Town of Gypsum, Colorado

Aviation Fuel Tax Action Plan

December 2015

The purpose of this action plan (Action Plan) is to demonstrate compliance by the Town of 

Gypsum, Colorado (the Town) with: (1) the Federal Aviation Administration (FAA) Policy and 

Procedures Concerning the Use of Airport Revenue, 64 Fed. Reg. 7696 (Feb. 16, 1999) (the 

Revenue Use Policy); (2) the FAA policy amendment: Policy and Procedures Concerning the 

Use of Airport Revenue; Proceeds from Taxes on Aviation Fuel, 79 Fed. Reg. 66,282 (Nov. 7. 

2014) (the Revenue Use Policy Amendment); and (3) FAA’s 2015 guidance entitled Aviation 

Fuel Tax Grandfathering Action Plans (the FAA Action Plan Guidance) (available at: 

www.regulations.gov/#!documentDetail;D=FAA-2013-0988-0041).

Part I of the Action Plan provides the necessary explanation and documentation to support this 

grandfathered portion of the Town’s sales tax. Part II of the Action Plan provides the details of 

the Town’s plan for restructuring its general revenues in order to ensure that the aviation fuel tax 

revenue derived from the non-grandfathered portion of its sales tax is appropriately dedicated to 

lawful aviation purposes permitted under federal law and FAA’s Revenue Use Policy.

PART I: ACTION PLAN FOR 

GRANDFATHERED AVIATION FUEL TAX REVENUE

A. Background

1. History of the Town’s General Sales Tax 

On February 2, 1976, the Town enacted Ordinance No. 1 (Series 1976) to establish a general 

sales tax on the privilege of selling tangible personal property at retail upon every retailer in the 

Town. See Attachment 1 (1976 Ordinance). The 1976 Ordinance set the tax at two percent (2%) 

of gross receipts. Id. § 5(a). It became effective on January 1, 1977, after it was approved by a 

majority of the electors of the Town. Id. §§ 6(a) & 7.

On January 14, 1986, the Town approved and passed Ordinance No. 9 (Series 1985). 

Attachment 2 (1985 Ordinance). The 1985 Ordinance was adopted in response to the State of 

Colorado’s desire to impose a uniform statewide method for collecting local taxes. It repealed 

and revised Title 3, Chapter 8, Section 100 (“Excepted from Sales Amount”) and provided new 

exceptions for certain sales, including sales to nonresident purchasers, sales of tangible personal 

property at retail if the transaction was previously subjected to a sales or use tax lawfully 

imposed by another statutory or home rule municipality. Id. at p. 1. The 1985 Ordinance did not 

adjust the amount of the sales tax. 
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On August 22, 1995, the Town approved and adopted Ordinance No. 10 (Series 1995). 

Attachment 3 (1995 Ordinance). The 1995 Ordinance increased the general sales tax to 3 

percent. Id. § 2(a). It became effective on January 1, 1996. Id. § 16.

On August 24, 2004, the Town approved and adopted Ordinance No. 15 (Series 2004). 

Attachment 4 (2004 Ordinance). The 2004 Ordinance increased the Town-wide general sales tax 

by 1% in order to secure additional revenue to construct a Town recreation center. Id. § 2. It 

also provided that as soon as the payment of all costs for the recreation center, including debt 

service, had been paid, satisfied, or cancelled, the additional one percent tax would terminate. 

Id. §§ 2, 4.

On March 12, 2013, the Town approved and adopted Ordinance No. 5 (Series 2013). 

Attachment 5 (2013 Ordinance). The 2013 Ordinance repealed and readopted Section 3.08.140 

of the Gypsum Municipal Code (Sales Tax Collection and Enforcement) to provide new 

enforcement mechanisms for the collection of unpaid sales tax.

On August 5, 2014, the Town approved and adopted Ordinance No. 8 (Series 2014). Attachment 

6 (2014 Ordinance). The 2014 Ordinance acknowledged that the debt on the recreation center 

had been paid, id. at p. 1, and decreased the general sales tax from 4% to 3%. Id. § 1.

The Town’s general sale tax is currently codified at Chapter 3.08 of the Gypsum Municipal Code 

(Attachment 7).

2. Annexation of the Eagle County Regional Airport

In 1996, the Town annexed the entire south side of the Eagle County Regional Airport (the 

Airport). Ordinance No. 17 (Series 1996) (Attachment 8) (1996 Annexation Ordinance). This 

property included almost 100 acres of land including portions of the Airport and the adjacent 

Cooley Mesa Road. In exchange, the Town agreed to provide water and utility services to the 

County-owned and operated Airport, and the County provided the Town with the necessary 

easements for these services. Fourteen years later, the Town adopted an ordinance approving the 

annexation of three additional parcels (the Second Eagle County Airport Annexation.) Ordinance 

No. 9 (Series 2010) (Attachment 9) (2010 Annexation Ordinance).

B. Documentation of Grandfathered Revenue 

The Town falls into the category of: “State and/or local tax statute in effect on December 30, 

1987, and amended in subsequent periods, proceeds used for other than airport purposes, and 

no current grandfathering determination.” FAA Action Plan Guidance at ¶ 4. Based on a

review of the FAA Revenue Use Policy Amendment, the Town has determined that the initial 

2% sales tax – which was in effect on December 30, 1987 – is grandfathered. To that end, the 

Town provides the following written justification and documentation, as requested by the FAA 

Action Plan Guidance, in order to demonstrate that the initial 2% sales tax in effect on December 

30, 1987, qualifies for grandfathered status.
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1. Written justification why tax on aviation fuel qualifies for grandfathered status for 

portion of tax in effect on December 30, 1987.

As described above, the Town has levied a general sales tax on the sale of tangible personal 

property since 1976. Ordinance No. 1 (Series 1976) (Attachment 1). The sales tax in effect as of 

December 30, 1987, was set at 2% of gross receipts, not including the amount of any sales or use 

tax imposed by the State. Id. § 5(a). 

Because the 2% general sales tax has applied broadly to the sale of tangible personal property 

since its onset in 1976, it would have applied to the sale of aviation fuel before the adoption of 

Airport and Airway Safety and Capacity Expansion Act of 1987 – i.e., before Congress extended 

the restriction on the use of airport revenue to include any local taxes on aviation fuel. In 

practice, however, the Town’s general sales tax was not applied to the sale of aviation fuel until 

the Town annexed the Eagle County Regional Airport through a series of two Ordinances in 

1996 and 2010, respectively. See, Ordinance No. 17 (Series 1996) (Attachment 8) and 

Ordinance No. 9. (Series 2010) (Attachment 9). 

Based on prior correspondence with Director Randall Fiertz, the Town concludes that the 

grandfather provisions of the law and FAA policy are applicable to the date of enactment of the 

initial 2% tax (i.e., 1976), notwithstanding the fact that the tax did not apply in practice to the 

sale of aviation fuel in the Town of Gypsum until the Town annexed the Airport, which 

annexation occurred after December 30, 1987. See September 18, 2015, email correspondence 

from R. Fiertz (Attachment 10). Specifically, Mr. Fiertz reviewed the question of whether the 

grandfather provisions of the law and FAA policy apply to the date of the enactment of the tax 

(pre-1987) or to the date on which it actually was applied to aviation fuel for the first time (post1987). Mr. Fiertz concluded that the grandfather provisions of the law and FAA policy “appear 

to be applicable to the date of the enactment of the tax (pre-1987).”1 However, Mr. Fiertz 

cautioned that the taxing entity would still be obligated to produce appropriate documentation. 

The Town is providing the requisite documentation with this Action Plan.

2. True and correct copies of original legislation and/or tax code and summary

explanation of law reflecting tax that was in effect on December 30, 1987, and the

amendments.

The Town provides with this Action Plan, a true and correct copy of the original legislation, 

namely: Town of Gypsum, Ordinance No. 1 (Series 1976) (Attachment 1). 

 

1 The Town notes that author of the initial inquiry to Mr. Fiertz was not aware that the Town sales tax had 

increased after December 30, 1987, and thus incorrectly described the Town sales tax as “unchanged” since 1987. 

To be clear, the Town does not rely on Mr. Fiertz’s response for the proposition that the entire current tax is 

grandfathered. Rather, the Town only relies on Mr. Fiertz’s guidance on the more narrow question of whether the 

post-1987 annexation of the Airport affects the grandfathered status of the Town’s pre-1987 sales tax. Mr. Fiertz 

concluded that the date of enactment of the tax was the controlling date on this narrow question. See Attachment 10 

(September 18, 2015, email correspondence from R. Fiertz).
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As depicted in the text of the original ordinance, the Town imposed a 2% sales tax on the 

privilege of selling tangible personal property at retail upon every retailer in the Town. Id. § 

5(a). The 1976 Ordinance provided that the amount subject to the sales tax shall not include the 

amount of any sales or use tax imposed by the state. Id. at § 4(b), currently codified at Gypsum 

Municipal Code §3.08.100 (Attachment 7). The 1976 Ordinance also allowed an exemption for 

sales of personal property on which a specific ownership tax had already been paid for certain 

nonresidents. Id. at § 4(f), currently codified at Gypsum Municipal Code §3.08.110.

As requested, the Town is also providing true and correct copies of the subsequent amendments 

to the general sales tax. As described below, none of these amendments affects the applicability 

of the grandfather provisions of the law and FAA policy to the initial 2% sales tax. 

- Town of Gypsum, Ordinance No. 9 (Series 1985) (Attachment 2). In 1985, the Town

modified and expanded the exemptions to the sales tax to comport with the State’s goal of 

imposing a uniform statewide method for collecting local taxes. Id. The 1985 Ordinance

added exemptions for certain sales of food, construction and building materials, and certain 

retail sales if the transaction had been previously subjected to a sales or use tax. Id. §§10(B) 

– (D), currently codified at Gypsum Municipal Code §§ 3.08.110 & 3.08.120 (Attachment 

7).2 None of these changes affects the applicability of the 2% sales tax to the sale of aviation 

fuel.

- Town of Gypsum, Ordinance No. 10 (Series 1995) (Attachment 3). In 1995, the Town

increased the sales tax in order to address the need “to construct and acquire certain capital 

improvements and provide other municipal services.” Id. at p. 1. The 1995 Ordinance 

increased the sales tax from 2% to 3%. Id. § 2. However, the Ordinance restricted the use of 

the revenue derived from this additional 1% sales tax as follows: Eighty percent (80%) must 

be spent for law enforcement, town hall and recreation expenses; the remaining twenty 

percent (20%) may be spent on general administration costs. Id. § 7. See also, 2004 

Ordinance § 2 (Attachment 4) (clarifying that the restrictions apply only to the revenues 

derived from the additional 1% sales tax adopted in 1995), currently codified at Gypsum 

Municipal Code § 3-08-200 (Attachment 7). This 1% increase occurred after December 30, 

1987, and is therefore not eligible for the grandfather provisions of the law and the FAA 

policy.

- Town of Gypsum, Ordinance No. 15 (Series 2004) (Attachment 4). In 2004, the Town 

adopted an ordinance to temporarily increase the sales tax from 3% to 4% for purposes of 

financing the Town recreation center. Id. § 2. The 2004 Ordinance clarified that the 

additional 1% sales tax would commence on January 1, 2005, and continue until all the costs 

of the recreation center (including debt service) were complete, after which the additional 1% 

tax would terminate. Id. §§ 2, 4. As noted below, this additional tax was terminated in 2014. 

- Town of Gypsum, Ordinance No. 5 (Series 2013) (Attachment 5). In 2013, the Town 

repealed and readopted Section 3.08.140 of the Gypsum Municipal Code (Sales Tax 

 

2 While not relevant to the sale of aviation fuel, we note that the original 1985 exemption for certain food 

sales is no longer applicable. See Gypsum Municipal Code §§ 3.08.110 & 3.08.120. (Attachment 7).
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Collection and Enforcement) to provide new enforcement mechanisms for the collection of 

unpaid sales tax.

- Town of Gypsum, Ordinance No. 8 (Series 2014) (Attachment 6). In 2014, the Town 

acknowledged that the debt on the recreation center had been paid, and adopted an Ordinance 

to decrease the general sales tax from 4% to 3%. Id. § 1.

The Town also provides with this Action Plan a copy of the most recent compilation of Chapter 

3.08 of the Gypsum Municipal Code (Sales Tax) (Attachment 7). Please note, however, that the 

Code has not been formally updated since April 28, 2008. Therefore subsequent amendments 

(i.e., the 2013 and 2014 amendments) are not yet reflected in the text.

3. Document the effective date of the aviation fuel tax.

- The 2% general sales tax went into effect on January 1, 1977, after it was approved by a 

majority of the electors of the Town. Ordinance No. 1 (Series 1976) §§ 6(a) & 7 

(Attachment 1). 

- The increase from 2% to 3% went into effect on January 1, 1996. Ordinance No. 10 (Series 

1995) § 8 (Attachment 3)

- The increase from 3% to 4% went into effect on January 1, 2005. Ordinance No. 15 (Series 

2004) § 4 (Attachment 4). 

- The increase to 4% was repealed in September 2014, at which point the tax reverted to 3%. 

Ordinance No. 8 (2014 Series) § 6 (Attachment 6).

Based the Revenue Use Policy Amendment and FAA’s Action Plan Guidance, the 2% tax in 

effect as of December 30, 1987, is eligible under the grandfather provisions of the law and FAA 

policy. The additional 1% tax currently in effect is not eligible.

4. Document the purpose and applicability of the tax.

The general purpose of Town’s Sales Tax was identified in the initial 1976 Ordinance. It is “to 

impose a sales tax on the privilege of selling tangible personal property at retail upon every 

retailer in the Town of Gypsum.” 1976 Ordinance at § 1 (Attachment 1). That purpose and has 

not changed since 1976; it is currently codified at Section 3.08.010 of the Gypsum Municipal 

Code (Attachment 7). 

As to applicability, the initial 1976 tax applied to “all sales of tangible personal property at 

retail.” 1976 Ordinance at § 5(a) (Attachment 1). The language was broadened in 1995 to cover 

“the sale of tangible personal property at retail, the furnishing of services, and sale of food 

items.” 1995 Ordinance § 2(a) (Attachment 3). It was modified most recently in 2004 to cover 

“the sale of tangible personal property at retail, the furnishing of services, and sale of food items, 

machinery and machine tools.” 2004 Ordinance § 2(a) (Attachment 4), and is currently codified 

at Gypsum Municipal Code § 3.08.080(a) (Attachment 7). While the language has been 
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modified slightly since December 30, 1976, there is no change to the general applicability of the 

sales tax to all sales of tangible personal property at retail. Thus, the sale of aviation fuel has 

been subject to the Town’s tax since its inception in 1976.

5. Document the use of the proceeds from the tax.

Use of the revenue derived from the 2% sales tax initially imposed in 1976 is not restricted.

Use of revenue derived from the 1% increase adopted in 1995 is restricted. In 1995, the Town 

acknowledged a new need “to construct and acquire certain capital improvements and provide 

other municipal services.” To that end, the Town increased the sales tax from 2% to 3%. 1995 

Ordinance at § 2 (Attachment 3). At that time, the Town imposed restrictions on the use of the 

revenue derived from the additional 1% sales tax. Eighty percent (80%) must be spent for law 

enforcement, town hall and recreation expenses; the remaining twenty percent (20%) may be 

spent on general administration costs. Id. § 7. See also, 2004 Ordinance at § 2 (Attachment 4) 

(clarifying that the restrictions apply only to the revenues derived from the additional 1% sales 

tax adopted in 1995), currently codified at Gypsum Municipal Code § 3-08-200 (Attachment 7). 

6. Document any administrative costs charged for the collection and allocation of the 

proceeds of the aviation fuel taxes.

Vendors are permitted to retain three and one-third percent (3 1/3 %) of the total amount of sales 

tax collected. Gypsum Municipal Code § 3.08.130 (Attachment 7).3 While this language was 

not incorporated in the full text of the original 1976 Ordinance, concurrent correspondence 

between the State of Colorado Department of Colorado and the then Town Clerk clarifies that 

the Town requested that merchants be permitted to retain a 3 1/3 percent vendor’s fee. See, 

December 1976 correspondence between Colorado Department of Revenue and Town of 

Gypsum (Attachment 11). Thus, the vendor’s fee has been in effect since before December 30, 

1987.

There are no other administrative costs charged for the collection and allocation of the proceeds 

of the aviation fuel taxes.

7. Document the tax rate or rates, credits, or exemptions.

Tax Rate. As documented above in response to item 1, the sales tax rate in effect as of 

December 30, 1987 was 2% and the sales tax rate currently in effect is 3%. 1976 Ordinance § 

 

3 Section 3.08.130 provides, in its entirety: “The vendor shall be entitled as collection agent for the town to 

withhold an amount equal to three and one-third percent of the total amount to be remitted by the vendor to the 

executive director each month to cover the vendor's expense in the collection and remittance of the sales tax. If any 

vendor is delinquent in remitting the sales tax, other than in unusual circumstances shown to the satisfaction of the 

executive director, the vendor shall not be allowed to retain any amounts to cover his expense in collecting and 

remitting said sales tax, and an amount equivalent to the full amount of the sales tax imposed by this chapter shall be 

remitted to the executive director by any such delinquent vendor.”
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5(a) (Attachment 1); Gypsum Municipal Code § 3.08.080 (Attachment 7), as modified by 2014 

Ordinance § 1 (Attachment 6).

Credits. In 1985, the Town offered a credit against the Town’s sales tax with respect to the sale 

of tangible personal property at retail of the furnishing of services if the transaction was 

previously subjected to a sales or use tax lawfully imposed on the purchaser or user by another 

statutory or home rule municipality equal to or in excess of two percent; the credit could not 

exceed two percent. 1985 Ordinance § 10(D). That credit is currently codified as an exemption

in Section 3.08.120 of the Gypsum Municipal Code (Attachment 7), which provides in relevant 

part that the applicability of the sales tax is subject to C.R.S. §§ 29-2-105(2) & (4). In turn, 

C.R.S. Section 29-2-105(4) offers an exemption granted against the sales tax equal in amount to 

the tax imposed by the other jurisdiction, but not to exceed the sales tax imposed by the 

subsequent jurisdiction (in this case, the Town). See infra n. 7. 

Exemptions. The Town currently provides an exception to and several exemptions from the 

Town’s general sales tax.4 All of these provisions were adopted before December 30, 1987, and 

therefore cannot affect the grandfathering analysis. Further, none of the exemptions applies to 

the sale of aviation fuel. The references below are to the Town Municipal Code (Attachment 7).

- 3.08.100 - Excepted from sales amount. The amount subject to the sales tax shall not 

include the amount of any sales or use tax imposed by Article 26 of Title 39, C.R.S.5 See 

also 1976 Ordinance at § 4(b) (Attachment 1).

- 3.08.110 - Specific ownership tax exemption. All sales of personal property on which a 

specific ownership tax has been paid or is payable shall be exempt from the sales tax when 

such sales meet both of the following conditions: (1) The purchaser is a nonresident of, or 

has his principal place of business outside the limits of the town, and (2) Such personal 

property is registered or required to be registered outside the limits of the town under the 

laws of the State of Colorado. See also 1976 Ordinance at § 4(f) (Attachment 1).

- 3.08.120 - Sales tax sales subject to other local sales or use taxes. The applicability of 

the sales tax shall be subject to the provisions of C.R.S. §§ 29-2-105 (2)[6] and (4)[7]. See 

also 1985 Ordinance at §§ 10 (C) – (D) (Attachment 3).

 

4 As noted above in footnote 2, the Town expanded the available exemptions in 1985 to include an 

exemption for the sale of food except for sales of food to be consumed at or near the place of sale, such as sales of 

food by restaurants, bars, cafes, etc. 1985 Ordinance § 10(B) (Attachment 2). That exemption was eliminated in 

the 1995 Ordinance. (Attachment 3). However, the history of this particular exemption does not affect the analysis 

of the application of the tax to the sale of aviation fuel.

5 Part 1 of Article 26 of Title 39 of the Colorado Revised Statutes is the “Emergency Retail Sales Tax Act of 

1935” as amended.

6 C.R.S. § 29-2-105(2) provides in its entirety: “No sales tax of any statutory or home rule city, town, city 

and county, or county shall apply to the sale of construction and building materials, as the term is used in section 29-

2-109, if such materials are picked up by the purchaser and if the purchaser of such materials presents to the retailer 

a building permit or other documentation acceptable to such local government evidencing that a local use tax has 

been paid or is required to be paid.”
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8. Document commitment to advise FAA of any subsequent amendments that could

affect grandfathered status.

The Town is scheduled adopt a Resolution acknowledging its obligations under federal law and 

its commitment to advise FAA of any future amendments that could affect the grandfathered 

status of the initial 2% sales tax. (Attachment 12). Town Council meetings are conducted on the 

2nd and 4th Tuesday of each month. The Resolution is scheduled for the December 8, 2015, 

meeting.

 

7 C.R.S. § 29-2-105(4) provides in its entirety: “(4) No sales tax of any statutory or home rule city and 

county, city, or town shall apply to the sale of tangible personal property at retail or the furnishing of services if the 

transaction was previously subjected to a sales or use tax lawfully imposed on the purchaser or user by another 

statutory or home rule city and county, city, or town equal to or in excess of that sought to be imposed by the 

subsequent statutory or home rule city and county, city, or town. A credit shall be granted against the sales tax 

imposed by the subsequent statutory or home rule city and county, city, or town with respect to such transaction 

equal in amount to the lawfully imposed local sales or use tax previously paid by the purchaser or user to the 

previous statutory or home rule city and county, city, or town. The amount of the credit shall not exceed the sales tax 

imposed by the subsequent statutory or home rule city and county, city, or town.”
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PART II: ACTION PLAN FOR 

NON-GRANDFATHERED AVIATION FUEL TAX REVENUE

The Town understands that the portion of revenue derived from any sales tax on aviation fuel 

beyond the grandfathered 2% tax must be dedicated to lawful aviation purposes permitted under 

federal law and FAA’s Revenue Use Policy. This Section describes the Town’s plan for 

compliance.

A. Background Information

1. Collection of Sales Taxes, Generally

When the Town’s sales tax was initially imposed, it was collected by the State of Colorado 

Department of Revenue on behalf of the Town. 1976 Ordinance at § 5 (Attachment 1). 

However, as of July 1, 2008, the Town has assumed the responsibility for collecting, 

administering and enforcing the sales tax. See, Gypsum Municipal Code § 3.08.140

(Attachment 7). 

2. Use of Sales Taxes, Generally

The Town currently imposes a 3% sales tax on the privilege of selling tangible personal property 

at retail upon every retailer in the Town. Ordinance No. 8 (Series 2014) at § 1 (Attachment 6). 

As documented above in Part I of this Action Plan, the initial 2% sales tax that was in effect on 

December 30, 1987, is grandfathered; however, any tax beyond that initial 2% is subject to 

federal revenue use requirements.

As also documented above in Part I, there are no use restrictions on the initial – grandfathered –

2% sales tax. However, use of revenue derived from the 1% increase adopted in 1995 is

restricted: Eighty percent (80%) must be spent for law enforcement, town hall and recreation 

expenses and the remaining twenty percent (20%) may be spent on general administration costs. 

Gypsum Municipal Code § 3-08-200 (Attachment 7). 

3. Collection of Aviation Fuel Taxes 

There are currently three vendors operating within Town limits that currently sales tax on 

aviation fuel. These operators are: (1) Avfuel Corporation; (2) the Vail Valley Jet Center; and 

(3) World Fuel Services Corporation. Avfuel Corporation and World Fuel Services Corporation 

sell only aviation fuel. Thus all of the tax revenue collected by these two entities must be 

reviewed for compliance with FAA’s Revenue Use Policy. The Vail Valley Jet Center is the 

fixed-based operator at the Airport, and in that capacity, sells a broad range of products, beyond 

just aviation fuel. The Vail Valley Jet Center does not currently provide an itemized account to 

the Town of the portion of sales tax revenue related to the sale of aviation fuel. However, the 

data is readily available and can be provided to the Town with the monthly reporting.
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Once collected by the vendors, the taxes are remitted to the Town Finance Department. Avfuel 

Corporation and the Vail Valley Jet Center remit sales tax to the Town on a monthly basis. 

World Fuel Services Corporation remits sales tax on a quarterly basis. 

Town employees are prohibited by state law from divulging the specific amount of sales tax

collected by any individual vendor.8 As a result, the Town cannot prepare public reports 

regarding the amount of aviation fuel tax collected from individual vendors. However, the Town 

can make public the number reflecting the total annual revenue derived from the Town’s sale tax 

on the sale of aviation fuel. 

4. Intergovernmental Agreement for Cooperative Law Enforcement Services

Eagle County and the Town of Gypsum are parties to an Intergovernmental Agreement for 

Cooperative Law Enforcement Services (the IGA) (Attachment 13). The most recent version of 

this agreement is the Amended and Restated Intergovernmental Agreement for Cooperative Law 

Enforcement Services (the IGA) made and entered effective January 1, 2013, and extending 

through December 30, 2017. Through this agreement, the Town pays for 684 hours per month of 

County law enforcement protection services within the corporate boundaries of the Town. Id. § 

II. The cost escalates each year. For example, in 2015, the cost for law enforcement services 

provided to the Town is set at $787,500. Id. § VII. The services provided to the Town under the 

IGA are comprehensive. They include the placement of law enforcement officers at schools and 

for special events; they also include general law enforcement activities such as general traffic

enforcement, investigation of traffic accidents, investigation of criminal offenses, and narcotics 

investigations throughout the Town, including at the Airport. Id. § II.C. The County provides an 

annual report to the Town of the services provided under the IGA. The most recent report is

provided as Attachment 14. 

A portion of the law enforcement services provided to the Town under the IGA represent

reimbursement for the costs of services that are actually received at, and solely benefit, the 

airport. These are lawful aviation purposes as provided for under the Revenue Use Policy. See, 

e.g., Revenue Use Policy § IV (D)(1) (“Congress ... prohibited the diversion of airport revenues 

through: Direct payments or indirect payments, other than payments reflecting the value of 

services and facilities provided to the airport”); id. at § V.A (1) (“Airport revenue may be used 

for: ... capital or operating costs of the airport, the local airport system ... Such Costs may 

include reimbursements to a state or local agency for the costs of services actually received and 

documented ... .”).

 

8 See, C.R.S. § 29-2-106(4)(C)(II) (“Except in accordance with judicial order or as otherwise provided by 

law, no official or employee of a municipality ... shall divulge or make known to any person not an official or 

employee of such municipality ... any information which identifies or permits the identification of the amount of 

sales taxes collected or paid by any individual licensed vendor. The municipal or county officials or employees 

charged with the custody of such sales tax information shall not be required to produce any such information in any 

action or proceeding in any court except in an action or proceeding under the provisions of this article to which the 

municipality or county having custody of the information is a party, in which event the court may require the 

production of, and may admit in evidence, so much of said sales tax information as is pertinent to the action or 

proceeding. Any municipal or county official or employee who willfully violates any of the provisions of this 

paragraph (c) is guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than 

one thousand dollars and shall be dismissed from office.”)
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While the County’s annual reports have not historically tracked airport-specific services, the 

Sheriff’s office is already required to prepare monthly written reports to the Town Manager 

detailing law enforcement and public service activities (IGA § VI) and, going forward, the 

Sheriff’s Office will track those law enforcement services actually provided at the Airport. 

Beginning in 2016, the County will then be able to include in its annual report a calculation of 

the percentage of law enforcement services provided to the Airport. Based on that calculation, 

the Town will be able to calculate the percentage of the annual IGA cost that can be used as an 

offset against any of its non-grandfathered tax revenue that must be expended toward lawful 

aviation expenses.

B. Action Plan to Comply with the FAA Revenue Use Policy

1. Summary

The Town will track compliance with the use restrictions on the additional 1% tax by monthly 

accumulating the relevant sales tax receipts and qualified expenditures to calculate the net 

amount of tax revenue subject to the FAA Revenue Use Policy. In brief, at the end of each 

calendar year, as part of the Town’s annual audit cycle, the Town will review the sales tax 

reports and calculate the total revenue derived from the tax on aviation fuel (the Total Aviation 

Fuel Tax Revenue). The Town will then calculate the portion of the Total Aviation Fuel Tax 

Revenue that is not grandfathered. This portion of the Total Aviation Fuel Tax Revenue (the 

Covered Revenue) is the amount of revenue that is subject to the Revenue Use Policy and must 

be used only for lawful aviation purposes. 

The Town will then calculate the value of aviation-related services provided through the IGA for 

the same calendar year. This total is the permissible offset against the Covered Revenue (the 

Offset). Because the Town does not own or operate any airport facility, any amount of the 

Covered Revenue that exceeds the Offset shall be remitted to Eagle County annually to be used 

solely for aviation purposes at the Eagle County Regional Airport. 

EXAMPLE 1:

If the Sales Tax is set at 3%

And the Total Fuel Aviation Tax Revenue = $500,000

And the Total Cost of the IGA = $787,500

And 22% of the IGA hours were for airport-related services

Then:

Covered Revenue = $166,500 [Covered Revenue is 1/3 of the Total Aviation Fuel 

Tax Revenue (because the grandfathered portion of 

the tax on aviation fuel (2%) is 2/3 of the 3% tax]

Offset = $173,250 [The Offset is calculated by multiplying the Total 

Cost of IGA by the percentage of IGA hours 

expended on airport related services]

Total Aviation Fuel Tax Revenue to 

be Remitted to the County

$0 [Offset exceeds Covered Revenue]
TOWN OF GYPSUM, COLORADO Aviation Fuel Tax Action Plan

 December 2015

12

EXAMPLE 2:

If the Sales Tax is set at 4%

And the Total Aviation Fuel Tax Revenue = $500,000

And the Total Cost of the IGA = $787,500

And 22% of the IGA hours were for airport-related services

Then:

Covered Revenue = $250,000 [Covered Revenue is 1/2 of the Total Aviation Fuel 

Tax Revenue (because the grandfathered portion of 

the tax on aviation fuel (2%) is 2/4 of the 4% tax]

Offset = $173,250 [The Offset is calculated by multiplying the Total 

Cost of IGA by the percentage of IGA hours 

expended on airport related services]

Total Aviation Fuel Tax Revenue to 

be Remitted to the County

$76,750 [Covered Revenue less Offset equals amount owed 

to County to be expended on airport-related services 

at the Eagle County Regional Airport]

The Town will engage an Independent Auditor to annually apply auditing procedures to test and 

verify that the Town’s annual aviation fuel sales tax calculations are correct and are presented in 

the annual financial statements.

2. Timing of Implementation

The Town will implement this Plan beginning on January 1, 2016. That will permit the 

necessary time to ensure that each existing vendor of aviation fuel can prepare the appropriate 

documentation for its monthly or quarterly reports to the Town. It will also permit the necessary 

time for the County Sheriff’s office to create procedures so that it can track the portion of IGA 

services provided to the Airport each month.

3. Compliance Checklist

To implement this plan, the Town will take the steps outlined in the checklist below:

PART 1 – Town Council

 The Town Council will adopt a Resolution on December 8, 2015, committing to comply 

with federal law and the FAA Revenue Use Policy, and to notify FAA, as necessary, of 

any changes to its sales tax that may affect this current action plan.

 The Town Council will coordinate with the Finance Director and legal counsel, as 

necessary, prior to implementing any change to the Town sales tax, in order to understand 

the implications to the existing grandfathered sales tax and the need for any amendments 

to this Action Plan in order to ensure compliance going forward.
TOWN OF GYPSUM, COLORADO Aviation Fuel Tax Action Plan

 December 2015

13

PART 2 – Town Finance Director

 The Town Finance Director will notify any new vendor selling and collecting tax on

aviation fuels that when reporting sales tax revenue to the Town, the vendor must provide 

a line-item identifying the total revenue collected from the sale of aviation fuel.

 As part of the annual auditing cycle, the Town Finance Director will oversee the 

preparation of an annual Aviation Fuel Tax Calculation Report containing the following 

information:

- An annual total of all tax revenue collected from the sale of aviation fuel (the 

Total Aviation Fuel Tax Revenue);

- A calculation of the portion the Total Aviation Fuel Tax Revenue that is 

attributable to the initial, grandfathered, 2% sales tax (the Grandfathered 

Revenue); 

- A calculation of the portion of the Total Aviation Fuel Tax Revenue that is not 

grandfathered and is subject to the FAA Revenue Use Policy (the Covered 

Revenue);

- The annual total of fees paid by the Town to Eagle County for law enforcement 

services (the Law Enforcement Contract); and

- A calculation of the portion of law enforcement services directly benefitting the 

airport (the Offset).

 If the Covered Revenue exceeds the Offset in any year, the Finance Director shall remit 

payment to Eagle County for use on lawful aviation expenses. 

PART 3 – Town Auditor 

 The Town Auditor shall review the Aviation Fuel Tax Calculation Report as part of each 

annual audit.

 The audit shall include line items for the Total Aviation Fuel Tax Revenue, the Covered 

Revenue, the Law Enforcement Contract, the Offset, and any amount required to be 

remitted to the County.