United States: Colorado's Guidance On Annual Notice To Employees Regarding Available Income Tax Credits

In November 2023, the Colorado Department of Revenue's (CDOR) Taxation Division issued guidance containing mandatory language to be included in notices provided to employees regarding available federal and state income tax credits.

Quick Hits

• The Colorado Department of Revenue issued guidance with mandatory language to be included in notices that employers must provide to employees regarding available income tax credits.
• Employers cannot fulfill their notice obligations merely by linking to the CDOR Taxation Division's information web page.

The guidance, DR 0995, "Notice of Federal and State Refundable Tax Credits," allows employers to fulfill their notice obligations by copying the language verbatim into a separate document or printing or scanning the CDOR's provided document for distribution to employees on paper or electronically. Employees must receive all of the language in the notice from their employers. The guidance provides size and other specifications for print notices.

Colorado House Bill (HB) 23-1006, signed into law on March 31, 2023, expanded annual tax withholding notice requirements to include written notice of the availability of federal and state earned income tax credits (26 U.S.C. § 32 and Colo. Rev. Stat § 39-22-123.5) and child tax credits (26 U.S.C. § 24 and Colo. Rev. Stat. § 39-22-129). This legislation provided that the written notice must be in English and in any other language that the employer typically uses to communicate with employees and must include any additional content that the CDOR may prescribe via rulemaking.

The guidance also states that employers cannot fulfill their notice obligations by merely providing employees with a URL to the CDOR's Child Tax Credit and Earned Income Tax Credit Information web page.

Ogletree Deakins' Denver office will continue to monitor developments with respect to HB 23-1006 and will provide updates on the Colorado and Wage and Hour blogs as additional information becomes available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.