Colorado – State Tax Refunds Not Subject to Recovery Audit Statute

SALT Report 2028 – The Colorado Attorney General issued a ruling regarding the state’s recovery audit statute, §24-30-203.5, C.R.S.  The statute allows the state to identify improper payments made by a state agency to a vendor or other entity.

The AG ruled that the statute does not apply to tax refunds because taxpayers are not “vendors or other entities” within the meaning of the statute, and tax assessments, refunds, and collection activities are not considered “payment activities” under the provisions of the statute.

Further, the AG states that to read that the Recovery Audit statute applies to tax refunds would result in a violation of taxpayer confidentiality because it would provide access by a third-party who is hired to review the records to determine if an improper payment has been made.

For Further Information:

Colorado Attorney General – Opinion No. 12-07