Members of the COCPA CDOR Working Group convened on May 29 to review the 2023 tax filing season with key staff from the Colorado Department of Revenue (CDOR, or the Department). During the meeting, the group assessed progress made, discussed areas needing improvement, and recapped significant legislation impacting the Department’s implementation workloads and CPAs' roles in assisting taxpayers. 

Key strategic themes being tracked and discussed include:

• TABOR refund processing
• SALT parity pass-through elections
• K-1 forms processing
• General return attachments and supporting documentation
• Service levels and notification letters

Key Operational and Service Level Challenges

The Department reported that several factors affected its 2023 tax filing season operations. While CDOR typically expects a 1% annual increase in return submissions, this year saw a surprising 7% rise. This surge is mainly attributed to the $800 per individual flat TABOR refund from 2023, which motivated more taxpayers to file returns. 

Additionally, there was an 11% increase in returns resulting in refunds rather than payments due, straining the mail processing and refund departments. These pressures led to delays, which COCPA members noted. The Department is working on solutions to enhance capacity and expedite the conclusion of the 2023 filing season.

The Taxpayer Helpline experienced significant delays, with wait times exceeding an hour at times, far below the Department's service standards. However, the Tax Practitioner Hotline remains a valuable resource for COCPA members, resolving routine issues more expeditiously. 

The working group expressed appreciation for the improvements to K-1 submission integration with the Modern E-File system, which came as a result of feedback provided in 2022 by the COCPA. Early reports indicate that the process went smoothly for the 2023 filing season.  

Legislative Updates

The Department also engaged in fiscal analysis for more than 85 proposed bills during the 2024 legislative session, with approximately half passed for implementation in future tax years. Notable bills include:

• HB24-1211 Family Affordability Tax Credit 
• HB24-1134 Adjustments to Tax Expenditures to Reduce Burden – impacting child care and earned income credits in addition to corporate income tax combined return criteria
• HB24-1312 State Income Tax Credit for Careworkers
• HB24-1052 Senior Housing Income Tax Credit
• SB24-228 TABOR Refund Mechanisms – temporarily reducing the income tax rate for 2024 from 4.40% to 4.25%, permanently changing deadlines for future TABOR refund claims to Oct. 15 for all individuals, and introducing a new TABOR refund mechanism through sales tax rate adjustments

The Department must now focus on designing and implementing the administration of these bills, many of which represent tax credits for targeted demographics passed with the intent of creating more affordability and influencing certain social behaviors desired by Colorado legislators. These legislative changes require tax forms, instruction, and software updates; therefore the volume and complexity can factor into the release and readiness for the new tax filing year.

The COCPA CDOR Working Group meets three to four times per year with CDOR staff to share member tax practitioner experiences and partner for strategic improvements. The COCPA appreciates the Department's willingness to collaborate, enhancing tax practitioners' ability to serve their clients and ultimately benefiting Colorado taxpayers. 

If you have an issue or strategic theme that you would like the CDOR Working Group to consider in future discussions with the Department, please complete this form to share your experiences.