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Vecchiarelli, John M.

From: . Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 9:59 AM
To: Couch , Mark P.; Giardini , Richard J.
Subject: RE: Tax checkoff fund glitch
I do have a recollection of the CITA requirement discussion surrounding this issue. I am not certain that it
is a system limitation that precipitated this requirement, rather it was the notion that the check-offs were
intended to allow a portion of a taxpayer's "refund" to be earmarked for donation to one of the authorized
entities, If the taxpayer owes money with the return , there is no refund money available to send to the
charity. While the taxpayer may include a check with the tax return that pays the outstanding tax due and
has extra money available for distribution to the charity, it is also possible that the check may be returned
by the bank as Non-sufficient Funds, If this happens then it places the department in the position of
having to serve as the charity's collection agent (in other words the charity already has been paid , so now
the DOR must collect from the donor instead of asking the charity to return the donation) I do not believe
this is was the legislative intent. I am going to review the statute and see if gives greater direction. Am I
hearing that there is a desire to allow this functionality? I may be missing something , but why is it better
for the donor to pay us extra and have us send the money to the charity ra ther than donating directly to
the charity? The only reason that I can think of, is so that the charity can make a final push to recei ve
sufficient check-off donations to allow it to remain on the return. If this is the only reason it seems just a
tad bit disingenuous, As for the comment that 3 Board members were in this position , I ask why did 3
Board members want to make check-off donations on their tax return , I think the answer may be that they
wanted to keep their charity on the return even though the general taxpaying public did not make
sufficient check-off donations to satisfy the statutory requirement to remain on the return,
I will let you know what the statutory review reveals.

From: Couch, Mark P.


Sent: Thursday, July 08, 2010 8:05 AM
To: Vecch iarelli, John M.; Giardini, Richard J,
Subject: FW: Tax checkoff fund glitch

Hi guys ,

Roxy just called and wanted to follow up on this issue.

She needs to verify how many checkoff contributions have been made historically by taxpayers who owe
money?

She also asks why this functionality was not included in the CITA programming and what it would take to
include it.

Thanks,

Mark

------ .__ ._- -_._- ._---_._- _. - - - . _.. ..--- ,--_.. _- ---------_. __.. _-------
From: Huber, Roxanne M,
Sent: Wednesday, July 07, 2010 7:51 PM
To: Couch, Mark P.
Subject: FW: Tax checkoff fund glitch

Mark, can you look into this, not sure th is is right.

From: Gurr, Jenifer [mailto:Jenifer.Gurr@ag.state,co.us]


Sent: Wednesday, July 07, 2010 7:18 PM

7/ 13/2010
rage L 01 .J

To: Huber, Roxanne M.


Su bject: FW : Tax checkoff fu nd glitch

Director Hu ber:
Commissioner Stulp asked me to forward the following email to you .
I gue ss t he questions are, is this j ust a techno logy glitch and will it be resolved?
Let us know if yo u need more information.
Tha nks,
Je nifer

Jenifer Gu rr
Executive Administrator/Human Resources Manager
Colo rado Departme nt of Agricult ure .
700 Ki pling Street. Suite 4000
Lakewood , CO 80215
(303) 239·4104
(30 3) 239·4176 fax

CONFIDENTIALITY NOTICE: The information contained in or attached to this transmission is intended solely for its authorized recipient and may be confidential. If
you are not the intended recipient, or responsible for delivering some or all of this information to the intended recipient, you have received this transmission in error
and are hereby notified that you are strictly prohibited from reading , copying, printing, distributing, or disclosing any of the information contained herein. If you have
received this communication in error, immediately notify the sender and delete or properly destroy this transmission, including attachments.

From: Anderson, Ka te
Sent: Tuesday, July 06, 20 10 4:56 PM
To: Stulp, John; Miller, Jim; Gu rr, Jenifer
Subject: Tax checkoff fu nd gl itch

Commissioner Stulp,

Th e boa rd of direct ors fo r the Pet Ove rpop ul at ion Fund wa nted to make you awa re of a conce rni ng
development at Departme nt of Reve nu e. It seems that due t o a techno logy gl itch, if you owe taxes you
cannot contribute any amount to any of the t ax checkoffs. I f you do, the amount of your donation
will be returned to you as a check f rom t he Stat e Treasu ry w it h no explanation. Our understanding
is that this is due to a change in DOR's computer system . It will undoubtedly have a negative
impact on all the checkoff funds. We don't know how many people who owe taxes make checkoff
donations (at least 3 CPOF board members) but regard less, this glitch needs to be fixed. The
checkoffs are no longer "a simple w ay to give." The Checkoff Coalition has this statement on it s
w ebsite:

Attention Tax Professionals

When you are fili ng Colorado individual income tax electronically for your clients this year, please note
that if your client owes tax, your software will not allow Colorado checkoff donations to be made on
returns with tax liabilities. Taxpayers who have a refund may donate a portion of the refund, but those
who owe will not be able to make checkoff donations on their return. Donations may be made directly to
the organizations li sted on the 2009 Colorado I 04 individual income tax return .

The Pet Overpopulation Fund is the third most successful fund on the checkoff list and has raised over
$1.3 million dollars since 2001 to suppOli spay/neuter for pets belonging to low income families in

7113/20 10
Page 3 of}

Colorado. Nearly 40,000 pets have received low cost sterilization surgeries in underserved areas of our
state thanks to Colorado state tax payers. The board would like to make you aware of this problem and
to ask for any assistance in informing the DOR of the impact this could have on the checkoff funds.

I would be happy to speak with you further about this but wanted to give you a bit of background first.

Thanks,

Kate N. Anderson, DVM


PACFAlBAP Administrator
Colorado Department of Agriculture
700 Kipling Street, STE 4000
Lakewood , CO 80215
303-239-4168
303-239-4164 fax
kate.anderson@ag.state.co.us

7/13/2010
Vecchiarelli, John M.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 10:48 AM
To: Horwitz, Phillip C.
Subject: RE : voluntary checkoffs
Thanks Ph il. Th is is the information that I need . I will submit an SQR (solution request) and see if we can
allow this functionality within GenTax, or ascertain if it was indeed a system limitation precludes the
allowance of these non-refund donations.

From: Horwitz, Phillip C.


Sent: Thursday, July 08, 2010 10:30 AM
To: Vecchiarelli, John M.
Subject: voluntary checkoffs

John ,

There would not appear to be any statutory requirement that voluntary contributions come out of refunds.
The language quoted below from the most recent five checkoffs is similar or exactly the same (in form) as
every other checkoff I looked at. In addition , many checkoffs (perhaps half) have legislative declaration
language that roughly conveys the following: "by allowing citizens to make vo luntary contributions
on their state income tax returns for such purpose". (That language is from the Easter Seals
legislative declaration in 39-22-3301.) Although the legislative declaration language does not have the
same consistency that is found in the procedure sections , all of the legislative declarations that I read
appeared to suggest that contributions could be made in addition to ones liability or out of ones refund.

Thus I conclude that we cannot rely on statutory language to limit the ability of taxpayers wishing to
contribute to these causes as an addition to a taxpayer's balance due . If we believe th is presents
administrative difficulties, we would probably wa nt to promulgate a regulation.

Thanks,

Phil

MS:
39-22-3202 - For income tax years commencing on or after January 1,2009, but prior to January
1, 2012, the Colorado state individual income tax return form shall contain a line whereby each
individual taxpayer may designate the amount of the contribution, if any, the individual w ishes to
make to the multiple sclerosis fund created in section 39-22-3203.

Breast Cancer:
39-22-3302 -For income tax years commencing on or after January 1,2007, but prior to January 1,
2010, the Colorado state individual income tax return form shall contain a line whereby each
individual taxpayer may designate the amount of the contribution, if any, the individual wishes to
make to the Colorado breast and women's reproductive cancers fund created in section 39-22-
3303.

9 Health Fair:
39-22-3402 -For income tax years commencing on or after January 1,2008, but prior to January 1,
20 II , the Colorado state individual income tax return form shall contain a line whereby each
individual taxpayer may designate the amount of the contribution, if any, the individual wishes to
make to the 9Health Fair fund created in section 39-22-3401 .

7/13 /2 010
Page 1 of2

Vecchiarelli, John M.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 11: 17 AM
To: Giardini, Richard J.; Couch. Mark P.
Subject: RE: voluntary checkoffs
Wow, this seems to have hit a nerve. I agree that it makes little sense for the DOR to serve as a
collection agency for these charities. Let me ask Phil to take a look at the language you have provided. It
would be easier to simply continue with the way the system is now configured, but if you haven't noticed
by now I am a bit sensitive to the idea that the new system is an easy scapegoat and is being blamed for
everything under the Sun. I do not think that the system precludes us from allowing this. The system
should simply see this as another debit and bill accord ingly. Let's see what Phil thinks. It appears as
though 39-22-1001(1) (a) is an umbrella statute that would apply to all check-offs.

From: Giardini, Richard J.


Sent: Thursday, Ju ly 08,2010 11:07 AM
To: Vecchiarelli, John M.; Couch, Mark P.
Subject: RE: voluntary checkoffs

While most of the checkoff statutes are silent on this issue, 39-22-1001 (1 )(a) does refer to programs
" ... funded by voluntary contributions of income tax refunds ... " So this does provide limited statutory
support for our position.

The bigger issue is whether we want to be responsible collection activity and P&I for funds donated to
checkoffs but not properly paid (as well as for short checks) . If a donor wants to make up the $7 ,000
shortage for the MS Fund in September so they can stay on the form next year, they can still manipulate
the system by sending an extension payment first and claiming that payment. so that is not a reason to
change our procedure. The grief we get from billing for unpaid checkoff donations will be far greater than
the grief we have gotten from the checkoff organizations .

Or we can go back to the legacy method and just distribute funds to the checkoffs on a hit and miss basis
with checkoff adjustments regularly coming months and years after the return was filed. This inaccuracy
in legacy allowed us to accept payment for the checkoff donations.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 10:51 AM
To: Couch, Mark P.; Giardini, Richard J.
Subject: FW: voluntary checkoffs

Below you will find Phil's statutory analysis. Based upon his findings I will submit an SQR in an effort to
configure the GenTax system to allow check-off donations for non-refund returns.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 10:48 AM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs

Thanks Phil. This is the information that I need. I will submit an SQR (solution request) and see if we can
allow this functionality within GenTax, or ascertain if it was indeed a system limitation precludes the
allowance of these non-refund donations.

From: Horwitz, Phil lip C.


Sent: Thursday, July 08, 2010 10:30 AM

7/13 /2010
Page I on

Vecchiarelli, John M.

From: Vecchiarelli, John M.


Sent: Thursday , July 08, 2010 1:40 PM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs
Okay well how about sending me an email that is no so targeted at Richard , one that deals with the actual
language of the statute and does not impugn his motives. One that I can copy him on. Thanks.

From: Horwitz, Phillip C.


Sent: Thursday, July 08, 2010 11:51 AM
To: Vecchiarelli, John M.
Subject: RE: voluntary checkoffs

John,

I am forced to disagree with Richard's interpretation of the language he has provided. It is quoted out-of-
context. (Though Richard notes that that language provides only "limited statutory support".) The full
language is as follows:

(I )(a) Except as otherwise provided in paragraph (b) of this subsection (I), it is the intent of the
general assembly that any program funded by voluntary contributions of income tax refunds that
is created on or after June 2, 1985, shall have a sunset clause providing that the program shall
apply to no more than three income tax years, unless the program is continued or reestablished
by the general assembly acting by bill prior to the date that the program is scheduled to sunset.

The rest of the section uses language of "voluntary contributions". For example (1)(b) refers to "All other
voluntary contribution programs". Subsection (5) refers to "every voluntary contribution". And Subsection
(6) indicates that "No more than fifteen voluntary contributions shall appear ... ".

Given the relatively clear language in each specific contribution section (each one entitled "procedure")
saying that the form "shall contain a line whereby every individual taxpayer may designate the
amount..." (emphasis added) , the language cited by Richard seems to me poor fodder for trying to argue
that the taxpayer must be receiving a refund. The provision he cites clearly does not create that
requirement. It merely seems to refer to it as an established idea. However, the statutes nowhere
establish that requirement. If anything, the statutes require that every taxpayer be given the opportunity
to make a contribution.

That's my take on the interplay between these sections.

Thanks,

Phil

----_ ...._. __..._--_. __._--_.-


From: Vecchiarelli, John M.
..... _---_.. __ . --- .... _---- -------- - - -

Sent: Thursday, July 08, 2010 11:18 AM


To: Horwitz, Phillip C.
Subject: FW: voluntary checkoffs

Phil ,
Please take a look at the language that Richard has provided. It seems that this language would apply to
all check-offs.

7/]3/2010
Page I of 4

Vecchiarelli, John M.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 1:59 PM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs
I thought that you might point to the fact that it was not enacted contemporaneously with the other
provisions, but I think that may support Richard's position. I assume that (1) (a) was enacted prior to the
other specific check-off provisions. If that is the case could it not be argued that the "contributions of
income tax refunds" language applies to each and every check-off that follows? I understand your
argument about "every individual taxpayer may designate an amount", but if the refund language was
original then I think it can be argued that the language really means every taxpayer to whom a refund is
due. These check-offs were to make it easy to contribute , but using the department as an agent to
process payments and collect accounts receivable is outside of that objective.

-----_.._. - - -
From: Horwitz, Phillip C.
Sent: Thursday, July 08, 2010 1:50 PM
To: Vecchiarelli, John M.
Subject: RE: voluntary checkoffs

John,

I am forced to disagree with Richard 's interpretation. Although the language Richard is pointing to is
correct, it does not limit the donation; it merely refers to the donation as though it is limited to refunds.
While this language could be used to help discern legislative intent, it has problems even in that context.
(E.g. , it was not enacted contemporaneously with the operative language of the donations.) The full
paragraph follows:

(I)(a) Except as otherwise provided in paragraph (b) of this subsection ( I), it is the intent of the
general assembly that any program funded by vo luntary contributions of income tax refunds that
is created on or after June 2, 1985, shall have a sunset clause providing that the program shall
apply to no more than three income tax years, unless the program is continued or reestablished
by the general assembly acting by bill prior to the date that the program is scheduled to sunset.

As you can see, the "income tax refund" language is more language of reference than language of
limitation. It is not supported by language in the rest of the section, which uses language of "voluntary
contributions". For example (1 )(b) refers to "All other voluntary contribution programs". Subsection (5)
refers to "every voluntary contribution". And Subsection (6) indicates that "No more than fifteen voluntary
contributions shall appear ... ".

I see the language in each specific contribution section as relatively clear: each one is entitled
"procedure" and each one indicates that the form "shall contain a line whereby every individual taxpayer
may designate the amount..." (emphasis added). Given these factors, and the fact that our current
interpretation has been challenged by the checkoff proponents, I do not believe that the language in 1001
(1 )(a) (above) can be effectively used to argue that the taxpayer must be receiving a refund . The
provision in question clearly does not create that requirement. It merely seems to refer to it as an
established idea. However, the statutes nowhere establish that requirement. If anything , the statutes
require that every taxpayer be given the opportunity to make a contribution.

That's my take on the interplay between these sections.

Thanks,

Phil

7/13/20 to
Page I ot .J

Vecchiarelli, John M.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 2:00 PM
To: Horwitz, Phillip C.
Subject: FW: voluntary checkoffs
FYI.

From: Giardini, Richard J.


Sent: Thursday, July 08, 2010 1:53 PM
To: Vecchiarelli, John M.; Couch, Mark P.
Subject: RE: voluntary checkoffs

I have real concerns that the complaints from billing for checkoffs (and the losses to the state for writing
off amounts less than $10) will be far worse than any feedback we have received from the checkoff
agencies. Furthermore, we cannot wait for the SQR resolution to decide what instructions go into the 104
book for 2010. My vote is to rely on the statutory reference and continue to offer the extension payment
workaround as an option for the 100 taxpayers who really want to donate on the tax form.

Perhaps it is important to explain to Roxy that the Gentax limitation that prevents payments from being
applied to the checkoff also prevents a multitude of errors in applying payments to the account that
existed in the legacy methodology. There is a real reason why the system works as it does.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 1:45 PM
To: Giardini, Richard J.; Couch, Mark P.
Subject: RE: voluntary checkoffs

I appreciate your comments, and I trust that they reflect what happened. However, if Roxy is getting
complaints and if Mark is correct that there will be some pressure to allow these non·refund contributions I
think it prudent to try and get ahead of the curve and submit the SQR. It may be that we will have to
simply allow any amount that is posted from the check-offs and bill if there is a discrepancy. Thanks.

From: Giardini, Richard J.


Sent: Thursday, July 08, 2010 12:00 PM
To: Vecchiarelli, John M.; Couch, Mark P.
Subject: RE: voluntary checkoffs

The original I-Specs had the system accepting payment for checkoffs as the old system did. Several
meetings were held as we tried to find a solution to make it happen , but the way Gentax matches the
payment against the return after the return is edited would not allow the system to identify whether or not
a payment was sent to cover the checkoff donation . It came down to Gentax being able to limit donations
to no more than the amount of the overpayment, or Gentax allowing any donation entered and billing if
the payment is not received.

Legacy didn't have this problem because the return posted and we billed for the tax balance ignoring the
checkoff keys among other items. Of course this meant we paid the checkoff agencies for unpaid
checkoffs and took the money back in later years if we found the mistake . Although sometimes we did bill
for the donations later depending on various possible scenarios on the account, sometimes with P&I and
sometimes without. Sometimes we even billed for dupl icate checkoffs in error. Gentax, even with this
limitation, is handling the checkoffs far more accurately than legacy ever could.

7113 /2010
Page 1 of3

Vecchiarelli, John M.

From: Vecchiarelli . John M.


Sent: Thursday. July 08, 2010204 PM
To: Giardini, Richard J.; Couch, Mark P.
Subject: RE: voluntary checkoffs
I truly understand your concerns and in large part I agree with what you are saying. I am troubled by the
notion that the DOR is being used to process contributions and manage any resulting accounts
receivable. However, if Phil concludes that the statutes do not limit contributions to accounts with refunds
due, where does that leave us? We must implement the statutes to the best of our ability.

------_._----------_._----_._------_._-------------------.------------
From: Giardini, Richard J.
Sent: Thursday, July 08, 2010 1:53 PM
To: Vecchiarelli, John M.; Couch, Mark P_
Subject: RE: voluntary checkoffs

I have real concerns that the complaints from billing for checkoffs (and the losses to the state for writing
off amounts less than $10) will be far worse than any feedback we have received from the checkoff
agencies. Furthermore, we cannot wait for the SQR resolution to decide what instructions go into the 104
book for 2010. My vote is to rely on the statutory reference and continue to offer the extension payment
workaround as an option for the 100 taxpayers who really want to donate on the tax form _

Perhaps it is important to explain to Roxy that the Gentax limitation that prevents payments from being
applied to the checkoff also prevents a multitude of errors in applying payments to the account that
existed in the legacy methodology. There is a real reason why the system works as it does.

-----------------------
From: Vecchiarelli, John M_
Sent: Thursday, July 08, 2010 1:45 PM
To: Giardini, Richard J.; Couch, Mark P.
Subject: RE: voluntary checkoffs

I appreciate your comments, and I trust that they reflect what happened. However, if Roxy is getting
complaints and if Mark is correct that there will be some pressure to allow these non-refund contributions I
think it prudent to try and get ahead of the curve and submit the SQR. It may be that we will have to
simply allow any amount that is posted from the check-offs and bill if there is a discrepancy. Thanks_

From: Giardini, Richard J,


Sent: Thursday, July 08, 2010 12:00 PM
To: Vecchiarelli, John M.; Couch, Mark P.
Subject: RE: voluntary checkoffs

The original I-Specs had the system accepting payment for checkoffs as the old system did_ Several
meetings were held as we tried to find a solution to make it happen , but the way Gentax matches the
payment against the return after the return is edited would not allow the system to identify whether or not
a payment was sent to cover the checkoff donation. It came down to Gentax being able to limit donations
to no more than the amount of the overpayment, or Gentax allowing any donation entered and billing if
the payment is not received_

Legacy didn't have this problem because the return posted and we billed for the tax balance ignoring the
checkoff keys among other items. Of course this meant we paid the checkoff agencies for unpaid
checkoffs and took the money back in later years if we found the mistake. Although sometimes we did bill
for the donations later depending on various possible scenarios on the account, sometimes with P&I and
sometimes without Sometimes we even billed for duplicate checkoffs in error. Gentax, even with this

7/13/2010
Page 1 of 4

Vecchiarelli, John M.

From: Vecchiarell i, John M.


Sent: Thursday , July 08, 2010 2:07 PM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs
It is not a system limitation! The system can allow for these contributions. What the system cannot do is
make sure that the amount posted correctly (thus subjecting the line to data capture errors) or verify that
the payment has cleared, before it posts. That means we may be in a position where we have to bill the
taxpayer and if unsuccessful either write-off the debt or recover it from the check-off organization.

-_._-_._-----
From: Horwitz, Phillip C.
Sent: Thursday, Ju ly 08, 2010 2:03 PM
To: Vecchiarelli, John M.
Subject: RE: voluntary checkoffs

I think this is fine, if that's the way we go, but we should recognize this as a system limitation not as a
statutory one. If we want to maintain this position , we would be best served by promulgating a regulation
articulating that limitation (though I worry that it would not pass muster in either the AG's office or LLS).
The more I read it, the more convinced I am that we are on shaky ground statutorily.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 20102:00 PM
To: Horwitz, Phillip C.
Subject: FW: voluntary checkoffs

FYI.
----_._-_._--_.._----_.. __. _ . _ - - - - - --- -- -_.-
From: Giardini, Richard J.
Sent: Thursday, July 08, 2010 1:53 PM
To: Vecchiarelli, John M.; Couch, Mark P.
Subject: RE: voluntary checkoffs

I have real concerns that the complaints from billing for checkoffs (and the losses to the state for writing
off amounts less than $10) will be far worse than any feedback we have received from the checkoff
agencies. Furthermore, we cannot wait for the SQR resolution to decide what instructions go into the 104
book for 2010. My vote is to rely on the statutory reference and continue to offer the extension payment
workaround as an option for the 100 taxpayers who really want to donate on the tax form.

Perhaps it is important to explain to Roxy that the Gentax limitation that prevents payments from being
applied to the checkoff also prevents a multitude of errors in applying payments to the account that
existed in the legacy methodology. There is a real reason why the system works as it does.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 1:45 PM
To: Giardini, Richard J.; Couch, Mark P.
Subject: RE: voluntary checkoffs

I appreciate your comments, and I trust that they reflect what happened. However, if Roxy is getting
complaints and if Mark is correct that there will be some pressure to allow these non-refund contributions I
think it prudent to try and get ahead of the curve and submit the SQR . It may be that we will have to
simply allow any amount that is posted from the check-offs and bill if there is a discrepancy. Thanks.

7113 /2010
Page I of 4

Vecchiarelli, John M,

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 2:33 PM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs
I couldn't disagree more. First of alii do not believe that Colorado was the first state to allow check-offs , I
think if we research other states we will find that they are limited to refunds and that is what was expected
here. Secondly I do not believe that the legislature gave any thought to our superior collections expertise ,
in fact if you listen to them you will find that they do not think do a very good job. They simply wanted to
make it easy for taxpayers who were due a refund to make a contribution of that refund or a portion
thereof to the charities involved. They did not want us to do the work of the charities. Perhaps I should
have our telephone collectors solicit donation instead of dunning debtors. I could also waive penalty and
interest in exchange for donations to the check-off charities.

From: Horwitz, Phillip C.


Sent: Thursday, July 08,20102:12 PM
To: Vecchiarelli, John M.
Subject: RE: voluntary checkoffs

It does seem to me that we can do that, and that our systems are designed to do. Contrary to Richard's
and your suggestions , it seems to me that this is exactly what the legislature was trying to do when it
passed these checkoffs. To the extent that the agency's collection expertise increases the amount these
recipients receive, that seems to have been the legislature's objective. I recognize (as do you and
Richard) that there is a high cost to such a system and that it is a poor use of state resources. However,
it seems to me certain that the legislature does not feel the same way (or at least did not at the time these
were passed).

I do think all these issues of what is best practice is academic, though. I think it's a tough row to hoe to
argue that the statutes allow us to limit the donations to refund recipients.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 20102:07 PM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs

It is not a system limitation! The system can allow for these contributions. What the system cannot do is
make sure that the amount posted correctly (thus subjecting the line to data capture errors) or verify that
the payment has cleared , before it posts. That means we may be in a position where we have to bill the
taxpayer and if unsuccessful either write-off the debt or recover it from the check-off organization .

From: Horwitz, Phillip C.


Sent: Thursday, July 08, 2010 2:03 PM
To: Vecchiarelli, John M.
Subject: RE: voluntary checkoffs

I think this is fine, if that's the way we go, but we should recognize this as a system limitation not as a
statutory one. If we want to maintain this position , we would be best served by promulgating a regulation
articulating that limitation (though I worry that it would not pass muster in either the AG's office or LLS).
The more I read it, the more convinced I am that we are on shaky ground statutorily.

_.----_ ... -._-......._--------------_ ....----- -..------ ....-----


From: Vecchiarelli, John M.
Sent: Thursday, July 08, 2010 2:00 PM

7113/2010
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Vecch iarelli , John M.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 2:37 PM
To: Horwitz, Phill ip C.
Subject: RE: voluntary ch eckoffs
Neil please, I do not want to bother Tim .

-----_._-_.__._----_._----_. .-----_._- - - - - - - -
From : Horwitz, Philli p C.
Sent: Thursday, July 08, 20 10 2:36 PM
To: Vecchiarell i, John M.
Subject: RE: vol untary checkoffs

I think all of those are excellent ideas. I'm sure if we floated them by our friends across the street, they
would jump on them (as long as they didn't have a fiscal note ... )

My argument is not about what the legislature meant or did n't mean to do. I don't believe that is relevant.
I'm strictly looking at the language of the statutes, and I think we have a poor position if we try to limit the
donations to refunds. I don't believe the language of the statutes support us.

We can certa inly get a forth opinion fro m Ti m or Neil.

Phil

- --.- - - - - - - . - -
Fr om : Vecchiarelli, Joh n M.
Sent: Th ursday, July 08, 20102:33 PM
To : Horwitz, Phillip C.
Subject: RE: voluntary checkoffs

I couldn' t disagree more. First of all I do not believe that Colorado was the first state to allow check-offs , I
thin k if we research other states we wi ll find that they are limited to refunds and that is what was expected
here . Second ly I do not believe that the legislatu re gave any thought to ou r superior collections expertise ,
in fact if you listen to them you will find that they do not think do a very good job. They simply wanted to
make it easy for taxpayers who were due a refund to make a contribu tion of that refund or a portion
thereof to the charities involved. They did not want us to do the work of the charities . Perhaps I should
have our telephone collectors solicit donation instead of dunning debtors. I could also waive penalty and
interest in exchange for donations to the check-off charities.
-------- - - -- - - - - -
From : Horwitz, Phillip C.
Sent: Thursday, July 08, 2010 2: 12 PM
To: Vecchiarelli, John M.
Subject : RE: voluntary checkoffs

It does seem to me that we can do that, and that our systems are designed to do. Contrary to Richard's
and your suggestions, it seems to me that th is is exactly what the legislature was trying to do when it
passed these checkoffs. To the extent that the agency's collection expertise increases the amount these
recipients receive, that seems to have been the legislature's objective. I recognize (as do you and
Richard) that there is a high cost to such a system and that it is a poor use of state resources. Howeve r,
it seems to me certain that the leg islature does not feel the same way (or at least did not at the time these
were passed).

I do think all these issues of what is best practice is academic, though. I think it's a tough row to hoe to
argue that the statutes al]0\"1 us to limit the donations to refund recipients.

7/ 13/20 10
Page 1 of 5

Vecchiarelli, John M.

From: Vecchiarelli, John M.


Sent: Thursday , July 08, 2010 2:38 PM
To: Horwitz , Phillip C.
Subject: RE : voluntary checkoffs
Even still. I know we won't have a change to the system before then .

From: Horwitz, Phillip C.


Sent: Thursday, July 08, 2010 2:37 PM
To: Vecchiarelli, John M.
Subject: RE: voluntary checkoffs

The only problem is that Neil won't be back until Tuesday ..

------ - - --- - - -- _ .. __ ._---_._-_.- -_._----- - -_ ... _--- --------


From: Vecchiarelli, John M.
Sent: Thursday, July 08, 2010 2:37 PM
To: Horwitz, Phillip C.
Subject: RE: voluntary checkoffs

Neil please, I do not want to bother Tim.

--.-.- - - - - - - - -
From: Horwitz, Phillip C.
Sent: Th ursday, July 08, 2010 2:36 PM
To: Vecchiarelli, John M.
Subject: RE: volun tary checkoffs

I think all of those are excellent ideas. I'm sure if we floated them by our friends across the street, they
would jump on them (as long as they didn't have a fiscal note .... )

My argument is not about what the legislature meant or didn't mean to do. I don't believe that is relevant.
I'm strictl y looking at the language of the statutes , and I think we have a poor position if we try to limit the
donations to refunds. I don 't believe the language of the statutes support us.

We can certainly get a forth opinion from Tim or Neil.

Phil

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 2:33 PM
To: Horwitz, Phillip C.
Subject: RE: volun tary checkoffs

I couldn't disagree more. First of all I do not believe that Colorado was the first state to allow check-ofts, I
think if we research other states we will find that they are limited to refunds and that is what was expected
here. Secondly I do not believe that the legislature gave any thought to our superior collections expertise,
in fact if you listen to them you will find that they do not think do a very good job. They simply wanted to
make it easy for taxpayers who were due a refund to make a contribution of that refund or a portion
thereof to the charities involved . They did not want us to do the work of the charities . Perhaps I should
have our telephone collectors solicit donation instead of dunning debtors. I could also waive penalty and
interest in exchange fo r donations to the check-oft charities.

7/ 13/2010
Page I of 4

Vecchia relli, John M.

From : Vecchiarelli, John M.


Sent: Thursday, July 08, 2010 2:59 PM
To: Couch , Mark P.; Giardini , Richard J.
Subject: RE: voluntary checkoffs
I don't wan t to beat a dead horse, but I don't think tha t what was allowed in legacy is germane. The fact
that legacy allowed this simply points out the system limitations of legacy not a purposeful decision on the
part of the department to allow contributions from people who do not have a refund due. Having said that,
I am still resea rching what options we have in GenTax.

From: Couch, Mark P.


Sent: Thursday, July 08, 20102:06 PM
To: Vecchiarelli, John M.; Giardini, Richard J.
Subject: RE: voluntary checkoffs

J really appreciate the points you're making. Richard , but I would express the concern that we have done
it in the past, but now would be relying on statute to say we don't have to.

From: Vecchiarelli, John M.


Sent: Thursday, July 08, 20 10 2:04 PM
To: Giardini, Richard J.; Couch, Mark P.
Subject: RE: vol untary checkoffs

I truly understand you r concerns and in large part I agree with what you are saying. I am troubled by the
notion that the DOR is being used to process contributions and rnanage any resulting accounts
receivable. However, if Phi l concludes that the statutes do not limit contributions to accounts wi th refunds
due , where does that leave us? We must implement the statutes to the best of our ability.

- - - -_._-_._----------_._-
From: Giardini, Richard J.
Sent: Thursday, July 08,2010 1:53 PM
To: Vecchiarelli, John M.; Couch, Mark P.
Subject: RE: volunta ry checkoffs

I have real concerns that the complaints from billing for checkoffs (and the losses to the state for writing
off amounts less than $10) will be far worse than any feedback we have received from the checkoff
agencies. Furthermore, we can not wait for the SOR resolution to decide what instructions go into the 104
book for 2010. My vote is to rely on the statutory reference and continue to offer the extension payment
worka round as an option for the 100 taxpayers who really want to donate on the tax form.

Perhaps it is important to explain to Roxy that the Gentax limitation that prevents payments from being
applied to the checkoff also prevents a multitude of errors in applying payments to the account that
existed in the legacy methodology. There is a real reason why the system works as it does.

From: Vecchiarelli, John M.


Sent: Thursday, Ju ly 08, 2010 1:45 PM
To: Giardini, Richard J.; Couch, Mark P.
Subject: RE: volu ntary checkoffs

I appreciate yo ur comments, and I trust that they reflect what happened . However, if Roxy is getting
complaints and if Mark is correct that there will be some pressure to allow these non-refund contributions I
thin k it prudent to try and get ahead of the curve and submit the SOR. It may be that we will have to

7/13/20 10
Page 1 of3

Vecchiarelli, John M.

From: Giardini, Richard J.


Sent: Thursday , July 08, 2010 8:59 AM
To: Couch, Mark P.; Vecchiarelli, John M.
Subject: RE: Tax checkoff fund glitch
Last year, approximately 100 taxpayers paid additional money so they could donate extra money to a
checkoff. We tried to include this functionality in Gentax, but the way Gentax processes overpayments we
had two options. To allow taxpayers to donate additional money to a checkoff, Gentax will have to include
checkoff donations in the billing process. This means that a taxpayer who makes a donation thinking they
had a refund but made a mistake that overstated the refund will receive a bill plus penalty and interest on
that donation amount. This is not correct and will result in significant problems, which is why we selected
the lesser of the two evils and restricted the checkoff payments. We have offered the option to taxpayers
to pay an extension payment that can then be applied to the checkoff as a work around if they are truly
committed to donating to the checkoff on the tax return.

From: Couch, Mark P.


Sent: Thursday, July 08, 2010 8:05 AM
To: Vecchiarelli, John M.; Giardini, Richard J.
Subject: FW: Tax checkoff fund glitch

Hi guys,

Roxy just called and wanted to follow up on this issue.

She needs to verify how many checkoff contributions have been made historically by taxpayers who owe
money?

She also asks why this functionality was not included in the CITA programming and what it would take to
include it.

Thanks,

Mark

From: Huber, Roxanne M.


Sent: Wednesday, July 07, 2010 7:51 PM
To: Couch, Mark P.
Subject: FW: Tax checkoff fund glitch

Mark, can you look into this, not sure this is right.

From: Gurr, Jenifer [mailto:Jenifer.Gurr@ag.state.co.us]


Sent: Wednesday, July 07,20107:18 PM
To: Huber, Roxanne M.
Subject: FW: Tax checkoff fund glitch

Director Huber:
Commissioner Stulp asked me to fo rward the following email to you.
I guess the questions are, is this just a technology glitch and will it be resolved?
Let us know if you need more information.

7113 /2010