Colorado § 39-21-114 - Methods of enforcing collection.

§ 39-21-114. Methods of enforcing collection.

(1) The executive director may issue a warrant executed either with his or her manual signature or with his or her facsimile signature in accordance with the "Uniform Facsimile Signature of Public Officials Act", article 55 of title 11, directed to any employee, agent, or representative of the department, sometimes in this section referred to collectively as "agent", commanding the agent to distrain, seize, sell, or otherwise levy upon the personal property of the taxpayer, except such personal property as is exempted from execution and sale by any statute of this state, for the payment of the tax due, together with any penalties and interest accrued thereon and the cost of execution:

(a) When any deficiency in tax is not paid within thirty days from the mailing of notice and final determination therefor and no appeal from such deficiency has been docketed with any district court of this state within said period; or

(b) When any other amount of tax, penalty, or interest is not paid within ten days from the mailing of demand for payment thereof; or

(c) Immediately upon making of a jeopardy assessment or of the issuance of a demand for payment, as provided in section 39-21-111.

(d) (Deleted by amendment, L. 2002, p. 1362, § 18, effective July 1, 2002.)

(2) (a) The agent charged with the collection shall make or cause to be made an account of the goods or effects distrained, a copy of which, signed by the agent making such distraint, shall be left with the owner or possessor, or at his usual place of abode with some member of his family over the age of eighteen years, or at his usual place of business with his stenographer, bookkeeper, or chief clerk, or, if the taxpayer is a corporation, shall be left with any officer, manager, general agent, or agent for process, with a note of the sum demanded and the time and place of sale; and shall forthwith cause to be published a notice of the time and place of sale, together with a description of the property to be sold, in some newspaper of general circulation within the county wherein distraint is made or, in lieu thereof and in the discretion of the executive director of the department of revenue, the agent shall cause such notice to be publicly posted at the courthouse of the county wherein such distraint is made, copies thereof to be posted in at least two other public places within said county. The time fixed for the sale shall not be less than ten days nor more than sixty days from the date of such notification to the owner or possessor of the property and the publication or posting of such notices. Said sale may be adjourned from time to time by said agent if he deems it advisable but not for a time to exceed in all ninety days from the date first fixed for the sale. When any personal property is advertised for sale under distraint as aforesaid, the agent making the seizure shall proceed to sell such property at public auction, offering the same at not less than a fair minimum price, including the expenses of making the seizure and of advertising the sale, and, if the amount bid for the property at the sale is not equal to the fair minimum price so fixed, the agent conducting the sale may declare the same to be purchased by him for the state. The property so purchased may be sold by the agent under such regulations as may be prescribed by the executive director. In any case of distraint for the payment of taxes, the goods, chattels, or effects so distrained shall be restored to the owner or possessor if, prior to the sale, the amount due is paid together with the fees and other charges or may be redeemed by any person holding a chattel paper or other evidence of right of possession.

(b) In all cases of sale, the agent making the sale shall issue a certificate of sale to each purchaser, and the certificate is prima facie evidence of the right of the agent to make the sale and conclusive evidence of the regularity of the proceedings in making the sale and transfers to the purchaser all right, title, and interest of the taxpayer in and to the property sold free and clear of all liens and encumbrances junior to the department; and, where such property consists of certificates of stock in the possession of the agent, the certificate of sale is notice, when received, to any corporation, company, or association of the transfer, and the certificate of the sale provides the authority for such corporation, company, or association to record the transfer on its books and records; and, where the subject of sale is securities or other evidences of debt in the possession of the agent, the certificate of sale provides the holder with good and valid evidence of title as against any other person; and, where the subject of the sale is a motor vehicle, the certificate of sale is notice, when received, to any public official charged with the registration of title to motor vehicles, of the transfer, grants authority to the public official to record the transfer on the books and records in the same manner as if the certificate of title to the motor vehicle were transferred or assigned by the holder of the certificate of title, and renders void all previously issued titles to the motor vehicle. Any surplus remaining above the taxes, penalties, interest, costs, and expenses of making the seizure and of advertising the sale must be returned to the owner or any other person having a legal right thereto, and, on demand, the executive director shall render an account in writing of the sale.

(3) The agent of the executive director of the department of revenue to whom a warrant has been issued may file with the clerk of any district court within this state a copy of said warrant, and thereupon the clerk shall enter in the judgment docket, in appropriate columns, the name of the taxpayer mentioned in the warrant, the amount of the tax, or a portion thereof, together with interest and penalties for which the warrant is issued, and the date upon which such copy is filed and shall issue and deliver a transcript of such judgment to the agent without cost. Said transcript so issued and delivered may be filed with the clerk and recorder of any county, and, from the time of such filing, such judgment shall become a lien upon all the real property of the judgment debtor in such county owned by him at the time or which he may afterwards acquire until said lien expires. The lien shall continue for six years from the entry of the judgment unless the judgment is previously satisfied, all in the same manner as is provided by statute for making a judgment of a court of record a lien on real property. The judgment so entered shall have the same force and effect as other judgments of a court of record, and execution upon the real and personal property of the judgment debtor and redemption thereof may be had as provided by law with respect to other judgments. The executive director and his agent may cause execution to be had thereon by the proper sheriff or other officer, and such sheriff or other officer shall be entitled to the same fees for his services to be collected in the same manner as in the case of other executions.

(4) Any employee, agent, or representative of the executive director of the department of revenue to whom warrant has been issued may file a notice of lien in such form as the executive director may prescribe with the person in possession of any personal property or rights to property belonging to the taxpayer, and the filing of such notice of lien shall operate as a lien upon such personal property or rights to property from the date of such filing. Any costs incurred by the person in possession of such property or rights to property by reason of compliance with said notice of lien shall be paid by the executive director and recovered by him out of any proceeds of sale of the property subject thereto. The executive director may release said lien as to any part or all of the property or rights to property covered by any such lien upon such terms as he may deem proper.

(5) Nothing in this section shall be construed to abrogate or diminish the rights of bona fide purchasers, lienors, or pledgees for value and without notice.

(6) The executive director of the department of revenue may be made a party defendant in an action at law or a suit in equity by any person aggrieved by the unlawful seizure or sale of his personal property, but only the state of Colorado shall be responsible for any final money judgment secured against said executive director; and said judgment, so secured, shall be paid or satisfied out of the tax refund provided by section 39-21-108 (2) upon presentation by the judgment creditor to the executive director of two certified copies of said final judgment.

(7) If any person, firm, or corporation liable for the payment of any tax covered by this article has repeatedly failed, neglected, or refused to pay the same within the time specified for such payment and the department has been required to issue distraint warrants to enforce the collection of any taxes due from such taxpayer, the executive director of the department of revenue is authorized to assess and collect the amount of such taxes due, together with all interest and penalties thereon provided by law, and also the following additional penalties for recurring distraint warrants:

(a) Three, four, or five consecutive distraint warrants issued: Fifteen percent of the delinquent taxes, interest, and penalties due or the sum of twenty-five dollars, whichever amount is greater;

(b) Six or more consecutive distraint warrants issued: Thirty percent of the delinquent taxes, interest, and penalties due or the sum of fifty dollars, whichever amount is greater.

(8) (a) In order to facilitate and expedite the collection of taxes more than six months overdue from a taxpayer who is not a resident of nor domiciled in the state of Colorado, the executive director may enter into a contract with a debt collection agency or an attorney for the collection of the taxes due from such taxpayer together with any penalties and interest accrued thereon.

(b) For purposes of paragraph (a) of this subsection (8), the executive director may contract with a debt collection agency or an attorney doing business in the state of Colorado or in any other state; except that, prior to entering into such contract with a debt collection agency, the executive director shall require that the debt collection agency file a bond in the amount of one hundred thousand dollars, which bond shall run to the state of Colorado for the purpose of guaranteeing compliance with the terms of the contract. Such bond shall be executed by the debt collection agency as principal and by a corporation, which is licensed to transact the business of fidelity and surety insurance, as surety.

(b.5) In order to facilitate and expedite the collection of taxes more than twelve months overdue from a taxpayer who is a resident of and domiciled in the state of Colorado, the executive director may enter into contracts with two or more debt collection agencies or attorneys for the collection of the taxes due from such taxpayer, together with any penalties and interest accrued thereon pursuant to the procurement provisions of article 103 of title 24, C.R.S. For the purposes of this paragraph (b.5), the executive director may contract with debt collection agencies or attorneys doing business in the state of Colorado or in any other state; except that, prior to entering into such a contract with a debt collection agency, the executive director shall require that the debt collection agency file a bond in the amount of no less than one hundred thousand dollars and no more than five hundred thousand dollars, which bond shall run to the state of Colorado for the purpose of guaranteeing compliance with the terms of the contract. Such bond shall be executed by a debt collection agency as principal and by a corporation, which is licensed to transact the business of fidelity and surety insurance, as surety.

(c) (I) Each contract entered into with a debt collection agency or an attorney shall specify that fees for services rendered shall be based on the total amount of delinquent taxes, including accrued penalties and interest, that is actually collected; however, under no circumstance shall the fees for services rendered exceed twenty percent of the total amount of delinquent taxes, including accrued penalties and interest, that is actually collected. Any fees for services rendered shall be collected by the agency or attorney in addition to the total amount of delinquent taxes, including accrued penalties and interest, actually collected. Such fees for services rendered shall be shown to the taxpayer as a separate and distinct item, and, when added, such fees for services rendered shall be a debt from the taxpayer to the agent or attorney until paid and shall be recoverable at law in the same manner as other debts.

(II) If the department enters into a contract with a debt collection agency or an attorney to collect delinquent taxes, including accrued penalties and interest, and any fees for services rendered as specified in subparagraph (I) of this paragraph (c) and the contract specifies that the department is required to collect the fees for services rendered if the taxpayer chooses to pay the total amount owed directly to the department, the department shall become the agent for the agency or attorney and collect the agency's or attorney's fees for services rendered on behalf of the agency or attorney.

(III) If a taxpayer makes a payment toward the total amount a debt collection agency or attorney is attempting to collect, including delinquent taxes, accrued penalties and interest, and any fees for services rendered as specified in subparagraph (I) of this paragraph (c), such payment shall be allocated among delinquent taxes, accrued penalties and interest, and fees for services rendered according to the rules or procedures of the department and the contract between the department and the agency or attorney. The taxpayer may not designate the allocation of the payment.

(IV) No costs except court costs shall be reimbursed unless authorized in such contract. If a debt collection agency or an attorney files a civil suit to collect delinquent taxes, including accrued penalties and interest, suit shall be brought in the name of the executive director of the department of revenue of the state of Colorado. When suit is brought by an agency or attorney, court costs are reimbursable by the department to the agency or attorney, but fees for services of legal representation incurred by such agency or attorney on behalf of the department for the purpose of such suit shall not be reimbursable.

(d) A debt collection agency or an attorney shall, pursuant to contract, remit the total amount of delinquent taxes, including accrued penalties and interest, collected, less allowable reimbursable costs, to the executive director within thirty days from the date the moneys are collected from the taxpayer.

(e) The executive director may prescribe forms to be used in implementing this subsection (8).

(9) The executive director, under such terms and conditions as he deems advisable, may enter into a reciprocal agreement with an agency of another state for the collection of delinquent taxes owed by individuals who are nonresidents of the state of Colorado. Under such an agreement, the agency would agree to collect delinquent taxes owed to the state of Colorado by taxpayers who are residing or domiciled in that state. In return, the executive director would undertake the collection of taxes of the same or similar type owed to the other state by taxpayers residing or domiciled in the state of Colorado.

(10) (a) The executive director is authorized to enter into an agreement with the controller for the purpose of collecting delinquent state taxes through the vendor offset program established pursuant to section 24-30-202.4 (3.5)(a), C.R.S.

(b) Each agreement entered into with the controller shall specify that fees for services rendered shall be based on the total amount of delinquent taxes, including accrued penalties and interest, that is actually collected through the vendor offset program established pursuant to section 24-30-202.4 (3.5)(a), C.R.S.

(c) The controller shall, pursuant to agreement, remit the total amount actually offset from a vendor's account pursuant to section 24-30-202.4 (3.5)(a), less fees for services rendered and allowable costs, to the executive director within thirty days after the date the moneys are offset from the vendor's account.

(11) In addition to any other remedies available to the department, any district court in the state has jurisdiction and venue to make and issue orders as may be necessary for the collection of any tax, interest, or penalty, including, upon ex parte application by an employee, agent, or representative of the department and a showing of probable cause, warrants to search premises to distrain, seize, and sell the taxpayer's personal property.

Source: L. 65: p. 1143, § 2. C.R.S. 1963: § 138-9-13. L. 76: IP(1) amended, p. 776, § 1, effective April 3. L. 77: (1)(d) added and (7) R&RE, pp. 842, 1774, §§ 8, 1, effective July 1. L. 84: (8) and (9) added, p. 1015, § 1, effective April 12. L. 87: (8)(b), (8)(c), and (8)(d) amended and (8)(b.5) added, p. 1424, § 1, effective July 10. L. 97: (10) added, p. 945, § 5, effective July 1. L. 2002: (1)(c) and (1)(d) amended, p. 1362, § 18, effective July 1. L. 2010: (8)(c) and (8)(d) amended, (HB 10-1055), ch. 33, p. 124, § 1, effective March 22. L. 2019: IP(1) and (2)(b) amended and (11) added, (SB 19-035), ch. 64, p. 231, § 2, effective August 2.

ANNOTATION

Law reviews. For article, "An Introduction to Tax Liens", see 13 Colo. Law. 399 (1984). For article, "Survey of Colorado Tax Liens", see 14 Colo. Law. 1765 (1985).

Judgment upon distraint warrant without service of process constitutional. A judgment entered upon a warrant of distraint as provided in subsection (3) without service of process upon the taxpayer is not invalid and void and does not deprive the taxpayer of his property without due process of law. Liebhardt v. Dept. of Rev., 123 Colo. 369, 229 P.2d 655 (1951).

Lien for state income tax which predates federal tax lien has priority under federal law. Eggleston v. Colo., 636 F. Supp. 1312 (D. Colo. 1986).

Taxpayer may proceed under subsection (6) or § 24-4-106, where a jeopardy assessment has been made without a notice of deficiency and a distraint warrant and seizure have been pursued under this section. Flores v. Dept. of Rev., 802 P.2d 1175 (Colo. App. 1990).

State tax lien was not extinguished by merger when the state bought property at the tax sale to avoid sale for an inadequate price. Such action by the state supported inference that it intended to preserve its lien on the property. U.S. v. State of Colo., 872 F.2d 338 (10th Cir. 1989).

In order to enforce liens for sales taxes, the department of revenue may activate its liens by recording the notice of delinquency pursuant to § 39-26-118 or by the more immediate means of distraint in accordance with this section. ITT Diversified Credit Corp. v. Couch, 669 P.2d 1355 (Colo. 1983).

Notice by publication held inadequate to advise secured lienholder of tax sale; lienholder was entitled to receive notice of tax sale by mail or personal service. Fact that secured lienholder might have taken steps to safeguard its interest by requiring owner to file a bond is irrelevant to the issue of whether notice was adequate. Omnibank Iliff, N.A. v. Tipton, 843 P. 2d 71 (Colo. App. 1992).

Where secured lienholder had known and conflicting claim, trial court erred in ruling that owner of property seized by the department of revenue for nonpayment of tax and sold at tax sale was, as a matter of law, entitled to surplus proceeds from the tax sale. Omnibank Iliff, N.A. v. Tipton, 843 P.2d 71 (Colo. App. 1992).