Tax Audit Protest and Appeal — Colorado

Tax Audit Protest and Appeal (COLORADO)

Quick-Reference Summary

Part A — Informal Conference Request Letter

[LAW FIRM / TAXPAYER LETTERHEAD]
[Street Address]
[City, CO ZIP]
Telephone: [____________]
Email: [____________]
CO Bar Reg. No.: [____________]

Date: [__/__/____]

Via Email and U.S. Mail

[Auditor Name], Tax Examiner
Colorado Department of Revenue — Taxation Division
[Address]
Email: [auditor email]

RE: Request for Informal Audit Conference and Pre-Assessment Review
Taxpayer: [TAXPAYER NAME]
CO Account No.: [____________]
Audit / Case No.: [____________]
Tax Type / Periods: [Income / Sales / Use / Withholding] — [YYYY]–[YYYY]

Dear [Auditor Name]:

This office represents the above-referenced Taxpayer in connection with the pending Colorado Department of Revenue audit. Pursuant to Department audit practice and prior to issuance of any Notice of Deficiency under C.R.S. § 39-21-103, Taxpayer respectfully requests an informal audit conference with the audit team and your supervisor to discuss the proposed adjustments set forth in the [Notice of Proposed Adjustment / 30-day letter / Audit Workpapers] dated [__/__/____].

1. Issues Proposed for Discussion

2. Documents Submitted Herewith

• [List of supporting documents — invoices, contracts, apportionment schedules, federal returns, etc.]

3. Requested Outcome

Taxpayer requests that the audit team reconsider the proposed adjustments in light of the enclosed documentation and applicable Colorado law, including [cite key statutes, regs, FYI publications]. If a Notice of Deficiency is nevertheless issued, Taxpayer will exercise its rights under C.R.S. § 39-21-103 to file a timely written protest within 30 days of the mailing date.

Please confirm a date and time for the conference. We are available [propose dates]. This letter is submitted without waiver of any procedural, jurisdictional, or substantive rights.

Respectfully,

[ATTORNEY NAME]
[Title]
CO Bar Reg. No. [____________]

Part B — Formal Protest / Petition

[LAW FIRM / TAXPAYER LETTERHEAD]

Date: [__/__/____]

Via Certified Mail — Return Receipt Requested
and Via Revenue Online (https://www.colorado.gov/RevenueOnline)

Colorado Department of Revenue
Attn: [Reviewer Name / Section named on Notice]
Tax Conferee Section
P.O. Box 17087
Denver, CO 80217-0087

RE: TAXPAYER PROTEST AND REQUEST FOR HEARING — C.R.S. § 39-21-103

1. Statement of Protest

Pursuant to C.R.S. § 39-21-103(1) and 1 CCR 201-1, Reg. 39-21-103, Taxpayer [TAXPAYER NAME] hereby protests, in whole [or in part as to the issues specified in Section 3 below], the [Notice of Deficiency / Notice of Rejection of Refund Claim] identified above (the "Notice") and requests a hearing before the Executive Director of the Colorado Department of Revenue.

2. Timeliness

The Notice was mailed by first-class mail on [NOTICE MAILING DATE]. This protest is filed and postmarked on [FILING DATE], within the thirty (30) day period prescribed by C.R.S. § 39-21-103(1) and § 39-21-105.5. Taxpayer reserves all rights under C.R.S. § 39-21-103(8), including stay of enforced collection of the disputed portion during the pendency of this protest and any timely appeal.

3. Itemized Schedule of Disputed Findings

4. Statement of Facts

4.1. Taxpayer is a [individual / Colorado-domiciled C-corporation / pass-through entity / nonresident] with [principal place of business / primary residence] at [ADDRESS].

4.2. For tax period(s) [YYYY], Taxpayer timely filed Colorado Form [DR 0104 / DR 0112 / DR 0106 / DR 0100] reporting [taxable income / receipts / tax due] of $[AMOUNT].

4.3. The Department initiated examination by letter dated [DATE] and issued the Notice on [MAILING DATE]. The Notice asserts [summarize adjustments].

4.4. [Additional material facts.]

5. Grounds for Protest

Taxpayer asserts each of the following independent grounds, in the alternative and without waiver:

5.1. Erroneous Application of Colorado Statute. [Identify statute and explain misapplication.]

5.2. Failure of Proof. [Department lacks competent evidence to support the adjustment; cite Department records, audit workpapers.]

5.3. Conflict with Department Guidance. [Cite FYI publications, GILs, PLRs that support taxpayer position.]

5.4. Statute of Limitations. [If applicable — e.g., assessment beyond § 39-22-621 4-year SOL for income tax or § 39-26-125 3-year SOL for sales/use tax. Note: federal-change adjustments have a separate 1-year window under § 39-22-621(2)(b).]

5.5. TABOR / Constitutional Defenses (if applicable). [Colo. Const. art. X, § 20 limitations; uniformity clause challenges.]

5.6. Penalty Abatement — Reasonable Cause. Per Department policy and prevailing practice, penalties under [§ 39-21-116 / specific provision] should be abated for reasonable cause where the taxpayer acted in good faith on a reasonable interpretation of the law.

6. Hearing Election

Pursuant to C.R.S. § 39-21-103(7), Taxpayer elects:

☐ In-person formal administrative hearing before the Executive Director or designated hearing officer.

☐ Written brief in lieu of hearing, to be submitted on a schedule to be set by the Department.

7. Requested Relief

Taxpayer respectfully requests that the Department:

1. Withdraw the Notice in its entirety;
2. Cancel all assessed tax, interest, and penalty;
3. [If refund denial:] Allow the refund claim in full with statutory interest under C.R.S. § 39-21-110;
4. Abate any penalties for reasonable cause;
5. Stay enforced collection pursuant to C.R.S. § 39-21-103(8) pending final determination and any appeal therefrom;
6. Issue a written determination addressing each ground raised herein.

8. Reservation of Rights

Taxpayer reserves the right to (a) supplement the record with additional documents, briefs, and witness testimony before and at the hearing; (b) appeal any adverse determination to Colorado district court under C.R.S. § 39-21-105 for de novo review; (c) raise any defense or claim not specifically itemized herein.

9. Verification and Signature

I, [TAXPAYER / AUTHORIZED OFFICER / GENERAL PARTNER / POA HOLDER], declare under penalty of perjury under the laws of the State of Colorado that the facts stated in this protest are true and correct to the best of my knowledge and belief.

_____________________________
[TAXPAYER / OFFICER NAME]
Title: [____________]
Date: [__/__/____]

_____________________________
[ATTORNEY NAME], Counsel for Taxpayer
CO Bar Reg. No. [____________]
[Firm / Address / Phone / Email]

Enclosures:

• Copy of Notice of Deficiency / Notice of Rejection of Refund Claim
• Form DR 0145 Power of Attorney (if applicable)
• [Exhibits A–__ supporting documentation]

Part C — Appeal Cover Letter to District Court (Judicial Review)

[LAW FIRM LETTERHEAD]

Date: [__/__/____]

Via Hand Delivery / E-Filing (Colorado Courts E-Filing)

Clerk of the District Court
[County Name] County Combined Courts
[Court Address]

RE: Filing of Complaint for De Novo Review of Department of Revenue Final Determination
Taxpayer / Plaintiff: [TAXPAYER NAME]
Tax Type / Periods: [____________]
Amount in Controversy: $[AMOUNT]
Statutory Authority: C.R.S. § 39-21-105

Dear Clerk:

Enclosed for filing please find the Complaint for De Novo Review of Final Determination of the Executive Director of the Colorado Department of Revenue, together with the following:

Jurisdiction and Timeliness

This Court has subject-matter jurisdiction under C.R.S. § 39-21-105. The Notice of Final Determination was mailed by the Department on [__/__/____]. This Complaint is filed within [___] days of that mailing date as required by [C.R.S. § 39-22-622 / § 39-26-125 / applicable statute].

Relief Sought

De novo review of the Department's final determination; abatement of all assessed tax, interest, and penalty; refund (with statutory interest under C.R.S. § 39-21-110) of any amounts paid under protest; costs; and such other relief as the Court deems just.

Service on the Department will be effected via the Executive Director, c/o Department of Revenue, 1881 Pierce St., Lakewood, CO 80214, and on the Colorado Attorney General, 1300 Broadway, Denver, CO 80203.

Respectfully submitted,

[ATTORNEY NAME]
CO Bar Reg. No. [____________]
[Firm / Address / Phone / Email]

cc: Colorado Department of Revenue (via certified mail)
Colorado Attorney General — Revenue & Utilities Section

Part D — Pre-Filing Checklist

Pre-Audit / During Audit

• ☐ Open a litigation hold and preserve all books, records, work papers, emails, and electronic data for the tax periods under audit.
• ☐ File Colorado Form DR 0145 (Power of Attorney) with the assigned auditor.
• ☐ Track every Information Document Request (IDR) and response date.
• ☐ Reconcile federal Form 1120/1040/1065 to Colorado return and identify all conforming/nonconforming adjustments.
• ☐ Calendar the federal RAR notification deadline (1 year under § 39-22-601(6)).
• ☐ Request an exit conference / informal supervisor review before issuance of Notice of Proposed Adjustment.

Notice of Deficiency / Rejection of Refund Claim Received

• ☐ Confirm and docket the MAILING DATE on the face of the Notice (not date received).
• ☐ Calendar DAY 30 (the protest deadline) — and DAY 25 as an internal cushion.
• ☐ Verify whether Day 30 falls on a Saturday/Sunday/legal holiday (deadline rolls to next business day).
• ☐ Pull Source Code from upper-right of notice.
• ☐ Identify the reviewer/section named on the Notice and obtain mailing address.
• ☐ Determine whether to elect in-person hearing or written brief in lieu.
• ☐ Assess whether to pay the undisputed portion to stop interest accrual.

Protest Preparation

• ☐ Draft itemized schedule of disputed findings (matches Department's adjustment numbering).
• ☐ Draft statement of facts.
• ☐ Draft grounds for protest (statute, regulation, case law, FYI publications).
• ☐ Identify SOL defenses — § 39-22-621 (income), § 39-26-125 (sales/use).
• ☐ Identify TABOR / constitutional overlays.
• ☐ Identify penalty abatement grounds (reasonable cause).
• ☐ Compile exhibits (Bates-stamp; index).
• ☐ Obtain taxpayer's verified signature (officer/POA holder for entity).

Filing

• ☐ File via Revenue Online AND certified mail (belt and suspenders).
• ☐ Retain Revenue Online confirmation number and USPS Form 3800 receipt.
• ☐ Calendar Department response date (no statutory deadline; typically 6–18 months).
• ☐ Note that interest continues to accrue during pendency despite collection stay.

Post-Filing / Hearing

• ☐ Respond promptly to Tax Conferee or Hearing Officer document requests.
• ☐ Prepare witness list and exhibit list (if in-person hearing elected).
• ☐ Submit pre-hearing brief and proposed findings.
• ☐ Preserve the record for district court de novo review.

If Adverse Final Determination Issued

• ☐ Calendar the judicial-review deadline for the specific tax type (income: § 39-22-622; sales/use: § 39-26-125; severance: § 39-29-115).
• ☐ Confirm bond / payment-under-protest requirements for the tax type.
• ☐ Draft Complaint for de novo review in Colorado District Court (Denver District unless venue otherwise prescribed).
• ☐ Effect service on Executive Director AND Colorado Attorney General.

Home-Rule Jurisdiction Disputes

• ☐ Exhaust local administrative remedies first.
• ☐ Obtain copy of local hearing officer's written decision.
• ☐ File request for CDOR § 29-2-106.1 hearing within 30 days of local-remedy exhaustion.
• ☐ Serve duplicate copy on the local jurisdiction.
• ☐ Include the local notice of assessment and the hearing officer decision with the request.

Sources and References

• C.R.S. § 39-21-103 (Hearings): https://codes.findlaw.com/co/title-39-taxation/co-rev-st-sect-39-21-103/
• C.R.S. Title 39 (Taxation) — Colorado Legislature: https://leg.colorado.gov/colorado-revised-statutes
• CDOR — Protest Rights & Process: https://tax.colorado.gov/protest-rights
• CDOR — File a Protest: https://tax.colorado.gov/file-a-protest
• CDOR — Taxation Disputes: https://tax.colorado.gov/taxation-disputes
• 1 CCR 201-1 (Procedure & Administration Regulations): https://www.sos.state.co.us/CCR/GenerateRulePdf.do?ruleVersionId=1495
• Colorado Revenue Online: https://www.colorado.gov/RevenueOnline
• Colorado District Court (Denver) — E-Filing: https://www.courts.state.co.us/Courts/County/Index.cfm?County_ID=11
• Colorado Attorney General — Revenue & Utilities Section: https://coag.gov/office-sections/state-services/revenue-utilities/
• FYI Publication Categories (CDOR Guidance): https://tax.colorado.gov/fyi-publication-categories
• TABOR (Colo. Const. art. X, § 20): https://leg.colorado.gov/sites/default/files/images/olls/crs2024-title-00-art-10.pdf
• C.R.S. § 29-2-106.1 (Home-Rule Disputes): https://codes.findlaw.com/co/title-29-government-local/co-rev-st-sect-29-2-106-1/