Colorado – Penalties and Interest for Unpaid Taxes

SALT Report 1898 – The Colorado Department of Revenue updated their FYI publication regarding the penalties and interest that will be imposed on unpaid sales and use taxes.  The publication also discusses the penalties that will be imposed on corporate officers that fail to collect or remit taxes.

Corporate Officers Penalty 

All officers of a corporation and all members of a partnership or a limited liability company who are required to, but do not collect, account for, or pay any tax administered by the Department of Revenue will be subject to penalties 150% of the total amount of the tax due.

Sales and Use Tax Penalties

Sales/Use Deficiency Due to Negligence – 10% of the tax due plus penalty-interest, as well as the loss of vendor’s fee,

Sales Tax Late Filing or Late Payment Penalty – 10% of tax due plus 1/2% per month not to exceed 18%,

Sales Tax Non-filer Penalty – 10% plus 1/2% per month not to exceed 18%,

Retailer’s Use Tax and Consumers Use Tax Non-filer Penalty – 10% plus 1/2% per month, and

Sales/Use Deficiency Due to Fraud – 100% of deficiency plus 3% per month

The Department notes that the penalties are cumulative and multiple penalties can be combined for the same assessment.  Further, the penalties and interest above apply to state-collected taxes only.  Home-rule jurisdictions make their own regulations regarding interest and penalties on unpaid taxes. Taxpayers are advised to contact a home-rule city directly for details regarding its tax regulations.

The publication provides an updated table with the applicable interest and penalty rates.

For Further Information:

Colorado Department of Revenue – FYI General 11