Colorado State Tax Lien Checklist

Colorado State Tax Lien Checklist

Understanding State Tax Enforcement Actions

Colorado tax lien enforcement represents formal collection actions the Colorado Department of

Revenue takes when a taxpayer carries unpaid state tax debt. Enforcement means the state actively pursues collection through legal mechanisms, including liens against property, wage garnishment that reduces paychecks, or bank levies that freeze or withdraw funds from accounts.

What a Tax Lien Means

A tax lien creates a legal claim against your property when you fail to pay state taxes owed. The lien does not immediately seize your assets but establishes a public record showing the state holds a right to collect from your property.

Colorado law authorizes the Department of Revenue to file judgment liens under C.R.S.

39-21-114, and these liens continue for six years from the entry of judgment unless you satisfy the debt earlier. Before the state files the lien, you will receive a notice of intent to issue judgment/lien at your last known address, giving you 10 days from the notice date to pay the balance in full with certified funds.

Why Colorado Issues Enforcement Actions

The state issues enforcement when you fail to pay taxes and do not respond to earlier collection attempts. Colorado follows a defined escalation process beginning with initial tax bills, followed by a 30-day period to pay or protest after receiving a notice of deficiency, then a final determination and demand for payment, and finally, enforcement actions after the final determination remains unpaid.

Consequences of Ignoring Enforcement

Ignoring a tax lien or enforcement action leads to escalating collection efforts that can severely impact your finances. A filed lien prevents you from selling or refinancing property because the lien must be satisfied before completing the transaction.

Colorado Department of Revenue collections may proceed with wage garnishment that takes 25 percent of your disposable pay, and if you file taxes jointly with a spouse, both paychecks can face simultaneous garnishment at the 25 percent rate. Bank levies withdraw funds in a single transaction that can empty your account up to the total debt owed, while the state also automatically applies any Colorado or federal income tax refunds to your outstanding tax debt.

What Enforcement Does Not Mean

Receiving enforcement notices does not mean immediate asset seizure or criminal charges.

Enforcement represents civil collection procedures rather than criminal prosecution, and you retain rights to request payment plans, file administrative appeals, or communicate with the collections section about your debt.

Steps to Take After Receiving an Enforcement Notice

1. Locate and review all documents: Gather every document from the Colorado

Department of Revenue related to your tax debt. Read notices completely to identify the enforcement type, debt amount, tax years involved, account numbers, response deadlines, and any specific payment requirements stated.

2. Verify debt accuracy: Compare the stated debt amount against your tax records to confirm accuracy. Document any discrepancies between the notice and your records, and prepare evidence if you believe you already paid the debt or if the amount appears incorrect.

3. Contact the Department of Revenue immediately: Call the collections section at

303-205-8291 during business hours to discuss available options. Request the name of the revenue officer or collections representative assigned to your case, and document the call date, time, representative name, and conversation summary.

4. Request payment plan information: Qualified taxpayers can make monthly payments until paying taxes in full, with no additional fees to participate. Late payment penalties and interest continue accruing during the plan's life, but approved arrangements stop active enforcement actions like wage garnishment or bank levy while you make payments. The state may keep the tax lien in place as security until you pay the full debt, so ask about application procedures and confirm what documentation the Department of

Revenue requires.

5. Understand Offer in Compromise limitations: Colorado does not maintain an independent Offer in Compromise program for settling tax debt. The Department of

Revenue will consider settlement only if the Internal Revenue Service has already accepted an Offer in Compromise for the same tax periods, though Colorado is not bound by or required to extend settlement options based on IRS acceptance.

6. Ask about penalty relief: The Executive Director may waive penalties for good cause shown under Colorado law. Request information about the penalty waiver process and required supporting documentation, understanding that penalty relief decisions are made case by case rather than through an automatic first-time abatement program.

7. Submit written responses: Complete and submit any required forms or written responses by the deadline stated in your notice. Use certified mail with a return receipt to verify delivery, and keep copies of everything you send to the Department of Revenue.

8. Document all communications: Maintain detailed records of every phone call, email, and letter exchanged with the Department of Revenue. Write down dates, times, representative names, and conversation summaries while saving copies of all correspondence and responses.

Protected Income and Garnishment Limits

Colorado’s general garnishment exemption statute protects public or private disability benefits from levy under C.R.S. 13-54-102. Social Security benefits carry federal protections from most creditors, though complex interactions exist with state tax levies, so contact the Department of

Revenue directly for case-specific guidance about protected income.

Common Mistakes to Avoid

Never ignore enforcement notices or assume the issue will resolve without action. Read all notices completely to avoid missing deadlines or required responses.

Keep thorough records of communications because verbal agreements need written confirmation. Submit complete and accurate information when applying for payment plans or relief options.

Make payment plan payments on time because missed payments cancel the plan and restart enforcement. Open and read all mail from the Colorado Department of Revenue immediately to stay informed about your case status and any new requirements.

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.