IBM Wins Tax Liability Case

Court finds Golden erred in two separate audits

Hugh Gottschalk, President of Wheeler Trigg O'Donnell

Wheeler Trigg O’Donnell recently represented IBM in a Denver bench trial against the City of Golden that resulted in the court invalidating certain tax assessments on IBM from 2006 to 2012 and also nullifying a 50 percent penalty. In the decision, Denver District Court Judge John Madden wrote a judgment from previous litigation in Jefferson County court about a tax assessment from 2003 to 2005 did not preclude IBM from litigating this case’s issues, because the Jefferson County court based its previous decision on IBM’s failure to pro-vide information.

“This is a recurring issue,” said WTO president Hugh Gottschalk, who represented IBM along with Pawan Nelson. “The money that Xcel pays to IBM for its contract services…is a repeating thing, and so if it is ultimately concluded, it has recurring significance. It’s about getting the law and the taxability of these payments right, both for this time period and for cur-rent and future time periods.”

In an email through a city spokes-person, Golden’s finance director Jeff Hansen declined comment beyond saying the city is “disappointed with the decision.” He confirmed the city will decide in a July 26 executive session with City Council whether to appeal the judgment.

To read this story and other complete articles featured in the July 16, 2018 print edition of Law Week Colorado, copies are available for purchase online.