How Long Can Colorado Collect Back Taxes

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How Long Can Colorado Collect Back Taxes?

In Colorado, the state has the authority to collect back taxes for a certain period of time. This period, known as the statute of limitations, determines how long the state can legally pursue the collection of unpaid taxes. Understanding the statute of limitations is crucial for taxpayers who have outstanding tax liabilities and want to know how long they may be held responsible for their unpaid taxes.

The statute of limitations for collecting back taxes in Colorado is typically ten years from the date the tax is assessed. This means that the state has a decade to pursue the collection of unpaid taxes from the time the tax liability is established. However, there are certain circumstances that can extend or pause the statute of limitations, giving the state additional time to collect the outstanding taxes.

One such circumstance is if the taxpayer leaves the state of Colorado. If a taxpayer moves out of state, the statute of limitations is paused until the taxpayer returns to Colorado. Once the taxpayer is back in the state, the statute of limitations resumes and the state can continue its collection efforts.

Additionally, if a taxpayer enters into an installment agreement or payment plan with the state, the statute of limitations is also paused. The statute of limitations will only begin to run again once the installment agreement or payment plan is completed, or if the taxpayer defaults on the agreement.

It is important to note that the statute of limitations only refers to the period during which the state can actively pursue the collection of unpaid taxes. It does not mean that the taxpayer is relieved of their tax liability after the statute of limitations expires. The taxpayer is still legally responsible for the unpaid taxes, but the state can no longer use legal means to collect the debt.

FAQs and Answers:

1. Can the state of Colorado collect back taxes indefinitely?
No, the state has a statute of limitations of ten years from the date the tax is assessed to actively pursue the collection of unpaid taxes.

2. Does leaving Colorado pause the statute of limitations for collecting back taxes?
Yes, if a taxpayer moves out of state, the statute of limitations is paused until the taxpayer returns to Colorado.

3. Does entering into an installment agreement with the state pause the statute of limitations?
Yes, the statute of limitations is paused while a taxpayer is on an installment agreement or payment plan with the state.

4. What happens if the statute of limitations expires?
After the statute of limitations expires, the state can no longer use legal means to collect the unpaid taxes, but the taxpayer is still legally responsible for the debt.

5. Can the state garnish wages or seize assets after the statute of limitations expires?
No, once the statute of limitations expires, the state cannot take legal action to garnish wages or seize assets for the unpaid taxes.

6. Can the state extend the statute of limitations for collecting back taxes?
In certain cases, such as fraud or failure to file a tax return, the state may be able to extend the statute of limitations beyond the usual ten years.

7. Can the state collect back taxes from deceased taxpayers?
Yes, the state can pursue the collection of unpaid taxes from a deceased taxpayer’s estate.

8. Can the state waive or forgive back taxes?
In exceptional circumstances, the state may consider waiving or forgiving back taxes, but this is not guaranteed and typically requires a thorough review of the taxpayer’s financial situation and a formal request.
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