SALT Report 1399 – The Colorado Department of Revenue issued guidance regarding the statute of limitations for payments and refunds of sales, use, and other taxes. The statute of limitations varies according to tax type and defines the time period during which a refund claim may be filed, an assessment may be initiated, or a collection activity may occur.
Sales and Use Tax
The statute of limitations for state and state-collected local sales or use tax refunds and assessments is three years from the due date of the return or the date the sales or use tax return was filed, whichever is later. This also applies to any special district sales or use tax.
The publication also explains the limitations periods as they apply to extended returns, federal waivers, the late payment of taxes, applying a refund to a balance due, reissued refunds, and the collection of taxes.
Refund of Disputed Tax Paid
Should a dispute arise between the purchaser and the seller as to whether or not the sales tax was correctly charged, the purchaser may submit an application for refund. An application for refund must be made within three years from the date of purchase and must be made on forms provided by the executive director of the Department of Revenue.
The Colorado statute of limitations can be extended when there is a written agreement between the taxpayer and the executive director to extend the statute of limitations. Also, when a written proposed adjustment of the tax liability has been issued by the department, the limitation is extended one year after the final determination or assessment is made.
There is no statute of limitations limiting the length of time the Department of Revenue can reissue sales and use tax refunds that were timely issued prior to June 30, 2009 but not cashed. Refunds issued on or after June 30, 2009 are not affected by the statute of limitations.
The statute of limitations for collecting a sales or use tax balance due is:
- Three years from the due date of the return or the date the return is filed, whichever is later, or
- One year from the date of the final determination or assessment
Tax Refunds for Exempt Use of Fuel
A refund of the Colorado fuel tax paid may be allowed for fuel purchased and used in Colorado for tax exempt purposes. A claim for refund must be submitted within twelve months after the date of purchase of the fuel.
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