Colo. Code Regs. 39-22-622

Current through Register Vol. 47, No. 23, December 10, 2024

Rule 39-22-622 - Income Tax Refund Interest

Basis and Purpose. The bases of this rule are §§ 39-21-112(1), 39-21-110, and 39-22-622, C.R.S. The purpose of this rule is to clarify the circumstances under which interest is paid on income tax refunds.

(1) Refund interest paid on all income tax returns, including amended returns, is controlled by § 39-22-622, C.R.S. A refund will include interest at the rate specified in § 39-21-110.5, C.R.S. plus a 5% refund penalty if the refund is not issued within the following time frames, unless an exception to the refund interest applies.

(2)Time Frames.

(a)Calendar Year Filer. For any calendar year return filed on or before the original due date of the return (excluding any extension of time to file) that is filed in:

(i) January, the refund must be made within 14 days from the date the return is filed.

(ii) February, the refund must be made within 21 days from the date the return is filed.

(iii) March, the refund must be made within 28 days from the date the return is filed.

(iv) April, the refund must be made within 45 days of receipt. The date of receipt for any return filed in April is deemed to be May 1 for the purpose of computing interest.

(b) For income tax returns filed after May 1, including amended returns, in the calendar year the return is due, the refund must be made within 45 days from the date the return is filed.

(c)Fiscal Year Filer. For any fiscal year return, the months established in (2)(a) shall be the first, second, third and fourth months, respectively, following the close of the fiscal year.

(i) For fiscal years that do not end at the end of the month, the months described in (2) (a) shall be the first thirty, sixty, ninety, and one hundred twenty days, respectively, following the close of the fiscal year.

(3)When a Return is Filed.

(a) A return is "filed" on the date the Department physically or electronically receives the return. The calculation of interest shall be from the due date of the refund until the date the refund is mailed or the date a financial institution holding state funds is directed to transfer funds to the taxpayer. If the "filed", "paid", or "made" date (as those terms are used in § 39-22-622, C.R.S.) is on a weekend or legal holiday, then such date is extended to the next day that is not a weekend or legal holiday.

(b) If the processing of a return is delayed for one or more reasons outlined in paragraph (4), below, then the "filed" date is the date the event is resolved. For example, a return which contains an erroneous ID number is not "filed" until the correct ID is obtained by the Department.

(4)Exceptions. Refund interest will not be paid if the delay is caused by any of the following:

(a) Mathematical or clerical errors on the return when filed, including, but not limited to, misspelled names, calculation errors, missing required documentation or certifications, unclaimed or overclaimed payments, and erroneous, illegible, or otherwise unprocessable tax account ID numbers, including "applied for" designations.

(b) Unforeseen delays caused by the failure of the processing equipment, including physical equipment and electronic processing systems.

(c) A review to verify the accuracy of the return. However, such review does not include any review initiated as a result of a Department data entry error. A review to verify the accuracy of the return is an audit of the return, but is not an audit of the taxpayer for the tax year as referenced in §§ 39-21-107(2) or 39-22-601(6)(g), C.R.S.

(d) The return includes a Colorado job growth incentive tax credit and the Department is awaiting confirmation from the Colorado Office of Economic Development and International Trade that the taxpayer is eligible for such credit.

(e) The return includes an enterprise zone credit and the Department is awaiting confirmation from the Colorado Office of Economic Development and International Trade that the taxpayer is eligible for such credit.

(f) A suspicion of identity theft or refund-related fraud.

(5) Refunds initially exempt from refund interest under paragraph (4), above, may receive full or partial refund interest and penalty if, after the error correction or review is completed, the refund is delayed more than the time frames defined in paragraph (2), above.

(6)Excessive Prepayments.

(a) If the total prepayments (withholding, estimated payments, extension payments, TABOR refund, and other payments) are more than double the amount of the tax liability, then no refund interest will be paid on any refund, except as allowed in subparagraph 6(c), below.

(b) If an amended return or claim for refund reduces the net tax liability or increases the prepayments, no refund interest will be paid on any refund if the total prepayments and prior payments are more than double the amount of the amended tax liability, except as allowed in subparagraph 6(c), below.

(c) If the taxpayer establishes that the prepayment was made incident to a bona fide and orderly discharge of an actual liability, or a liability reasonably assumed to be imposed by law, then interest will be paid.

39-22-622

Colorado Register, Vol 37, No. 14. July 25, 2014, effective 8/14/2014

37 CR 18, September 25, 2014, effective 10/15/2014

37 CR 19, October 10,2014, effective 10/30/2014

37 CR 22, November 25, 2014, effective 12/16/2014

38 CR 04, February 25, 2015, effective 3/17/2015

38 CR 07, April 10, 2015, effective 4/30/2015

38 CR 11, June 10, 2015, effective 6/30/2015

38 CR 22, November 25, 2015, effective 12/15/2015

38 CR 24, December 25, 2015, effective 1/14/2016

38 CR 24, December 25, 2015, effective 1/19/2016

39 CR 01, January 10, 2016, effective 1/30/2016

39 CR 16, August 25, 2016, effective 9/14/2016

40 CR 08, April 25, 2017, effective 5/15/2017

40 CR 12, June 25, 2017, effective 7/15/2017

40 CR 16, August 25, 2017, effective 9/14/2017

40 CR 23, December 10, 2017, effective 1/1/2018

41 CR 14, July 25, 2018, effective 8/14/2018

41 CR 20, October 25, 2018, effective 11/14/2018

42 CR 02, January 25, 2019, effective 12/18/2018

42 CR 02, January 25, 2019, effective 12/18/2018, expires 4/17/2019

42 CR 06, March 25, 2019, effective 4/14/2019

43 CR 04, February 25, 2020, effective 3/16/2020

43 CR 13, July 10, 2020, effective 6/2/2020

43 CR 17, September 10, 2020, effective 9/30/2020

44 CR 03, February 10, 2021, effective 3/2/2021

44 CR 07, April 10, 2021, effective 4/30/2021

44 CR 08, April 25, 2021, effective 5/15/2021

45 CR 01, January 10, 2022, effective 1/30/2022

45 CR 04, February 25, 2022, effective 3/17/2022

45 CR 05, March 10, 2022, effective 3/30/2022

46 CR 11, June 10, 2023, effective 5/2/2023

46 CR 09, May 10, 2023, effective 5/30/2023