Colorado Vehicle Bill of Sale Form Tax Professionals Update 2008 Colorado Department of Revenue

							 Tax Professionals
   Update 2008
Colorado Department
     of Revenue
Taxpayer Service Division
 Public Information & Education
               Agenda
•   Introduction
•   Additions
•   Subtractions/Credits
•   2008 Legislation – Income/Sales Tax
•   Helpful Hints – Avoid Delays
•   Miscellaneous
•   Resources/Online Services
•   Questions?

August 2008   Colorado Department of Revenue   Slide 2
              Introduction
 Class Time
 Breaks
 Food and Beverage
 Rest Rooms
 Cell Phones
 Questions
 Handouts and Forms


August 2008    Colorado Department of Revenue   Slide 3
            Additions
          • Municipal Bond Interest
      • Income Tax Deduction Addback
    • Unearned Income for a Minor Child
• Charitable Contribution Deduction Addback
      Municipal Bond Interest
• State and local municipal bond interest is exempt from federal tax
  and therefore is not included in federal taxable income reported
  on line 1 of the Colorado income tax return. However, this
  income is taxable in Colorado if it is from sources outside of
  Colorado or from certain older Colorado municipal bonds. This
  interest must be added to taxable income on the Colorado return
  in the "Additions to Federal Taxable Income" section of Form
  104. C.R.S. 39-22-104(3)(b).
• The net amount of state and municipal bond interest to be added
  to taxable income is the gross amount of the interest reduced by
  any bond premium amortization applicable to that income and
  any expenses required to be allocated to that income by the
  Internal Revenue Code.
• FYI Income 52 “Addition To Income For Non-Colorado
  State and Local Bond Interest”

August 2008         Colorado Department of Revenue            Slide 5
 Income Tax Deduction Addback
• Individuals who itemize deductions on their federal
  returns, must add back on the Colorado return any state
  income tax included in their federal deductions. Enter this
  modification on line 2 on the Colorado Individual Income
  Tax Return (Form 104). Estates and trusts must also add
  back this deduction on Form 105. C.R.S. 39-22-104(3)(d).

• If you do not itemize deductions on your federal income
  tax return, you will not be required to add back your state
  income tax on your Colorado return.

• If you do itemize deductions on your federal income tax
  return but deduct general sales taxes on line 5, Schedule
  A, Form 1040, you do not add back your taxes on your
  Colorado return.

August 2008       Colorado Department of Revenue         Slide 6
Income Tax Deduction Addback cont.

Q. Should the state income tax deduction addback include
  the local tax portion of the state and local taxes
  deducted on federal form Schedule A?
   – There are no local income taxes in Colorado. The amounts
     often reported on Colorado W-2 forms as local income taxes
     for cities such as Denver, Aurora and Greenwood Village are
     actually occupational taxes charged at a flat rate by those
     cities for the privilege of working in that city.
   – Local income taxes are collected in a few states. These taxes
     would not be included in the state income tax deduction
     addback because only "state taxes" must be included in the
     addback.
• FYI Income 4 “State Income Tax Deduction Addback”

August 2008        Colorado Department of Revenue             Slide 7
  Unearned Income for a Minor Child

• Parents of children with gross unearned income greater than
  $850 but less than $8,500 are given the option to report
  their child’s income on their federal income tax return, Form
  1040, by completing and attaching Form 8814 to the Form
  1040. Form 8814 is for children under 18 who received
  unearned income consisting of interest or dividends.
• When Form 8814 is used, the child’s unearned income
  greater than $850 and less than $1,700 is not included in the
  parents’ federal taxable income because it is not subject to
  the parents’ marginal tax rate.
• Include the missing income on the ―other additions‖ line of
  the Colorado 104 Form. The explanation would be "unearned
  net taxable income of minor child."
• FYI Income 26 “Filing on Unearned Income For a
  Minor Child”
August 2008       Colorado Department of Revenue          Slide 8
              Charitable Contribution
                Deduction Addback
• A charitable contribution deduction addback is required for
  individuals who claim both a charitable contribution deduction on
  their federal income tax return and a gross conservation easement
  credit on their Colorado return.

• The addback is required irrespective of whether the donor applies
  the credit against his/her tax liability or transfers the credit, either
  in full or in part.

• The amount of the credit claimed, the amount of the deduction
  allowed and any limitation on the taxpayer’s total itemized
  deductions may all impact the calculation of the addback.

• FYI Income 39 “Gross Conservation Easement Credit” for
  additional information.

August 2008           Colorado Department of Revenue                  Slide 9
  Subtractions/Credits

     • Government Interest
        • Pension/Annuity
• Colorado Source Capital Gain
• Tuition Program Contributions
   • Charitable Contribution
          Government Interest
• Interest from U.S. government obligations is generally exempt from
  Colorado income tax.

• NOTE: A taxpayer receiving interest from a mutual fund which
  includes obligations that are exempt from Colorado income tax and
  obligations that are taxable may exclude only the interest from the
  exempt obligations.

• EXAMPLE: A taxpayer has a mutual fund in which 90% of the
  interest received is from U.S. Treasury bills (an exempt obligation
  under Colorado law). The rest of the interest received from this
  mutual fund is from the Government National Mortgage Association
  (a taxable obligation under Colorado law). The taxpayer may
  exclude 90% of the mutual fund interest.

• FYI Income 20 “United States Government Interest”

August 2008         Colorado Department of Revenue              Slide 11
              Pension/Annuity
• Colorado allows a pension/annuity subtraction for:
   – taxpayers who are at least 55 years of age as of the last day
     of the tax year;
   – beneficiaries of any age (such as a widowed spouse or orphan
     child) who are receiving a pension or annuity because of the
     death of the person who earned the pension.

• This subtraction allows all or a portion of pension and annuity
  income taxable on the federal return to be exempt from
  Colorado tax. C.R.S. 39-22-104(4)(f).

• Lump-sum distributions from a pension or profit-sharing plan
  that are reported on federal form 4972 should be added to line 3
  of the 104 form, as this income would not be included in federal
  taxable income on line 1 of the 104 form.

August 2008        Colorado Department of Revenue             Slide 12
        Pension/Annuity cont.
• Qualified taxpayers who are under age 65 as of the last day of
  the tax year can subtract the smaller of:
   – $20,000, or
   – the taxable pension/annuity income included in federal
     taxable income and/or line 3 of the Colorado return.
• Taxpayers who are 65 years of age or older as of the last day of
  the tax year can subtract the smaller of:
   – $24,000, or
   – the taxable pension/annuity income included in federal
     taxable income and/or line 3 of the Colorado return.
• Each spouse must qualify by age to claim the pension
  subtraction. Each spouse’s subtraction is computed separately
  and no part of one spouse’s subtraction may be claimed by the
  other.
• FYI Income 25 “Pension/Annuity Subtraction”
August 2008        Colorado Department of Revenue           Slide 13
   Colorado Source Capital Gain
• Qualified Colorado taxpayers may subtract certain net capital
  gain income earned from Colorado sources to the extent the
  gains are included in their federal taxable income. C.R.S. 39-22-
  518.
• The subtraction applies only to net capital gains earned from
  property located in Colorado.
• The gain from the sale of stock or ownership interest also
  qualifies if the stock or ownership interest is of a ―Colorado
  company, limited liability company, or partnership.‖ These are
  entities that have 50% or more of their property and 50% or
  more of their payroll assigned to Colorado under the Multistate
  Tax Compact C.R.S. 24-60-1301 for the required holding period
  (e.g., one or five years).
• Must report the property and payroll percentages on Form DR
  1316 (information is confidential and cannot be disclosed).
August 2008         Colorado Department of Revenue            Slide 14
              Capital Gain cont.
• Because the sale of a sole proprietorship is not considered a sale
  of an entity, but only of its assets, such a sale does not qualify
  as a sale of an ―ownership interest.‖ Therefore, gains earned
  from intangibles owned by a sole proprietorship do not qualify
  for the subtraction.

• Example: A Colorado taxpayer owns stock in a pass-through
  entity that has de minimus tangible property and payroll and
  whose only significant asset is stock held in another company.
  The Department will apply the ―Colorado source‖ and applicable
  holding period requirements to the underlying company to
  determine whether the pass-through of capital gain income from
  the sale of such stock qualifies for this subtraction.

• FYI Income 15 “Colorado Source Capital Gain
  Subtraction”

August 2008         Colorado Department of Revenue            Slide 15
 Tuition Program Contributions
• You can deduct on your Colorado income tax return the
  payments or contributions you make to certain ―qualified
  state tuition programs.‖ C.R.S. 39-22-104 (4) (i). You
  cannot take this deduction if the payments or
  contributions were not included in your federal taxable
  income.
• For purposes of this subtraction, a qualified state tuition
  program is a ―529 College Savings Plan‖ administered by
  College Invest and includes the Direct Portfolio College
  Savings Plan, Scholars Choice College Savings Program,
  Stable Value Plus College Savings Plan, and Prepaid
  Tuition Fund.
• FYI Income 44 “State Tuition Program
  Contribution Subtraction”

August 2008       Colorado Department of Revenue         Slide 16
         Tuition Program cont.
Common Questions
1. Can I subtract the payments or contributions I make to a
   qualified tuition program of a different state?
    - No. You can only subtract payments/contributions made to a
   qualified state tuition program established by College Invest or to a
   qualified tuition program affiliated with a Colorado education
   institution. To date, College Invest is the only qualified tuition
   program in Colorado.
2. Federal tax law permits an individual to rollover an
   investment from one state qualified tuition program to
   another state qualified tuition program. If the individual
   does a rollover into one of Colorado's state qualified tuition
   programs is this considered a contribution that qualifies for
   the Colorado tax deduction?
    - No. Since the funds being rolled over into the Colorado state
   qualified tuition program are not included in federal taxable income
   for the tax year, a deduction is not allowed.
August 2008           Colorado Department of Revenue               Slide 17
         Tuition Program cont.
3. Can an individual receive a tax deduction if they
   contribute to an unrelated individual's contract?
    - Yes. There is no requirement that the beneficiary be related
   to the contributor.

4. Is there a limit to how much I can subtract on my
   Colorado income tax return for payments or
   contributions?
    - No. However, the qualified state tuition program limits the
   amount of payments or contributions you can make to the
   program.

5. How can I receive additional information on College
   Invest and the plans that they offer?
    - Contact College Invest at www.collegeinvest.org, or (800)
   448-2424.
August 2008         Colorado Department of Revenue             Slide 18
       Charitable Contribution
• For tax years beginning on or after January 1, 2001 any individual who
  claims the federal standard deduction instead of itemizing deductions
  on the federal return may be able to subtract a portion of his/her
  charitable contributions from Colorado taxable income. This
  subtraction will only be available in tax years during which the state’s
  fiscal year ends with a qualified surplus. C.R.S. 39-22-104(4)(m).

• The charitable contributions subtraction is not available for tax years
  2002 through 2005. The State of Colorado did not have a sufficient
  budget surplus for the years ending June 30, 2002 through June 30,
  2005.

• The charitable contributions subtraction will be available for tax years
  2006 through 2010 because an exemption from the qualified surplus
  was activated when Referendum C passed at the November 2005
  statewide election authorizing the state to retain and spend the budget
  surplus for those five years. C.R.S. 39-22-104(4)(m)(IV).

August 2008           Colorado Department of Revenue                 Slide 19
   Charitable Contribution cont.
• The amount that can be subtracted from income will be equal to
  the amount in excess of $500 that could have been deducted on
  the Federal Schedule A under the Gifts to Charity section had
  the taxpayer itemized their federal deductions.

• Example: Stephanie gave $700 to charity A and $200 to charity
  B during 2006. She did not have enough deductions to itemize
  her 2006 deductions, so she claimed the federal standard
  deduction. She can subtract $400 ($900 - $500) on the
  Qualifying Charitable Contribution subtraction line of Form 104.




August 2008        Colorado Department of Revenue            Slide 20
    2008 Legislation
      Income Tax
• Conservation Easement Credit
   • Child Care Facility Credit
 & Historic Preservation Credit
• Employee Incentive Programs
  • Corporations/Partnerships
           • Checkoffs
     Conservation Easement Credit
HB08-1353, effective 07/01/2008

• Establishes the Conservation Easement Oversight
  Commission which shall review transactions and advise
  both the Department of Revenue and the Division of Real
  Estate on easement related matters.

• Establishes an application and certification program for
  conservation easement holders that will be administered
  by the Division of Real Estate.

• Provides the Division of Real Estate with the authority to
  investigate and discipline easement holders.


August 2008       Colorado Department of Revenue        Slide 22
         Easement Credit cont.
• Provides the Board of Real Estate Appraiser with the
  authority to impose educational requirements upon
  investigate and discipline appraisers.

• Requires that all appraisals for which a credit will be
  claimed be submitted to the Division of Real Estate along
  with an affidavit from the appraiser. The division will
  maintain a database of the submitted appraisals.

• Limits tax basis in calculation of credit for properties held
  less than one year prior to donation.




August 2008        Colorado Department of Revenue          Slide 23
        Child Care Facility Credit
      & Historic Preservation Credit
HB08-1033 & HB08-1049, effective 08/05/2008

• Extends the sunset date of both tax credits to January 1, 2020.

• In addition, the legislation provides that if the revenue estimate
  prepared by the legislative council in December 2010 and each
  December thereafter indicates that the amount of the total
  general fund revenues for that particular fiscal year will not be
  sufficient to maintain the limit on appropriations specified in
  C.R.S. 24-75-201.1(1), then the tax credits shall not be allowed
  for any income tax year commencing during the calendar year
  following the year in which the estimate is prepared.

• Any taxpayer eligible to claim a credit in a tax year in which the
  credit is not allowed is allowed to claim the credit in the next
  income tax year in which the estimate indicates that the
  amount of the total general fund revenues are sufficient.
August 2008         Colorado Department of Revenue             Slide 24
  Employee Incentive Programs
HB 08-1183, effective 08/05/2008

• Personal and Corporate Income Tax — Eliminates
  references to the rural area jobs requirements and
  streamlines the employer criteria in order to obtain a
  performance-based incentive from the Colorado economic
  development fund. Employers that qualify to receive
  performance based incentives for new jobs created under
  the new business facility employees credit pursuant to
  C.R.S. 39-30-105 and performance-based incentives will
  continue to be eligible to receive both the credit and the
  performance-based incentive.


August 2008      Colorado Department of Revenue        Slide 25
         Partnerships/Corporations
HB 08-1380, effective 01/01/2009

• Eliminates the two-factor and three-factor methods by which
  corporations and partnerships with income from multiple states
  apportion their income.
• Requires all multistate corporations to apportion business income
  using a "single sales factor" by which business income is
  apportioned based upon the percentage of their sales occurring in
  Colorado.
• Allows non-business income to either be apportioned in the same
  manner as business income or directly allocated.
• Provides multistate partnerships the option to either allocate
  income pursuant to C.R.S. 39-22-109 or apportion income using
  the single sales factor.
• Establishes a separate method for apportionment for mutual fund
  companies.
August 2008        Colorado Department of Revenue           Slide 26
               Checkoffs
• Colorado Watershed Protection Fund renamed
  Colorado Healthy Rivers Fund.

• Colorado Healthy Rivers Fund, Alzheimer’s
  Association Fund and Military Family Relief Fund
  extended through tax year 2010 subject to
  minimum total contribution requirements.

• Adult Stem Cells Cure Fund and 9Health Fair Fund
  added to the Colorado individual income tax return
  for tax years 2008 through 2010.

August 2008    Colorado Department of Revenue   Slide 27
     2008 Legislation
        Sales Tax
• Tax Exemption Salvaged Wood
   • School Sales/Fundraisers
       • Sales Tax Rates
        • Aircraft Sales
   Sales Tax Exemption - Salvaged Wood
HB08-1269, effective 05/28/2008

• Creates a state sales/use tax exemption for products made from
  the wood of salvaged Colorado trees killed or infested by mountain
  pine beetles. The exemption also applies to RTD/CD/FD and RTA
  sales/use tax. The exemption is effective July 1, 2008 and will
  sunset June 30, 2013.
• Products from beetle-infested wood include sawn lumber,
  furniture, wood pellets, wood shavings, and wood chips. The bulk
  of sales falling under this exemption will likely be from lumber,
  roundwood (which includes electrical poles and fence posts),
  timbers, and other sawn products.
• The statute does not define a wood content percentage, but wood
  furniture and other wood products such as wood pencils contain
  small amounts of non-wood materials. Such wood products can
  still be considered to fall under this exemption.

August 2008         Colorado Department of Revenue            Slide 29
              Sales Tax Exemption -
              Salvaged Wood cont.
• Wholesalers must verify with the manufacturer or distributor
  that the products are made from salvaged trees harvested in
  Colorado and complete and sign the form ―Certification for Sales
  Tax Exemption on Pine Beetle Wood‖ (DR 1240).
• The wholesaler must provide a signed copy to each retailer that
  purchases these products for resale. The wholesaler must send
  a signed original of the DR 1240 form to the Colorado
  Department of Revenue Field Audit Section at the address listed
  on the form.
• Retailers selling exempt products will list such sales under other
  exemptions on the exemptions worksheet when preparing their
  DR 0100 state sales tax return.
• FYI Sales 84, “Sales Tax Exemption of Beetle Wood
  Products”
August 2008         Colorado Department of Revenue            Slide 30
  School Sales – Tax Exemption
HB08-1013, effective 09/01/2008

• Sales made by public and private K-12 schools, school
  activity booster organizations, and student classes or
  organizations are exempt from state sales tax if all proceeds
  of the sale are for the benefit of a school or school-approved
  student organization. Proceeds of sales by public school
  parent/teacher organizations can also be used for the
  reasonable expenses of the organization.

• This state sales tax exemption includes, but is not limited to,
  fundraiser items such as gift wrap, bake sale goods, silent
  auction donation items, and booster club concession stand
  food items that are sold by the school or school-related
  organization.
August 2008        Colorado Department of Revenue           Slide 31
  School Sales – Tax Exemption cont.
• This sales tax exemption does not apply to state-collected
  city and county local sales tax unless they have added
  the exemption to their ordinances. Refer to the DR 1002,
  Colorado Sales/Use Tax Rates, to find information on cities and
  counties that have enacted this exemption. This exemption does
  apply to RTD/CD/FD special district sales tax and
  Regional Transportation Authority(RTA) sales tax.

• To obtain items to sell for fundraising without paying tax to the
  vendor, school related organizations and PTO/PTA organizations
  should obtain a sales tax license if they do not already have one.
  New licensees should apply for a charitable sales tax license,
  which has a fee of $8. There is no state sales tax deposit for this
  license. Public schools should obtain a standard sales tax license.
  There is no fee or deposit requirement for public schools.

August 2008         Colorado Department of Revenue            Slide 32
Exemption - Components for Production
of Electricity Renewable Energy Source
HB08-1368, effective 05/27/2008

• Provides that counties and municipalities that have adopted a local
  sales tax ordinance can levy a sales tax on sales of components
  used in the production of electricity from renewable energy
  sources, including but not limited to wind, unless exempted by local
  ordinance or resolution.

• Exemption applies to the components used in production of
  alternating current electricity including, but are not limited to: wind
  turbine generators, rotors and blades, solar modules, trackers,
  supporting structures or racks, inverters, towers and foundations.

• Refer to publication DR 1002 ―Colorado Sales and Use Tax Rates‖
  for a list of localities that grant this exemption.

• FYI Sales 83 “Sales Tax Exemption on Components for
  Production of Electricity from Renewable Energy Sources”
August 2008          Colorado Department of Revenue                Slide 33
               Aircraft Sales
HB1261, effective 08/05/2008

• Establishes a sales tax exemption for aircraft sold to persons
  who are not residents of Colorado when such aircraft are to be
  removed from Colorado within 120 days of the sale and the
  aircraft will not be in Colorado for more than 73 days in any of
  the three calendar years following the calendar year in which the
  aircraft is removed from the state.

• The purchaser, at the time of purchase, must provide an affidavit
  to the seller that the purchaser is not a Colorado resident and
  that the purchaser agrees to pay Colorado sales tax if the
  purchaser fails to comply with the exemption requirements. An
  aircraft that is hangared or parked overnight is considered to be
  in the state.
August 2008        Colorado Department of Revenue           Slide 34
     Helpful Hints
• Avoiding Tax Errors/Delays
      • Colorado W-2s
     Miscellaneous Tax Errors
1. When an individual decides to be excluded in the composite
   return, he/she can file an individual return and have the
   company pay an estimate on his/her behalf. The estimate
   should be sent in with a payment from the company along with
   form DR108. The taxpayer should send a copy of the DR108
   and a copy of the cancelled check (front and back) so Revenue
   can properly credit the correct account.

2. Are you using the correct forms? For example, a tax preparer
   used the 2006 tax return and copied the 2007 information over
   the 2006 information. The tax preparer filed all of his/her
   clients’ returns on this form. Since the lines don't always match
   up, there were issues with all of these returns.

3. Many errors occur because instructions outlined in tax booklets
   and/or FYI publications are not followed.
August 2008         Colorado Department of Revenue             Slide 36
              Tax Errors cont.
4. Use the correct form (the correct year) when submitting
   payments. Make sure the social security number and other
   identifiers are on the payment to ensure proper posting.

5. Do not assume that because there is a carry-forward credit, or
   the credit has been taken in the past that the credit claimed on
   the current year filing will be accepted. 98% of the processing
   delays occur because of this error.

6. Fill out the form completely that corresponds to the credit. For
   example, many capital gains subtractions are delayed/denied
   because the property description is too vague or missing, the
   payroll/property % is not included for stock sales, and/or the
   acquisition date is omitted.

August 2008         Colorado Department of Revenue             Slide 37
              Tax Errors cont.
7. Filing more than one tax return for the same year.
   For example, if corrections are needed, file an
   Amended return (form 104X).

8. Consult FYIs regarding what subtractions from
   federal income can be taken on Colorado return.

9. Send injured spouse claims separately – Do not send
   with return.

10. Not claiming/accounting for carry-forward credits
   from prior years.

August 2008      Colorado Department of Revenue      Slide 38
              Tax Errors cont.
11. Treat electronic/paper filings same. For example,
    if the credit requires documentation, fill in as
    much as you can online. Also, after submitting the
    return electronically, send a paper copy of all
    schedules, certificates, forms, etc. needed for the
    credit – will save the DOR time ordering the
    returns and/or requesting copies of the forms.

12. Credit for taxes paid to other states. Errors occur
    because the 104PN is filed in conjunction with the
    other state(s) return(s) and form 104CR is not
    attached to the return.
August 2008     Colorado Department of Revenue    Slide 39
          Tax Errors - Credits
Enterprise Zone Credits
   1.The credit is taken from a pass-through entity and
     documentation is lacking to show the percentage of
     ownership in the partnership or S Corporation.
     Attach this documentation to the 104CR form/tax
     return.
   2.The certificates are not attached. In the case of
     carryover credits, attach a carry-forward schedule.
     Calculating the correct % of credit (25% or 12.5%
     of the donation amount) for contributions.
   3.Enterprise Zone certificates must be signed by an
     administrator.
August 2008     Colorado Department of Revenue    Slide 40
       Tax Errors – Credits cont.
Gross Conservation Easement Credits
    1. All transferees must include a completed form DR 1305
        with their return.
    2. All donors must submit completed forms DR 1305 and
        DR 1303 as well as all additional attachments listed on
        the DR 1303. Electronic filers must submit the DR 1303
        and additional attachments separately from their income
        tax return.
    3. All donors must also submit a completed form DR 1304
        separately from their income tax return. This form may
        be filed online at www.TaxColorado.com.

Child Care Contribution Credit
     1. Only 50% of the contribution can be claimed.
     2. Form 1317 must be included. Donation confirmation
        letters alone will not suffice.

August 2008       Colorado Department of Revenue          Slide 41
          Tax Errors – Credits cont.
Alternative Fuel Credits
   1. Attach the bill of sale showing the vehicle registered in the primary
       or joint filer’s name.
   2. Only vehicles listed in the FYI are eligible for the credit. E-85
       vehicles are NOT eligible for the credit.
   3. Credit must be claimed in year of purchase, if no tax liability exists
       for the year of purchase. The credit must be claimed and carried
       forward in its entirety.
   4. Only the amount of the credit in excess of the net taxes due for
       the year of purchase may be carried forward to the following year.

Final note:
If a return is selected for review, any/all credits will be verified.
$100 credit with no documentation will delay a $100,000 refund.
Therefore, always include ―documentation‖ and follow the
FYIs/instructions. Don’t assume the DOR knows the carry forward
amounts from prior years.

August 2008            Colorado Department of Revenue                   Slide 42
                  W-2s/Paystubs
• In contact with your clients in December/January? Advise
  them to keep their last pay stub from an employer so that
  the information contained on the stub can be used for
  their tax filing. This is helpful in case they lose W-2 forms
  or employer does not provide a W-2.

• Final pay stubs should include the total amount of taxes
  withheld for Colorado. Taxpayers can use this information
  to fill out a W-2 Substitute form (DR 0084) to send with
  paper returns. If filing electronically, they’ll have the W-2
  Substitute form for their records.

• Need a Colorado W-2 Substitute form? Go to
  www.Taxcolorado.com and click on ―forms.‖

August 2008       Colorado Department of Revenue          Slide 43
      Miscellaneous

• Nonresident Partners/Shareholders
 • Forms – Potential Changes 2008
      • Online Tax Payments/
     Agreement To Pay (ATP)
    Nonresident Partners/Shareholders

• A nonresident partner/shareholder can complete
  Form 0107, Colorado Nonresident Partner or
  Shareholder Agreement. This establishes that the
  taxpayer is required to file a Colorado income
  tax return. Form 0107 must be submitted to
  the Department of Revenue each year.

• Withholding is required for any nonresident
  partner/shareholder who fails to complete, sign
  and return Form 0107 to the partnership/
  corporation prior to the due date of the return, and
  not included in a composite return.

August 2008     Colorado Department of Revenue     Slide 45
    Partners/Shareholders cont.
• The partnership/corporation must withhold 4.63% of
  the taxpayer’s Colorado source income. The amount
  withheld is submitted with Form 0108, Statement of
  Colorado Tax Remittance for Nonresident Partner or
  Shareholder. The amount withheld is credited to
  the taxpayer’s account and is claimed on the
  taxpayer’s return as an estimated tax payment.

• FYI Income 54 “Nonresident Partners and
  Shareholders of Partnerships and S
  Corporations”

August 2008    Colorado Department of Revenue   Slide 46
  Potential Changes – Forms
1. Form 104 - list of common eligible credits on line 12 "Other
subtractions" with checkboxes to identify the subtraction – to cut down
the erroneous subtractions taken.

2. Form 104CR - checkboxes on the applicable lines of page 2 of the
form so that taxpayers can indicate if the credit they are claiming is
carried forward from a prior year.

3. Form 104PTC - Moved some pages in the booklet. The affidavit
included now requires an Alien Registration Number if the applicant is
not a U.S. citizen.

4. Form 104CR and 112CR instructions have been revised to direct the
taxpayer to enter on the applicable lines only the amount of the credit
that is being applied to the particular tax year.

August 2008           Colorado Department of Revenue              Slide 47
   Online Tax Payments/ATP
• Online tax payment is available. Pay tax owed by using a
  checking or savings account or by credit card with our online tax
  payment service at www.colorado.gov/paytax. Payments are
  applied within 24 hours after submission.

• If the taxpayer is unable to pay the balance due in full,
  the taxpayer can apply for an Agreement to Pay (ATP).
  Additional penalty will not be assessed after the installment plan
  is set up, however interest will be added for the term of the
  plan.

• There are two automated methods to request an Agreement to
  Pay plan:
   – Colorado Income Tax Account service on the Web at
     www.myincometax.state.co.us
   – Automated telephone system at (303) 238-FAST (3278). Press
     3 in the menu to reach the automated system.
August 2008         Colorado Department of Revenue            Slide 48
    Online Tax Payments/ATP cont.
• Monthly payment coupons are mailed to the taxpayer within 30 days.

• If taxpayers disagree with the balance due notice they can protest the
  amount due. Taxpayers must send a letter for a hearing to present the facts
  and arguments.

• This written application must be filed within 30 days from the date of the
  notice. The 30-day period is fixed by statute and cannot be extended. Be
  aware the protest review process can take some time.

• The written application (protest) must contain the following information:
   – Taxpayer’s name and address
   – The bill notice number and the taxpayer’s Social Security number
   – The tax period/year involved
   – The amount of income tax in dispute
   – A statement summarizing the reasons the taxpayer believes tax is not due

• Mail to: Colorado Department of Revenue, Protest Section, 1375 Sherman St.
  Denver, CO 80261

August 2008             Colorado Department of Revenue                  Slide 49
    Resources/
   Online Services
• Draft Forms Comments
  • Electronic Services
   • CDOR Resources
        • Classes
       Draft Form Comments
• The draft forms are available through the DOR main Web page,
  www.TaxColorado.com
      1. Tax Professionals
      2. Forms, Publications, References
      3. Draft Forms
      4. Email Us

• Comments & suggestions for any form may be submitted to:
  TaxFormComments@spike.dor.state.co.us

• Comments and suggestions will be accepted until mid October
  2008.

• Note: Tax-specific questions cannot be answered through this
  email address.

August 2008        Colorado Department of Revenue           Slide 51
      E-File C-Corporations
• Electronic filing of Colorado C-corporation income tax is now
  available. Colorado participates in the IRS Modernized e-File (MeF)
  program. The Colorado Department of Revenue accepts several
  software providers who have updated their software to add
  Colorado e-file for tax years beginning in 2007.

• Software accepted by Colorado for filing 2007 C-corporation income
  tax as of June 2, 2008.
   – CCHProSystem fx Tax; www.cchgroup.com/Tax
   – Creative SolutionsCS Professional Suite; http://cs.thomson.com/
   – DrakeDrake Tax Solutions; www.drakesoftware.com
   – CCH Small Firm ServicesTaxWise; www.taxwise.com

• Corporations that want to efile to Colorado with their own
  accounting software should contact Steve Asbell at
  sasbell@spike.dor.state.co.us

August 2008         Colorado Department of Revenue              Slide 52
                  Resources
Colorado Department of Revenue

 1. Tax Practitioner Hotline: 303-232-2419
 2. www.TaxColorado.com (Forms, FYI publications, Online
     Customer Support, Statutes & regulations, Links to other
     government agencies, Tax Alerts)
 3. Email: publiceducation@spike.dor.state.co.us
 4. Online Customer Support
 5. Tax Information Index
 6. ―CDOR Tax InfoEmail‖ Subscription Service
 7. Forms Department Fax: 303-866-4407
 8. Walk-in Service Centers, Hours: M-F, 8 a.m. - 4:30 p.m.
    - Denver (1375 Sherman Street - 14th & Sherman)
    - Colo. Springs, Ft. Collins, Grand Junction, Pueblo

August 2008        Colorado Department of Revenue           Slide 53
                Tax Classes
Free Classes - Department of Revenue
 1. Sales/Use Tax for Beginners – Content online
 2. Advanced Sales/Use Tax – Content online
 3. Employer/Employee Basics 101 (federal and state wage
    withholding, unemployment tax and workers’ compensation) –
    Content online
 4. Contractor/Manufacturing – Content online
 5. Hospitality – Content online
 6. Printing/Advertising – Content online
 7. Application of Use Tax in Colorado – Content online

Note: Some of the classes above are also offered online where you
can obtain CPE credit. However, not all classes are currently
available in this format but will eventually be added. So, be sure to
check the Web site often for new class offerings. Or, contact
publiceducation@spike.dor.state.co.us
August 2008          Colorado Department of Revenue            Slide 54
   Questions?
  Thanks for attending
          and
have a great tax season!