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FORT COLLINS, Colo. — A small-business owner in Fort Collins says he may be forced to close his candy shop because of a potential tax of $40,000.

The Fort Collins Candy Store Emporium is a walk through history. The location on Jefferson Street looks and feels like the 1940s. Some of its candy brands date back to the 1800s.

“I don’t really sell candy,” said store owner Tony Vallejos. “I sell memories.”

The sweet taste of nostalgia includes dozens of sweets from candy cigarettes, strawberry rolls and even World War I ration bars.

The candy is just part of Vallejos’ vision. Vintage toys — including an original Mr. Potato Head — have been a decorative force of success. The toys are not for sale.

“It took me 20 years to gather up all these antiques,” Vallejos said.

He moved his shop from Cheyenne to Fort Collins 15 months ago. In Colorado, however, his crowd-pleasing toys are threatening the bottom line. Vallejos says his antiques are worth a total of $400,000. Under state law, the Larimer County Assessor must tax the assets at 10 percent per year— that’s $40,000.

“It’s what’s driving and luring people into your store and that needs a taxation,” Vallejos said, describing what county officials told him.

In Wyoming, Vallejos displayed his trinkets under museum status. He says he was told that classification would transfer to Fort Collins, but Colorado doesn’t grant museum exemptions to private business owners. That means the toys need to be removed from the shop. Customers are noticing.

“My [sales] numbers are really low,” Vallejos told FOX31.

He is now trying to change state law when it comes to museum classification. Vallejos says he’s on a mission to continue offering sweet treats and vintage exhibits without being taxed to death.

Vallejos says the assessor had given him a yearlong grace period in which he has not been taxed for displaying the antiques.

Larimer County Assessor Bob Overbeck sent FOX31 the following statement:

In Colorado, all Assessors follow the laws of the state. Our duties is to list, discover, classify and value. Regarding your email about Mr. Vallejos, it sounds there is a concern with the state statute on PERSONAL EFFECTS Defined by § 39-1-102(10), C.R.S. and exempted under § 39-3-103, C.R.S.

Personal effects include all property used by private citizens in private life. It includes any property used by the taxpayer in sports or hobbies or other recreational activities so long as the personal property is never used to produce income. If the equipment is used to produce any income during any time of the year, it is taxable for the entire year.

There are instances in which it is difficult to ascertain whether or not income is being derived from a personal effect. One indicator is if the taxpayer advertises a service in some sort of public medium. If the assessor suspects that a taxpayer is using personal effects for the production of income, a declaration schedule should be sent so that the taxpayer has an opportunity to file and be on record as to the nature and use of the property.

Assessors are not allowed to share confidential information on any commercial operation.

On Feb. 13, Vallejos said that someone from the county assessor’s office alerted him of a passage in the bylaws that gave him an exclusion from the potential tax he was facing. The passage states:

“Antique value is generally considered an intangible value component and should not be included in the valuation of personal property for property tax purposes. Market sales of antique personal property will typically exceed the RCNLD value. Antique personal property should be valued using the RCN of comparable non-antique personal property that serve the same purpose or function.”

Vallejos is now in the process of putting the antiques back into his shop.