Tax Alert #3

2023 Tax Season - Alert #3

National flag State of Colorado on a flagpole

COLORADO DELAYS

Unfortunately, this tax year is not off to a great start for the Centennial State.

Not only was CO late in opening the window to accept 2023 tax returns (delayed until Feb 13th), they are overwhelmed with volume and seeing processing delays. For e-filed returns, they are indicating you should allow up to 12 weeks for processing (and 12-18 weeks manually filed returns)
On what appears to be a random basis, CO is mailing refund checks to certain taxpayers even when direct deposit information was provided.
It is almost impossible to speak with an agent on the phone (trust me, we try every day!). You can help by only calling CO Department of Revenue with urgent tax matters. Also, DO NOT CALL them looking for the TABOR refund. As advised before, the TABOR refund ($800 if single, $1,600 if married) is automatically included in the 2023 tax return and will either increase your refund or decrease the amount owed.

Tax Extension. Stack of papers and calculator.

A few comments on extensions

Many clients choose to file an extension rather than file their return by the April 15th deadline. If you have NOT submitted all tax data to us at the time of this newsletter, you should assume you will need to file an extension this year.

A few reminders if you do file an extension:

An extension DOES NOT extend your time to pay - it only extends the time to file your "official" return.
If you file an extension, your return is due October 15th. You cannot file another extension at that time - you can only extend ONCE.
In order to be valid, an extension must be filed on or before April 15th.
If you file an extension, you can still file your return on time (so no harm in filing an extension).
If you file an extension and do NOT owe any taxes when you file, there are no penalties nor interest due.
If you file an extension and ultimately OWE taxes, the IRS will charge interest and this cannot be waived. The current interest rate charged by the IRS is 8% per year.
In addition to interest, you could also be subject to one or more of the penalties noted below. These MAY be waived depending on your past payment/penalty history.

Close up on a conceptual watch with the text late fees. Due date and unpaid invoices penalties concept. 3D illustration.

FAILURE TO FILE (FTF)

PENALTY

Assessed if you do not file by April 15th AND do not file a valid extension OR if you file a valid extension but do not file your actual return by October 15th
Penalty is 5% of the unpaid tax per month (or partial month) that the return is late
Penalty is capped at 25%

Sticker with the text LATE PAYMENT on white background_ near calculator and notebook

FAILURE TO PAY (FTP)

PENALTY

Assessed if you do not pay the tax owed on the April 15th due date
Penalty is .5% (1/2 of 1 percent) of the unpaid tax per month (or partial month)
Penalty will be reduced to .25% if a payment plan is established
Penalty is capped at 25%

UNDERPAYMENT

PENALTY

Assessed if you don't pay enough tax during the year through withholding and/or your estimated tax payment OR you pay late
This penalty will apply if you did not pay at least the lesser of
100% of your prior year taxes (110% if AGI is > $150K)
90% of your current year taxes
Penalty is 5% of the unpaid tax per month (or partial month) that the return is late
Penalty is capped at 25%

Scam grunge red stamp. Scam square sign label isolated.

BOI Scams

You can refer to our past newsletters for more background on new legislation requiring reporting of BOI (Beneficial Ownership Information) but as a reminder

For businesses established before January 1,2024, the BOI filing is not due until January 1, 2025;
Businesses established after January 1, 2024 have 90 days to complete the BOI filing;
BOI reporting can only be filed on-line.

The AICPA has been alerted to scams where unscrupulous companies are sending BOI solicitations that look official (including a BOI filing form they will mail in for you) but are meant to get you to provide your private information (and pay them a fee to do so). Please be very cautious with whom you work in regards to BOI - if they indicate they will mail the BOI filing, the firm is NOT legitimate.

We still feel most clients can do the BOI reporting on their own if you choose to do so. We plan to assist clients if needed with BOI reporting but will not be able to do so until after the April 15th tax deadline. Our fee will be $200 per BOI filing

microphone on a stand up comedy stage with reflectors ray_ high contrast image

More tax humor...

“The income tax has made more liars out of the American people than golf has.” — humorist Will Rogers

What sort of tax returns do marijuana dispensaries file? Joint returns.

What does my wife say to fall asleep when she has insomnia? "Sweetie, tell me about your job"

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