(1) As soon as practicable after any tax return or the return showing the value of oil and gas is filed pursuant to articles 22 to 29 of this title, article 60 of title 34, or article 3 of title 42, C.R.S., the executive director shall examine it and shall determine the correct amount of tax. If the tax found due is greater than the amount theretofore assessed or paid, a notice of deficiency shall be mailed to the taxpayer by first-class mail as set forth in section 39-21-105.5.
(2) The taxpayer may request a hearing on the proposed tax by application to the executive director within thirty days of the mailing of a notice of deficiency.
(3) The request for hearing shall set forth the taxpayer's reasons for and the amount of the requested changes in the deficiency.
(3.5) If the executive director determines that a request for a hearing related to the tax set forth in part 1 of article 22 of this title is a frivolous submission and rejects the request pursuant to section 39-21-104.5, the taxpayer shall not be entitled to a hearing before the executive director and the provisions of section 39-21-104.5 shall apply.
(4) The executive director of the department of revenue shall notify the taxpayer in writing of the time and place for such hearing thirty days prior thereto. In all cases where the disputed deficiency involves gift taxes or exceeds two hundred dollars and does not involve sales and use taxes, the hearing shall be held in Denver, Colorado. If the disputed deficiency does not involve gift taxes, is two hundred dollars or less, or involves sales and use taxes regardless of the amount, the hearing may be held, at the election of the taxpayer, in the district office of the department nearest to the place where the taxpayer resides or has his principal place of business within Colorado. If the taxpayer does not reside or have a place of business in Colorado, the hearing shall be held in the city and county of Denver.
(4.5) If the taxpayer and the executive director agree that the disposition of the taxpayer's requested changes requires the resolution of a question of law arising under the United States or Colorado constitutions, the executive director shall memorialize the agreement and send the taxpayer a notice of the agreement by first-class mail as set forth in section 39-21-105.5. If a notice is sent pursuant to this subsection (4.5), a taxpayer may elect to waive a hearing pursuant to this section and appeal the notice of deficiency directly to the district court pursuant to section 39-21-105 within thirty days after the mailing of the notice.
(5) After a hearing under this section, the taxpayer shall not be entitled to a second hearing before the executive director of the department of revenue on the matters set forth in his previous request for hearing.
(6) (a) Except as provided in paragraph (b) of this subsection (6), the hearing shall be held before the executive director of the department of revenue.
(b) In cases where the disputed deficiency is more than two hundred dollars and involves an income tax, the hearing may be held before such qualified person within the department specifically authorized by the executive director to act on the executive director's behalf to hear such dispute. In cases where the disputed deficiency is two hundred dollars or less or involves a sales, use, or gift tax, the hearing may be held before such person within the department as the executive director shall designate.
(c) The executive director or the executive director's delegate is authorized to administer oaths and take testimony. At the hearing, the taxpayer may assert any facts, make any arguments, and file any briefs and affidavits the taxpayer believes pertinent to the case.
(7) In lieu of the request for hearing within the time provided by this section, the taxpayer may, at his election, file a written brief and such other written materials or documents as he deems appropriate and request that the executive director of the department of revenue reconsider the deficiency without a hearing. The executive director shall reconsider the deficiency in the same manner as if the written material submitted had been presented at a hearing pursuant to this section. The submission of written material shall be considered for all purposes the same as a request for and submission of the material at a hearing.
(8) (a) Based on the evidence presented at the hearing or filed in support of the taxpayer's contentions or after the expiration of thirty days from the mailing of the notice of deficiency, if no request for hearing or brief has been filed by the taxpayer, the executive director of the department of revenue shall make a final determination within the time specified in paragraph (b) of this subsection (8) and shall send the taxpayer a notice of final determination accompanied by notice and demand for payment by first-class mail as set forth in section 39-21-105.5.
(b) The executive director shall make a final determination within sixty days of the hearing. Such deadline may be extended:
(I) By up to an additional sixty days by mutual agreement between the executive director and the taxpayer; or
(II) By the executive director in the executive director's discretion if the final determination raises issues that require additional information or time to analyze in order to make the determination. The executive director may authorize successive extensions of a deadline to make a particular determination; however, no individual extension authorized pursuant to this subparagraph (II) shall exceed sixty days. Prior to authorizing each extension of a deadline pursuant to this subparagraph (II), the executive director shall mail a written notice of the extension and the specific reasons therefor to the taxpayer.
(c) The executive director may modify the tax, penalty, and interest questioned at the hearing and may approve a refund; except that no additional tax shall be assessed for less than one dollar. Unless an appeal is taken as provided in section 39-21-105, the tax, together with interest thereon and penalties, if any, shall be paid within thirty days after mailing of the notice and demand for payment by the executive director.
History Source: L. 65: p. 1131, § 2. C.R.S. 1963: § 138-9-2. L. 73: p. 1417, § 101. L. 77: (1), (4), and (6) amended, p. 841, § 3, effective July 1; (1) amended, pp. 1766, 1852, § § 2, 4, effective January 1, 1978. L. 79: (1) amended, p. 1499, § 21, effective January 1, 1980. L. 86: (1) amended, p. 1110, § 4, effective July 1. L. 89: (1) amended, p. 1594, § 5, effective July 1, 1993. L. 90: (1) amended, p. 1721, § 3, effective May 1; (1) amended, p. 1722, § 4, effective July 1, 1993. L. 96: (1) and (8) amended, p. 163, § 1, effective July 1. L. 2001: (1) amended, p. 777, § 8, effective June 1. L. 2002: (4.5) added and (6) and (8) amended, p. 256, § 1, effective July 1. L. 2003: (3.5) added, p. 661, § 1, effective March 20. L. 2009: (1) amended, (HB 09-1053), ch. 159, p. 689, § 11, effective August 5.
Annotations Notes Editor's note: Amendments to subsection (1) by House Bill 77-1076, Senate Bill 77-100, and Senate Bill 77-144 were harmonized. Case Notes ANNOTATION Law reviews. For article, "Taxation", which discusses Tenth Circuit decisions dealing with the fifth amendment privilege in tax proceedings, see 61 Den. L.J. 384 (1984). Annotator's note. Notes from People ex rel. Dunbar v. Maytag, 129 Colo. 316, 270 P.2d 782 (1954), decided under former § 39-25-115, which dealt with objections to the amount of gift tax, are included in the annotations to this section. Director of revenue is vested with the full authority to determine tax liability, subject to the right of appeal to the district court, and the further right of review pursuant to the provisions of § 39-21-105. Ray v. State, 123 Colo. 144, 226 P.2d 804 (1950). Decision of director final against state. After the tax liability determined hereby is paid under protest, the decision of the director of revenue is apparently final against the state, for § 39-21-105 makes available only the remedy to be pursued in the event the taxpayer is dissatisfied with the director's decision. California Co. v. State, 141 Colo. 288, 348 P.2d 382 (1959), appeal dismissed, 364 U.S. 285, 81 S. Ct. 37, 5 L. Ed. 2d 37, reh'g denied, 364 U.S. 897, 81 S. Ct. 219, 5 L. Ed. 2d 191 (1960). Section sets forth a statutory procedure available to a donor if he is dissatisfied with the assessment or the gift tax determined by the commissioner (now executive director). People ex rel. Dunbar v. Maytag, 129 Colo. 316, 270 P.2d 782 (1954). Section affords the taxpayer a plain, speedy, and adequate remedy and a full opportunity to be heard as to the quantum of the tax and the alleged irregularities leading up to the fixation of tax liability. Liebhardt v. Dept. of Rev., 123 Colo. 369, 229 P.2d 655 (1951). Taxpayer's sole remedy under this section. If the donor is dissatisfied with the commissioner's (now executive director's) determination of the gift tax, his sole and only remedy is under the provisions of this section. People ex rel. Dunbar v. Maytag, 129 Colo. 316, 270 P.2d 782 (1954). Section provides a clear opportunity to be heard without condition. Reed v. Dolan, 195 Colo. 193, 577 P.2d 284 (1978). Section is applicable only where there has been assessment and tax determination by the inheritance tax commissioner (now executive director), and the objections therein provided are limited to questions of erroneous valuation, appraisement, or objections or petitions in a court of competent jurisdiction within three months after the gift tax has been determined. People ex rel. Dunbar v. Maytag, 129 Colo. 316, 270 P.2d 782 (1954). No "return" filed without information with respect to income on form. Where a Colorado income tax form contains no information with respect to income, the taxpayer has not filed a "return" within the meaning of subsection (1) and he is not within the class of persons protected by this section who are entitled to a determination of tax due after a return has been filed. People v. Vickers, 199 Colo. 305, 608 P.2d 808 (1980). Failure to exhaust statutory remedies constitutes waiver. The failure to interpose objections in the manner and at the time prescribed by law, and to exhaust the statutory remedies afforded the taxpayer, constitutes a waiver of such objections. Liebhardt v. Dept. of Rev., 123 Colo. 369, 229 P.2d 655 (1951). The taxpayer's failure to pursue the proper administrative courses available to him as possible remedies bars him from later attacking the final determination and notice of tax deficiency. Manka v. Martin, 614 P.2d 875 (Colo. 1980), cert. denied, 450 U.S. 913, 101 S. Ct. 1354, 67 L. Ed. 2d 338 (1981). The general assembly intended the controlled substances tax to be subject to the provisions of this article, and, since taxpayer failed to pursue administrative remedies set forth therein, the court was without jurisdiction to hear taxpayer's complaint. Huff v. Tipton, 810 P.2d 236 (Colo. App. 1991). Where partnership is assessed for use tax and incurs liability owing to its failure to protest liability, taxpayer who is general partner of a limited partnership is jointly and severally liable therefor. AF Prop. v. Dept. of Rev., 852 P.2d 1267 (Colo. App. 1992). When issue of material fact existed as to whether general partnership had been assessed with a use tax, trial court erred in entering motion for summary judgment in favor of individual partner on grounds that partner could not be held jointly and severally liable for deficiency owed by partnership. AF Prop. v. Dept. of Rev., 852 P.2d 1267 (Colo. App. 1992). Applied in People v. Vesely, 41 Colo. App. 325, 587 P.2d 802 (1978); Montgomery Ward & Co. v. State, Dept. of Rev., 628 P.2d 85 (1981); Montgomery Ward & Co. v. Dept. of Rev., 675 P.2d 318 (Colo. App. 1983).