Sales Tax Auditor Position Added to City Budget

Fort Collins will add a fifth sales tax auditor position in 2026, bringing the city's compliance enforcement staffing closer to levels maintained by comparable Colorado municipalities and addressing what officials expect will be a revenue-generating investment.

The addition moves Fort Collins from four to five auditors, a staffing level that more closely aligns with Front Range cities of similar size, according to comparative data presented at the October 14 City Council work session.

"I've always supported the addition of sales tax auditors," Councilmember Kelly Ohlson said during budget discussions. "I certainly am supportive of now. I'm glad Council is."

The new position appeared in budget documents showing Fort Collins previously employed fewer auditors relative to population than peer communities including Boulder, Arvada and Westminster.

Auditor Positions Typically Pay for Themselves

Sales tax auditors in Colorado municipalities commonly generate revenue substantially exceeding their employment costs through recovered taxes, interest and penalties from non-compliant businesses.

Boulder's 2024 budget estimates approximately $940,000 in direct sales and use tax assessment and recovery per auditor, while staffing costs including salary and benefits total between $120,000 and $135,000 per full-time employee, according to the city's budget appendices.

Loveland and Arvada have reported tax audit recovery in the $700,000 to $1.1 million range per auditor in annual finance reports. Denver regularly publishes cost-benefit ratios of at least 8:1 to 12:1 for its Sales Tax Audit Division, meaning every dollar spent on auditors yields $8 to $12 in recovered or preserved revenue.

Fort Collins' most recent recruitment for a Sales Tax Auditor II position listed a salary range of $70,000 to $87,000 per year, not including benefits. Comprehensive compensation including benefits for municipal finance positions in Colorado typically ranges from 35% to 45% above base salary.

Fort Collins Staffing Now Matches Regional Benchmarks

The addition brings Fort Collins to five auditors serving a population of approximately 171,000, creating a ratio of roughly one auditor per 34,200 residents.

That ratio now more closely matches Boulder's four auditors for 105,000 residents and Westminster's five auditors for 116,000 residents, according to 2025 department organizational charts and municipal budget staffing documents.

Greeley employs three auditors for 110,000 residents, while Loveland maintains three auditors for 79,000 residents. Longmont staffs three auditors for 102,000 residents, and Arvada employs four auditors for 124,000 residents.

Fort Collins maintained three sales tax auditor positions from 2015 through 2018, then increased to four auditors in 2019 during a finance department reorganization designed to meet revenue recovery targets, according to adopted budget documents.

The Colorado Municipal League's "Sales Tax Audit Best Practices" guidance recommends at least one auditor per $30 million to $40 million in annual sales tax revenue or per 30,000 to 35,000 population for cities with active audit programs.

Auditors Focus on High-Risk Industries

Sales tax auditors examine business books and records, summon business owners for interviews regarding tax compliance, and issue assessments for underpaid taxes under authority granted by Colorado Revised Statutes and Fort Collins Municipal Code Chapter 25.

Auditors typically focus on industries with higher risks of non-compliance, including construction contractors, auto dealers, restaurants and food service establishments, home improvement retailers, e-commerce resellers, and lodging and hospitality businesses.

Common issues triggering audits include delinquent or inconsistent sales and use tax returns, failure to remit taxes on large capital purchases, inaccurate business license filings, and reported revenue anomalies compared to marketplace standards.

Following assessments, the city may demand payment for underpaid taxes and penalties, suspend or revoke business licenses, or pursue collection through district court. The city can report flagrant non-compliance to the Colorado Department of Revenue for broader tax enforcement action.

Businesses subject to audit receive written notice and have rights to request conferences or hearings to contest audit findings under Fort Collins Municipal Code provisions.

Fort Collins requires sales tax auditors to hold bachelor's degrees in accounting, finance or related fields and provides regular training in audit ethics and technical tax law, according to Human Resources job specifications.

City Council is scheduled to vote on the 2026 budget revisions at upcoming meetings, with final approval expected before year-end.