On September 8, 2025, the Colorado Supreme Court (court) held that two municipal ordinances adopted in 1996 and 2015 modifying the City of Lakewood's business and occupation (B&O) tax on certain telecommunications services, that was originally enacted in 1969, constituted "new taxes" for purposes of Colorado's Taxpayers' Bill of Rights (TABOR). Accordingly, because the City did not obtain voter approval before enacting the ordinances, as required by TABOR, the court concluded in MetroPCS California, LLC v. City of Lakewood, Colo., 2025 CO 53; No. 24SA178 (Colo. S. Ct. September 8, 2025) en banc that the ordinances violated the Colorado Constitution and were invalid.

The Lakewood B&O tax originally applied to "the occupation and business of maintaining a telephone exchange and lines connected therewith in [Lakewood] and of supplying local exchange telephone service to the inhabitants of the city." Following deregulation of the telecommunications industry in 1996, the State of Colorado enacted a law providing that "any tax, fee, or charge imposed by a political subdivision shall be competitively neutral among telecommunications providers." In 2014, the State expanded the scope of the statute to cover broadband services.

In response, in 1996 and 2015, Lakewood revised its B&O tax to reflect the State and federal changes, noting that the "tax set forth in this chapter is not a new tax, the extension of an existing tax or an increase in a tax, but is the reduction of an existing tax to new entrants in order to eliminate a potential barrier to the entry of new providers into the business of providing basic local exchange service within Lakewood." The municipality did not seek or obtain voter approval before making the changes.

Effective November 4, 1992, TABOR requires districts to obtain voter approval in advance of adopting any "new tax."¹ Although TABOR does not expressly define what constitutes a "new tax," Colorado courts have explained that a "new tax" suggests creation, rather than alteration, but that the expansion of an existing tax to a new class of goods or activity "may constitute a new tax." Further, courts have noted that a legislative change causing only an "incidental and de minimis revenue increase" (as a percentage of the taxing authority's overall tax revenue and budget) — considered in light of whether any revenue increase projected to be generated by a legislative change is incidental to the legislation's purpose — would not constitute a new tax for TABOR purposes.

Applying these principles, the court concluded that both the 1996 and the 2015 ordinances constituted "new taxes," requiring voter approval under TABOR. Specifically, the court noted that the 1996 ordinance "expanded the class of providers subject to the tax to all persons, including non-utilities, who provided cellular service to any business or entity as its primary local telecommunications service." With respect to the 2015 ordinance, the court explained that the measure "further expanded the [B&O] tax to cover the provision of all cellular service to any business, person, or entity," thereby bringing "providers that supply cellular service to any person (rather than only to a business or entity) and to those providing cellular service when the service is not the recipient's primary local telecommunications service" within the scope of the tax.

Implications

Telecommunications providers that paid City of Lakewood B&O taxes that are not a "utility operating within [Lakewood]" and do not "maintain a telephone exchange and lines connected therewith in [Lakewood] and supply local exchange telephone service to inhabitants of [Lakewood]" may be able to discontinue remittance of this tax and may be eligible for a refund. This will generally apply to mobile and VoIP telecommunications providers. Any consumer that paid City of Lakewood B&O taxes to a mobile or VoIP telecommunications services provider may also be eligible for a refund.

Many other municipalities in Colorado impose similar taxes and have likewise adopted ordinance changes that may also be considered violations of TABOR. Telecommunications providers and consumers should consider reviewing their records to evaluate whether they may qualify for a refund of similar B&O or utility taxes paid to any municipality in Colorado.