Colorado Bank Levy Checklist
What State Tax Enforcement Means
State tax enforcement occurs when the Colorado Department of Revenue takes active collection steps because a tax debt remains unresolved through routine billing notices. These actions can involve formal demand letters, tax liens filed against your property, bank levies, wage garnishment, or seizure of business assets.
The state views your account as delinquent and pursues collection through legal mechanisms available under Colorado tax law. Collection processes do not necessarily mean criminal prosecution, as most cases involve civil enforcement procedures.
Why Colorado Initiates Enforcement
The state begins enforcement when a tax debt remains unpaid after earlier collection attempts have failed. Common triggers include unfiled tax returns, unpaid tax balances, accumulated penalties and interest, or failure to comply with payment agreements.
Colorado Department of Revenue follows a documented escalation sequence that begins with a
Notice of Deficiency, progresses to a Final Determination and Demand for Payment if not protested or paid, and then moves to enforcement actions such as liens or levies if the debt remains unresolved.
Consequences of Ignoring Enforcement Actions
Failure to respond to or address an enforcement action typically results in continued collection efforts through available legal mechanisms. Additional penalties and interest continue to accrue on the unpaid balance throughout the collection process.
The state may file additional liens, increase wage garnishment amounts, levy additional bank accounts, or pursue other collection remedies authorized by statute. Each escalated action increases the total amount owed and makes resolution more complex and expensive.
What Enforcement Does Not Mean
Receiving an enforcement notice does not mean the state has seized your property, frozen all your accounts, or filed criminal charges against you. An enforcement action does not mean all available resolution options have expired or that negotiation has become impossible.
Many enforcement actions can still be addressed through payment arrangements, appeals, or other administrative processes available through the Department of Revenue. It does not automatically result in jail time or prevent you from conducting business operations.
Steps to Take After Receiving an Enforcement Notice
1. Review the notice thoroughly
Locate the official notice or document you received from the Colorado Department of Revenue and read the entire notice to understand what type of enforcement action the state is taking.
Identify the specific tax type, tax year, amount owed, and the action the state is taking, whether it involves a lien, levy, or garnishment. Look for any deadline listed on the notice for responding or taking action, and note the name and phone number of the contact person or department listed on the notice.
2. Verify the debt amount
Gather your own tax records for the years listed in the enforcement notice and compare the amount shown in the notice to your records of what you believe you owe. Look for evidence of prior payments, credits, or adjustments that may not be reflected in the notice, and identify any penalties or interest charges included in the total. Contact the Colorado Department of Revenue if you believe the balance is incorrect or if you need clarification on how the amount was calculated.
3. Gather supporting documentation
Collect copies of any prior notices, bills, or correspondence from the Department of Revenue about this debt. Organize receipts, cancelled checks, or bank statements showing any payments you made on this account, and keep copies of any tax returns you filed related to this debt, along with the filing confirmation.
4. Contact the Department of Revenue
Call the phone number listed on the enforcement notice to reach the appropriate department, and have your Social Security number, business identification number, or other identifying information ready. Explain your situation clearly, including whether you dispute the debt or believe payments were not credited properly.
Ask for clarification on the specific enforcement action being taken and what options are available to you. Request information about how to set up a payment plan, request a hearing, or dispute the assessment if applicable.
5. Respond within required deadlines
Check the notice again for any deadline to respond, request a hearing, or object to the enforcement action. Missing a deadline can result in the loss of certain rights or options available to you.
Specific deadlines include the following timeframes
- If you receive a Notice of Intent to Issue Judgment/Lien, you have ten days from the date
of the notice to pay the balance in full with certified funds.
- Only a bank cashier’s check or money order can be accepted as certified funds.
- If you receive a Notice of Deficiency, you have thirty days from the mailing date to file a
written protest or request a hearing with the Executive Director of the Colorado
Department of Revenue.
Mark all deadlines on your calendar and plan to respond before those dates.
6. Explore resolution options
Ask the Department of Revenue about installment plans or payment arrangements for the debt, and request information about hardship provisions if you cannot pay the full amount immediately. Inquire whether you can request a hearing to challenge the debt or the enforcement action, and ask whether penalties can be reduced or waived based on reasonable cause. Payment plans for business tax debt, such as sales tax and wage withholding, can only be requested by speaking with a compliance agent.
7. Address wage garnishment and bank levies
The Colorado Department of Revenue sets wage garnishment levies at twenty-five percent of your disposable pay. Both parties' paychecks can be levied simultaneously at the twenty-five percent rate if you file jointly with a spouse or partner.
To stop a tax levy on wages, only a bank cashier’s check or money order can be accepted, and the payment must pay the full balance due. Once a tax levy notice has been sent to your employer, funds will be withheld from each paycheck until the balance is paid in full.
Bank levies allow the state to withdraw funds from any jointly held account if the taxpayer is listed. Contact your bank to understand which accounts are affected when a bank levy is in effect.
8. Document all communication
Save copies of every email, letter, or document you send to the Department of Revenue, and write down details of every phone call, including the date, time, name of the representative, and what was discussed. Keep records of any payments made, including the date, amount, and confirmation number.
Understanding Tax Liens and Collection Authority
A tax lien filed by the Colorado Department of Revenue under state statute continues for six years from the entry of the judgment unless the judgment is previously satisfied. The lien attaches to all of your assets, such as property and vehicles, and will prevent you from selling them without first paying your tax debt. Collection of income taxes may be enforced at any time within six years from the date of assessment, according to Colorado law.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
We help with
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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