Few things tested the resolve of Colorado tax professionals more than the unexpected delays in return processing during the 2024 filing season. For COCPA members, the burden of an already demanding season was intensified by delays in processing with the Colorado Department of Revenue (CDOR or the Department). But behind the scenes, COCPA’s CDOR Working Group (the Working Group) was actively engaged, working to keep members as informed as possible and advocating for change in real time. On May 14, the group met directly with CDOR officials for a critical post-season debrief. The conversation went beyond airing frustrations, but focused on a forward-looking dialogue about what worked, what didn’t, and, most importantly, what must improve in 2025. By channeling member experiences, the Working Group provides meaningful influence on the Department’s operational and policy responses, a key component of the COCPA’s commitment to advocacy. 

Inside CDOR’s Operational and System Updates

CDOR provided important context around the delays, explaining they were largely driven by the sheer volume of new requirements introduced during the 2023 and 2024 legislative sessions that took effect in the 2024 tax year. While none of the individual changes were particularly complex, the cumulative effect, requiring new tax forms, revised instructions, testing, and extensive software updates significantly impacted implementation timelines. They were making these adjustments amid existing general upgrades.

Once return processing officially opened, however, CDOR reported minimal systemic issues. In fact, despite the delay, the Department had received more returns than at the same time last year and successfully issued refunds without additional complications. Notably, while return volume was up, overall refund totals were down. This shift was primarily attributed to the return of the TABOR refund credit to the statutory six-tier income-based structure, replacing the 2023 flat-rate override by legislators. As a result, the average refund amount was lower this year.

During the debrief, COCPA members raised key concerns about the disproportionate impact these delays had on specific taxpayer groups, particularly farmers, ranchers, and others with early filing deadlines. CDOR acknowledged the challenges and responded with empathy, outlining several forward-looking process improvements already in motion for the 2025 season. These include upgrades aimed at expediting change management, the introduction of new dedicated project management resources to support timely implementation, and a reassessment of risk tolerance and testing protocols during rollout. 

The COCPA has continued to raise concerns about the growing volume of tax-related legislation, particularly the use of tax credits to accomplish policy objectives and its impact on timely implementation and administration. When asked further about the Department’s role in this process, the Department representatives stated that they have discussed the impacts of significant new laws on their systems with legislators. Many legislators have started utilizing implementation dates in later tax years to ensure the department has sufficient time to adjust and avoid possible future delays. 

Despite these efforts, as COCPA has previously shared, the General Assembly faced a significant budget deficit at $1.2 billion this legislative session. While CDOR requested additional resources to address challenges currently being faced by the agency, these requests for more support were unable to be approved. This underscores the critical need for ongoing strategic collaboration, focused improvements, and continued engagement by CPAs in the legislative and regulatory arena.

Legislative Updates from the 2025 Session:

The department engaged with 61 proposed laws in the 2025 legislative session. The number of proposals this session that impacted the department was significantly reduced from 2024, where CDOR analyzed almost 90 bills. Overall, department staff were able to provide input on legislative proposals, meet with elected officials to share information, and testify in Committees on fiscal impact. 

Legislation highlighted that may impact the Department’s implementation workload, CPAs, and taxpayers included:

• HB 25-1296: Tax Expenditure Adjustment: This legislation creates several adjustments, extends certain credits and changes, and makes other adjustments based on anticipated changes from the federal government.
• HB25-1021 Tax Incentives for Employee-Owned Businesses: This bill expands and extends tax incentives to promote employee ownership by creating two new income tax subtractions and enhancing the existing tax credit for conversion and support costs related to employee-owned business transitions through 2038.
• HB 25-1274: Healthy School Meals for All Program: Created because of voter approval on Proposition FF, this legislation allows the state to retain and spend state revenue that would otherwise need to be refunded for exceeding the estimate in the ballot information booklet. The bill will also allow the state to maintain the increases in state taxable income established in Proposition FF that would otherwise need to be decreased.
• SB 25-199: Suspend Legislative Interim Activities: This legislation suspends interim committees, including the Sales & Use Tax Simplification Taskforce.  While this is detrimental to the COCPA’s ongoing commitment to this effort, the Department noted this suspension will allow the department more time to implement new legislative priorities when the General Assembly is not in session this summer and fall. 
• SB 25-302: Achieving a Better Life Experience Tax Deduction: This legislation extends the ABLE deduction until December 31, 2030.
• SB 25-319: Modification Higher Education Expenses Income Tax Incentive: This legislation made adjustments from HB 24-1340 and clarifies the statute that provides for the income tax incentives to improve the administration, including data tracking and reporting, of the incentives. 
• SB25-026 Adjusting Certain Tax Expenditures: Led by the Legislative Oversight Committee Concerning Tax Policy, this bill extends multiple tax expenditures, including adjustments to credits for fuel loss, energy storage, lawn equipment, and biotechnology, while clarifying the purpose and evaluation metrics of several exemptions and deductions to improve tax policy oversight and transparency.

HB 25-1296: Tax Expenditure Adjustments, signed by the Governor May 16, was OPPOSED by COCPA during session due to concerns of the extensive programmatic and procedural changes required, potentially exacerbating existing implementation challenges and delays. However, through advocacy efforts by COCPA and the broader business community, one particularly problematic provision, a proposed sales tax on downloadable software, was successfully removed during the legislative process.

Looking Ahead to the 2025 Filing Season:

As the Department begins to look ahead for the next filing season, they are actively working to manage version upgrades, leverage resources from other areas of the department, and develop new paths for approved legislation that is yet to be implemented. 

A recurring concern among COCPA members is the burden and confusion surrounding the e-filing system and requirements of supporting attachments. The Working Group has raised this issue in discussions and encouragingly, CDOR indicated it is actively evaluating areas where documentation requirements may be streamlined or eliminated, especially in cases where the necessary data is already being captured elsewhere. CDOR noted that any changes in this area will likely be addressed as system capacity and priorities align.

When asked how COCPA members can engage and support this process, CDOR officials shared that the continued efforts of the Working Group help foster productive and insightful conversations about the impacts of new policies from the perspective of practitioners in Colorado.  CPAs are also encouraged to participate in the Department’s working groups and rulemaking sessions to help provide upfront feedback on rules that will impact implementation and administration.  

The Working Group meets several times a 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.  The Working Group is essential to our community collaboration. It provides our members with an excellent opportunity to not only share the challenges they face as practitioners, stay informed, but to advocate for improvements in needed areas. 

Key Areas of Focus

Throughout the year, the COCPA CDOR Working Group has been tracking major strategic themes that influence both daily practice and long-term planning, including:

• Return Acceptance and Processing
• TABOR Refund Administration
• Retroactive SALT Parity Filings 
• SUTS System Enhancements
• Return Attachments and Documentation
• Tax Credits and Incentives
• Opportunities for Education, Communication & Legislative Support

If you have an issue or strategic theme that you would like the Working Group to consider in future discussions with the Department, please complete this form to share your experiences. If you are interested in serving on this critical group, please completed our Get involved with COCPA form.