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Colorado Statute of Limitations: Watch Dates in Home Rule Cities

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Article XX, Section 6 of the Colorado Constitution grants a great deal of authority to the state’s Home Rule cities. However the legislature determined “that the enforcement of sales and use taxes can affect persons and entities across the jurisdictional boundaries of taxing jurisdictions and that dispute resolution is a matter of statewide concern…” C.R.S. 29-2-106.1(1)

Generally the Statute of Limitations for sales and use taxes is three years from the date on which the tax was due. C.R.S. 39-26-125 and 39-26-210 However, the letters sent out by many Colorado Home Rule cities which notify a taxpayer of a sales and use tax audit will specify a 36 month audit period that begins more than three years before the date when the audit is scheduled to begin. (For example, a letter dated July 15, 2014 notifying “Taxpayer X” of an audit which will begin on October 1, 2014, will say that it will cover the 36 month period from August 1, 2011 through August 31, 2014.) The cities take the position that the mailing of their notice suspends the Statute. Most taxpayers don’t know the difference, but there is nothing in the state statutes which provides for the suspension claimed by the cities. So by the time the audit starts, the first two months of the audit period in my example are already closed. Watch the dates carefully when dealing with Colorado cities!

In addition, some attorneys argue that a taxpayer should never agree to sign an extension of the Statute of Limitations. But that’s a subject for another time.

Other recent “Local Sales Tax / Home Rule Issues” posts by Keith Crichton, CPA:

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2 Responses to Colorado Statute of Limitations: Watch Dates in Home Rule Cities

  • Posted by Jeff on January 21, 2016 1:16pm:

    It appears the City of Aurora has found a way around this issue by including in their code a rule that mailing a notice extends the statute of limitations until they are done with the audit. Code Section 130-90(c). Do you know if this has been challenged in court?

    • Posted by Author photo of Keith Crichtonkeithcrichton on February 2, 2016 2:36pm:

      To the best of my knowledge it has not been challenged, but it remains contrary to the state statute. I rather doubt that it would be upheld. but I'm not an attorney.

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