the statewide RAR. No vote is required to lower the RAR. In 2003, the legislature set the RAR at 7.96% of value - where it stayed until 2018. The decrease in the 2003 values reflected the impact of the dot-com bubble. In subsequent years, when the RAR adjustment called for an increase, the legislature kept the rate at 7.96%. As Colorado worked its way out of the great recession of the late 2010’s, housing along the Front Range grew in values and numbers. In the last two re-evaluation cycles, the extraction industries buffeted the dramatic decrease in RAR. The statewide RAR for tax years 2018 and 2019 was set at 7.2%. The current RAR is 7.15%. For school districts, county governments, fire, and other special districts that rely on property taxes, the RAR reduction impacts them differently. If the district’s property is primarily residential, especially in an area outside of the booming Front Range, the lower RAR reduces the property taxes the district collects. As the RAR has been lowered over the years, the burden of property taxes shifts to the business community and lowers some local government revenues. ATTEMPTS TO ADDRESS INEQUITIES In 2018, the legislature created an interim committee to study alternatives to the Gallagher Amendment.1 The committee learned the following: • The Gallagher amendment worked as intended to provide protection against rising property taxes for homeowners. • Regional disparities in residential values continue due to rising home prices and additional housing units along the Front Range. • Local governments outside the Front Range had reduced assessed property values that resulted in reduced revenues and cuts in service. • Local governments planned to ask voters for mill levy increases but were concerned about voters’ ability to understand the need.

https://leg.colorado.gov/committees/alternatives-gallagher-amendment-interim-study-committee/2018-regular-session

NewsAccount | July/August 2020

The committee recommended three bills to the 2019 General Assembly: • Repeal the Gallagher Amendment. • Create Regional Residential Assessment Rates for Property Tax. • Backfill Property Tax Loss to Certain Special Districts. The only 2019 legislation which passed established the RAR as of January 1, 2020. The rate was set at 7.15%. THE CURRENT SITUATION Real estate values were set to be reappraised as of June 30, 2020, pursuant to the Gallagher Amendment. In May, the Joint Budget Committee met to make drastic cuts to the current budget and the 2020/2021 budget. JoAnn Groff, the state property tax administrator,2 presented an update on the anticipated RAR the legislature will consider in the spring of 2021. The RAR factor comprises three general categories – Oil & Gas, Commercial, and Residential Properties. During the two-year period since the last RAR adjustment, oil and gas valuations have decreased 36%. Commercial property valuations have decreased 20%. Meanwhile, the residential market has increased 10%. The best estimate as of May 11, 2020, for the next RAR, is a reduction to 5.88%. This reduction in the RAR means an approximately $490,800,000 loss in revenue to school districts. Remember, the state budget will be required to backfill this shortfall.

With the reduction in the RAR, the business community’s share of the statewide property tax bill will increase. Non-metropolitan Denver area local governments will experience shortfalls. They again will face asking voters for mill levy increases or making cuts in services. THE MOVE TO REPEAL With the need for increased funding for schools and pressure from the business community, Senators Jack Tate and Chris Hansen and Representatives Daneya Esgar and Matt Soper took action. On June 1, 2020, with bi-partisan support, a measure to refer repeal of the Gallagher Amendment was introduced. Companion legislation setting the RAR at 7.15% if the referred measure passes in November also was introduced. WHAT’S NEXT Now, it’s up to Colorado voters. Expect to see copious political advertising on electronic media and in your mailboxes. This will be a hot ballot issue. Pamela M. Feely, CPA, MBA, AF, is past president of the West Metro Fire Protection District and a past director for the Fire & Police Pension Association. She currently serves on the Colorado Fire Commission. She is co-author of A Penchant for Pensions, A Guide to the Actuarial Valuations for Public Pension Plans, released in July 2018. Contact her at pamfeely@aol.com.

https://leg.colorado.gov/sites/default/files/property_tax_05-12-20.pdf

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July/August 2020 | www.cocpa.org

SALES AND USE TAX

SUTS: The New Colorado Sales and Use Tax Lookup System is Live On May 6, the new SUTS system successfully launched, seven weeks ahead of schedule, under budget, and with all Colorado and four home rules – Ridgway, Rifle, Craig, and Montrose – operational and many more in the pipeline. Built to work like Google Maps and with Google Search functionality, the new lookup tool provides businesses with all the details needed to pay sales and use taxes in multiple jurisdictions. The following information is excerpted from the Colorado Department of Revenue (CDOR) website. Learn more at colorado.gov/pacific/tax/sales-tax-GIS.

he SUTS (Sales and Use Tax System) lookup tool was designed to create a better way for Colorado taxpayers to comply with sales and use tax requirements in the post-Wayfair, destination-sourcing environment. It is a one-stop portal that enables taxpayers to perform tasks related to collecting and remitting sales and use tax in an easy, automated, and seamless fashion. As required by Colorado statute, the system provides: • Accurate address location capability • Single application process for state and local tax licenses • Uniform remittance form • Single point of remittance • Taxability and exemption matrix • Access to data for auditing or revenue projection purposes • Ability to interface with existing state and local tax administration systems • Flexibility to change tax bases or jurisdictional boundaries • Ability to collect taxes on items with differing tax rates in the same jurisdiction • Record of the history of any changes GIS FUNCTIONALITY One of the most important features of the new system is the ability for businesses to easily, through free technology, identify the correct taxing jurisdictions related to the sale of a taxable good or service. The Colorado Department of Revenue, in partnership with the Governor’s Office of Information Technology, was tasked with creating and implementing an online Geographic Information System (GIS).

NewsAccount | July/August 2020

The system allows businesses to look up the specific sales tax rate for an individual address through the Colorado Sales Tax Lookup feature at colorado.ttr.services. It shows state sales tax information, as well as for counties, municipalities, and special taxation districts. It enables businesses to calculate and collect sales tax from customers accurately, in real time. Another feature, in development, will enable a single point of remittance. ADDITIONAL FEATURES Colorado is home to 71 separate, “home rule,” taxing districts and numerous variations in what’s taxable. The new system accommodates those variations through the Products and Services List which correctly identifies the tax rate - which may be zero - for 346 items. The list is searchable and evergreen so that items can be added, deleted, or modified as needed. WHAT’S NEXT While the system is operational now, the ultimate goal is widespread adoption, according to Lu Cordova, CDOR Executive Director. That involves participation of the top ten Colorado cities and 95% of home rules. The City and County of Denver has begun the process to join, and Colorado Springs, Pueblo, Arvada, and Breckenridge are in the pipeline. Cordova encourages all taxing jurisdictions to “join and see” rather than “wait and see.”

August 4 Roaring Fork (12 - 1 p.m.)

August 5 San Luis Valley (12 - 1 p.m.) Four Corners (4 - 5 p.m.)

20 2 0 1290

August 6 Colorado Springs/Southeast (12 - 1 p.m.)

August 10 Western Slope/West Central (12 - 1 p.m.) Northern/Northeast (4 - 5 p.m.)

August 11 Boulder/Longmont (12 - 1 p.m.)

August 14 WITH SHARON S. LASSAR,

PHD, CPA (FLORIDA)

Denver Metro (12 - 1 p.m.)

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The 2020 Women to Watch Awards will be presented.

July/August 2020 | www.cocpa.org

PERSPECTIVES

CPAs and the PPP: Stories from the Trenches BY NATALIE ROONEY

The Paycheck Protection Program (PPP), implemented by the U.S. Small Business Administration, is a $669-billion business loan program established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers. The PPP allows entities to apply for low-interest private loans to pay for their payroll and certain other costs. The amount of a PPP loan is approximately equal to 2.5 times the applicantâ&#x20AC;&#x2122;s average monthly payroll costs based on 2019 historical data. The loan proceeds may be used to cover payroll costs, rent, interest, and utilities. The loan may be partially or fully forgiven if the business keeps its employee counts and employee wages stable and meets other criteria. In the days leading up to the passage of the PPP on March 27, and then in the weeks following, things went a little crazy for CPAs from all areas of the profession. Three COCPA members share their stories of life on the PPP front lines.

NewsAccount | July/August 2020

Marc Hendrikson, CPA, CCIFP, CGMA

SVP – Contractor & Commercial Banking, Sunflower Bank, N.A., Broomfield Sunflower Bank, N.A. is a $4 billion full-service, family-owned community holding bank. Sunflower, originally based in Salina, Kansas, is now headquartered in Denver and has over 1,000 employees spread across Colorado, Kansas, New Mexico, Missouri, Texas, and Arizona. Hendrikson is in the commercial bank’s construction sector, and because construction was deemed essential, it was assumed the industry would proceed with business as usual during the pandemic. That wasn’t exactly what happened. “When PPP was rolled out on April 3rd, there was very little direction,” Hendrikson says. “We weren’t totally certain who in our client group would apply for funds, and then it just blew up. Everyone applied. They had such bad experiences during the last recession and that, along with the COVID situation, created significant uncertainty.” Over the course of April and May, construction companies grew more nervous. “It’s because they just didn’t know what would happen,” Hendrikson says. During April and May, Hendrikson personally processed 19 loans for his client base. The construction group closed 50 loans overall. Ultimately, Sunflower closed several thousand loans for current clients and walk-ins totaling several hundred million dollars. “It all happened so fast, we barely had time to absorb what was going on,” Hendrikson recalls. “The PPP was thrown together as part of the CARES Act, and suddenly thousands of people were applying.” Many banks had to shut down after being flooded with tens of thousands of applications in the first 72 hours. Even as a smaller bank, Hendrikson says Sunflower branches were overrun by the demand. “Processing these applications required all hands on deck. It was an exhausting experience for nearly every employee of the bank from our CEO to our tellers on the front line.” The loan amounts customers were requesting were all over the board - from $10,000 to

$10 million. But the amount of work required to process every loan – whether it was large or small – was the same. Borrowers were required to provide a wealth of back up information including payroll for the past year and all of 2019 and Form 941s (a company’s quarterly federal tax return), among other items. From the submitted information, which was often incomplete, the bank built a database to approve the loans based on the formula provided by the federal government. “And we didn’t have time to prepare for any of this,” Hendrikson explains. “It just landed in our laps.” AN AVALANCHE OF QUESTIONS Hendrikson says during the last week of March, clients and non-clients alike were calling with questions and asking if the bank were ready to accept PPP applications. “We weren’t, but we went live on April 3rd and did the best we could, processing applications without really knowing what we were doing.”

“It’s only a twopage application but trying to determine the number for the loan amount was challenging. It was total chaos.” For the next month, client questions continued to flood in via email and phone. Advice and information were coming from many different sources which required multiple back and forth exchanges with clients and generated a lot of internal discussion. “There was so much ambiguity,” Hendrikson says. “It’s only a two-page application but trying to determine the number for the loan amount was challenging. It was total chaos.” Keep in mind: All of this was happening while everyone was working from home. Hendrikson says even his administrative team was commandeered to help review, approve, and document loan files. “We gave team members access to the database, and then even those who had never even seen a loan document before had to help us process

these loans,” he says. “Even the CEO, COO, and CFO were uploading documents and helping to approve loans so we could get applications through the system. It was complete insanity.” Despite the challenges, Hendrikson says there were positive outcomes. Sunflower earned new clients after people were rejected by other banks. And, the little guys who received the help they needed made all the stress worthwhile - like the family business owner who desperately needed money to pay the mortgage and buy groceries but missed out on the first round of PPP funding. On the second round, Hendrikson was able to close and fund that loan in 24 hours. “It was just a $20,000 loan, but it will keep this family going until one of their large contracts comes back,” he says. “That’s where the PPP is amazing despite all of the angst and frustration. We’ve all read about the big public companies which perhaps shouldn’t have received money, but those who really needed it are so grateful and thankful.”

Laura Theiss, CPA

Tax Director, SingerLewak, Denver “Very, very busy,” is how Theiss describes her work with closely held businesses and high net worth clients at SingerLewak. “We were busy right away in January, and when COVID-19 hit in March, it intensified an already intense time of year.” Theiss says it was challenging to become an instant SBA loan expert on the CARES Act and the PPP. She says it’s still a wild ride because the SBA continues to tweak the rules and release FAQs weekly or even bi-weekly. “We have to constantly seek out the latest guidance.” Theiss says the AICPA’s guidance has been helpful to address and clarify certain rules as they kept changing. “The guidance we had been giving clients for six or seven weeks changed on a dime,” Theiss says. That uncertainty was a common thread from the beginning. The threshold to apply for a PPP loan at the outset was that “current economic uncertainty makes this loan request necessary to support the ongoing operations.” CONTINUED ON PAGE 12 July/August 2020 | www.cocpa.org

PERSPECTIVES

CONTINUED FROM PAGE 11 “That’s a pretty low bar and open to interpretation,” Theiss points out. “There were some practitioners saying that every business should be applying for a PPP loan no matter how their business was doing.”

they were,” Theiss says. “They’re looking for signs of improvement in the economy and are waiting for things to turn around.” Clients who were completely shut down made small steps when they could to start

“Many had to press pause on what they were doing and how they were looking at the PPP loans and review whether they were still in compliance and on track for forgiveness.” But Theiss wasn’t convinced it was the correct course of action to encourage every business to apply. “The message to do the right thing in the right way has always resonated with me,” she says. Sure enough, on April 30, the SBA circled around with additional provisions about taking liquidity into account. “That threw a wrench into the works for a lot of small business owners,” she explains. “Many had to press pause on what they were doing and how they were looking at the PPP loans and review whether they were still in compliance and on track for forgiveness. As with much of the guidance, we as advisors are left trying to help clients interpret that and what it means for them.” CLIENT TRIAGE Theiss says the early days of the PPP process were like performing triage, and what clients needed depended on how COVID-19 was impacting their businesses. Some were shut down completely. They needed to know what to do first, what to focus on, and how to manage in this strange time. “The SBA PPP loan program was the most promising option and has been a muchneeded life preserver for businesses to stay afloat and keep people employed,” Theiss says. “If not for the PPP, we’d be seeing far worse unemployment numbers. My heart does go out to a lot of businesses which have been completely shut down.” Clients waited and watched. Some could continue to operate at partial capacity but took a huge revenue hit. “Now, they’re doing everything they can to get back up to what 12

NewsAccount | July/August 2020

moving in the direction of reopening. Remote client work continued for the most part, but Theiss says some older individual income tax clients weren’t keen on receiving returns securely via email or a portal system. “We had to tell those folks to hold on and that we’d send a paper return when we could.” CPA LIFE DURING CARES Theiss says many practitioners were working as many hours as they possibly could while grappling with the impacts of COVID-19 on their own lives - loss of childcare, homeschooling, and other impacts to daily life that everyone took for granted previously. SingerLewak was already set up for remote work, but Theiss says there was still a certain level of reliance on someone being in the office to receive mail and information. “We had to find workarounds for all of that,” she says. Once companies were approved to reopen – with precautions in place – SingerLewak started with a soft opening and a limited number of people in the office. Masks, directional walking, and sanitizing of work stations were all part of the plan. “I foresee all of these things continuing for some time,” Theiss says. “We’re all hoping to find the new normal, but we all see the headlines. This won’t magically go away. The lasting impact of COVID-19 is going to take all shapes and forms and change life for the foreseeable future.” Theiss says she has been fortunate her mother can help out with childcare for her two children (ages 4 and 19 months). Theiss and her husband are both CPAs working

from home. “It has been interesting,” she laughs. “You would think we would have a lot more interaction than we do, but at the end of the day, we still ask, ‘Did you have a good day at work?’”

Charlie Wright, CPA

Chief Financial Officer, Denver Zoological Foundation, Denver Making sure employees are paid during a pandemic is one thing. Making sure you’re able to feed thousands of exotic animals at the same time is another issue altogether. On March 12, Denver Mayor Michael Hancock announced safe social distancing guidelines that the City and County of Denver would follow beginning March 14. On March 13, many businesses and many of Denver’s “Tier 1” institutions such as the Denver Art Museum, the Denver Center for the Performing Arts, and the Denver Museum of Nature & Science closed to the public. Only the Denver Zoo and the Denver Botanic Gardens remained open. Wright says most cultural institutions knew restrictions or even closures might be coming and had made interim plans for social distancing, limiting the number of guests, and timed ticketing - strategies the zoo had used for prior large events. The process worked well for a few days, but then Mayor Hancock ordered a more complete shutdown, effective, March 16. “The speed and near totality of the economy’s shutdown was unbelievable,” Wright says. The State of Colorado followed with a similar order on March 19. Now, with no revenue coming in and the PPP not yet available, the zoo had to address not only how to pay employees but also how to feed and care for the animals. The zoo’s executive team held day-long sessions, preparing short-term cash flow projections to determine what might happen without any operating revenue. Wright contacted City and County of Denver officials who were sympathetic to the zoo’s plight but were having money problems of their own. “There was no magic money to fix the situation,” Wright says. “We were in trouble.”

It was clear that immediate cuts had to happen. The zoo’s leadership reviewed the entire employee list, keeping primarily those individuals who were needed for animal care: vets, animal keepers, and nutrition staff. “Every other department had to make significant cuts because the one thing we couldn’t cut was the animal care expense,” Wright says. “It was horrible.” The zoo’s human resources team helped to divide staff into groups for layoffs and furloughs. Everyone was paid through April 1. Furloughed individuals received their benefits through May. All of these steps were taken quickly. Wright observed that some nonprofits were reluctant to take drastic steps early on. “Our CEO and I both had experience with this type of thing after 9/11 and the 2008 recession,” Wright says. “We knew we couldn’t put it off. Ironically, for some people it was better to get out into the unemployment world more quickly.” In addition to the layoffs and furloughs, empty positions went unfilled, raises were frozen, and 2019 bonuses weren’t paid. The executive team took a 20 percent pay cut, the next tier took a 10 percent pay cut, and the 403(b) match was halted. “Holy moly, it all happened at once,” Wright marvels. PPP TO THE RESCUE When the CARES Act was passed, Wright and the zoo team read the particulars and watched webcasts explaining the PPP. It looked like just the ticket for the zoo. “We jumped in,” Wright says. “Everyone was trying to be at the front of the line.” Rules were slow to be released. A basic outline of the program left everyone in limbo. The zoo has depository relationships with three different banks, and Wright worked with all three. “I told them whoever is ready first, we’re in.” Wright knew the PPP was an SBA program, and banks were working on the rules. “We also knew we had to produce good payroll records for 2019, but there wasn’t a lot of other information to be gathered at the time.” Some banks were trying to develop and use their own portal to process applications while others were submitting the infor-

mation to the SBA and trusting it would be processed. The banks which were trying to do it themselves had to delay the start of the program over and over. And the SBA was completely inundated, Wright says.

keepers continued to do what they had to do – go to work and care for the animals. For his part, Wright says he and his finance and accounting senior director have never worked harder for a more sustained period

“We had money in the bank. We were going to spend it on facility improvements this year, but now that won’t happen. Our savings went to buy food for the animals and to keep people working.” Finally, one bank told Wright it was ready to proceed on a Friday. By Saturday afternoon, after much back and forth providing information, the bank approved the zoo’s loan package. “Those amazing people worked all weekend and beyond to get all of those applications through,” Wright says. On April 6, the zoo received an SBA loan number. After signing the final promissory note and getting everything notarized (another challenge when no one is working in person), the money appeared in the zoo’s bank account on April 14. FIGURING OUT THE DETAILS The zoo was one of the earlier recipients of a PPP loan, and its “covered period” – an eight-week stretch according to the rules at the time – ended more quickly than that of many other businesses receiving funds. Zoo leadership had figured out how to survive for ten weeks before the PPP option was available. “We’re savers,” Wright says. “We had money in the bank. We were going to spend it on facility improvements this year, but now that won’t happen. Our savings went to buy food for the animals and to keep people working.”

of time than the months of March and April. As things began to open up in May and June, another set of problems and questions arose. How many people can come in? Some furloughed people were brought back with PPP money, but now do we need to hire? “We’ve done endless projections to figure these things out,” Wright says. THE RISK OF EXTINCTION “I never thought I’d see the day when no visitors could walk into a zoo for more than two months,” Wright marvels. “But for the animals, nothing changes. You still have to take world class care of the animals. It’s what we stand for.” What’s scary, Wright adds, is looking around the world and thinking about all of the endangered species and the programs and research zoos conduct to save those species. Now the revenue that would support these programs has fallen away. “If people can’t go to zoos, there is a higher chance that animals will die. Species could disappear. The specter of the worst case here is awful. Let’s hope it doesn’t get close to that.”

FROM ZERO TO INSANE Wright says the pandemic caused things to go insane and stay insane. From constant meetings to announcements of shutdowns to reducing the workforce to working at home – it was crazy. But during it all, the animal

July/August 2020 | www.cocpa.org

THE COLORADO ECONOMY

Industry Impact: COVID-19 in Colorado BY NATALIE ROONEY

hen the Colorado Office of State Planning and Budgeting released its May 2020 Economic Forecast, it provided a glimpse into how our economy was faring in the midst of COVID-19.

• Colorado’s unemployment rate hit 11.3 percent in April, according to data from the Colorado Department of Labor and Employment (CDLE). The rate is the highest recorded since the state began tracking unemployment levels in 1976. The prior record was 8.9 percent in the fall of 2010, in the aftermath of the Great Recession. • The April rate was up from 5.2 percent in March and far above the 2.5 percent reported in February, before the pandemic began to take its economic toll. • Colorado’s unemployment rate in April was lower than the national rate of 14.7 percent, which is the highest recorded since 1948. • Colorado lost 323,500 jobs from March to April. Of those, 311,400 were private sector jobs. • More than 16 percent of the state’s workers had filed unemployment claims since mid-March, predominantly in low-wage industries. • General Fund revenue is expected to fall by 7.4 percent in fiscal year (FY) 2019-20 and by another 7.5 percent in FY 2020-21. • Colorado’s tourism and energy industries are expected to rebound more slowly than other industries. • Nationally, more than 30 million jobs have been lost as businesses close and consumers stay home.

Several experts from various industries that have a large impact on the Centennial State’s economy shared their stories about what’s going on in their sectors. LEISURE & HOSPITALITY Colorado’s leisure and hospitality industry has been the hardest hit by the COVID-19 pandemic with the number of jobs declining by 148,100. Tourism faced the first government-mandated restrictions when Gov. Jared Polis ordered ski areas to shut down on March 14. Restaurants and bars were closed to in-person dining a few days later. On 14

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March 25, the governor issued a statewide stay-at-home order. David Corsun, Ph.D., director and associate professor of the University of Denver’s Fritz Knoebel School of Hospitality Management, calls the impact on the hospitality industry

for planned renovations to complete them. It’s also a great time for training and development if there are the resources to do so. “When the rebound happens, you want to be ready,” he says. Restaurants, which employ nearly ten percent of Colorado’s workforce, are facing a different scenario. Denver isn’t as dependent on chain restaurants as many other Colorado communities are. “We have a thriving inde-

“People still want to have experiences and celebrate things. It won’t be pretty in the interim, but we will get to that place, and the industry will be here to serve them.” “apocalyptic” with restaurants likely to experience more long-term damage than hotels. “I don’t think we’re going to see a V-shaped recovery for hospitality in general,” he says. “It’s going to be a while before travel really rebounds. The ski industry is so reliant on air travel, and if people aren’t ready to fly, we’ll be dependent on the drive-in markets to come here.” Where areas were able to open up in May, signs were promising, with hotel occupancy rates approaching 50 percent in states with beaches such as Texas and Florida. But Corsun predicts that until there is a reliable vaccine, people will likely err on the side of caution and not travel in typical numbers. “This is a public health issue with economic consequences,” he says. Hospitality is a cyclical industry, and this bad down cycle didn’t stem from economic causes. “We will have an upcycle, and we will rebound,” Corsun says, adding that this is a great time for properties that have reserves

pendent restaurant sector, but the impact is greater because those businesses don’t have the deep pockets large chains have,” Corsun says. Corsun adds that it’s unlikely any restaurant – except pizza and Chinese delivery which experienced a boom – was making money during the stay-at-home order. While businesses were able to create cash flow with curbside and delivery service that was mostly an effort to cover fixed costs and keep people working. How we approach food likely has changed permanently. Over the last year, restaurant spending outpaced grocery store spending for the first time ever. COVID-19 caused the pendulum to swing sharply back to home cooked food. As a result, restaurants, both chains and independents, are closing forever. Home meal replacements are now competing with restaurants and grocery stores. Restaurants operating at lower capacities coupled with customers who want to remain

socially distant while still having a dining experience are going to make food portability more important, Corsun points out. “Dining isn’t going to rebound in a huge way,” he says. “Restaurants that don’t have deep pockets will just fold up the tent.” Another factor in the mix is food delivery services like Uber Eats and Grub Hub whose commissions make delivery service borderline unprofitable for restaurants to use. While some cities legislated caps on delivery commission percentages during the stay-athome orders, taking the cut from 30 percent to 15 percent, it’s still tough for restaurants to absorb that amount because they can’t pass it on to customers. “The delivery market hasn’t been purely additive,” Corsun says. “It has to some degree cannibalized dine-in and will do so more in the future than it has in the past.”

What’s on the Horizon? One of the biggest questions for Colorado is: Will there be a ski season? “Will people purchase a season ski pass while a resurgence of COVID-19 is expected?” Corsun wonders. As dire as things seem, overall Corsun says there should be hope for Colorado’s hospitality industry. “It will come back,” he says. “People still want to have experiences and celebrate things. It won’t be pretty in the interim, but we will get to that place, and the industry will be here to serve them.” COMMERCIAL REAL ESTATE Ben Hrouda, CPA, is managing partner of Flywheel Capital, Denver, a commercial real estate investor that focuses on creating unique buildings and sites that belong in communities rather than “cookie cutter” projects. The firm takes pride in finding diamonds in the rough. Hrouda describes the current environment as weird but says the firm has also been fortunate. “Our portfolio is diverse,” he says. “We have stable tenants who are government-related or larger tenants, and they haven’t been impacted as much by COVID19.” But, Hrouda also sees some smaller tenants which have been impacted and whose ability to pay rent has suffered.

Most affected have been development projects that require capital. Hrouda says things started to shift in early March as investors waited and watched. “The markets were just dead,” he says. “It was like that through March and April until capital markets began to come back to life in mid-May.” As a result of the market shifts, however, Hrouda says investors’ risk and return profile has changed. The risk is higher than before COVID-19, and while that risk will decrease over time, currently investors expect a commensurate return. “An investor might choose to invest a smaller amount now because of the higher risk but will also expect a higher rate of return,” Hrouda says. “In general, the risk profile has increased a little bit. Some investments we thought were good previously aren’t seen that way right now.” What’s on the Horizon? Hrouda says the primary consideration will continue to be risk and return. “Investors want to mitigate their risk. They aren’t stopping their investments, but they’re pausing,” he says. “They’re waiting to see how we come out of this and what it all means. None of this will happen quickly. It’s going to take some time to work through it. The rest of 2020 isn’t going to be as it was in the first couple of months of the year.” OIL & GAS It’s no secret that the oil and gas industry already was having a rough go of it long before COVID-19, but the pandemic has made things even more challenging for a struggling industry. Ultra Petroleum is a natural gas company headquartered in Englewood. “The oil and gas industries started to go sideways years ago,” says Mark Solomon, CPA, Ultra’s vice president and chief accounting officer. He explains that oil and gas used to move in tandem with each other but about 15 years ago began to move independently. Natural gas has “been in the toilet for years,” Solomon says. “The industry is really struggling.” Oil was stable during fall 2019, but as we entered 2020, natural gas prices began to erode. In early March, oil prices bottomed out, and Solomon describes natural gas prices as “on the ropes.” While the oil price collapse was horrible for oil companies, it actually gave the price of natural gas a temporary boost. But Solomon says he still wouldn’t characterize the prices as good. “We’re a low cost operator, and we CONTINUED ON PAGE 16 July/August 2020 | www.cocpa.org

THE COLORADO ECONOMY

Photo: Talbott Farms

CONTINUED FROM PAGE 15 still can’t economically drill new wells,” he says. “Demand for oil and gas has dropped significantly because of the economic turmoil. We were already in bad shape, and COVID-19 tipped things over the edge on both sides of oil and gas.”

they borrowed money in pricing environments that were higher. He emphasizes that with COVID-19 coming on the heels of already low prices and the Russia/OPEC deal in late March, demand for oil has fallen off the map.

To survive, natural gas companies are cutting back on development budgets. No one is drilling new wells, and companies are winding down any current drilling programs. “Companies will focus on operating what they already have,” Solomon says.

Liquid natural gas exports were already at the lowest they had been in a year after worldwide demand dried up. “This will impact a lot of companies,” Solomon predicts. “It will be a bloodbath.” He foresees significant restructuring over the next year and companies going under. “It will devastate the industry from an organization and personnel standpoint.”

Oil companies also are going into survival mode, changing business activities, and cutting costs. “The first thing to go is always capital investment,” Solomon says. “That money will be needed to service debt payments.” He speculates companies might have to start selling equipment and shutting off wells. “Every company will be different, but they’ll all be looking to change their business model and strategy to react to low prices and survive.” What’s on the Horizon? Solomon says many oil companies will face bankruptcy sooner rather than later because 16

NewsAccount | July/August 2020

Some wells will be shut down until prices increase. “Those assets won’t go away. Someone is going to want them,” Solomon says. “This is a cyclical business. Things stabilize. Prices go up and down. We’ve seen this many, many times. At some point it becomes economical for someone to start drilling again, and prices come back up. It won’t, and can’t, stay this low. Some companies can still survive and do business. We’ll see who has the stomach for it. Maybe private equity?”

Solomon says COVID-19 is the last straw for oil and gas, and it’s a big one. “We only needed a few more straws anyway, and we got the whole bale at once. This has been devastating.” AGRICULTURE Talbott Farms, Palisade For over 100 years and five generations, the Talbott family has farmed on the Western Slope in Palisade. Their main crop is peaches, sold mostly to institutional customers, but they also grow and sell wine grapes. Talbott Farms recently expanded its retail outlet which was set for an exciting inaugural year beginning in spring 2020. “We’d scheduled our tasting room for our hard ciders events, and wine events were scheduled throughout the spring and early summer,” says Charlie Talbott, president of Talbott Farms. Because it wasn’t harvest time for peaches or grapes, farm operations could continue as COVID-19 spread. Talbott says fortunately, most of the farm’s H-2A workers (temporary agricultural workers) were already in the country. “We were able to continue with spring work such as pruning, irrigation set

up, and other blossom-time work without any great disruption.”

about whether those types of sales will be allowed.”

What was far more disruptive and devastating was the early spring freeze that resulted in the worst crop loss in two decades. The freeze combined with COVID-19 uncertainty has Talbott Farms revaluating 2020 plans. Talbott says he had three immediate concerns: continuity of workers and the key people needed, communication and continuity with customers, and financial issues.

Since the COVID-19 shutdown and subsequent reopening happened prior to harvest, operations have continued. Talbott says when they can open for retail and tastings, changes such as plexi-glass protectors and a touchless card swipe may be options.

“We weren’t currently shipping, so that was a blessing,” Talbott says. He anticipates the wine grapes, which were more dormant, survived the freeze, but the winery, like the farm’s tasting room, has had to cancel all of its events and activities for the foreseeable future. “We are getting early indications that demand for wine grapes to wineries will be curtailed dramatically,” Talbott says. “We haven’t experienced that yet, but there is a lot of discussion around the possibility that preorders will be thirty to fifty percent of normal. We know the impact is coming.” Talbott says farms that package their food for retail were in great shape to take advantage of a shift in demand caused by COVID-19. Those who package for institutions weren’t quite so lucky if they couldn’t retool quickly. The media was full of images of fields being plowed under because farms were set up only for institutional buyers. “As a nation, we didn’t stop eating as much, but delivery to universities, public schools, cafeterias, and restaurants just dropped like a hot rock,” Talbott says. “That retooling couldn’t happen fast enough.” Customers already are asking if Talbott Farms can package items for curbside and home delivery. “As we consider reopening, there will be a new norm,” Talbott says. “We’re all looking hard into our crystal ball to see what that is so we can be properly aligned and avoid disruption to our business.” Even with 5.7 million Coloradans, 250,000 of them on the Western Slope, Talbott Farms produces far more peaches than it could sell in its own retail outlet. In fact, 99 percent of their fruit is trucked away; 75 percent leaves Colorado, bound for Midwestern grocery stores. Farmer’s markets and direct sales, such as fundraisers, are in question this year. “It remains to be seen if those channels will be as robust,” Talbott says. “The expectation is they will, but there definitely is uncertainty

This year just happened to be the farm’s move from a seasonal operation for fruit to a year-round facility that includes the wine and hard cider. “This was going to be all new for us,” Talbott says. “This was going to be a breakout year. We made upgrades and dialed in our social media and advertising. We had a lot in the pipeline. We would have had a meaningful cash flow stream. All of that was truncated.” What’s on the Horizon? Talbott is hopeful for summer. “Our season took a hard turn with the crop low, but there will be plenty of fruit for local sales and events,” he says. “We very much hope that part will return.” Previously, salespeople were pounding the pavement in Denver and along the Front Range to peddle the farm’s wine and hard ciders, and they’re ready to get back at it. “We’re chomping at the bit to go when we get the green light.” Hunter Ridge Dairy, Ault Seven years ago, AJ De Jager built Hunter Ridge Dairy, a 4,000 head milking cow facility, in Ault. De Jager also has operations in central California. The business sells primarily to Leprino Cheese, the world’s largest producer of mozzarella and pizza cheese. The dairy industry had a stagnant last few years. “Commodity markets in general haven’t been very strong, but futures for milk were bullish,” De Jager says. “The economy was strong, we had a good export market, and milk was worth something again,” De Jager reflects. “After some bad years, we were looking to have a better year. Now, we’re bleeding money.” In January 2020, the price for milk was $18 a hundred weight. By April, the price had plummeted to $10 a hundred weight. Locally, De Jager says they didn’t have to dump milk as seen in the national news, but when dairies have to dump, “everyone pays the price.” He credits the Mountain Council for the Dairy Farmers of America for “handling things extraordinarily well for us.” The demand for milk was still high, but in a different format. Rather than half pints for school lunches, now gallons were needed,

but distributors weren’t set up to process whole gallons. Instead of restaurants needing mozzarella cheese, moms feeding kids at home needed more string cheese. “The demand for string cheese was the highest ever, but we weren’t set up as a country to process for this pandemic,” De Jager says. “We found every way possible to process milk into dairy products, but nothing can happen overnight. There is a huge cost to throwing away a perishable item to give yourself the time needed to adjust your processing. And this happened nationwide.” De Jager describes milk prices as a slingshot. While they’re not back to breakeven, restaurants are reopening and filling orders for different dairy products. The dairy was able to participate in the federal Paycheck Protection Program and the Coronavirus Food Assistance Program (CFAP) which is specifically designed for farmers or ranchers who faced price declines and additional marketing costs due to COVID-19. De Jager says the CFAP funds helped but aren’t designed to sufficiently compensate larger scale farms’ economies of scale. “We have more animal numbers than the government programs are willing to pay for. We need other avenues.” He hedges a lot of their product and is active on options and futures markets. “We were able to capitalize early on in the year on some of the better prices we’d seen to protect some of our product.” What’s on the Horizon? De Jager is encouraged by May’s bullish markets but is hesitant about the future. “I think there will be a short-term recovery and then a long-term decline,” he says. “There are so many variables that determining causation is going to be a challenge for the next year or two.” Over the last 20 to 30 years, there was consistency of market, De Jager says. In the last five years, he’s seen mass volatility that he expects will continue to grow exponentially. “Protecting ourselves further out is the end result of all of this. There is further volatility ahead.” Hunter Ridge Dairy made the executive decision to produce at 100 percent capacity. “Everyone has a different model,” De Jager says. “For some, backing off was right. For us, it was right to keep going full bore. I still believe in this country and its ability to do things and feed people. When these markets change to breakeven or better, I want to be poised to be as efficient as possible rather than having to rebuild the system.” July/August 2020 | www.cocpa.org

STATE TAXATION

Colorado Sales and Use Tax: Changes and Continuities BY MARK KOZIK AND BRUCE M. NELSON, CPA

t is safe to say that the Wayfair decision1 has impacted all 45 states that impose a sales and use tax.2 However, its impact in Colorado is particularly complex, both substantively and procedurally, because of the number of different taxing jurisdictions that must be considered and, because while the sales and use tax bases in some of the state’s local jurisdictions tend to follow the state-level sales and use tax bases, in others they do not. Plus, some 72 local jurisdictions in the state are “home-rule” cities/towns that have their own substantive and procedural rules that are largely independent of the state-level rules. Finally, in addition to providing an economic presence threshold for sales tax collection, legislation enacted in 2019 also provides new sourcing requirements, with different rules which apply depending on whether the seller meets a $100,000 Colorado-sales threshold. Welcome to Colorado!

While the sales and use tax bases in some of the state’s local jurisdictions tend to follow the state-level sales and use tax bases, in others they do not. From a jurisdictional perspective, a sale to a Colorado customer must be analyzed at five levels: • State; • County; • State-administered city/town (if any); • District (if any); and • Home-rule city/town (if any). The county, city/town, and district levels are commonly referred to as the “local” jurisdictions. These jurisdictions fall into one of two buckets—those whose sales tax bases generally “piggyback” off the state sales tax base and whose sales tax is administered by the Colorado Department of Revenue (commonly referred to as the “state-administered” or “statutory” local jurisdictions), and those whose sales tax base and administration are

largely independent from the state-level tax base and Department of Revenue (commonly referred to as the “home-rule” jurisdictions). Although the state-administered local sales tax bases generally follow the state-level sales tax base, there are presently 16 potential exceptions, where the sales tax base for each state-administered county, city, and town may, or may not, depart from the statelevel sales tax base. The treatment of each of these 16 potential exceptions in each of the state-administered counties, cities, and towns is lined out in Colorado Department of Revenue Form DR 1002 (DR 1002), cryptically titled “Colorado Sales/Use Tax Rates.” Unlike the state-administered counties, cities, and towns, the sales tax base for special districts is generally identical to that at the state level.

With regard to use tax, the tax base in state-administered counties, cities, and towns is limited to motor vehicles and building materials, and it is not administered by the Department of Revenue. However, the use tax base in the special districts generally follows the state-level use tax base, and it is administered by the Department of Revenue. Home-rule jurisdictions (all cities/towns, including the City and County of Denver and the City and County of Broomfield), on the other hand, have almost complete autonomy with regard to their own sales and use tax, and each has its own licensing, registration, forms, and, most importantly, a separately defined tax base.3 The differences can be frustrating, sometimes mind-boggling, to even the most experienced practitioner. STATE-ADMINISTERED LOCAL JURISDICTIONS—SOME DETAILS The state has 269 “state-administered” local tax jurisdictions that impose a sales tax, a use tax, or both. As noted previously, these jurisdictions are also sometimes referred to as “statutory” jurisdictions. They include 173 cities/towns (mostly on the smaller side), 62 of the state’s 64 counties, and 34 special districts (such as the Regional Transportation District and the Scientific and Cultural Facilities District). The two “missing” counties are Denver and Broomfield, each of which is a combined city and county (the “City and County of Denver” and the “City and County of Broomfield”). Of the 62 counties noted, 52 impose a sales tax. Ten do not. DR 1002 provides a listing of all the state-administered local jurisdictions, along with their sales tax rates and information about those 16 instances where the sales tax base in a state-administered county, city, or town can differ from the state-level sales tax base. These items range from manufactur-

South Dakota v. Wayfair, Inc., 585 US _____ (2018), 138 SCt 2080.

In brief, in Wayfair, the U.S. Supreme Court held that physical presence was not a prerequisite to a state requiring a remote seller to collect sales/use tax on sales to customers in that state. In that case, South Dakota required remote sellers to collect sales tax if they met a threshold that was based on $100,000 in annual sales or 200 separate sales transactions of any amount. Forty-five states impose sales and use tax. The only states that do not are Alaska, Delaware, Montana, Oregon, and New Hampshire. However, numerous Alaska cities and towns do impose sales tax, some of which have formed the Alaska Remote Seller Sales Tax Commission to enact an economic presence standard for requiring remote sellers to collect and remit.

There is some state-wide uniformity imposed on the home-rule cities by state statute. For example, these cities are subject to certain uniform rules regarding the time for protesting assessments and refund denials, and also regarding the protest/appeal process. See CRS §29-2-106.1.

NewsAccount | July/August 2020

ing machinery and machine tools to beetle wood products, and all of them are exempt from the state-level sales tax. However, they are subject to sales tax in each state-administered county, city, and town unless that jurisdiction affirmatively elects to follow the state-level exemption.4 DR 1002 also provides information as to whether a particular state-administered county, city, or town imposes use tax on motor vehicles, building materials, or both, and the related use tax rates. Finally, DR 1002 provides the tax rates for the special districts. However, unlike the state-administered counties, cities, and towns, the sales and use tax bases for the special districts do follow the state-level sales and use tax bases. Also, the Department of Revenue administers both the special district sales and use taxes. If you are interested in going beyond DR 1002 in determining or documenting any of these issues for a state-administered local jurisdiction, you must go to the controlling authority for the local jurisdiction. However, depending on the jurisdiction, that information may or may not be readily available either on a commercial research database or the jurisdiction’s website. As would be expected, there are sometimes questions about which local jurisdiction(s) are involved in a given transaction. For example, it may or may not be clear whether something in Adams County is east or west of Box Elder Creek. If it is on the west side, it is in the Regional Transportation District (1% district-level sales and use tax). If it is on the east side, it is not in the Regional Transportation District.5 Sales tax registration with the Department of Revenue includes any relevant state-administered local jurisdictions, and state-ad-

ministered local sales tax is reported to the appropriate local jurisdiction as part of the state-level sales tax reporting. The sales tax due to state-administered local jurisdictions is remitted along with the state-level tax to the Department of Revenue, which then passes the tax along to the appropriate local jurisdiction. The Department of Revenue also audits the appropriate state-administered local jurisdictions as part of their state-level sales tax audits. These jurisdictions do not independently undertake sales tax audits. As noted previously, the state-administered counties, cities, and towns can also impose use tax but, unlike with their sales tax base, their use tax base is limited to the storage, use, or consumption of motor vehicles and the use or consumption (no provision for storage) of building materials.6 Also unlike for sales tax, the Department of Revenue does not administer the reporting and payment of use tax in these jurisdictions. Rather, the use tax is administered at the local level. For motor vehicles, state and local-level use tax is assessed at the time a vehicle is registered. For building materials, it becomes more confusing. State and special district use tax is generally paid on the contractor’s use tax return filed with the Department of Revenue. However, use tax for most of the state-administered counties, cities, and towns that impose a local-level use tax on building materials is generally assessed in the building permit process.7 HOME-RULE JURISDICTIONS—SOME DETAILS Aside from navigating the sales and use tax base, collection, reporting, and remittance rules and procedures for the state and pertinent state-administered local jurisdictions, taxpayers must also take into account the state’s “home-rule” jurisdictions. So, if the

preceding isn’t confusing enough, the state has 96 “home-rule” jurisdictions, 72 of which independently administer their own sales and use tax ordinances (generally referred to as “self-collecting” home-rule cities). Included in this group are the two homerule “city and county” jurisdictions, that is, the City and County of Denver and the City and County of Broomfield (otherwise, counties are state-collected local jurisdictions). The 24 home-rule cities/towns that are not self-collecting are “state-administered,” “state-collected,” or “statutory” home-rule cities/towns and follow the state-administered local jurisdictions rules already discussed.8 Each self-collecting home-rule jurisdiction imposes its own sales and use tax according to its own ordinance, regulations, and other guidance, with separate registration, licensing, forms, filing requirements, payment procedures, and audit/appeal processes. They do so under the authority of the Colorado Constitution Article XX, which authorizes such municipalities to impose, administer, and enforce their own individual sales and use tax statutes.9 There is no limit to the differences between the tax base in one self-collecting homerule jurisdiction and that in another, or that at the state level. For example, the City and County of Denver, the City of Boulder, the City of Fort Collins, and the state of Colorado all define and tax software differently. The same is true with respect to registration and compliance in these home-rule jurisdictions. Each one must be dealt with independently from all the others, and from the state. Also, each of these jurisdictions handles its own audits and, to a degree, has its own protest/hearing procedures and requirements, subject to some overriding consistency CONTINUED ON PAGE 20

The current list shown in DR 1002 includes food for home consumption; certain machinery and machine tools; gas and electricity for residential use; occasional sales by charitable organizations (as defined); farm equipment (as defined); pesticides (generally before July 1, 2012); food sold in vending machines; low-emitting vehicles that are over 10,000 pounds; renewable energy components (as defined); beetle wood products; certain school-related items; biogas production systems components (detailed definitions); property used in space flight; certain machinery and machine tools used for processing recovered materials (see Public Health and Environment list); marijuana and marijuana-related products; and manufactured homes.

According to a state audit, the Department of Revenue failed to properly register businesses within the correct taxing location 11% of the time. Taxpayers and software companies often fare no better. See Colorado Office of the State Auditor, Department of Revenue Local Sales Taxes Performance Audit (November 2015).

See CRS §29-2-109. It is thought that one reason for the growth in the number of home-rule jurisdictions is the limitation on use tax for state-collected cities.

This is also true for most of the home-rule cities—for example, when a general contractor pulls a building permit in the home-rule city of Fort Collins, the local city and county tax is paid at that point as a use tax. While most cities collect use tax when the building permit is issued, there are a few exceptions, primarily the cities of Denver and Colorado Springs. Most of the cities require a reconciliation of a contract’s actual costs to the building permit estimate prompting either a refund, or more commonly, additional tax due. Material differences may prompt home-rule cities to perform a field audit. Statutory cities resolve the differences through office reviews.

The 24 home-rule cities for which the state collects include Alamosa, Basalt, Burlington, Cedaredge, Dillon, Fort Morgan, Fountain, Fruita, Georgetown, Hayden, Holyoke, Johnstown, Kiowa, Manitou Springs, Minturn, Monte Vista, Morrison, Mountain View, New Castle, Ouray, Parachute, Rico, Silt, and Ward. A list of all Colorado cities and towns by type is available at the Colorado Department of Local Affairs website: https://dola.colorado.gov/lgis/municipalities.jsf.

See Berman v. Denver, 400 P2d 434 (1965). Each city’s statutory and regulatory authority can be found online at the respective city’s website.

July/August 2020 | www.cocpa.org

STATE TAXATION CONTINUED FROM PAGE 19 provisions set out in the state statute.10 Perhaps the best way to think of self-collecting home-rule cities is that from a sales and use tax viewpoint, they are just like other states, only they are all within the state of Colorado. All told, someone making sales to Colorado customers can face up to 756 sales tax combinations.11 NEXUS/DOING BUSINESS Whether a seller must collect and remit sales tax on a sale to a Colorado customer depends on whether it is “doing business” in Colorado for sales tax purposes. However, the requirement to collect and remit is further limited by whether the seller has “nexus” with Colorado. “Doing business” is defined in the Colorado statutes. “Nexus” is determined under the federal constitution, along with the related judicial interpretations. Historically, nexus contemplated some level of physical presence in a state that sought to impose a sales tax collection and remittance obligation on a seller. However, several states enacted legislation that imposed an obligation to collect sales tax solely on the basis of the seller making sales to in-state customers in excess of specified dollar limits. One of those states was South Dakota, and its economic presence statute was the one that reached the U.S. Supreme Court in Wayfair. The U.S. Supreme Court decision in Wayfair opened the door to states requiring sellers to collect and remit sales tax in the absence of physical presence if they have sufficient economic presence in the state. Nearly all of the states that impose a sales tax have now enacted legislation requiring sellers to collect and remit if they have economic presence similar to that which existed in the Wayfair case, that is, sales to in-state customers and/or number of transactions with in-state customers in excess of defined threshold amounts. Colorado enacted such

legislation (although ultimately without the number-of-transactions element) effective June 1, 2019. The legislation passed notwithstanding that the sales tax environment in the state bears little resemblance to that approved by the U.S. Supreme Court in Wayfair.12 SOURCING SALES FOR THE STATE AND STATE-COLLECTED JURISDICTIONS Emergency Regulation §39-26-102(9) (issued along with the initial economic presence Emergency Regulations originally scheduled to take effect Dec. 1, 2018, and subject to the Department of Revenue’s grace period through May 31, 2019) provided new sourcing rules for sales/use tax purposes. Colorado House Bill (HB) 19-1240, which provides the economic presence rules, also amended CRS §39-26-104 to incorporate these sourcing rules effective June 1, 2019. These rules were based almost word for word on the model sourcing language discussed and adopted by the Streamlined Sales Tax Project Sourcing Issue Paper.13 Specifically, “for purposes of determining where a sale of tangible personal property, commodities, or services is made,” the following rules apply effective June 1, 201914: First, “if tangible personal property, commodities, or services are received by the purchaser at a business location of the seller, the sale is sourced to that business location.”15 Second, “if tangible personal property, commodities, or services are not received by the purchaser at a business location of the seller, the sale is sourced to the location where receipt by the purchaser occurs, including the location indicated by instructions for delivery to the purchaser, if that location is known to the seller.”16 Third, if neither of the first two rules apply, then “the sale is sourced to the

location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller’s business, when use of this address does not constitute bad faith.”17 Fourth, if none of the first three rules apply, then “the sale is sourced to the location indicated by an address for the purchaser obtained during the consummation of the sale, including, if no other address is available, the address of a purchaser’s payment instrument, when use of this address does not constitute bad faith.”18 Fifth, if none of the first four rules can be applied, then “the sale is sourced to the location indicated by the address from which the tangible personal property, commodity, or service was shipped.”19 These provisions became effective June 1, 2019.20 For leases of tangible personal property that are not covered by special rules and that have recurring payments, the first payment generally is sourced according to the preceding rules. The second and subsequent payments generally are sourced to the property’s primary location for each period covered by the payment as provided by the lessee and available to the lessor in the ordinary course of business. The primary location is not altered by “intermittent” use of the property at other locations.21 If the lease or rental does not require periodic payments, the payment is sourced under the rules applicable to sales, as described above.22 Special rules apply for the lease or rental of motor vehicles, trailers, semi-trailers, and aircraft that do not qualify as “transportation equipment.”23 Other special rules apply to leases of “transportation equipment” (which includes items such as certain locomotives,

See CRS §29-2-106.1, discussed below. See the Colorado Department of Revenue report at https://leg.colorado.gov/sites/default/files/images/committees/2017/170711sales_and_use_tax_simplification_task_force_presentation_colorado_department_of_revenue.pdf. 12 House Bill (H.B.) 19-1240. 13 See https://www.streamlinedsalestax.org/docs/default-source/issue-papers/sourcing.pdf?sfvrsn=ece9b090_4. 14 H.B. 19-1240, Section 17. 15 CRS §39-26-104(3)(a)(I). 16 CRS §39-26-104(3)(a)(II). 17 CRS §39-26-104(3)(a)(III). 18 CRS §39-26-104(3)(a)(IV). 19 CRS §39-26-104(3)(a)(V). 20 H.B. 19-1240, Section 17. 21 CRS §39-26-104(3)(b)(I)(A). 22 CRS §39-26-104(3)(b)(l)(B). 23 See CRS §39-26-104(3)(b)(II). 10 11

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railcars, trucks, truck-tractors, trailers, semi-trailers, passenger buses, aircraft, and containers).24 While the legislation attempts to put both in-state and out-of-state sellers on an equal and level playing field, it fails, if ever so slightly for the very smallest of retailers. If a seller does not meet the $100,000 economic presence threshold, it sources its sales to its business location regardless of where the purchaser receives the property or service (unless such sale would be sourced to a location outside Colorado under CRS §3926-104(3)(a) (discussed above), in which case the sale is simply exempt from state- and state-administered local sales tax).25 Thus, an in-state retailer with less than $100,000 in sales would collect state and state-administered sales tax for its business location in Colorado on a sale to a Colorado customer, while an equally small out-of-state remote seller would not have to collect any state or state-administered tax at all on that same sale. For example, an Iowa seller making a Colorado sale would not have to collect any Colorado state or state-administered taxes because it is below the threshold (assuming it did not otherwise have nexus, such as through physical presence) and would not have to collect any Iowa sales tax assuming the sale is an out-of-state sale for Iowa sales tax purposes. This inequality may be only temporary. Once the state has implemented an online geographic information system (GIS) that will determine the taxing jurisdiction and applicable rate, all sales will be sourced according to the new rules.26 In that event, the old “place of business” sourcing for sales into state-administered local jurisdictions will be completely gone. Can a retailer avoid following the new sourcing rules by simply requiring that all sales be FOB shipping point and that all risk of loss, etc., transfers to the buyer at the retailer’s store or dock? In short, that the sale is consummated in all circumstances at the store or dock? It seems not. The new sourcing rules provide that “receipt” or “receive” for the buyer “means taking possession of tangible personal property or commodities ... but does not include possession by a shipping company on behalf of the purchaser.”27 24

It appears that the taxable situs of the sale is where the buyer takes possession of the goods regardless of the language of the sales contract. As for the home-rule jurisdictions, their sourcing rules for sales tax are unaffected by HB 19-1240. While uniformity between the state and the home-rule cities on taxable presence may be an insurmountable obstacle, there may be some hope that the cities

physical and economic nexus standards, and sourcing rules, we believe we know the answer. * This article does not necessarily represent the opinions of the authors’ employers, should not be considered the rendering of tax or legal advice, and is not intended to provide specific guidance or advice for any issue in any particular jurisdiction.

Taxpayers and tax practitioners often argue over which state, Alabama, Colorado, or Louisiana, has the most complicated sales and use tax Compliance. We think we know the answer. will adopt the state’s sourcing rules for sales tax. That hope rests on the fact there may be an economic incentive for the home-rule cities to adopt the new rules. Currently, for example, it is unlikely that a customer in Fort Collins, Colorado remits city use tax on an online purchase from a Denver seller. The transaction is not subject to tax in Denver because it is a sale shipped outside the city. And while the customer owes Fort Collins use tax on the sale, it is unlikely that Fort Collins will ever see that tax.

Mark Kozik is Of Counsel with Holland & Hart, LLP, Denver, Colorado. Bruce M. Nelson, CPA, is a frequent COCPA author/ instructor with more than 35 years’ experience in state and local tax. He is the Editor-in-Chief of the Journal of State Taxation. An earlier version of this article appeared in the Spring 2020 edition of the Journal of State Taxation, Vol. 38, No. 2. For a copy of the entire article, as originally published, email Bruce Nelson at bruce.nelson@brucenelsoncpa.com.

If Denver and Fort Collins both adopted the state’s destination sourcing rules, that uncollected use tax would be captured as a Fort Collins sales tax collected and remitted by the seller. Whether that is enough incentive for the home-rule cities to do so remains to be seen. SUMMARY Taxpayers and tax practitioners often argue over which state, Alabama, Colorado, or Louisiana, has the most complicated sales and use tax compliance. Given Colorado’s state-administered and home-rule jurisdictions, different tax bases, multiple licensing, registration, and filing requirements,

CRS §§39-26-104(3)(b)(III) and -104(d)(3)(III).

CRS §39-26-104(3)(c).

CRS §39-26-104(3)(c)(III)(A) and (B). Note that legislation introduced during the 2020 legislative session would, if passed, make the “small seller” rule permanent. See S.B. 20-099.

CRS §39-26-104(3)(d)(II) and Regulation §39-26-102.9(3).

July/August 2020 | www.cocpa.org

PERSONAL DEVELOPMENT

Why You Shouldn’t Be the Same Leader After COVID-19 BY NATALIE ROONEY

As a CPA-turned-Emmy-nominated-writer and consultant who helps companies develop strategies to retain their top talent, John Garrett is known for being funny - and he really is! Yet, even he has struggled to find the humor in the ongoing challenges of COVID-19.

“

My business went to zero dollars overnight. People are dying. More and more people are unemployed. We can’t make light of this,” he says. “But what we can do is take advantage of the lessons we’ve learned and continue to think differently.” WELCOME TO MY HOME Garrett’s consulting practice helps leaders and companies create stronger people connections. He says the rapid move to 100 percent virtual work after stay-at-home orders were implemented greatly increased the need for forming human connections. Thanks to video conferencing, we’re all seeing each other in an entirely new light: kids running past during our meetings, dogs jumping into our laps while we present quarterly financials, and maybe even someone bursting in and asking if we have any whites to add to the laundry load. (Oops, sorry, were you on a call? Are you wearing your pajamas?) “When we’re in the office, it’s like we’re playing a part in a theater production,” Garrett says. “Thanks to virtual meetings, now we’ve been in each other’s homes. We’ve seen who each of us is as a person. To act as if that hasn’t happened is a huge disservice.” Historically, professionalism has told us to leave our personal lives outside of work because we’re, well, working, and that part of our lives is a distraction. It doesn’t matter. But, but it does, Garrett says. In fact, it matters a lot. “People haven’t just worked from home. They’ve worked from home in a pandemic while homeschooling their kids, and other people lost their jobs. That 22

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messes with morale. There is a lot going on that companies and leadership really need to think through. How do we transition back to the office, and what does that even look like?” Garrett says the future is about knowing your people and humanizing what they’ve been through these past months. “We need to continue to connect our personal lives, including our hobbies and interests, with the accounting side of our lives.” HUMANIZING THE BRAND Garrett’s research shows that 93 percent of people have a hobby or passion they love to pursue outside of work. Even before COVID19 made life weird, Garrett’s philosophy has been to encourage companies to foster an environment that allows and encourages people to share those outside-of-work passions. “Then, of course, there’s the seven percent who say work is just their thing,” he laughs. “That’s fine if that’s the case. But for so long, that seven percent has told everyone else they should want to work until they die. Those of us with multiple dimensions to our lives are actually the stereotypical accountant.” Fostering work environments that harness who people are isn’t complicated and can be as simple as building a few minutes into team meetings for people to talk about their hobbies and passions. “These little acts by leadership show you genuinely care about the people around you,” Garrett says. “This isn’t about asking someone if she finished a project. Rather, it’s

asking, ‘How did your son do on his science project?’ CPE exists for technical skills. Leaders always make sure their teams have time for that. But do you make sure your team members have time to mountain bike, play piano, do a puzzle, or whatever it is that makes them light up?” WE ARE MORE THAN WHAT WE DO When Gov. Jared Polis sent us all home that fateful day in March 2020, little did we know we might be getting to know each other better than we ever had before. Everything cracked. Now, Garrett encourages not to close that crack. “Leave it open,” he says. “Let people see and continue to see that you genuinely care about them, that this hasn’t been easy, and seeing the other sides of your life isn’t over.” Garrett’s book, What’s Your “And”?: Unlock the Person Within the Professional, set to publish in September, and his weekly podcast by the same name delve into who we are as people beyond what we do for a living. “You’re an accountant and a skier. Or a CPA who loves to watch scary movies. That ‘and’ is whatever lights you up,” he says. “Colleagues know about the first part - whether you’re a lawyer, banker, teacher, or accountant. It’s the second part - the passion - that we often don’t take the time to find out and that’s the important part.” Here are a few ways leaders can help individuals share their “and” without taking too much time from the workday: • Extend a team meeting. “Each time the group gets together, take just three to five minutes for someone to share his

or her ‘And,’” Garrett suggests. “People practice their public speaking skills while sharing that hobby or passion. You’ll bring people closer together, and whether or not someone else has that same interest, it’s still fascinating to hear what people enjoy doing.” • Genuinely ask. “Not every meeting has to have an agenda and be 100 percent work-related,” Garrett says. “Genuinely ask how people are doing, take a couple of minutes to allow some space, and let ‘how are you doing?’ breathe. People are going through a lot of stuff you don’t even know about. Maybe a spouse was laid off. Maybe a parent had the coronavirus. A meeting isn’t just a checklist. Meet people where they are. Don’t be tone deaf about what people are dealing with. You hired a whole person, not just the accountant part. You need to nourish that whole person, not just the technical skills learned through CPE hours.” • Go to lunch - once it’s possible - or get together virtually. Garrett suggests putting people from multiple departments together. Then, don’t talk about work. “All of a sudden, friendships bloom,” he says. “We’re not best friends, but if I need something from a different department, I don’t email. I talk to Susie, and we resolve it. Relationships break down barriers and humanize the people around you.” • Create a bucket list. Garrett says one of his clients is a managing partner who loves to travel and check off the countries on her bucket list. She had each person on her 75-member staff put two or three of their own bucket list items into a jar. Once a quarter, she pulls a name from the jar, and then up to a certain amount, the firm pays for the individual to pursue that bucket list item. When the lucky winners return, they present to the team. One team member had always wanted to be a chef. When his name was pulled, the firm purchased a knife set for him and sent him to chef training. At his presentation, he described how his grandfather was a chef and how he had grown up helping in the family restaurant over the summers. He used the training to occasionally prepare happy hour dishes in the firm’s kitchen for everyone to enjoy. Small actions like this bring emotion to work and show that we’re multi-dimensional people, Garrett says. “These are simple ways to humanize both you and your people.”

JUST CARE How we think about work tends to be generational, Garrett says. Our grandparents tell us we should just be happy to have a job. Our parents tell us to keep our heads down and just do the job. But today’s younger workers know they can go anywhere and do anything. “We’ve tipped from I should be happy I have a job to you should be happy I came in,” Garrett says. The competition for accounting talent continues to be fierce, despite economic challenges. “You need to care about the people you want to keep,” Garrett says. “If you don’t, they’ll find someone who will.” More money is rarely the answer. “Just care,” Garrett says. “Know what matters to people.” What matters can be something small, like someone’s favorite candy. “One day, you put a box of Kit Kats on someone’s desk. It cost you ten dollars, but he’s so excited he’s doing backflips.” Could billables be down? Yes. Will some clients go out of business? Yes. “But don’t be a jerk because someone didn’t get eight hours

WHAT’S YOUR “AND”? “Who we are is so much more than what we do” is Garrett’s core message. Each week through his podcast, he showcases people who are their professional persona and their “And”…whatever that is – a hobby, a passion, an outside-of-work interest. Look at people when they talk about their passions. Their faces light up. They’re smiling. They’re “breathing in happy,” as Garrett describes it. “True connections are created where genuine interest comes from,” he says. “Then they take the expertise, skills, and energy from that and bring them to work, making them better.” Garrett says we’re taught a false hope that to stand out as a professional, you need to be the best technician. But it’s really about human to human interaction. “The thought that people who spend time doing things outside of work might be less dedicated to their career is outdated. Make your profession you. Make accounting you. What you bring to your job is totally different from what the person sitting next to you brings. How boring would it be if we all were exactly

“You should have to do a minimum number of hours in whatever lights you up. If you don’t hit your minimum, your supervisor talks with you because if you’re not pursuing your passion, you’re not being your best self.” in,” he counsels. “I’ve been consulting to help people think this through. You were forced out of the office, but the coming back in can be done with thoughtfulness.” We’re all just trying to get through this together, Garrett says. “As a leader, humanize yourself, and be a little bit vulnerable. People will gravitate toward that authenticity, and it will pay dividends with clients and also with talent. If you’re a company that is beating people over the head with the message to hit billable hours and that’s the only message they get from you, the first chance they get, they will go somewhere that’s not like that. Take care of them, and they will take care of you in return. That’s not a generational thing. That’s a human thing we all want.”

the same? There are so many types of accountants who are successful.” Imagine if a new CPE field of study were created for Passions. That’s Garrett’s ultimate dream. “You should have to do a minimum number of hours in whatever lights you up. If you don’t hit your minimum, your supervisor talks with you because if you’re not pursuing your passion, you’re not being your best self. When you’re your best self, you’re better at doing your job. Who can argue with that?”

Learn more about John Garrett’s new book and weekly podcast at www.whatsyourand.com.

July/August 2020 | www.cocpa.org

HUMAN RESOURCES

Mental Health: A Workplace Priority Removing the barriers to guide others through the storm BY LISA HACKARD, CPA This article is the first in a series addressing mental health in the workplace. In the March/April 2020 NewsAccount, Marc Cowan shared his story about the challenges of depression and how they can be overcome with the right help. In this article, Lisa Hackard, audit partner at KPMG Denver, shares her journey and the events that led her to become a passionate promoter of mental health.

ost of us recognize the importance of mental health ever since the news of COVID-19 broke in the U.S. in early March. We’ve adapted every aspect of life to put health and safety at the forefront, and we’re making tough choices to balance the interests of our employees, business partners, households, communities, and the capital markets. We’ve also come to appreciate the importance of skills inherent to our accounting profession including integrity, critical thinking, and resilience, as we uphold our professional and personal responsibilities. We’ve realized that to do this successfully, it’s critical to take care of ourselves - physically and mentally. COVID-19 TAKING A TOLL Working remotely, we are physically isolated from our colleagues, friends, and some or all of our family, causing mental, emotional, physical, and financial challenges. A May 1, 2020 Harvard Business Review article underscores this, reporting that “COVID-19’s second order crisis is starting to emerge, and it is taking a toll on our mental health.” The article references a global study of more than 2,700 employees across more than 10 industries undertaken by Qualtrics and SAP during March and April 2020. It found that a whopping 75 percent of people say they feel more socially isolated, 67 percent report higher stress, 57 percent are feeling greater anxiety, and 53 percent say they feel more emotionally exhausted. Now more than ever, it’s important to prioritize mental health and well-being, and to lead by example as we guide others through this storm.

“75 percent of people say they feel more socially isolated, 67 percent of people report higher stress, 57 percent are feeling greater anxiety, and 53 percent say they feel more emotionally exhausted.” BREAKING DOWN THE STIGMA Mental and physical health are fundamental to professional and personal achievement. Yet in our profession, as in many others, we face a barrier – a stigma around mental health, especially in the workplace. When I was asked to share my mental health story with a large 24

NewsAccount | July/August 2020

audience at KPMG as part of our annual Town Hall event in December 2019, I was reluctant. While comfortable sharing one-on-one, I knew that with a large group there could be criticism and questions. But I also knew there would be accountants just like me – touched by heartbreaking events related to mental health issues. So, I shared my story – the one you’re about to read – with nearly 900 KPMG Denver colleagues. The response was inspiring and heartwarming. Countless people reached out to me with their own similar, yet unique stories. My colleagues reminded me the more we know we’re not alone, the more our challenges seem to diminish. By sharing our stories, we illuminate a path for others --raising awareness, decreasing the stigma, and building the courage and confidence to talk about these uncomfortable yet important topics. MY STORY In December 2002, I was new to KPMG and looking forward to celebrating at that year’s Denver Town Hall and holiday party. That morning, I answered a phone call that changed my life. My brother Jeff, having battled mental and physical health issues all of his 24 years, died from suicide the night before. I was devastated and completely taken by surprise as he had just helped my husband and me move to a new house, and he was about to start college with his best friend. Thankfully, my KPMG mentor and good friend was there for my family and me. He reshuffled my work to other team members, handled administrative details for my leave of absence, and either called or spent time daily with us, answering every question we had, patiently, kindly helping us through our grief, tears, and ‘what-ifs’. After three weeks, I felt ready to return to work. I got a much-needed haircut and met my mentor for lunch at the Rocky Mountain Diner – a favorite spot for our team back then. He asked how I was doing, as he did every day. For the first time since Jeff died, I knew one day I would be okay. Clearly, I wasn’t there yet, but I knew one day I would be. He smiled his big smile, gave me a light punch on the shoulder, and told me he knew I would be, too, that he’d been waiting for me to say it. I told him I’d see him tomorrow; he smiled again and walked out the door. That was the last time I saw my friend. That night, he died from suicide. In the midst of my grief and recovery, I found myself front and center with colleagues, using his words to answer their questions – the same questions I had asked only days earlier. The hope I saw of one day being okay had faded. I was exhausted and not in good health but couldn’t see it. I felt like work was where I should be, as I craved familiarity, eager to tackle accounting questions and auditing challenges – things I knew how to solve, questions with concrete answers. Way ahead of his time, my engagement partner was practicing ‘Heads

up Thinking’ – now a core part of KPMG’s culture. He noticed I needed more time to recover, that I wasn’t ready to return to work. It took courage for my partner to tell me his observations, courage for me to agree, and courage for my colleagues to willingly absorb my workload at a very busy time. I am forever grateful for his outreach, for my colleagues, and for KPMG’s generous time-off policies and benefits, such as our employee assistance program. They provided me the space and guidance I needed to heal. When I returned to work, I was ready to be there. I found a supportive team, office, firm, and clients, and it didn’t take long before I was right back in the swing of things. The kindness and courage of those who asked how I was doing, using Jeff and my mentor’s names, meant the world to me, and it still does. They provided solid ground during shaky times. I’m honored to have so many individuals from that time as my partners today. They showed me that together, we do what matters. Together, we can do hard things. I know I’m not alone in losing someone too early and knowing how it can change lives. Not only immediately afterwards, but on and off for years to come – around certain times of year and certain places, there are moments that remind us of our loss. And that’s okay. It’s not hard because we’re doing it wrong; it’s hard because we’re human. But if we can learn how to move through hard times, we learn that we are stronger for having experienced them. HAVING THE COURAGE TO BE KIND Jeff, my mentor, and my colleagues from 17 years ago drive my passion in prioritizing mental health and well-being. In Colorado, we’re comfortable assisting those on crutches or in wheelchairs from injuries on the ski slopes, bike trails, and other adventures. We offer to hold doors for them, carry their coffee, and choose meeting locations that don’t involve stairs. Let’s practice the same kindness and outreach for those with injuries we can’t see. We must recognize also that because we’re all at our own place in this journey, some of us are not comfortable talking about how we’re doing, and that’s okay too. We can all make a point to look around, check in on each other, and provide a kind word and a smile. We can have the courage to see who might be having a rough moment, the courage to be seen in our own rough moments, and the courage to give and receive those little bits of light that can make a world of difference. We can work together to build resiliency, a key part of successfully moving through life’s challenges. We’re accountants, not experts in mental health, but we can all learn about the resources available in our own firms, companies, and communities. And, we can all take one step forward in becoming more comfortable talking about mental health and sharing resources with each other. Lisa Hackard is an Audit Partner with KPMG LLP in Denver and the National Co-Chair of KPMG’s ‘Abilities in Motion’ Business Resource Group, whose 1,800+ members in chapters throughout the U.S are raising awareness and supporting people with disabilities and those who are caregivers for people with disabilities. This includes people with visible disabilities and those we can’t see, including depression, anxiety, cancer, or addiction. Lisa envisions a time when we’re just as comfortable talking about mental health as we are talking about physical health, recognizing the importance of health as a fundamental part of professional and personal achievement.

MENTAL HEALTH SUPPORT AND RESOURCES •

Johnson Depression Center www.coloradodepressioncenter.org

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Man Therapy mantherapy.org

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NAMI: www.nami.org/getattachment/About-NAMI/NAMINews/2020/NAMI-Updates-on-the-Coronavirus/COVID19-Updated-Guide-1.pdf

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Center for Workplace Mental Health www.workplacementalhealth.org/getmedia/fd8a9b98b491-4666-8f27-2bf59b00e475/Working-RemotelyDuring-COVID-19-CWMH-Guide

•

Suicide Crisis Line: National Suicide Prevention Lifeline 1-800-273-TALK (8255) www.suicidepreventionlifeline.org

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Colorado Crisis Services 1-844-493-TALK (8255) www.coloradocrisisservices.org

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Safe2Tell 1-877-542-7233 www.safe2tell.org

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Crisis Text Line Text START to 741-741 www.crisistextline.org

July/August 2020 | www.cocpa.org

MEMBER PROFILE

From Bouncing Around to Finding His Niche BY NATALIE ROONEY

NewsAccount | July/August 2020

Some of the best stories about how COCPA members chose the accounting profession come about because they took an unusual route. Pete Zimmerman, CPA, tells such a story.

oday, Pete Zimmerman is a lead auditor for CoBank in Denver, but he’ll be the first to tell you it took some “bouncing around” – from salesman to ski instructor to non-traditional student – for him to get to where he wanted to go.

Zimmerman describes the COCPA as the springboard for his career. Each year, he donates to the Educational Foundation of the COCPA through a CoBank program that earmarks dollars for employees to donate to their favorite causes.

Zimmerman grew up in Maine and attended Marist College in New York State where he majored in business administration with a focus in marketing. Four years of that “bouncing around” led him to Seattle where a post-Sarbanes-Oxley business environment meant the world was desperate for accounting professionals. Zimmerman earned his accounting certification through a unique program at the University of Washington. “There was such a demand for CPAs in Washington State that the program took people who didn’t have an accounting degree and fast-tracked them,” he explains.

“As a COCPA member, I utilize the CPE, and I donate whatever resources I can to the Educational Foundation,” Zimmerman says. “It’s so important to provide accounting education resources for students, especially now, in light of COVID-19. I believe in giving people from every walk of life a boost to get through their programs.”

For nine months, Zimmerman spent Wednesday nights and all day every Saturday completing six traditional accounting classes. “The concept was straightforward. Those who graduated from the program would hit the 150-hour credit requirement in conjunction with enough accounting credits to sit for the exam,” he says. “It was crazy. I completed it while working full time. That was my start in accounting.” In 2009, Zimmerman and his wife, Mary, relocated to Colorado so that she could take advantage of an alternative licensure program for special education teachers through Denver Public Schools. The 150-hour requirement hadn’t yet gone into effect in Colorado, but Zimmerman says, “I knew it was on the runway and that I wanted to get my master’s degree since 150 hours would be the industry standard.” He was working at Metropolitan State University of Denver when the school launched its Master of Professional Accountancy program. “That program ensured I could get to the exam table,” he says. It would take Zimmerman seven years and living in two different states. In 2011, Zimmerman enrolled in the MSU masters program. At first, he took just one class at a time and then realized he needed to be a full time student. Zimmerman graduated in 2013 and sat for the CPA exam that fall, completing all parts in fall 2014. THE COCPA CONNECTION Many COCPA members’ stories about their first connection to the COCPA begin with, “I met Mary Medley …,” often followed by “...when I was a student.” That’s exactly what happened in Zimmerman’s case. He was taking the late David Dirks’s accounting communications course. “Professor Dirks always brought in speakers to share their experiences with us,” Zimmerman recalls. “Mary mentioned the upcoming COCPA student interview day, noting it was a great opportunity for student members.” As a result, Zimmerman submitted his resume and received a number of inquiries which led to an internship with Hein & Associates (now Moss Adams) in Denver. “Sonya LaVeau brought me in as an intern,” he says. “She was instrumental in my being where I am today.”

After four years in public accounting – two at Hein and two at KPMG – Zimmerman seized the opportunity to transition to banking. “Public accounting gave me the opportunity to see firsthand how different organizations design, execute, and run their business processes, and leverage technology on day-to-day tasks,” he says. “It translates to what I do every day at CoBank. As a utility player, I can do business processes and internal controls and traditional CPA work. I’m thankful to everyone along the way who made it possible for me to work in that space.”

“Public accounting gave me the opportunity to see firsthand how different organizations design, execute, and run their business processes, and leverage technology on day-to-day tasks.” FINDING RESOURCES, BUILDING A NETWORK Zimmerman pays it forward in appreciation for the advice and assistance he received along his own way. He is an MSU Denver alumni mentor, through its program that connects alumni and students so they can learn about various aspects of business. “I tell students the technical foundation of education in accounting is key. You have to have it,” he says. Zimmerman also emphasizes that the $25 COCPA student membership provides access to opportunities that will help develop a lifelong network of professional contacts. “I explain that knowing who’s out there, what they do, and seeing what it’s like to work in a field is 80 percent of the battle,” he says. “There are so many resources through the COCPA. For me, the student interview day was an immediate ROI, multiple times over. It changed my life.”

July/August 2020 | www.cocpa.org

VOLUNTEER SERVICE

How to Be An Effective Nonprofit Board Treasurer BY NATALIE ROONEY such as merging with another organization, buying a building, or starting a new program that needs financing. “These are all important financial decisions,” Fagan says. “Having someone with the experience to look at financial statements, pro forma statements, and cash flow can be helpful.” WHAT TO DO FIRST If this is your first time as a nonprofit board treasurer, Fagan offers these tips: • Work with the executive director to make sure the organization has established financial policies and guidelines for how the nonprofit accounts for and manages its finances and when board approval is needed for certain financial decisions. “Get a roadmap for good financial decisions,” he suggests. • Determine if the organization needs to assess its financial controls to make sure they are written down and clearly understood by all staff. • Work with the executive director to understand the organization’s financial structure and revenue sources and the cycles that apply to each. • Make sure all financial reporting is complete and reasonable. Ask questions about monthly financial statements or other financial statements.

ore often than not, CPAs who volunteer for nonprofit organizations find themselves in the treasurer role sooner or later. While many nonprofits are well-managed with stable finances and staff support, many smaller organizations may not be so fortunate.

“Serving on a nonprofit board is a meaningful way for CPAs to support a cause they’re passionate about,” says Renny Fagan, president and CEO of the Colorado Nonprofit Association. “Nonprofits need skilled volunteers to support their mission. Any nonprofit would welcome and value a CPA’s experience and expertise.”

NewsAccount | July/August 2020

The accounting needs of nonprofits are as varied as the organizations themselves. Sudden changes in leadership, the operating environment, or the loss of major contributors may mean an organization needs help making financial decisions. Some organizations are growing rapidly and taking advantage of new opportunities

While smaller organizations without an accounting staff will need help with these, it’s a good idea to review the financial policies at larger organizations as well. “That kind of review could happen in the context of an audit, but it could also be helpful to have a check in as part of the nonprofit’s regular, annual process,” Fagan says. If a nonprofit has a financial committee, which many do, the treasurer would be a part of the committee, if not the chair, Fagan says. “Understanding how the committee works, how often it meets, and what the members review is helpful to know before joining the board.”

CONFLICT AND INDEPENDENCE Fagan says rules to avoid conflict and remain independent are fairly straightforward. Technically, the CPA, like any other board member, isn’t barred from doing business with the nonprofit organization, “but there

SEE SOMETHING, SAY SOMETHING Over the years, Fagan has seen CPAs provide excellent support in serving on nonprofit boards. He advises lending expertise when asked, providing advice on financial decisions that aren’t clear cut, and knowing

“CPAs are looking at the numbers and can identify if there’s a story behind a variance and ask good questions. should be sufficient disclosure and distancing to avoid the appearance of impropriety,” Fagan says. “It’s better not to be paid to do work for an organization at the same time you’re serving as treasurer. You don’t have independent judgment.”

when to advise the executive director to ask for outside help. “CPAs are looking at the numbers and can identify if there’s a story behind a variance and ask good questions. But their value is greater when it comes to adding expertise to the organization and specifically to the CEO when requested,” Fagan says.

In addition, Fagan says, don’t hesitate to speak up when something doesn’t seem right. “When a CPA sees something, he or she should say something,” he encourages. “While they’re not on the board to be an ex-officio CFO, boards do have a fiduciary responsibility. If there’s something the CPA thinks should be brought to the attention of the CEO, do it.” BEYOND TREASURER Fagan encourages CPAs to volunteer with nonprofits even if not as treasurer. “CPAs can be helpful in many other ways without directly using their financial expertise,” he says. “They have the critical thinking skills to work through problems.” That, alone, makes for a valuable board member. Seize the opportunity.

Guiding the businesses of a

GROWING INDUSTRY AUGUST 13, 2020 CPE: 8.0

cocpa.org/MBS July/August 2020 | www.cocpa.org

LIFE LESSONS

Is Success A Big Limitation? BY DANIEL BURRUS, CEO, BURRUS RESEARCH

racing at the amateur level but ultimately decided he would work toward racing professionally in the Indianapolis 500, making his debut at the USAR Hooters Pro Cup Series in 1995.

HELPING OTHERS When I met Sam Schmidt, he had increased his significance even further by founding Conquer Paralysis Now, which works to find a cure for paralysis and spinal cord injuries. Additionally, by using old technology in new ways to race again, he altered positively the future view of other quadriplegics hoping to drive again. Since Sam’s race, a number of other disabled race car drivers are behind the wheel again.

During the off-season, Sam was testing in preparation for the 2000 season when he crashed at Walt Disney World Speedway on January 6, rendering him a quadriplegic and for a moment, ending his racing career.

Knowing what Sam did, I think it’s possible to combat the shortage of truck drivers by adapting this technology to help disabled veterans get behind the wheel again, filling that role.

SKIPPING YOUR BIGGEST PROBLEM Sam was far from done; his tragedy became a starting point in a personal transition from a life of success to one of significance. One

Before the accident, Sam focused on living a successful life, but after the accident, he started living a significant one, inspiring and helping others around the world and creating a new level of success.

once gave a commencement speech where I made a comment that took the parents and graduates completely by surprise. I said, “I don’t want you to try to live a successful life; it will limit you, as success is only about you and the accolades on your wall. Instead, live a significant life. Significance is about what you do for everyone else. Elevate your significance, and success will follow in a much more meaningful and impactful way.” SUCCESS IS SELFISH, SIGNIFICANCE IS SELFLESS To find out where you and your organization are in pursuit of success or significance, we must first understand the difference between the two from a leadership and organizational perspective. A successful organization is based more on surface value accomplishments, whereas a significant organization broadens its reach and impact, focusing on the difference it can make on a larger scale. A prominent difference between success and significance is whether you are acting in a selfless or selfish way. When your mindset

“When you set out on a business venture based on elevating the impact you will have on others, you shift your focus from your own personal desires to building something that everyone needs. is trained to focus only on success, you tend to be focused on what will benefit only you under the guise that with enough money, you can afford to be impactful. The problem with that assumption is that one never really knows what “enough” is. When you set out on a business venture based on elevating the impact you will have on others, you shift your focus from your own personal desires to building something that everyone needs. THE ROAD TO SIGNIFICANCE When someone aims for success alone, it breeds limitations, but once we break those limitations, we break free and find a pathway to significance. Take for example a rather inspiring individual I met who embodies a physical shift from success to significance. His name is Sam Schmidt, a former Indy race car driver. Before racing, Sam was a successful businessman, purchasing his father’s parts company in 1989 at the age of 25. He began 30

NewsAccount | July/August 2020

might consider being a quadriplegic to be an impossible obstacle to overcome as a race car driver, but Sam did not. His first implementation of my principle of Taking Your Biggest Problem and Skipping It was to overcome his disability and race again. There is plenty of autonomous technology on the market today that could have aided Sam. However, instead, he commissioned a tech team to help him be in full control of the car. And for his return, he wanted an exponential challenge: the Broadmoor Pikes Peak International Hill Climb competition - a winding climb up a Colorado mountain! To solve any technical problems, the team used another principle I teach: Opposites Work Better. Instead of autonomous equipment, they used off-the-shelf technology, like sensors mounted on a headset that detected Sam’s head-tilt motions to steer and a sip-and-puff device that he breathed into to accelerate and brake.

Making the shift from success to significance professionally will allow you to find ever-expanding levels of success while elevating your significance and improving the world. Daniel Burrus is considered one of the World’s Leading Technology Futurists on Global Trends and Innovation and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology-driven trends to help clients understand how technological, social, and business forces are converging to create enormous untapped opportunities. He is the author of seven books including the newest, The Anticipatory Organization: Turn Disruption and Change Into Opportunity and Advantage. Burrus also is the creator of The Anticipatory Organization™ Learning System–named a Top 10 Product of 2016. Contact Rebecca Campbell, rebecca@cocpa.org, for information on the program. Reprinted with permission.

EDUCATIONAL FOUNDATION OF COCPA

Congratulations 2020 Gold Key Award Winners

Each year, the Educational Foundation recognizes with the Gold Key Award the top graduating accounting student chosen by faculty at each Colorado college or university. Congratulations to these outstanding recipients and future CPAs.

Adams State University Brooke Mitchell

Colorado State University - Pueblo

Colorado Mesa University Lindy Dixon and Hailey Hinson

Fort Lewis College Tristen Musselman

Colorado State University - Fort Collins Ziyao Yu

Regis University Roman Lucero

University of Colorado Boulder Devon Steiner

Glenn Willis

University of Colorado Colorado Springs Jenna Hinshaw and Elizabeth Poskey

ince 1958, the Foundation also has helped the best and brightest Colorado accounting students who want to become CPAs through scholarship dollars. Made possible through COCPA membersâ&#x20AC;&#x2122;

University of Denver Emma Hultgren

University of Northern Colorado Kyle Wickstrom

financial support, scholarships are awarded primarily on merit and the studentâ&#x20AC;&#x2122;s commitment to pursuing accounting as a career goal.

Western Colorado University Emily Clark

To contribute to the Educational Foundation and continue its important work, go to coloradogives.org/EFColoradoSocietyCPAs/ overview.

July/August 2020 | www.cocpa.org

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IN MEMORIAM

MOVERS & SHAKERS DIANNE E. RAY, CPA, MPA The Governmental Accounting Standards Board (GASB) appointed Dianne E. Ray, CPA, MPA, current Colorado State Auditor, to a five-year term beginning July 1, 2020.

We extend our sympathy to the families and friends of the following COCPA members and former member: William Curtis Member since 1969 Centennial, Colorado

William Rister Member since 2003 Fort Collins, Colorado

Stephen McClain Member since 1986 Centennial, Colorado

Miles Silver Member since 1973 Denver, Colorado

C. Edward McVaney Denver, Colorado

William Tyson Member since 1993 Durango, Colorado

Robert Moonie Member since 1996 Louisville, Colorado

LORI A. DAVIS, CPA Denver Mayor Michael B. Hancock tapped Lori A. Davis, CPA, Managing Partner, Grant Thornton LLP, Denver, to chair the city’s Economic Relief and Recovery Council, an advisory group that provides strategic recommendations on how to mitigate and prevent further negative impacts of COVID-19, as well as accelerate future growth of the Denver economy and businesses.

CLASSIFIEDS

DAVID GANTOS, CPA David Gantos, CPA, ACM LLP, Denver, was selected to attend the AICPA 2020 Leadership Academy.

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TAX STUDY GROUPS

MEGAN S. LOBERG Dalby, Wendland & Co., P.C., Glenwood Springs, announced that Megan S. Loberg received her Colorado CPA certificate.

Careers At ACM, we work hard, play hard, and greet each day with optimism. This commitment is shared by each and every member of our firm – and it’s why we’ve been consistently recognized as one of the best accounting firms to work for in Colorado and across the nation.

“ACM is a family. It’s an amazing group of people who bring their best to the table each and every day.” - melissa k. hooley, partner-in-charge, employee benefit plan services

Boulder/Longmont Tax Study Group VIRTUAL ONLY

“ACM encourages each employee to take on new challenges and grow professionally – all while being able to maintain a quality family life.

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For additional information, contact Lynn M. Mitton, CPA, MT, MPA, 303-499-7445, or email lynn@flewellingcpa.com.

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