City of Golden v. Aramark Educational Services, LLC
2013 COA 45
Colo. Ct. App.2013Background
- Golden imposes a municipal sales tax on all food sales on the Colorado School of Mines campus unless exempt.
- Aramark Education Services, LLC operated the campus food service under a Food Services Management Agreement, handling all food service operations and collections.
- CSM students, faculty, staff, and guests purchased food across several Aramark facilities and categories tied to meal plans and campus funds.
- Aramark’s receipts from non-meal-plan sales generally go to Aramark with CSM receiving a fixed commission; CSM acts as landlord/collections agent for some sales.
- Golden taxed all sales unless exempt; Aramark contends wholesale or governmental-capacity exemptions apply; Golden disputes those exemptions.
- District court granted summary judgment for Aramark; Golden appeals to challenge the exemption interpretations and outcome.
- The Colorado Court of Appeals reverses the district court, concluding Aramark’s campus food sales are not exempt from Golden’s tax and remands to reinstate the assessment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Wholesale exemption applicability to campus food sales | Golden argues meals and related plans are wholesale sales | Aramark argues transactions meet wholesale exemption under GMC §3.03.040(a)(13) | Not entitled to wholesale exemption for meal-plan and related sales |
| Retail versus wholesale treatment of cash/credit purchases | Golden’s position on retail nature for these purchases | Aramark argues retail sales for cash/credit transactions | Cash/credit purchases are retail sales subject to tax |
| Governmental-capacity exemption applicability | N/A (not asserted) | Aramark claims exemption as direct sales to CSM in governmental capacity | Not entitled to exemption; sales not made in governmental capacity only and involve proprietary capacity as well |
| Direct sales to CSM in governmental capacity vs. proprietary capacity | N/A | Aramark contends some direct sales to CSM in governmental capacity; court does not find exemption | Exemption unavailable because sales are in both governmental and proprietary capacities |
Key Cases Cited
- A.B. Hirschfeld Press, Inc. v. City & County of Denver, 806 P.2d 917 (Colo. 1991) (primary use test for resale in wholesale determinations)
- Regional Transportation Dist. v. Martin Marietta Corp., 805 P.2d 1102 (Colo. 1991) (primary use test applied to determine wholesale vs. retail)
- Hodgson v. Prophet Co., 472 F.2d 196 (10th Cir. 1973) (retail sales when college dining is operated by a food service company)
- Frank Lyon Co. v. United States, 435 U.S. 561 (1980) ('substance over form' taxation analysis; economic realities matter)
- City of Aurora v. State, 82 P.3d 590 (Colo.App. 2001) (governmental vs. proprietary capacity for tax exemption)