Dept. of Revenue won’t pay penalties for late refunds

The Colorado Department of Revenue says it’s not liable to pay late penalties with interest for delivering late tax returns.

KRDO NewsChannel 13 previously reported on a state statute that requires the Colorado Department of Revenue to deliver refund checks within a specific time of filing, otherwise it must pay a late penalty plus interest.

But Deputy Executive Director Heather Copp told KRDO NewsChannel 13 Tuesday that the state is exempt from that law because it is checking for fraud.

When the state learned about widespread fraud in January, Copp says it temporarily halted all returns.

“For those taxpayers and tax refunds that are affected during that period of time where we had to hold all returns and look at all of them to make sure we were properly identifying those that are legitimate refunds and those that are not, we are not going to be paying penalty and interest on those,” Copp said.

Copp said the state’s actions can fall under three exemptions written in the state statute:

Those exemptions include auditing returns, checking for mathematical errors and updating computer systems to detect fraud. Copp said while she understands people are frustrated with late tax refunds, she hopes they will understand the care the state is taking to check for fraudulent activity.

“It’s always our goal to be able to issue refunds as quickly as possible, but I think that definitely people could understand that this was something out of control of the department or the state, this was something on the national level,” Copp said.

When asked about complaints over the Department of Revenue’s busy phone line, Copp explained the state is simply overwhelmed with calls. She encouraged taxpayers to check the status of their refund through the online portal.

Copp said, to date, the state has discovered 369 cases of fraud.