Colorado § 39-22-343 - Election.

§ 39-22-343. Election.

(1) (a) Notwithstanding sections 39-22-201, 39-22-302, and 39-22-322, and except as provided in subsection (2) of this section, for income tax years commencing on or after January 1, 2018, an S corporation or partnership may annually elect to be subject to tax at the entity level for the taxable period.

(b) Except as set forth in subsection (1)(c)(I) of this section, the S corporation or partnership shall make the election on the return filed by such S corporation or partnership under section 39-22-601. The filing of a return filed under section 39-22-601 or subsection (1)(c)(I) of this section is binding on all electing pass-through entity owners.

(c) (I) For income tax years commencing on or after January 1, 2018, but prior to January 1, 2022, the S corporation or partnership must make the election on or after September 1, 2023, but before July 1, 2024, in a composite amended tax return for all of the years for which the election is made that is filed on behalf of the S corporation or partnership and all of the electing pass-through entity owners. The department of revenue shall establish the return, which shall not include any changes to the past returns other than those that are directly related to the election. The provisions of sections 39-21-107 (2) and 39-21-108 (1) shall not apply to the payment or refund of the tax made pursuant to the return.

(II) Notwithstanding any other provision of law, if an S corporation or partnership files a return specified in subsection (1)(c)(I) of this section, neither the S corporation or partnership nor the electing pass-through entity owners shall incur any penalties for filing late nor owe interest on such amounts, and the department shall not be required to pay penalties or interest on any amounts owed to the taxpayers.

(III) Notwithstanding the dates provided in subsection (1)(c)(I) of this section, the department shall have one year from the date the composite amended tax return is filed to review the return and make a written proposed adjustment in accordance with section 39-21-103. The department must make any assessment within one year after a final determination is made under section 39-21-103 (8). Any final determination made as specified in this subsection (1)(c)(III) may be enforced at any time within six years from the date of the final determination.

(2) The election allowed under subsection (1) of this section is only allowed in an income tax year where there is a limitation on the deductions allowed to individuals under section 164 of the internal revenue code.

Source: L. 2021: Entire subpart added, (HB 21-1327), ch. 300, p. 1802, § 1, effective June 23. L. 2022: (1) amended, (SB 22-124), ch. 164, p. 1018, § 2, effective May 16.