Colorado Balance Due Notice: What It Means & How to Respond

Thousands of Colorado taxpayers open their mailboxes yearly to find a Balance Due Notice waiting inside. It’s a letter that instantly causes worry, often signaling unpaid taxes, penalties, or adjustments to a previously filed return. While it may look intimidating, understanding what this notice means and how to respond correctly can prevent severe financial consequences.

A Colorado Balance Due Notice is more than just a tax bill. It’s an official communication from the Colorado Department of Revenue that demands attention and action. Ignoring it can lead to additional fees, interest charges, and even wage garnishment or liens against your property. Many taxpayers receive this letter after filing late, making payment errors, or overlooking income later reported by an employer or bank. Whatever the reason, the key is to respond promptly and accurately.

This guide will walk you through each step: identifying why you received the notice, reviewing its details, and choosing the right resolution path. You’ll learn how to protect your income, prevent penalties from growing, and find relief options such as payment plans or penalty abatement. Acting quickly can stop the problem from escalating and help you regain control of your finances.

What Is a Colorado Balance Due Notice?

A Colorado Balance Due Notice is an official letter from the Colorado Department of Revenue informing you that your state tax account shows an unpaid balance. This notice may relate to income tax, property tax, or refund claim adjustments and serves as a legal request for payment. Understanding what this notice means and why it was issued is the first step in resolving your account quickly and avoiding additional penalties.

Definition and Purpose

The notice is designed to notify taxpayers about an outstanding amount owed to the state. It outlines how much you owe, why, and what actions are required to correct or dispute the balance. Depending on your situation, you may receive one of several versions of this notice, such as a Notice of Deficiency, Final Determination and Demand for Payment, or Rejection of Refund Claim.

These notices are not limited to income tax but can also relate to property tax statements or business taxes. Each notice summarizes the amount due, including the original tax, any penalties, and accrued interest. Once the letter is issued, you are given a fixed period—typically 30 days from the mailing date—to take action before the department takes additional measures.

Key Details Found on the Notice

Every Colorado Balance Due Notice follows a structured format. Knowing how to read it can help you confirm whether the information listed is correct. The notice usually contains the following sections:

Taxpayer Information: This section lists your name, mailing address, and tax account number. Review these details to ensure they match your official tax records. Errors here could indicate that the notice was issued incorrectly or applied to the wrong taxpayer.
Tax Year and Type of Tax: The notice clearly specifies which tax year and what type is in question. For example, a notice could refer to an unpaid 2023 individual income tax or property taxes assessed by your county. Verifying this helps you understand which return or bill the issue relates to.
Summary of Charges: This section provides a breakdown of the original tax reported, the corrected tax determined by the Department, and any additional charges. It lists penalties and interest separately to see how the total balance was calculated.
Payment and Protest Instructions: The letter includes instructions for paying or disputing your balance. If you agree with the amount, you can pay using the included coupon or through the Department’s Revenue Online web page. If you disagree, you can file a formal protest, but it must be submitted before the deadline.
Important Dates and Deadlines: The notice specifies the mailing date and the response deadline. Acting before this deadline is essential; once it passes, your right to protest may be lost, and the department may begin collection activity such as garnishment or liens.

Comparison 1: Sample Colorado Balance Due Notice Breakdown

1. Taxpayer Information

Description: Displays your name, mailing address, and account number.
What to Verify: Make sure all details match your tax records exactly. Any mismatch could delay processing or payments.

2. Tax Year and Tax Type

Description: Identifies the specific tax year and type of tax involved (such as income or property tax).
What to Verify: Confirm these align with your recent filings or property ownership records.

3. Summary of Charges

Description: Breaks down the total amount due — including tax owed, penalties, and interest.
What to Verify: Double-check the math and ensure all adjustments or credits have been applied correctly.

4. Payment or Protest Instructions

Description: Explains how to make a payment, file a protest, or appeal the notice.
What to Verify: Follow the instructions exactly and respond within 30 days to avoid additional penalties.

5. Key Dates

Description: Lists the date the notice was mailed and your response or payment deadline.
What to Verify: Mark these dates immediately to stay within required timelines and maintain appeal rights.

Understanding each part of your notice allows you to take the correct action before penalties and interest increase. In the next section, we’ll look closely at the common reasons why taxpayers receive a Colorado Balance Due Notice and what those reasons mean for your account.

Why You Received a Colorado Balance Due Notice

Before you decide how to respond, it’s essential to understand why the notice was sent to you. The Colorado Department of Revenue issues thousands of these notices yearly, most falling into a few common categories. Recognizing which situation applies to you will help determine your next step and prevent further penalties.

Unpaid Balance or Filing Errors

A balance due notice often appears when the amount you paid with your return does not match what you owe. This can happen if you miscalculated your tax liability or overlooked additional income that should have been reported. Sometimes, taxpayers file correctly but cannot afford to pay the full amount owed when submitting their return.

Unpaid Tax After Filing: The unpaid portion becomes an outstanding balance when you file your return but fail to include the full payment. The department automatically notes the remaining amount, late payment penalties, and monthly interest. Paying the balance promptly can prevent further accumulation of charges and protect your account from enforcement actions.
Calculation or Input Errors: Simple mistakes—such as entering the wrong figure from a W-2 or 1099—can differentiate what you reported and what the department’s records show. Even minor discrepancies can trigger a balance due notice because the system automatically adjusts underreported income. Carefully reviewing your return before filing is the best way to avoid this correction.
Late Filing or Missed Deadlines: Filing after the due date triggers penalties calculated as a percentage of the unpaid tax. The penalty for late filing is generally the greater of fifteen dollars or ten percent of the balance, with an additional half-percent for each month the amount remains unpaid. These costs continue to rise until payment or a payment plan is established.

Department Adjustments and Missing Returns

Sometimes, the department issues a notice after reviewing data from employers, banks, or other reporting agencies. These adjustments can occur even when you file on time.

Adjustments to Reported Income: If the Colorado Department of Revenue receives information that differs from what you reported—such as wages, interest, or dividend income—it may adjust your return. The revised figures often increase your taxable income and generate a balance due notice showing the corrected amount. You can request clarification or submit supporting documents if the adjustment is incorrect.
Unfiled Tax Returns: If you fail to file a required return, the Department may create a substitute return using available data. This substitute return rarely includes deductions or credits you might have claimed, leading to a higher calculated tax bill. Filing accurate returns as soon as possible can replace the substitute and reduce or eliminate the balance.
Rejected or Amended Refund Claims: When a refund claim is disallowed or adjusted, the Department issues a notice explaining the change. This can occur if the claim was based on incorrect information or duplicate filings. The letter will identify the tax year and provide directions for submitting supporting documentation if you disagree with the adjustment.

Penalties, Interest, and Fees

Your notice may include charges for penalties, accrued interest, and unpaid tax. These costs can quickly turn a small oversight into a significant balance.

Failure-to-File and Failure-to-Pay Penalties: The Department enforces both penalties when returns or payments are late. Each penalty increases the longer the debt remains unresolved, making it essential to pay or set up a payment plan as soon as possible. These penalties can compound quickly and make an otherwise manageable balance difficult to resolve.
Monthly Interest Accrual: Interest builds on any unpaid tax from the original due date until the full amount is paid. The rate is adjusted periodically by law, and interest cannot be waived even if penalties are removed. The longer you wait to act, the higher your total balance becomes due to compounding interest.
Collection Fees and Administrative Costs: If your balance progresses to enforced collection, the Department may add fees for processing liens, wage garnishments, or bank levies. These additional costs are legally authorized and remain your responsibility until the balance is cleared. Avoiding them is possible only by resolving the issue before it reaches the collection stage.

Understanding which factors caused your Colorado Balance Due Notice gives you a clear starting point for resolution. The following section explains what can happen if you ignore the notice or fail to respond within the required timeframe.

How to Respond to a Colorado Balance Due Notice

Once you understand why you received the notice, the next step is to take action. The Colorado Department of Revenue provides a limited response window—typically 30 days from the mailing date. Acting within this timeframe can prevent additional penalties, protect your right to protest, and help you resolve the issue before enforcement measures begin.

Step 1: Review the Notice Thoroughly

Begin by carefully reading every part of your Colorado Balance Due Notice. The letter outlines the tax year, type of tax involved, and total amount due, including penalties and interest. Review the figures against your filed return, refund claim, or tax statement to ensure they match your records.

Compare with Your Filed Return: Use your copy of the tax return to confirm the original numbers reported for income, deductions, and payments. If the notice shows a different amount, it may indicate a calculation error or a missing payment. Double-check all W-2s, 1099s, and other supporting documents to find discrepancies.
Verify the Tax Year and Determination: Ensure the notice refers to the correct year. Sometimes taxpayers receive letters related to older years that were previously unresolved. Confirm that the department’s determination aligns with your records and that the notice was appropriately located in your correspondence.
Check for Administrative Errors: Even official notices can contain mistakes. Review your address, Social Security number, and account information for accuracy. If something appears incorrect, note the issue for discussion when you contact the department.

Step 2: Gather and Organize Your Tax Documents

Having your documents ready before contacting the Department helps you respond efficiently. Gather your filed tax returns, any supporting schedules, and proof of payments. This information will be helpful whether you plan to pay, dispute, or request more information.

Locate Supporting Forms and Statements: Collect your W-2s, 1099s, property tax statements, and any payment confirmations. Your tax statement shows how much you reported, what was withheld, and the amounts credited. Having complete records ensures you can address questions accurately.
Use the Revenue Online Web Page: Visit the official Colorado Department of Revenue web page to obtain electronic copies of past returns and correspondence. You can also verify recent payments and find detailed instructions for submitting documents online.
Confirm Additional Payments or Refund Adjustments: If you recently made a payment or filed a refund claim, check whether it has been applied to your account. Sometimes, payments or credits take time to post, and this delay can cause a temporary balance to appear on your notice.

Step 3: Verify the Department’s Calculations

After reviewing your documents, compare your calculations with those shown on the notice. Understanding how the department arrived at its figures is essential before submitting any response.

Recalculate Based on Your Income and Deductions: Use your filed return and original figures to confirm whether the department’s numbers are correct. Include any credits or deductions you claimed that may not have been applied. If you find an error, prepare a written explanation with your response.
Check Property Tax or Assessment Changes: If the notice involves property taxes, contact your county assessor’s office to confirm that the assessed value, mill levy, and payment record are correct. Property owners sometimes receive notices when payments through a mortgage company are delayed or misapplied.
Identify Any Interest or Penalty Miscalculations: Ensure penalties and interest were calculated correctly according to the payment date and tax law. If you believe the amount was assessed in error, make a note to include these details in your written protest or when you speak with a representative by phone.

Step 4: Choose Your Response Option

Depending on whether you agree with the balance, you have several ways to resolve a Colorado Balance Due Notice. Choose the option that best fits your circumstances and follow the submission process exactly as stated in the letter.

Option A – You Agree with the Notice: If you agree with the balance shown, you can pay the full amount immediately or request a payment plan. Payments can be made through the Revenue Online web page, by mail using the attached payment coupon, or over the phone with a representative. Full payment stops the accumulation of interest and penalties.
Option B – You Disagree with the Notice: If you believe the determination is incorrect, you must file a written protest within 30 days of the notice date. Your protest should include your name, address, tax year, and a clear explanation of why you disagree with the assessment. Submit all supporting documentation through the department’s secure web page or by mail to the address listed on the notice.
Option C – You Need More Information: If you require clarification before paying or protesting, contact the Department immediately. You can reach the Collections Section by phone or submit an online request for more details. While obtaining information is permissible, it doesn't prolong the protest or payment deadline, so promptly proceed once you receive answers to your questions.

Step 5: Submit and Follow Up

Once you have decided on your course of action, submit everything by the deadline. Keeping detailed records of what you send and when you send it protects you in case of future disputes.

Submit the Required Forms and Documentation: Whether you are paying or protesting, follow the exact submission instructions on your notice. Include any supporting forms, letters, and copies of correspondence. The department’s system allows electronic submission through its online portal for faster processing.
Confirm Receipt and Monitor Your Account: After submitting your payment or protest, verify that the department received it. You can check your account status on the web page or by phone. Keep copies of payment receipts, confirmation emails, and reference numbers for your records.
Document Future Communication: If you contact the department by phone or mail, write down the date, time, and name of the representative who assisted you. This ensures accountability and helps if you need to refer to previous discussions later.

Responding correctly to your Colorado Balance Due Notice prevents unnecessary penalties and allows the Department to review your situation fairly. The following section will explore the resolution options available if you cannot pay your full balance immediately.

Resolution Options for Taxpayers

If you cannot pay your full balance immediately, the Colorado Department of Revenue provides several options to help taxpayers manage their obligations. These programs are designed to promote voluntary compliance while ensuring that taxes assessed by law are collected fairly. Choosing the right option depends on your financial situation, tax year, and whether the balance due resulted from an error, missed payment, or refund rejection.

Payment Plan (Installment Agreement)

A payment plan allows you to spread your tax bill over several months, making repayment more manageable. While interest and penalties continue to accrue until the balance is fully paid, this option prevents more serious collection actions such as wage garnishment or property liens.

Eligibility and Setup: Most taxpayers who have filed all required returns and owe less than a certain dollar threshold can request a payment plan online. You can apply through the Revenue Online portal or by mailing the required form. Approval depends on your financial capacity and the department’s determination that your request complies with current state law.
Maintaining the Agreement: Once approved, you must make every scheduled payment on time. Missing even one payment can result in the cancellation of your plan and referral to collections. To avoid disruption, set reminders and ensure your account has sufficient funds before each withdrawal date.
Payment Confirmation and Review: You can check your payment history and remaining balance on the department’s web page. You should review your account monthly to confirm that payments are posting correctly and interest calculations are accurate.

Penalty Abatement

Penalty abatement provides partial relief from penalties assessed due to late filing or payment. Although interest cannot be removed under state law, qualifying for abatement can significantly reduce your balance.

Requesting Abatement: To request penalty abatement, submit a written statement explaining why you could not pay or file on time. Valid reasons include serious illness, natural disaster, or other unavoidable circumstances. Include documentation supporting your claim, such as medical records or proof of income loss.
Department’s Determination: The Department reviews each request individually to decide whether penalties should be waived. A determination letter explaining whether your request was approved or rejected will be mailed. If rejected, you may refer to the following instructions in the letter for reconsideration or appeal.
Effect on Future Compliance: Even if you receive approval, you must remain compliant with future tax obligations. Repeated requests for abatement or continued late payments may result in the denial of coming relief. Keeping accurate records and submitting returns promptly will demonstrate good faith and responsibility.

Offer in Compromise

In rare cases, the Colorado Department may consider an Offer in Compromise (OIC) that allows you to settle your tax debt for less than the full amount owed. This is common when the taxpayer already has an accepted IRS Offer in Compromise for the same tax year.

Eligibility Requirements: To qualify, you must have an accepted IRS OIC, have filed all required Colorado returns, and not be in active bankruptcy. The department will verify your financial condition before deciding. If the state rejects your offer, the balance remains due in full, including all interest and fees.
Submitting an Offer: You must submit a formal written offer with complete financial documentation, including income statements, expenses, and asset listings. The department evaluates whether collecting the full amount would create economic hardship or exceed your ability to pay within the legal collection period.
Review and Outcome: If your offer is accepted, you must comply with all payment terms as written. Failure to pay the agreed amount or missing future filing requirements will void the compromise. Once finalized, the department will issue a confirmation letter, and the account will be marked as resolved.

Temporary Economic Hardship Relief

When taxpayers face severe financial difficulty, the Department may grant temporary relief. This does not erase the balance but can pause or reduce payment requirements while you regain economic stability.

Filing for Hardship: Submit Form DR 6596, Statement of Economic Hardship, to request a review of your situation. You must provide complete financial documentation showing your income, expenses, and assets. The Department’s decision will be based on whether immediate payment would create undue hardship under Colorado law.
Department Review and Follow-Up: If approved, the Department may reduce your monthly payment amount or temporarily suspend collection actions. You must still file all future tax returns and report any changes to your income. The relief will be reviewed periodically to determine whether you still qualify.
Future Payment Obligations: Once your situation improves, you must resume normal payments or enter into a regular payment plan. The Department expects taxpayers to make good-faith efforts to repay once financial conditions allow.

Exploring these resolution options can prevent further enforcement actions and reduce the overall financial impact of unpaid taxes. In the next section, we’ll look at practical steps to help you avoid future Colorado Balance Due Notices and maintain your account in good standing.

Frequently Asked Questions (FAQs)

What is a Colorado Balance Due Notice?

A Colorado Balance Due Notice is a letter from the Colorado Department of Revenue informing you that you owe unpaid taxes, penalties, or interest. It lists the tax year, amount owed, and payment or protest instructions. Ignoring the notice can lead to tax liens, wage garnishment, or additional fees. Always review the notice carefully and contact the Department if you disagree with the determination.

How do I pay the amount listed on my tax bill?

You can pay your balance through the official Revenue Online web page, by mail with the attached payment coupon, or by phone with a Department representative. Payments must be submitted by the date shown on the notice to avoid penalties and interest. Keep your receipts or confirmation page for your records to show that the payment was filed correctly.

Can I set up a payment plan if I can’t pay the full amount?

Yes, the department allows taxpayers to request a payment plan that divides the balance into monthly installments. You can apply through the Revenue Online page or by submitting a written request form. Once approved, you must make all payments on time to remain in good standing and avoid cancellation of your plan or further collection action.

What happens if I ignore my balance due letter?

Ignoring your balance-due letter may result in serious legal and financial consequences. The department can issue a tax lien, garnish wages, or refer your account to a collection agency. Interest and penalties continue to grow until the full balance is paid. Acting promptly—paying, protesting, or contacting the department—is the only way to prevent further enforcement.

How can I prevent future balance due notices from Colorado?

Review each tax statement closely to ensure the amount assessed is correct and promptly pay any balance owed. Property owners should confirm that their property tax statement shows accurate mill levy and assessed value data through their county assessor’s office web page. Filing early, avoiding math errors, and checking for missing forms or refund rejections can prevent future notices and penalties.

What should I do if my property tax statement shows a balance due?

If your property tax statement shows an unpaid balance, contact your county treasurer or assessor’s office immediately. Verify whether the amount was already paid through your mortgage company or if it remains outstanding. Delayed reporting or clerical errors sometimes cause duplicate notices. Keep copies of your payment receipts and property tax statements to resolve discrepancies quickly and avoid penalties or additional interest.