Payment Plan for Colorado Back Taxes

In Colorado, you may be able to set up a payment plan to repay delinquent taxes in monthly installments. Here is an overview of payment plans on back taxes in Colorado.

How to Set Up a Payment Plan for Individual Taxes Online

Individual taxpayers can apply for payment plans online. Simply set up an online account with the Colorado Department of Revenue and follow the prompts to request a payment plan. 

To set up an online account, you will need to confirm your identity with one of the following: 1) your most recent tax return, 2) your federal taxable income amount, 3) your refund amount, or 4) an ID number from a letter received from the Colorado DOR.

Once you have created an online account, follow these steps to request a payment plan:

1. Log into your Colorado Revenue Online account.
2. Click "additional actions" in the account box.
3. Chose "set up a payment plan.”
4. Select the date you want your payment plan to start — it must be 30 to 60 days from the current date.
5. Decide if you want to base your monthly payment on the amount you can afford or the number of installments you want to make. The system gives you both options, calculating your payment based on your response. The minimum monthly payment you can select is $25, and the system will show you the maximum length of time you can take to repay the bill.
6. Choose if you want to make your payments automatically with direct debit or ACH, manually online, or through the mail. 
7. Click the box that says you agree with the proposal. 
8. Enter your bank details if you want to set up automatic payments. 
9. Save your payment confirmation number or print a copy for your records. 

Remember, this is just a request. Completing the online application is not a guarantee of your payment agreement. The CO DOR will contact you to let you know if your plan was approved.

How to Request a Payment Plan on the Phone

Alternatively, you can request a payment plan over the phone. Call the Collections Section at (303) 205 8291. When you call, the collections rep will talk with you about your outstanding tax bill and your financial situation. Then, they will give you an overview of your options. 

How to Set Up a Payment Plan Over Email

You cannot set up a payment plan on Colorado taxes over email. However, you can email the DOR with questions about payment plans. Contact the agency at [email protected]. 

How to Set Up a Payment Plan for Business Taxes

You may be able to set up a payment plan on sales tax or wage withholding tax for your business. But, you must contact the CO DOR directly. To request a payment plan for Colorado business taxes, contact a compliance agent at (303) 866-3711 Monday through Friday, 8:00 am to 4:30 pm. 

The state will only let you make a payment plan request for business taxes if you have received a bill. Additionally, you cannot be in an active bankruptcy case, and you must have filed all required tax returns. 

When Can You Set Up a Payment Plan

You can request a payment plan on your current year's taxes any time after April 15. For example, you can request a payment plan for your 2021 Colorado state taxes any time after April 15, 2022. 

If you know that you cannot afford to pay your Colorado taxes in full, you should set up a payment plan as quickly as possible. If the state garnishes your wages or seizes your assets, you typically cannot reverse those actions by setting up a payment plan. 

What to Expect When You Have a Payment Plan

If you set up a payment plan, interest will continue to accrue on your balance. The CO DOR will also keep any state tax refunds until your balance is paid in full. 

When the CO DOR keeps your refunds and applies them to your balance, those amounts are not a substitution for your monthly payment. You must continue to make payments as outlined in your plan. 

While you are on a payment plan, the DOR may still send you a Final Notice of Determination and Demand for Payment. Don't worry — as long as you're making payments, the state will not take any new collection actions. 

However, to ensure the state has a record of your payment plan, look at the Statement of Account. This document should be included with the Final Notice, and it should show you which of your debt is in a repayment plan. If you don't see that information, you should reach out to a tax professional or contact the DOR directly to make sure your payment plan is recorded. 

Reasons for Payment Plan Cancellation

If you don't maintain the terms of your agreement, the CO DOR can cancel your payment agreement. You must satisfy the following terms to keep your payment plan valid:

• Sign and return the waiver with your payment plan paperwork.
• Make the full monthly payment on time. 
• File all tax returns.
• Pay all tax due.
• Provide a complete statement of income and expenses if requested.
• Update your address if you move.

To make sure your payment reaches the DOR on time, mail the payment at least ten days before the due date. If you're paying online, remit the payment two days before the due date. 

If the state decides to cancel your payment plan, the CO DOR will notify you in writing. Failure to meet these terms is considered a violation of your agreement. However, if you cannot afford to pay your tax bill, you may be able to roll your existing tax bill into your payment plan. You can use Revenue Online or call the DOR to make this request. 

What If You Can't Afford to Pay Your Colorado Tax Payment Plan

If you cannot afford to make the payments on your payment plan, you can request new terms. Send your request along with DR 6596 (Statement of Income and Expenses) to the CO DOR. You must continue to make payments during the review process. 

You can also use this form to request different payment terms if you cannot afford the CO DOR's proposed payment plan. Form DR6596 provides the CO DOR with a very detailed analysis of your financial situation, and if you are experiencing financial hardship, this form will prove your situation to the state.

In rare circumstances, the CO DOR may consider an offer in compromise. An offer in compromise allows you to settle the taxes you owe for less than the total amount. Before applying for a Colorado offer in compromise, you must first get an offer in compromise accepted with the IRS for the same period and the same type of taxes.

Get Help Setting Up a Colorado Payment Plan

Can't afford to pay your Colorado taxes in full? Then, a payment plan may be the best option. Contact a Colorado tax pro today to help set up a payment plan or explore other options for your back taxes. You can view the top-rated Colorado tax problem professionals here.