Colo. Code Regs. 39-21-116.5

Current through Register Vol. 47, No. 19, October 10, 2024

Rule 39-21-116.5 - Penalties for Officers or Members

Basis and Purpose. The statutory bases for this rule are sections 39-21-101(4), 39-21-102(1), 39-21-112(1), and 39-21-116.5, C.R.S. The purpose of this rule is to clarify the liability for the penalty imposed by section 39-21-116.5, C.R.S., and establish requirements for the administration thereof.

(1) This rule applies to all taxes within the scope of article 21 of title 39, C.R.S., that a corporation, partnership, or limited liability company is required to collect, account for, and pay over to the Department.

(2) Any application for licensure or registration filed by a corporation, partnership, or limited liability company with respect to any tax specified in this paragraph (2) shall state, under penalty of perjury, the name or names of any and all officers of the corporation or members of the partnership or limited liability company who are responsible for tax compliance. The Department may deny any application that fails to comply with the requirements of this paragraph (2). The requirements of this paragraph (2) shall apply with respect to:

(a) sales tax imposed pursuant to article 26 of title 39, C.R.S.;

(b) use tax imposed pursuant to article 26 of title 39, C.R.S.;

(c) any local taxes collected, administered, and enforced pursuant to article 26 of title 39, C.R.S.;

(d) wage withholding required pursuant to section 39-22-604, C.R.S.;

(e) fuel tax imposed pursuant to article 27 of Title 39, C.R.S.;

(f) retail marijuana sales tax imposed pursuant to article 28.8 of title 39, C.R.S.; and

(g) oil and gas severance tax withholding required pursuant to 39-29-111, C.R.S.

(h) retail delivery fees imposed pursuant to sections 24-38.5-303, 25-7.5-103, 43-4-218, 43-4-805, 43-4-1203, and 43-4-1303, C.R.S.; and

(i) daily vehicle rental fee imposed pursuant to section 43-4-804, C.R.S.

(3) A corporation, partnership, or limited liability company required to collect, account for, and pay over Colorado taxes shall, at all times, designate any and all officers or members who are responsible for compliance with such requirements. Delegation of duties to subordinates shall not relieve such officers or members from responsibility for collecting, accounting for, and paying over taxes when due. In the event that an officer or member previously designated as responsible for collecting, accounting for, and paying over any tax resigns as an officer or member or otherwise ceases to be responsible for collecting, accounting for, and paying over taxes, the corporation, partnership, or limited liability company shall designate one or more responsible officers or members by amending its account information with the Department. In the event that no responsible officer or member is designated, the responsible persons are presumed to include, but not be limited to, the president, chief executive officer, chief operating officer, chief financial officer, and treasurer of a corporation, all general partners of a partnership, and all managing members or managers of a limited liability company.

(4) A person against whom a penalty is asserted under section 39-21-116.5, C.R.S., is a "taxpayer" within the meaning of section 39-21-101(4), C.R.S.

(5) The imposition of penalties under section 39-21-116.5, C.R.S., against a particular responsible officer or member for a particular tax period does not preclude the imposition of a penalty against other responsible officers or members for the same tax period, regardless of who the taxpayer designated and named as responsible for tax compliance pursuant to paragraphs (2) and (3) of this rule, nor does it preclude the imposition of a penalty against the same responsible officer or member for a different tax period.

(6) For purposes of section 39-21-116.5, C.R.S., a finding of willful failure to collect, account for, or pay over tax does not require the Department or its Executive Director to establish a bad motive or a specific intent to defraud the Department. An officer of a corporation, a general partner of a partnership, or a managing member or manager of a limited liability company is presumed to have willfully failed to collect, account for, or pay over a tax required to be collected, accounted for, and paid over to the Department if:

(a) during the relevant tax periods, the officer of the corporation, general partner of the partnership, or managing member or manager of the limited liability company was a person responsible for tax compliance by the corporation, partnership, or limited liability company, and;

(b) the corporation, partnership, or limited liability company;

(i) intentionally failed to collect tax as required by law;

(ii) acted with reckless disregard of a known or obvious risk that tax due under Colorado law might not be collected;

(iii) used collected tax for any purpose other than remitting such collected tax to the Department, including, for example, for its own benefit or to pay creditors;

(iv) acted with reckless disregard of a known or obvious risk that collected tax might not be remitted to the Department; or

(v) failed to promptly correct the failure to remit collected tax after being notified by the Department that such funds had not been paid over.

39-21-116.5

38 CR 03, February 10, 2015, effective 3/2/2015

40 CR 22, November 25, 2017, effective 1/1/2018

41 CR 14, July 25, 2018, effective 8/14/2018

41 CR 20, October 25, 2018, effective 11/14/2018

42 CR 05, March 10, 2019, effective 3/30/2019

44 CR 05, March 10, 2021, effective 3/30/2021

46 CR 03, February 10, 2022, effective 3/2/2023

46 CR 06, March 25, 2023, effective 4/14/2023