Challenging Tax Laws with Michelle Bush

Hosts & Guests

Meredith Smith, Senior Tax Manager, SALT

Judy Vorndran, Lead Partner, SALT

Michelle Bush, Tax Attorney, Silverstein & Pomerantz


Challenging Tax Laws With Michelle Bush

Meredith Smith [00:00:04] Welcome to SALTovation. The SALTovation Show is a podcast series featuring the leading voices in SALT, where we talk about the issues and strategies to help you make sense of state and local tax. Welcome to another conservation discussion. Today, we are joined by Michelle Bush, a partner at Silversun Pomerance law firm. Michelle began her tax practice with the tax and revenue division of the Utah attorney general's office, where she handled individual income tax sales and use tax and property tax matters on behalf of the Utah State Tax Commission. After becoming the property tax section chief for that office, she litigated state assessed property tax matters involving public utilities, telecommunications, airlines, railroads, pipelines and mining properties. Michelle moved to Colorado and served as an assistant city attorney with the city and county of Denver during her tenure. She has litigated numerous local taxation and bankruptcy matters before administrative hearing officers and in Colorado courts. We are lucky to have Michelle join us today to give us her insight, especially from the perspective of someone who challenges tax law within the court system. Michelle, thank you so much for being here today.

Michelle Bush [00:01:18] Thank you. Thanks for the invitation. It's great to be here.

Meredith Smith [00:01:22] And as always, cultivations. Judy Vorndran.

Michelle Bush [00:01:25] Hello, everyone.

Meredith Smith [00:01:27] Michelle, I gave an incredibly high summary of your background, but walk us through the progression of your career.

Michelle Bush [00:01:33] Yeah, you bet. So I graduated from law school in nineteen ninety two, which doesn't sound longer than it feels. And at the time I was working for the Utah Attorney General's office and they had an opening in their tax division. So, you know, it's not like I set out to become a tax attorney, but that was the job that I was able to get. And so I've been doing salt since I was a brand new baby lawyer who started off doing really low level stuff, individual income tax. They put, you know, always the lowest person on the totem pole. You get put with them. Tax protesters, so I got to deal with a lot of the folks who think that, you know, they don't have to pay income taxes because there's a fringe on the flag and things like that. So I worked my way up there doing sales and used a little bit of corporate franchise tax, individual income tax, and eventually moving to the really large state assessed property tax group. So that's huge litigation. You're talking about properties that cross state and county lines. Their values are in the billions of dollars. So that was my primary focus starting in about nineteen ninety nine. And then I did that. I had a brief stint at Salt Lake County for about a year. I moved from the Utah AG's office to go to the Salt Lake District Attorney's Office to do exclusively property tax. And that was supposed to be a long term career move. But then things changed and our family decided to move to Colorado. So I negotiated a year off to be with my kids who were young at the time, three and five. And then after my daughter said, Mom, when can we go back to daycare? It's time to start looking for a job. And magically, Denver had an opening and the job listings said we're you know, we're searching for someone with 10 to 15 years of state and local tax litigation experience and all of these areas, sales and use property like they're looking for me. I mean, there really are, you know, the students, there aren't a lot of us so applied for that job. I was fortunate enough to get it and spent five years with Denver doing locally assessed property taxes and sales and use tax and learning about Colorado's home city environment because Utah doesn't have that. So that was a whole new thing. Wow. I mean, that's

Meredith Smith [00:04:08] the word for Colorado's tax system.

Michelle Bush [00:04:12] I think that's the technical term for it. Yeah, it's definitely. You know. It's hard to comply with all of the home rule cities and their different interpretations of that. So, you know, I spent five years with Denver and learned a lot and worked with a lot of great people, representing the Treasury division there. And it just turns out I was fortunate enough to have an opportunity to join Neal Pomerance and work with Silverstein of Pomerance, the Denver office. So I've been there since 2012. And I think that's you know, if I have my way, that's that's where I'll die. So it's great , it's great practice. And I'm glad I made the change.

Meredith Smith [00:05:03] So does that mean you cross sides representing the city and then now representing taxpayers?

Michelle Bush [00:05:09] Exactly. Just doing the exact same stuff. Switching sides as Neal. You know, some people that I used to work with say I've gone to the dark side. Neil says he rescued me from the dark side. So it's a matter of perspective.

Meredith Smith [00:05:22] Are you allowed to say which one you prefer more?

Michelle Bush [00:05:27] You know, I think. Every time I worked wherever I worked, it was the right thing at the time. When I was just starting out, I was also in the Army National Guard. And so I chose public practice because I didn't really foresee that I could do military service in a reserve capacity and be in private practice. But I also had a young family. So that was just the right thing. Now, this is the right thing for me to do in private practice. I can leverage my experience, you know, and my relationships and my knowledge to do even more broad, broadly challenging practice. So. So is that a good way of avoiding an answer to your question?

Meredith Smith [00:06:13] It's as if you haven't been listening to all the political stuff going on where you don't have to clarify.

Michelle Bush [00:06:20] Well, if Neal is listening, then I prefer what I'm doing now.

Meredith Smith [00:06:23] Yes, the lifelong commitment needs to say I prefer

Michelle Bush [00:06:29] the business side. Exactly. Yeah. No, it's been an excellent move and I'm glad I made it.

Judy Vorndran [00:06:34] Wasn't it just overwhelming coming here, though, from Utah? I mean, I feel like Utah has its complexities, but a heck of a lot simpler than 71 home rule cities, one state, six hundred eighty three statutory cities. And I mean, for such a small state, we have such a complicated state tax system and wonder why, like, why were we like this? I mean, and then I was saying I, I think we were talking earlier where Denver the population is probably equivalent to the population of Utah. I mean, I'm going to go right now. I haven't done it yet, but I think it's almost the same amount of humans. So even though it is the entire state, Denver is a very large metropolitan area. So really it's a very different mentality and sort of city versus state, but similar population issues. So a lot of work, honestly, and a lot of nuance and a lot of business. And you've got your metro area of Utah, Salt Lake City and Provo and some of that and your outlying areas with your recreational area, ski areas and so forth. So you kind of have a little bit of the same of what we have here, honestly, metro area schools and you've got your skis and your fishing and all the different things that Colorado provides to its citizenry and visitors. So similar issues, but we have such a crazy system. Did you come out about it? Oh, my gosh. What is wrong with us?

Michelle Bush [00:07:59] Well, when I first got here and somebody said, oh, yeah, you've got to figure out the home rule of home rule cities. And I nodded my head, like, yeah, I've got to do that. And then I'm thinking, what the heck is that? So I think I had to Google it even to figure out what that meant, because that was a whole new thing. It's definitely one of the main reasons. I'm really glad I spent five years with Denver. I don't think you can grasp the home rural environment unless you work in it or work with it. And even then, there are still things I have to say. Does Denver's code say that even though I worked there and looked at that, that's all the time I have to keep looking at it. And there's just so many moving parts and, you know, and so even if Denver has the same code, a neighboring city has the exact same code, but for whatever reason, they interpret it and apply it. So you have those. Yeah.

Judy Vorndran [00:08:56] And then business is morphing all the time. Right. And it's not like I'm just curious and unglue of those two experiences, like in terms of enforcement. Right. You are working on behalf of enforcement in both jurisdictions and now you're working on behalf of valid enforcement. I would argue like Bill O'Reilly. Right. Like you wouldn't have a case if you didn't think the government was overreaching. To my mind, if people were good with investments, they would pay them. Right. They don't hire an attorney if they feel comfortable with what the decision is and they're not comfortable with the decision. So what framework do you bring with regards to that, giving your position as a government administrator and say these are valid? Now you're saying, wait a minute, there's some overreaching here. Where are your thoughts on it?

Michelle Bush [00:09:37] Right. Well, first, I think what you're saying is the taxpayers who make challenges to things that are overreached. I think that's even a small percentage of the actual overreach because, you know, you have a small company that gets a very small assessment. It's certainly, you know, they have to make a business decision. Are you going to pay somebody thirty thousand dollars to fight a twenty thousand dollar assessment? And that's just an example. And so there's a lot of overreach. I think that happens. That just never gets called on. Yeah, the city's become emboldened by that. So we hear all the time that we've always imposed this tax. Nobody's ever challenged it. I heard that when I was with Denver. Nobody ever challenges this. And then you start looking. Well, just because nobody's challenging it doesn't mean it's the right application, doesn't mean it's the wrong application. Right? Correct. But long standing practice is what the cities love to say. Well, this is what we've always been doing. Well, let's look at your code and see what your code permits you to do so. You know, from the client perspective, there are situations where the client feels like it's an overreach and we have to tell them, you know, in this case, it's not the city that got it right this time. And we do that when it makes sense. But, yeah, I mean. If you're it's a balancing act, right, the cities are genuinely having worked with auditors that Denver and Utah. Most of the auditors that we encountered, they're just trying to do the right thing. They have been told what their code means. They've got an understanding and our clients are trying to do the right things. I think it's a really, really rare case where you have either an auditor who is blatantly trying to push things that they think are beyond the scope of their code or a taxpayer that is absolutely a scofflaw. I mean, but it's a balancing act. You've got to figure out where that line is. And I think that's the constant tension because the economy is always evolving. Products are always the way people do. Business is evolving. But in Colorado, because of TABOR, the codes don't get to evolve, you know. So you've got to lock yourself into this nineteen ninety two, nineteen ninety one environment. And can that code have predicted the new services, the new economy, the new kinds of products that are rolling out. And so the cities have to be creative, if you will, to try and figure out how they administer these. Doesn't sound like an older code, but, you know, there's a lot that's different from 1990

Judy Vorndran [00:12:17] that it is hard to make laws. As we all know, it's a time consuming, years long process. It doesn't just happen overnight if it's put together thoughtfully.

Meredith Smith [00:12:26] Well, and especially when you have to push things out because of TABOR to a vote of the people. You know, I, I, I live in Denver, so I vote on Denver measures reading. I get my blue blue-black for the day, I get my blue book for Denver and I'm reading kind of the ballot initiatives. It's like I have no idea what this means though. Things are written such that the constituents can really understand what they're trying to vote for. That is really in the best interest of the state or the city or whatever. Right.

Michelle Bush [00:12:57] That is even. Yeah, even as a tax practitioner, I had to read the Blue Book on the Gallagher amendment thing multiple times, and I'm still not sure, you

Judy Vorndran [00:13:09] knows that I understand what they are meant to say. No, I couldn't agree more. I'm reading the language of the ordinance in the state or whatever the language, and I'm thinking, what are you really saying? And then I read the pros and the cons and I'm like, OK, I guess this is a pragmatic application on this side versus this side. And even that wasn't that clear to me. And this is all we have now on whether or not to allow our residential property taxes to increase, which is something that's been falsely kept low for many years to our benefit. As I look at property taxes around the nation, Colorado has some of the lowest, right? Yeah, it's a very interesting issue. And I'm not a big fan of property taxes going up, but fair market value personally, because people pay a certain price and they buy and that's kind of what they expect. And so why should they have this false inflation being in their tax base when it's not even a known thing? Right. And a different and up and down and but I'm going to live in my home until I die maybe. And now I've got these taxes that are going up and up and up. So that troubles me, to be honest, as a taxpayer.

Michelle Bush [00:14:10] So. Right. But I think if you even look at the Blue Book on the initiative on the ballot now the Gallagher Amendment initiative, I think even if you can understand what the initiative says, it's not clear what it means or what it's going to do. It's not clear to voters if I vote yes, what does this mean for me and what does this mean for the business down the street? I think that, you know, and I'm not sure we even know what the answer is to it.

Meredith Smith [00:14:40] Yeah, Michel, I know you know, there's this process within Colorado of trying to simplify everything from a sales tax perspective. The system, one point of central registration, central remittance. But we've heard kind of on multiple levels that the cities really didn't. And maybe this is evolving. The cities didn't trust the state to collect the money that they're due and that there was just this tension of relinquishing control to someone else. Did you find that when you were working in the city?

Michelle Bush [00:15:12] Well. I think it's fair to say that the cities with their home rule thinking necessarily have, you know, this idea that we got to do this, especially a big city who is not just self collecting, but they're not even farming that out. They have their own collection group. I mean, Denver's very large and some of the cities are small enough that they can't do that. So I think maybe the thought process would be different from a city like Denver or Aurora. Some city that's large enough to have their staff. So I would say I felt like there was distrust between the cities and the state so much as the desire to retain control and have your fingers on everything. I mean, I speak honestly. I think it would be hard to say that the state isn't to be trusted to collect the money and to divide it out, especially if the cities have an ability to to review the records. And certainly they do or they should. But no, I never felt like there was a high level of distrust between Denver and the state. And I don't. I don't sense that now. At least that's pardon me if I'm wrong,

Judy Vorndran [00:16:29] that I perceive to be in the counties and the outlying areas. Yeah, there was a lot of feedback during the discourse around the system about you're not going to get the right people in the jurisdiction. You don't know where we are full. And then some of the cities don't even have good meat and bounce rights on paper. They don't even have a good record of knowing who is where. And we got some comfort around that because we bought a third party. That state bought a third party system called trees that actually went in and roof top rated everybody. I mean, they cite everything. I've spent tons of man hours basically figuring out where everything is so they can accurately reflect the jurisdictional boundaries of a rate. So, you know, the county is an amoeba or a parallelogram or whatever the heck the shape is that fits over the overlay of the city. And then you've got the arcade. So just all those go to different cities and counties and all that. So there was a lot of fear, I think, outside of Denver about where they were. But that was partly related to bad technology, to be honest, or lack of technology, honesty and resources to really accurately measure where people are. And these are remote areas with maybe five thousand people, to be blunt about me. How are you going to justify spending the cost to figure out where things are? I mean,

Michelle Bush [00:17:44] it's the cities, the states already collecting for all the statutory cities and counties. So the states already doing that in some of those are in outlying areas. So, yeah, once you get the boundaries figured out and then you can have a system you can trust for sourcing, then. Yeah.

Meredith Smith [00:18:02] Yeah, I remember I remember my internship like the first summer I worked in public accounting because I walked right into public accounting, doing state and local tax. So I'm going to kind of like the weird outliers. But I remember our sales tax guy pulled out these maps and was like, what the hell are you doing? Like, I thought we were like tax people and like, our nose was in some sort of book, but like this whole map thing. He's like, all right, well, this is Alamosa County and this is actually this. And it was all highlighted and written all over. I was like, this is ridiculous. I don't know if I'm signing up for this

Michelle Bush [00:18:41] well and talk to a company that's doing business in all of those places. Have you ever looked at the boundaries of North versus Borten, for example? I mean, good luck trying to figure out you've got an address on one side of the street that's in a city address on the other side of the street. And even taxpayers that are trying to get it right. It's a challenge. Yeah.

Judy Vorndran [00:19:04] And the Avalon audits and they're I mean, it's kind of incumbent on them to know. And it's sort of like that's sort of ridiculous thing to do. I mean, you can't even go get your name and address because you could say it's in Denver, but it's in Northwest from a perspective of like, how are people supposed to know this is craziness?

Michelle Bush [00:19:22] Right. Well, because a lot of mailing addresses that are actually in Glendale have Denver. They say Denver. Yep. Because Glendale is a little donut hole in Denver. And so, yeah, you've got to really want to get it right.

Judy Vorndran [00:19:36] And did you ever get any history as to why it was like that? How would that get how it gets done when you're building something that becomes this different pie shape, whatever shape an amoeba covers one thing versus another. How about that from a building perspective? Why don't we have clear lines?

Michelle Bush [00:19:54] I don't know. But yeah,

Judy Vorndran [00:19:56] that's one that I live on Sheridan and apparently, like right down the middle of Sheridan is Wheat Ridge, and then I'm Denver. I mean, it's that close to where I live.

Meredith Smith [00:20:05] I learned that I learned that the hard way because we were driving north on Sheridan and we got rear ended. So we had to call the police. But I was filtered to the Wheat Ridge, not like a non-emergency line there. Like, I was like, you know, I'm on thirtieth and shared. And they're like, well, are you going northbound or southbound? It's like, well, I'm northbound. Like, well, that's Denver. So we need to transfer you to Denver

Judy Vorndran [00:20:26] and be like, what is it, Lakeside Amusement Park? And that's a little town. Yeah. And so there's little cops doing this little small rowboat area and they handle that side of the street. So they're constantly speeding tickets on that side of the street.

Meredith Smith [00:20:39] A friend of mine got a tire there. She said it was very expensive.

Judy Vorndran [00:20:42] Yes. It's like a revenue raiser for them because I don't really have any commerce of any meaningful Molly's. I guess. I think that's in that jurisdiction

Michelle Bush [00:20:50] or it's a good thing your accident wasn't in the middle of the street. Like in a turn later she was like, are you sitting in the driver's side or are you in the passenger side?

Meredith Smith [00:21:01] Because then at the end of the day, it didn't really matter because it was a manager driver. And it's like, I don't know who's going to pay for it. Why the police report didn't really matter because we were on the hook for it. Right. I digress. Well, so then what kind of opinions do you have on the set system? Like, do you know? I don't know, it's just it's this thing, it's in place, do you think it's a good thing? You know, I know Judi's and working really hard on it. And I know she said that you've kind of

Judy Vorndran [00:21:32] made it a part of it. Her partner

Meredith Smith [00:21:34] so bright and come in

Judy Vorndran [00:21:36] at the table to make sure he was there to advocate so he could be telling these legislators and cities and counties like don't overreach. Right. But I also sort of I was sort of like, we've got to get rid of this. I mean, there's just so much noncompliance at the local small business level and it's too complicated for them to handle. Right. So the money's not going where it needs to go. And I and I also believe that the biggest tax payers end up bearing an undue burden, a greater share of the burden than small taxpayers, because everybody's not contributing as they should be. And I don't think that's a fair level of enforcement either, right?

Michelle Bush [00:22:11] Yeah, I think from putting myself in the shoes of our clients, any time you can remove a barrier to compliance, I think that's a good thing. So, you know, because a lot of our clients, no matter how large they are, their tax departments are not always very large. I mean, some of them have large tax departments, but these people that work in the tax departments of our larger clients, they're bused in there. But to get this right. And so any time you can make compliance easier, I think that's a good thing. I do think, you know, it remains to be seen whether big cities like Denver are going to sign in. And Aurora, I think that's what's really going to take to have a meaningful removal of barriers. And I know it's just sales and use tax right now. There are a lot of other other returns our clients have to file, you know, occupational privilege tax. Sometimes the lodging tax is in a different form. So I wouldn't want to make perfect the enemy of the good because I think every step towards increased transparency, removal of barriers is a good thing. And I do think if the cities can get some comfort, they are going to go over here to this portal. We're going to get our money. We still have our ability to audit. We still have our ability to be made whole. If something goes wrong, I think you're going to see if it goes that way that more and more cities will be comfortable in, especially the smaller ones that don't have their own audit staff or their own compliance stuff. You know, so but you have and you if you give meaningful streamlining to companies that maybe haven't been in compliance before, that that could move them, you know, nudge them right. Towards compliance.

Judy Vorndran [00:24:03] And then I also think if there were a ton of money and there was no shortage, do you think we'd have any audits kind of wonder right when things go or do you like? So there'll always be a level of some checking in. Right. We're still here. We're not just trusting you to do it right. But I just always wonder, as I watch my career, I feel like I have been really busy when things are dire because enforcement kicks in and then my clients get in trouble and I've got to help them. And I'm like, oh, my God. And so that ends up being the push pull. But things are good. My clients usually say, all right, I'm going to fix this. We're ready. You could afford to. Well, we want to do the right thing. We just didn't have the resources or the ability to focus on it. Now we will. But I don't know if you feel that way, then I think so. Then I think what governance thing do they think I will go after because I just should. Or do I go after because I want to beat people up. Right. Or I need the money. Like, what is it? Desperation. What is it that creates enforcement at the government level? Because. No, that's arbitrary. I feel like.

Michelle Bush [00:25:07] Right. I think we saw this in the downturn in 08, 09.

Judy Vorndran [00:25:12] Yes. Yes. The number of audits, the ten ninety nine enforcement. I mean, it was crazy. The next questionnaires are flying around.

Michelle Bush [00:25:20] Sure. Well, you know, fiscal pressure is clearly a driver of that. If the cities get squeezed, you know, if you have a city that. You know, a lot of their revenue comes from sales and use tax and the sales and use tax base goes down. They've got to figure out, OK, how do we bring in here's how they view it. How do we bring into compliance the people who are not complying? Now, do you call that going after someone or before always being done? Sure. But I think in good times there's also, let's say, really good financial times. The city is no, there's a lot of business being conducted and maybe some of it's fallen through the cracks, maybe these big companies or really, really fast growing companies. We see this a lot with some of our clients who start it up and then all of a sudden their business went crazy and they didn't have the compliance structure in place because they didn't think about it. And a lot of companies don't even know about US tax. They hear about sales tax because as a consumer, you go into a store, you pay sales tax, you know what that is. But use tax is almost like when you say use tax, people figure they look at you and say, I know the words you're using are in the English language, but I don't know what that means.

Meredith Smith [00:26:37] But I have used that phrase before. I live in full disclosure, everyone.

Michelle Bush [00:26:45] So to explain to them, especially new construction companies or new businesses that are in technology, if they're not selling something, but they're providing a service and they're consuming things to do that, they don't have a lot of awareness around their use tax reporting obligations. And so what we see is businesses, things go really, really great. And then they get big enough to finally realize they have a problem. Right. And now. OK, now what? Either the city has come knocking because they found you. Yes, because they drive around all the time and they say, oh, that car has a rap on it or it has this or it has that, or they bought something or someone came to do a service for them or, you know, whatever. They're always looking for new leads for audits.

Meredith Smith [00:27:37] OK, well, you know, Michel, you've given us a lot of kind of we've talked a lot about the jurisdiction, the city staff. But that's not who you are today, right? I mean, granted, you still do it and you still live in Colorado. But, you know, has there been a case that you've argued that has had the biggest impact on the way you think about tax and the application of the law?

Michelle Bush [00:27:58] Sure. So, you know, when I was a baby lawyer, I was involved in this two week long slugfest in Utah on some property tax, big oil and gas property. And going through that trial, it drummed home to me. And there's something I remember in every piece of litigation that I do now, that these are compelling issues and people think about taxes being, oh, tax. When you go to a party and somebody says, what do you do? I do tax litigation. They're like, get by. So I think I will see my friend over there, but frankly, they're emotional. People get emotionally invested on both sides. And the really what underlies for me in every piece of litigation, you've got to tell a story and you think about what this is tax. How can there be a story? Well, that's just not true. There's always a story to be told. So you've got to get a really clear grasp of the facts and you've got to be able to tell a compelling story about why something is either taxable or why it has this value or doesn't have this value. So fundamentally, to me, after going through that trial in two weeks, I'll say we lost that truck because we didn't have the best grasp of the facts. And now every time we take a case that is fact critical, obviously setting aside some cases that are just pure questions of law, you still have to have a compelling story. You know, we litigated this case all the way up to the Supreme Court and prevailed. But it's because we were able to set a compelling story about why this entity was created, what business purposes did it have so that it wasn't a sham entity? The courts gave it substance. But you've got to put in that extra work to say, I need to understand the facts. I need to understand why. So for me, tax litigation is just like anything else. You've got to present your story. You've got to be the most compelling. So fundamentally for me, I try to remember that in every piece of litigation, you know, it's not just dry tax work.

Judy Vorndran [00:30:13] I was working with your firm on a landscaping client of mine, and the city of Denver was going after two of the biggest landscapers in the state. The point of the weather landscape is that our retailers are used to it. What is right? And Denver decided on their retailers and. They are not thinking they are retailers, they're thinking they're contractors, right, and I'm going to this hearing. What if someone was there before you at your firm was working with me? I can't, Rob. I think it was Rob. So I remember driving there and it's very stressful, like it's just like half a million dollars. I miss a lot of money at stake for this client. And I'm driving. I'm very agitated and I want to win. I want to prevail. We won. I believe we're right. We believe the city is wrong. But I also sort of had this context of like, well, at least it's not Nazi Germany. I don't know why I went to that example, but those are honestly the Holocaust and all that. And I thought, well, all right, that puts a framework around it. You usually get really caught up in the money, the money at stake, the risk involved, the slight people feel people they don't want to do poorly. They thought they were doing things right. There's just so many things wrapped up in that story, isn't there? I mean, both sides honestly both wanted to what they believe is the right answer, both sides. And you have to kind of figure out how to get to the middle of that and at a resolution.

Meredith Smith [00:31:36] And and, you know, when you say when you want to kind of pull together a compelling story, is that factor when you leave the emotion out, you know, or do you or is there like this perfect marriage of the two of them?

Michelle Bush [00:31:52] Yeah, I think it has to be. I mean, I would say a little less. On the emotional side. There are some cases, especially for small businesses, where the emotion does matter. But large businesses, I think the compelling story is mostly factual. But I had the same thing you did, Judy, sort of an epiphany when I was in a trial. I was also in the military at the same time. And on my weekends, I was spending my weekends drafting wills and powers of attorneys for kids that were getting deployed to Iraq and Afghanistan. And it just drummed home to me, OK, when I grow up and I argue an attack case, nobody's shooting at me. At the end of the day, it's money. Sure, nobody wants to give away money. They don't have to, but. When you're in the middle of it, it feels so high stakes and so critical. Yeah, you have to be mindful that put it in perspective,

Judy Vorndran [00:32:50] not life or death or not. We're not a certain irony in someone's brain. But, you know, I do believe it can get to this thing. I mean, I certainly have felt that way over my career because so much is at stake or so much emotion as part of it. And I want to manage that. And then I own it, too. I take it in as a helper, as their advocate. Right. I'm like, oh, your case is my case. I feel bad for you, even though it's not really my money that's going to be at risk. But it's an interesting issue. And you've got to

Michelle Bush [00:33:18] especially for small businesses. I mean, if it's their livelihood, I mean, this is so critical. You miss something and then all of a sudden you're facing a tax assessment that's going to put you out of business because of some misunderstanding or maybe the city has changed their interpretation or their application or just plain honest error. And then you're

Judy Vorndran [00:33:41] a really good Vietnam. I think it was called. It was totally in California between 16th and 17th. That place had a line going out the door. This restaurant, amazing Vietnamese food. They got put out of business because they were not paying their sales tax correctly. They probably did not. Shame, shame they were there for years. I mean, I love that restaurant. I can't even imagine what that family went through. Honestly, I can't, because I'm sure they just did what they didn't know. And they just the whole business was wiped out. And who was right? Because there was a lot

Michelle Bush [00:34:16] you go three years down the road, and if you're a business that should have been collecting from your clients, if you're a Vietnamese restaurant, you can't go because you don't know who your clients are. You can't go out and say, you know, on that floor noodle bowl, we didn't charge you taxon, I'm going to ask you for 18 cents or whatever,

Judy Vorndran [00:34:34] and that puts them out of it. I just remember being even a few years ago, I remember seeing some notices on some doors downtown Denver were shut down for sales tax errors or whatever. I mean, some of the notifications were like five thousand twenty eight. Hatzalah means I'm like that, like this. But it came.

Michelle Bush [00:34:52] It really came. I'll tell you, before recreational marijuana became a thing, you know, the dispensaries were working really hard to start collecting sales tax because it was a pathway towards legitimacy that was working with Denver at the time. And the guy in charge said, well, what if they don't pay their sales taxes? Can I seize their inventory and sell it at tax sale? I'm thinking that would have been the most amazingly well attended tax sale in Denver's history. And then

Meredith Smith [00:35:27] you can walk out the door and get busted for possession and then have to pay the fines

Michelle Bush [00:35:32] for possession or distribution. The city, Wright County of Denver, is now distributing marijuana. But I see your dog legal

Judy Vorndran [00:35:44] issue you ought to be thinking about,

Michelle Bush [00:35:46] right? Great. I told them no. I'm like, even if you had the legal right to do, let's not you know, we're not going to do that.

Meredith Smith [00:35:53] Well, and then kind of with that, do you see anything in our future where you think you might be litigating some contentions if you had a crystal ball? Is there kind of like, you know, can you foreshadow anything that may come from a litigation perspective?

Michelle Bush [00:36:12] Sure. I think in the short term, we don't know yet what it's going to mean for our taxing jurisdictions and for our businesses. You know, I hear from property tax clients all the time that they couldn't use their facilities or it's a landlord whose businesses were not allowed to use the facilities. So they have either vacancy or they aren't able to collect rent. So that's going to be a problem. You've got sales tax revenue crazy down in some industries, restaurants, movie theaters, things like that. So I think you might see some short term covid. What about occupational privilege tax for those of us who are working remotely? I mean, Opti is usually not high dollar. But, you know, if you're a small city and you think I know those employees used to work in Denver, but we think they're all working somewhere else now. We want that hoppity. I don't know if you'll see litigation in those, but if I had a crystal ball, I will tell you the two biggest issues I see are digital products or electronic commerce, attacks on electronic commerce, the states trying to implement a regulation to text streaming services. We have strong feelings about that, whether that's TPP tangible personal property or is a service, is it even property? So I think you're going to see a lot of fights over. What is TPP and expansion to tax digital goods, electronic goods, things like that? I think that that's going to be many, many years of litigation, if I had to guess. I think you're also going to see. Go ahead, Judy.

Judy Vorndran [00:37:55] I was just going to say you have to find the right client to take it, because like we were talking about earlier, if it's a couple of thousand dollars, people are just going to pay for it. They're going to move on and are going to take a case that's going to cost them 30 to 50 thousand dollars vs three years of study. It needs to be material and it needs to be ongoing. So I think those are colleges where you've got to get the right taxpayer to take the case forward or a group of taxpayers. And honestly, businesses only sell motivation to do things like that.

Michelle Bush [00:38:24] Well, especially if they can pass it on to their customer. If you can pass

Judy Vorndran [00:38:28] the Wayfair law that the state enacted saying, well, we are a statute, therefore we can have a fair law. And a lot of what's used to do location in common and now we're going to destination collection low, right. But obviously any litigation on that, we've all just capitulated to it. But I would question whether that was a fair reading of the law. Right. But they said, oh, it's fine, we're going to impose that standard and we haven't seen any litigation on that. But, you know, that's a stretch of saying the language meant one thing that we curtailed it because of. Well, and now it means something else today, because the way there and that's sort of like administrative enforcement. Right. And that's what we're going to see with the streaming is an administrative position, saying our statute was written this way and therefore we can tax that. And the answer is really? That's what it meant. OK. Oh, yeah.

Michelle Bush [00:39:21] Yeah. So I think Nexus Nexus, the marketplace facilitator with their issues, that's the other bucket I was going to highlight. But I think those are all integrated into digital products because who's selling digital products? It's usually people that are operating from a remote location to you. I mean, you don't go down to a taco cart and buy a streaming service or something, you know what I mean? And so I think all of those are tied together. I think really fundamentally it's the codes that were established in nineteen ninety or ninety one trying to keep up with evolving commerce and the evolving economy in the way we do business anymore. And yes, the bigger the bigger vendors, the bigger electronic marketplaces, they're collecting tax because why not? You can pass it on to your customers. Customers become injured. They'll pay for it. It's going to be smaller. I do believe somebody is going to litigate this issue. Somebody is going to litigate, you know, is a home rule. The home rules are adopting these marketplace ordinances, economic nexus. Is that viable? Can you have a substate? Can you have Nexxus in one substate jurisdiction by virtue of establishing Nexus in another substrate jurisdiction? And now if I sell into Denver, do I have to collect Colorado Springs tax? So I think those are hot button issues, but. Digital goods. E-commerce marketplace facilitator. I think those are going to be hot button issues going forward.

Judy Vorndran [00:41:01] I don't know, like digital goods. I don't think that's advertising that you have probably seen. There's been Maryland trying to impose a digital advertising tax and Facebook ads. I mean, this SEO search engine optimization and monetization monetization of whatever our behavior we want to target to those people. So they will come to us and use our services and people pay money for that. I mean, we had a client that said three hundred thousand a month on Google ads, Google AdWords, I guess, different terms, so that when Google , when you Googled it, you came to their platform to say, we can do that for you. There's money in that. So what does that mean? Advertising has never historically been taxable anywhere except how we're thinking about it, because it's a big moneymaker for these guys.

Michelle Bush [00:41:49] I know at least one city that is currently taking the position that digital advertising is tangible, personal property and taxable.

Judy Vorndran [00:41:58] As far as tax newsletters, when you belong to an organization because it's a newsletter, you're like, I'm just a member and I get this ancillary newsletter and you're arguing that the whole bloody membership is taxable. I mean, yeah, I mean, that is Venit or LinkedIn ads are taxable. But what I'm just advertising a position or whatever, that's a taxable service up in Denver. I mean, we have had some fights about that. And what you do is some of our clients and a lot of money to belong to organizations or have events. I mean, they spend like one hundred dollars. This is like a twenty dollar three or fifty dollar a year bar association fee. Right. It's like something Ginder than that. So there's some serious money put towards these organizations. And Denver's like a tax.

Michelle Bush [00:42:44] Right. I think that that's what we're going to see. Anything that has digital is the next wave of and if you jumped the shark, so to speak, and to assume that all of that is tangible, personal property, where does that and what's not TPP? Right. And at one point, if you start defining TPP to include anything perceptible to the senses, how is wind or the massage? I might go get laid or how is that not? Where where do you draw the line, you know,

Judy Vorndran [00:43:20] and that's for so that's why we get them

Michelle Bush [00:43:23] exactly

Judy Vorndran [00:43:27] right.

Michelle Bush [00:43:30] So that's what I think is coming down the pipe. But, you know, the Colorado home rule cities are definitely working together too. To try to capture tax on these kinds of questions,

Judy Vorndran [00:43:45] to broaden their taxpayer base is well.

Michelle Bush [00:43:48] Absolutely no question about it.

Judy Vorndran [00:43:50] Out of state money, that's to me, like you were saying earlier, it's about getting other people's money, not in-state constituencies. We want to treat our businesses well or in city businesses. We want the money from these other companies selling to our citizens.

Michelle Bush [00:44:03] Yeah, yeah. But they forget it's they're selling to our citizens. So ultimately, who's bearing the burden of this tax is clearly the consumer.

Judy Vorndran [00:44:11] Absolutely. In the end, it always is.

Michelle Bush [00:44:14] Yeah, no question.

Judy Vorndran [00:44:16] How are you and me?

Meredith Smith [00:44:18] OK, well then as we wrap, I just want to ask if there is anything that you feel we should know that we didn't already talk about. Just one final thought to leave us with

Michelle Bush [00:44:30] one final thought, I'm going to just take a quote from my partner, Neil Pomerance. It's not taxable. It's not taxable. So that's the answer to everything. It's not taxable.

Judy Vorndran [00:44:42] So we're going to have Neil on. We'll let him know. We'll get him on here, obviously, if you are a woman in business and a lawyer and a litigator. And with all the things going on in this world of ours, you just want to really simplify some women out there. So that's why we wanted to interview you. Thank you so much for taking the time to speak with us today.

Meredith Smith [00:45:03] And I hate the term bad ass and your bad ass. And we're so lucky to have had you. You know, Judy, another bad ass woman in the business. Do you want to do her thing? Guys, this was a great conversation. You know, Michelle, we really appreciate your insight. This has been this observation podcast. I'm Meredith Smith. Until next time, this podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.

Questions asked and answered in this Episode:

    • Why did she switch sides from representing the city to representing taxpayers?
    • What are Michelle thoughts on overreaching enforcement?
    • Was there a lack of trust from the cities for the state to collect their dues?
    • Why doesn’t Denver have clearer boundary lines?
    • What are Michelle’s opinions on the Sales & Use Tax System (SUTS) system?
    • What case had the biggest impact on Michelle on the way she thinks about tax and the application of the law?
    • How do you put together a compelling story for litigation?
    • What does Michelle foresee in future litigations?

What You Will Discover:

  • [01:29] The progression of Michelle’s career
  • [05:03] Why she shifted from representing the city to taxpayers
  • [06:34] How she adjusted to Colorado’s complicated state tax system
  • [08:59] The balancing act on enforcing the tax law
  • [14:40] If Michelle felt any distrust between the City of Denver and the state of Colorado
  • [19:35] Issues with Colorado’s boundary lines
  • [21:15] Michelle’s opinions of the SUTS system
  • [27:38] What Michelle tries to remember in every piece of litigation
  • [31:40] How to put together a compelling story
  • [35:56] How the COVID-19 pandemic could play in future litigations
  • [37:37] Other litigations Michelle foresees in the future


  • “Wherever I worked, it was the right thing at the time.” – Michelle Bush [05:30]
  • “Just because no one is challenging it doesn’t mean it’s the right application. Doesn’t mean it’s the wrong application.” – Michelle Bush [10:21]
  • “Putting myself in the shoes of our clients, any time you can remove a barrier to compliance, I think that’s a good thing.” – Michelle Bush [22:10]
  • “But use tax is almost like when you say use tax, people think that… they look at you and say `I know the words you are using are in the English language, but I don’t know what that means.’” – Michelle Bush [26:28] 
  • “There’s always a story to be told.” – Michelle Bush [28:57]