Colorado Notice of Tax Assessment Checklist
A Colorado Notice of Deficiency is an official letter from the Colorado Department of Revenue informing you that the state has reviewed your tax situation and determined you owe additional taxes, penalties, or both. This notice is being sent because there is a discrepancy between the information you reported, the amount you paid, and the state's records. You must take this notice seriously, as it initiates an official process. Responding correctly can prevent the situation from escalating to more serious enforcement actions, such as wage garnishment, bank levies, or liens on property.
The good news is that this notice is not the end of the road. It provides information, and information gives you options. Understanding what the notice states and what it requires is the first step toward resolving the issue.
What This Notice Means
The Colorado Notice of Deficiency is the state's official record indicating that you have an outstanding tax debt. It provides the dollar amount owed, the tax year or tax period to which it relates, and includes a deadline for payment or response. The notice is a formal calculation that shows how Colorado arrived at the additional tax amount based on their review of your account.
This notice indicates that the state has completed its review and is now requesting that you either pay the amount owed or contact them if you disagree with the assessment. Colorado may also send a Rejection of Refund Claim or a Final Determination and Demand for Payment, depending on your situation and whether you responded to the initial notice.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Why the State Sent This Notice
The state sends a Notice of Deficiency for several common reasons related to the tax year in question. You may not have filed a required return, or you may have filed but underpaid the taxes owed. You may have claimed deductions or credits that the state reviewed and adjusted in accordance with Colorado law.
In other cases, the state discovered unreported income through matching with employers, financial institutions, or other data sources. The state also sends this notice when you file late or when the payments you made do not match the actual value due. The notice is how Colorado formally notifies you that their review is complete and the amount is now official.
What Happens If You Ignore This Notice
If you do not respond to or pay the Notice of Deficiency within the 30-day deadline from the mailing date, Colorado will typically issue a Final Determination and Demand for Payment. After that, the state may proceed with additional collection actions that could significantly impact your financial situation. These actions follow a transparent process outlined in Colorado law.
The state may file a tax lien against your tangible property or personal property, which is a public record showing that Colorado has a claim against your assets. After that, the state may attempt to garnish your wages, which means money is taken directly from your paycheck before you receive it. The state may also issue a tax levy on your bank account, taking funds directly to pay the debt.
Before these actions occur, Colorado sends additional notices: a Notice of Intent to Issue Judgment or Lien (giving you 10 days to pay with certified funds) or a Notice of Intent to Issue Tax Levy. Ignoring the assessment does not make it go away. It makes the situation more complicated and more costly to you.
What This Notice Does Not Mean
This notice does not mean you are being criminally prosecuted or that you will be jailed for a tax debt. Colorado pursues unpaid tax debts through civil collection procedures. Criminal prosecution is reserved for tax fraud, tax evasion, and willful failure to file or pay taxes; it does not apply to simple nonpayment of assessed taxes.
This notice also does not mean that all collection actions have already happened. It means the state has completed its assessment and is formally notifying you of it. The notice does not automatically imply your wages are being garnished, your bank account is frozen, or a lien has been filed.
Those are separate actions that come after the assessment notice if the debt is not resolved.
Checklist: What to Do After Receiving This Notice
Step 1: Read the Notice Completely
Find the following information on the notice and write it down or highlight it:
• The tax year or period the notice covers.
• The total dollar amount the state says you owe.
• The mailing date of the notice (this determines your 30-day deadline to protest).
• The department phone number or mailing address for questions.
• Any reference number or notice number listed on the document.
Step 2: Gather Your Records
Collect documents related to the tax year or period in question:
• This includes your original tax return (if you filed one), pay stubs, 1099 forms, receipts, bank statements, or any documentation of deductions or credits you claimed.
• If you did not file a return, gather records showing your income for that period.
• Organize these documents in chronological order to make comparison easier.
Step 3: Compare the Notice to Your Records
Look at what the state says you owe and compare it to your own tax records:
• Check whether your filing status, income, or deductions on the notice match what you reported.
• Note any amounts that do not match and identify specific discrepancies.
• Check the math on the notice to see if the calculation is correct based on the numbers shown.
Step 4: Decide Whether You Agree or Disagree
Read through the notice carefully and decide whether the state's assessment appears correct based on your records:
• If you agree with the amount, move to Step 5.
• If you disagree with any portion of the assessment, move to Step 6.
• If you are uncertain, contact the Taxpayer Helpline at (303) 238-7378 for clarification before the 30-day deadline expires.
Step 5: If You Agree (Prepare to Pay)
Contact the Colorado Department of Revenue to confirm the current balance owed:
• Ask about payment options, which typically include mailing a check, paying online through Revenue Online, or setting up a payment plan.
• Ask about the payment schedule and whether interest continues to accrue after the notice date.
• Make a note of the payment method you choose and keep a receipt or confirmation for your records.
Step 6: If You Disagree (Prepare to Protest)
You must file a written protest within 30 days from the mailing date of the Notice of Deficiency:
• This 30-day deadline is a statutory requirement under Colorado law and cannot be extended.
• If the 30th day falls on a Saturday, Sunday, or legal holiday, the protest is due the following business day.
• Contact the Colorado Department of Revenue at the number or address listed on the notice to begin the protest process.
Your protest must include specific property information and details:
• Your name and address.
• A reference number from the notice.
• The tax period involved.
• The amount and type of tax in dispute.
• An itemized schedule of findings you disagree with.
• A statement summarizing why you believe the tax is not due or the assessment is incorrect.
Provide copies (not originals) of documents that support your position. The protest must be signed by you and include a statement that the facts stated are actual.
Step 7: Keep All Documentation
Make copies of the notice itself and all related documents:
• Keep copies of everything you send to the state, including your protest letter and supporting documents.
• Keep records of phone calls, including the date, time, and name of the person you spoke with.
• Keep copies of any responses from the state in a dedicated file.
• Organize these materials in a folder so you can find them quickly if needed.
Step 8: Meet the 30-Day Deadline
Note the 30-day deadline on your calendar and set reminders:
• Do not wait until the last day to respond, as delays in mailing or processing could cause you to miss the deadline.
• If you are requesting more information or filing a protest, contact the state before the deadline, even if your research is not complete.
• If you cannot meet the deadline, call the state immediately at (303) 238-7378, but understand that the 30-day protest deadline cannot be extended by law.
Step 9: Follow Up
If you paid, keep your receipt and check that the balance on your account is updated within a reasonable time:
• If you filed a protest, follow up if you do not hear back within two weeks.
• If you set up a payment plan, make payments on time according to the payment schedule to avoid violating the agreement.
• Keep watching for additional notices related to this assessment in your mail.
Common Mistakes to Avoid
• Throwing away the notice without reading it: The 30-day deadline starts from the mailing date, and missing it can result in immediate collection action.
• Assuming the amount is incorrect without comparing it to your own records: Check the math and the figures before deciding the state made a mistake.
• Sending payment without confirming the current balance: Interest may have accrued, and you want to make sure your payment actually resolves the debt.
• Not responding at all because the amount seems overwhelming: Ignoring it makes the situation worse, not better.
• Missing the 30-day deadline to protest: Colorado allows challenges to assessments, but the 30-day deadline is a statutory requirement that cannot be extended.
Frequently Asked Questions
Can I set up a payment plan instead of paying the whole amount at once?
Colorado offers payment plan options for qualified taxpayers. There are no additional fees to participate in a payment plan; however, standard late payment penalties and interest will continue to accrue during the plan's duration. You will need to contact the Collections Department directly at (303) 205-8291 to discuss payment plan options and establish a payment schedule that works for your situation.
If I disagree with the notice, can I appeal it?
Yes. Colorado allows formal protests of tax assessments, but you must file your written protest within 30 days from the mailing date of the Notice of Deficiency or Rejection of Refund Claim. This deadline is required by statute and cannot be extended. The notice should explain your protest rights and procedures for submitting your dispute.
What if I filed my return, but the state says I underpaid?
This occurs when the state reviews your return after you file and determines that an adjustment is necessary. The notice will explain the basis for the adjustment and how the state calculated the additional amount owed. You have the right to review the explanation and file a protest within 30 days if you believe it is incorrect.
Will interest continue to accrue while I am disputing the assessment?
Interest and penalties typically continue to accrue on unpaid tax balances during the protest process. If you are considering filing a protest, contact the Colorado Department of Revenue directly to understand how interest will apply to your specific situation and to determine your total balance if the protest is unsuccessful.
If I pay the amount on the notice, can I still appeal later?
You must file a protest within 30 days from the mailing date of the Notice of Deficiency to preserve your appeal rights. Paying without filing a timely protest may result in the forfeiture of those rights. If you want to pay but also preserve your right to dispute the assessment, contact the Colorado Department of Revenue before the 30-day deadline expires to discuss payment options under protest.
Does this notice affect my property or assets?
The Notice of Deficiency itself does not create a lien on your tangible property or personal property. However, if you do not respond or pay within the required timeframe, the state may file a tax lien or issue a tax levy against your assets as part of the collection process. Responding promptly to the notice can prevent these collection actions from occurring.
Received a State Tax Notice?
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance
