Colorado § 39-21-110 - Interest on overpayments - repeal.

§ 39-21-110. Interest on overpayments - repeal.

(1) Interest shall be allowed and paid upon any overpayment in respect to any tax or charge administered pursuant to this article 21 at the rate imposed under section 39-21-110.5. Such interest shall be allowed and paid as follows:

(a) In the case of a credit, from the date of the overpayment to the due date of the amount against which the credit is taken;

(b) Except as provided in subsection (1)(c) of this section, in the case of a refund, from the date of the overpayment to a date, to be determined by the executive director of the department of revenue or their delegate, preceding the date of the refund by not more than thirty days, whether or not such refund is accepted by the taxpayer after tender of such refund to the taxpayer. The acceptance of such refund shall be without prejudice to any right of the taxpayer to claim any additional overpayment and interest thereon; or

(c) (I) In the case of a refund claim made by a purchaser for sales or use tax paid to a vendor under section 39-26-703 (2) on or after July 1, 2022, but before July 1, 2026, from the date that the claim for refund was filed to a date, to be determined by the executive director of the department of revenue or their delegate, preceding the date of the refund by not more than thirty days, whether or not such refund is accepted by the taxpayer after tender of such refund to the taxpayer, but only if the date of the refund is more than one hundred eighty days from the date the claim for refund was filed. The acceptance of such refund shall be without prejudice to any right of the purchaser to claim any additional overpayment and interest thereon.

(II) This subsection (1)(c) is repealed, effective July 1, 2030.

(1.5) Notwithstanding any other provision of this section to the contrary, a payment not made incident to a bona fide and orderly discharge of an actual liability or a liability reasonably assumed to be imposed by law is not an overpayment for the purposes of this section only, and interest is not payable on the payment. For purposes of this subsection (1.5), the following burdens of proof shall apply:

(a) If a taxpayer's total payments are less than or equal to twice the amount of the actual tax liability, then the department shall bear the burden of proving, by a preponderance of the evidence, that such payments were not made incident to a bona fide and orderly discharge of an actual liability or a liability reasonably assumed to be imposed by law; and

(b) If a taxpayer's total payments are more than twice the amount of the actual tax liability, then the taxpayer shall bear the burden of proving, by a preponderance of the evidence, that such payments were made incident to a bona fide and orderly discharge of an actual liability or a liability reasonably assumed to be imposed by law.

(2) Any portion of any tax or charge administered pursuant to this article 21 or any interest, assessable penalty, additional amount, or addition to a tax or charge which has been erroneously refunded shall bear interest at the rate imposed under section 39-21-110.5 from the date of the payment of the refund.

(3) If any overpayment of any tax or charge administered pursuant to this article 21 is refunded within ninety days after the last date prescribed for filing the return of such tax or charge, determined without regard to any extension of time for filing the return, no interest shall be allowed under subsection (1) of this section on such overpayment.

(4) If the amount of any income tax is reduced by reason of a carry-back of a net operating loss, such reduction in tax shall not affect the computation of interest under this section for the period ending with the last day of the taxable year in which the net operating loss arises. If any overpayment of income tax results from a carry-back of a net operating loss, such overpayment shall be deemed not to have been made prior to the close of the taxable year in which such net operating loss arises.

Source: L. 65: p. 1139, § 2. C.R.S. 1963: § 138-9-9. L. 73: p. 1418, § 104. L. 77: IP(1), (2), and (3) amended, pp. 1768, 1854, §§ 7, 9, effective January 1, 1978. L. 79: IP(1), (2), and (3) amended, p. 1500, § 25, effective January 1, 1980. L. 81: IP(1) and (2) amended, p. 1864, § 3, effective June 8. L. 86: (2) amended, p. 1111, § 8, effective July 1. L. 89: (2) and (3) amended, p. 1596, § 10, effective July 1, 1993. L. 90: IP(1), (2), and (3) amended, p. 1724, § 11, effective May 1; IP(1), (2), and (3) amended, p. 1725, § 12, effective July 1, 1993. L. 2009: (1.5) added, (HB 09-1219), ch. 71, p. 241, § 1, effective March 25. L. 2022: IP(1) and (1)(b) amended and (1)(c) added, (HB 22-1118), ch. 110, p. 501, § 1, effective April 21. L. 2024: IP(1), (2), and (3) amended, (HB 24-1349), ch. 423, p. 2904, § 13, effective December 17 (see editor's note).

Editor's note: (1) Amendments to the introductory portion to subsection (1) and subsections (2) and (3) by Senate Bill 77-144 and House Bill 77-1076 were harmonized.

(2) Section 19(1) of chapter 423 (HB 24-1349), Session Laws of Colorado 2024, provides that the act changing this section takes effect on the date of the official declaration of the vote thereon by the governor only if, at the November 2024 statewide election, a majority of voters approve the ballot issue referred in accordance with § 39-37-201. The ballot issue, referred to the voters as Proposition KK, was approved on November 5, 2024, and was proclaimed by the Governor on December 17, 2024, see L. 2025, p. 3636. The vote count for the measure was as follows:

FOR: 1,675,123

AGAINST: 1,406,112

ANNOTATION

Law reviews. For article, "Collecting Pre- and Post-Judgment Interest in Colorado: A Primer", see 15 Colo. Law. 753 (1986). For article, "An Update of Appendices from Collecting Pre- and Post-Judgment Interest in Colorado", see 15 Colo. Law. 990 (1986).

Trial court erred in allowing state department of revenue to determine the form of the remedy for collecting an unconstitutional tax. It is the obligation of the trial court, after declaring the collected tax unconstitutional, to provide it with a remedy. Buckley Powder Co. v. State, 924 P.2d 1133 (Colo. App. 1996), aff'd in part, rev'd in part on other grounds, 945 P.2d 841 (Colo. 1997).