Colorado recently released an updated version of its FYI General 11 Publication, Colorado Civil Tax Penalties and Interest. The penalties and interest discussed in this publication cover a wide array of tax types, including withholding tax.
Penalties for late payment of withholding taxes remains unchanged from the previous version of this publication: the greater of $5 or a percentage of the unpaid tax equal to 5% plus 0.5% for each full or partial month the tax remains unpaid, not to exceed a total of 12%.
Interest has increased since the last version of this publication, from 6% to 7% for the regular interest rate, and 3% to 4% for the discounted rate. The regular rate is generally applicable to tax underpayments or past due payments, while the discounted rate applies to those who:
- Pay the tax prior to the issuance of a notice of deficiency
- Pay or enter into an agreement to pay the tax within 30 days of the issuance of a notice of deficiency for the unpaid tax.
About the Author
Paul Ogawa is a Junior Regulatory Counsel at Sovos Compliance. As part of the Regulatory Analysis team, his main areas of focus are state and federal tax withholding, the Affordable Care Act (ACA), and Canadian tax information reporting. Prior to Sovos, Paul worked as a litigation attorney in Boston area law firms, representing clients in insurance subrogation claims, family law matters, and employment disputes. Paul is a member of the Massachusetts Bar, earned his B.A. from Brandeis University and his J.D. from the Suffolk University Law School.More Content by Paul Ogawa