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Incentives to file delinquent returns

By Ramin Karimi
Special to the Times-Call

Taxpayers who have not filed tax returns or owe back taxes should file their tax returns and pay the taxes due this June. Colorado has enacted legislation that provides tax amnesty for returns filed and taxes paid between June 1, 2003 and June 30, 2003.

The amnesty program covers all taxes collected by the Department of Revenue. Included are corporate and individual taxes, employer withholding taxes, state sales tax and some local sales taxes. The returnís original due date must be prior to Dec. 31, 2002 to be eligible for amnesty. The amnesty does not cover taxes that are not collected by the DOR such as unemployment taxes and property taxes.

Tax amnesty is an opportunity for taxpayers to file and pay back taxes with no penalties or criminal prosecution. Taxpayers who pay in full before July 1, 2003, will pay only one-half of the interest that would otherwise have been due. Taxpayers, who request an installment arrangement to pay their taxes but do not pay in full before July 1, 2003, will not be liable for penalties but will be liable for interest at the normal rate.

Any taxpayer who owes taxes for a return due prior to Dec. 31, 2002, for which the DOR has not issued a bill as of June 1, 2003, may apply for amnesty. This includes anyone who failed to file a tax return, failed to report all income or taxes that were due, or misrepresented or omitted any tax due.

Taxpayers who are under criminal or civil tax fraud investigation are not eligible for amnesty. Taxpayers who are under audit or filing an amended tax return should be eligible for the amnesty program.

Applications for tax amnesty must be filed during June 2003. The application must include a Colorado Tax Amnesty Application (Form DR 1089), a completed tax return, and either payment in full of taxes due plus one-half the interest, or a Tax Amnesty Agreement to Pay application. Taxpayers who choose the agreement to pay alternative will be responsible for the full amount of interest due.

The filed returns must have the word ďAMNESTYĒ across the top of the forms. At the time of this article, some of the forms are available at the departmentís Web site, www.revenue.state.co.us/ taxamnesty.html.

Filing under the amnesty program could save taxpayers a large amount of interest and penalties. For example, consider a taxpayer who owes $5,000 in individual income taxes for the year 2000.

If the taxpayer files the return under the amnesty program and pays the tax due, they would save approximately $900 in penalties and interest.

Should you have any questions regarding the tax amnesty program, consult a tax professional or the Colorado Department of Revenue.

Karimi is a certified public accountant and a partner with Jensen Burcham Stelmack Edwards LLP. He can be reached at 303-651-3626.