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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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what is the statute of limitations for collection ...

Resolved Question:

what is the statute of limitations for collection of state income
taxes in colorado?
Submitted: 10 years ago.
Category: Tax
Expert:  Lev replied 10 years ago.

According to Colorado DOR - http://www.revenue.state.co.us/fyi/html/generl18.html - the federal statute of limitations and any activity that affects the federal time frame will impact the Colorado statute of limitations. [§§39-21-107(2) and 39-21-108, C.R.S.]

When a taxpayer fails to file an income tax return or files a false or fraudulent return with intent to evade the tax, the tax may be assessed and collected at any time. [§39-21-107(4), C.R.S.]

The Colorado statute of limitations can be extended beyond the federal statute of limitations plus one year in the following situations:

  • When there is a written agreement between the taxpayer and the executive director to extend the statute of limitations. [§39-21-107(5), C.R.S.]
  • When the taxpayer fails to notify the executive director in writing within 30 days of any final determination from the federal IRS. [§39-22-601(6)(c), C.R.S.]
  • When the taxpayer fails to file an amended Colorado income tax return to notify the executive director of the filing of an amended federal income tax return reflecting any change in income reportable to the state of Colorado. [§39-22-601(6)(d), C.R.S.]
  • When a written proposed adjustment (e.g. a notice of deficiency or assessment) of the tax liability has been issued by the Department, the limitation is extended one year after the final determination of assessment is made. [§39-21-107(1), C.R.S.]

Federal statute of limitation for assessments is 10 years. The 10 year statute of limitations can be extended by agreement between the taxpayer and the IRS provided the agreement is made prior to the expiration of the 10 year period. See section 6501(c)(4) of the Tax Code and section(NNN) NNN-NNNNc)-1(d) of the Tax Regulations.

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