The bar and billiards hall in downtown Durango known as The Garage could lose its business license for failing to pay nearly $20,000 in city sales taxes.
The city of Durango has ordered owner Jennifer Kelley to appear at a hearing Wednesday to argue for retaining the business license.
As of May 14, The Garage had failed to remit an estimated $19,697.38 in sales taxes, according to the city.
City code requires businesses to pay 3.5% of all sales in a calendar month by the 20th of the following month.
The city discovered The Garage’s delinquency in July 2025, city documents said. Efforts to collect payments between August 2025 and February 2026 were unsuccessful. On April 2, the city issued a final demand for payment, warning failure to pay within 20 days could result in The Garage’s business license being suspended.
“The Garage has taken no remedial action and remains noncompliant with statutory filing and payment requirements,” city documents said.
The Wednesday meeting agenda includes three sales tax returns for The Garage for quarters ending in June, September and December 2025, which showed amounts due of $1,858, $5,518 and $6,142, respectively.
City Attorney Mark Morgan said the city typically holds about two or three show-cause hearings for delinquent taxes yearly, which is more often than it would like.
Businesses tend to get in trouble when they mix sales tax collections with their other business funds when sales taxes should always be kept separate from operational and other expenses.
He said Durango’s business culture has a bad habit of holding onto sales taxes during rough times and paying them back during better times – a habit driven by the nature of the city’s seasonal business booms. But all it takes is one bad season to put a business in a bad spot.
The city offers delinquent businesses remedies. Morgan said the city requires 50% of what is owed paid back up front – following that, a business can be placed on a payment plan.
“They can go get a small business loan. They can get personal loans, private loans – but the city requires 50% of what’s owed to get back on track,” Morgan said.
He said a common and problematic framing of sales taxes is that businesses pay them. But taxpayers are footing the bill – businesses just collect it and pass it along.
Morgan said failing to remit sales taxes can amount to a felony under the law.
“It’s one of those crimes people don’t really see as a crime,” he said. “People tend to be lenient because they feel sorry for business owners, but in the purest sense, there’s no difference between (retaining sales taxes and stealing from the bank).”
Efforts to reach Kelley for comment were not immediately successful Tuesday. The business license hearing is scheduled for 2 p.m. Wednesday in Smith Council Chambers at City Hall.
Former owner Chip Lile, who bought The Garage in 2019, said he sold the bar to Kelley around May last year. He said his former business partner wanted to get out of the business, and he didn’t have time to run the bar.
cburney@durangoherald.com
