HB 22-1118

HB 22-1118, also known as the Sales and Use Tax Refund Act, affects Colorado taxpayers who file claims for sales or use tax refunds. If a refund takes more than 180 days to process after being filed between July 1, 2022, and July 1, 2026, interest will accrue on the refund from the filing date. The bill also introduces civil penalties of up to 10% for incomplete or unreasonable claims, with opportunities for appeal and waiver under certain conditions. Since it has been signed into law, this act is now in effect and impacts anyone who files a tax refund claim during the specified period.

Official Summary

Under the act, if a purchaser files a sales and use tax refund claim between July 1, 2022, and July 1, 2026, interest will accrue on the refund from the date that the purchaser files the claim, so long as the refund is paid more than 180 days from the date that the purchaser files the claim. If a purchaser files a claim for a sales and use tax refund that is incomplete, duplicative of another claim, or lacks a reasonable basis in law or fact, the act requires the executive director of the department of revenue (executive director) to assess and collect, in addition to other penalties provided by law, a civil penalty. The civil penalty is equal to 5% of the total refund claimed if the claim is materially incomplete and is equal to 10% of the total refund claimed if the claim is duplicative or lacking a reasonable basis in law or in fact. Prior to assessing a civil penalty for a claim that the executive director deems materially incomplete, the executive director is required to provide notice to the purchaser or the preparer of the claim, specify what is missing, and state the conditions that will lead to the executive director assessing the civil penalty. If a sales and use tax refund claim on which the executive director assesses a civil penalty is prepared, in whole or in part, by a person other than the purchaser, the penalty is imposed on that other person. The executive director shall give the person against whom the civil penalty is assessed written notice, and that person may petition for a hearing and appeal the civil penalty. The executive director may waive the penalty if the person against whom the penalty is assessed establishes that a duplicate claim was not intentional and was either minimal or immaterial or demonstrates other good cause for waiver. (Note: This summary applies to this bill as enacted.)

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