Statement regarding business tax refund

Statement regarding business tax refund

Published on January 21, 2026

City Council will have a public hearing to decide how to proceed with refunding a business tax to telecommunications providers at its Jan. 26 Regular City Council Meeting. While this tax refund will affect the city's 2026 Annual Budget, the impact of the tax refund is expected mostly to delay or modify infrastructure improvements and facility upgrades known as "capital projects."

Staff recommendations for adjusting the 2026 budget:

• Transfer funds from money set aside to pay for additional capital projects for public safety, transportation improvements and parks projects.

• Identify the proposed capital projects that will be delayed or reduced. Staff will report back to City Council once such reductions have been identified.

• Identify any additional reductions as needed in the 2026 budget.

Several factors will determine the total amount of the tax refund:

• While the city has a list that shows 177 telecommunications providers potentially paid the tax, this information will need to be verified by each provider before a refund will be issued. The city will conduct thorough research and analysis to ensure refunds are made only to legitimate entities that paid the tax.

• The city has notified all potential providers about the refund and provided instructions on how to file the paperwork to receive a refund. The total refund amount will depend on how many providers respond to the city's request for information and request a refund.

• Some providers might have passed this business tax on to customers through their monthly bills. The city is asking providers how they plan on repaying their customers after the providers' refunds are issued. The city will post information on the city's website that it receives from providers for customers to contact the providers directly. Please visit LakewoodCO.gov/CustomerInfo.

Background information on business tax refund:

The tax refunds is the result of a recent decision by the Colorado Supreme Court. The court reviewed amendments made to Lakewood's business and occupation tax in 1996 and 2015, which the city made to comply with federal and state telecommunications law. The court determined that those amendments required voter approval, but that voter approval did not occur. As a result of the court's decision, the city is obligated to refund taxes to providers that collected the tax and remitted it to Lakewood under those amendments.

Because of the number of variables involved in calculating the total amount of the refund due to the telecommunication providers, it has taken city staff working diligently for several weeks to identify a reliable refund figure to provide to City Council. As a result, the total potential refund amount was not known at the time that City Council adopted the 2026 Annual Budget.

Staff has now determined that up to $42.2 million could be needed for refunding this tax. At the Jan. 26 meeting, the City Council will be asked to authorize the required adjustment to the 2026 Annual Budget.

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