January 26, 2010 - William L. Henry IV
The Colorado Department of Revenue can levy your bank accounts, garnish your wages, and place liens against certain assets for uncollected taxes. Below are some of the income tax penalties that the Colorado Department of Revenue may assess against you. Penalties are cumulative in most cases.
Employment Taxes: All officers of a corporation or members of a limited liability company or partners in a partnership who are required to collect and deposit taxes administered by the Colorado Department of Revenue are subject to a penalty equal to 150% of the total tax not collected or deposited.
Failure to File: 5% of the tax due for the first month plus 1/2% each additional month, not to exceed 12%. Delinquent Payment Penalty (failure to pay): the greater of $5 or 5% for the first month plus 1/2% each additional month not to exceed 12%. Deficiency due to Negligence: 25% of the deficiency. Fraudulent or Willful Failure to File: Penalty equal to the greater of $100 or 100% of the tax due. Filing of a Fraudulent, frivolous, or willfully False Return: Greater of $150 or 150% of the tax due. Failure to Pay a Notice or Demand for Payment: The Colorado Department of Revenue may assess a collection penalty of 15% of0020the tax due. Fraudulent Failure to Pay or Willful Evasion of Payment: 150% of the tax due.
Colorado Department of Revenue penalties and interest can quickly amount to more than the original tax liability. After the penalty is assessed, Colorado can place a levy on your wages or bank accounts or file a federal tax lien against your home to collect the assessed tax.
Taxpayers may be able to avoid paying penalties or interest. Among the possible defenses include demonstrating reasonable cause, innocent spouse relief, disclosure, establishing a mistake, negating intent, establishing substantial authority for the return position, or through an offer in compromise.
Robinson & Henry examines a variety of defenses and assists all taxpayers in reducing and eliminating their tax liabilities imposed by the Colorado Department of Revenue, New Jersey Division of Taxation, or the Virginia Department of Taxation. Please contact our tax lawyers to discuss your specific penalty abatement situations. We have offices throughout the front range including Denver, Castle Rock, and Colorado Springs.