State & Local Tax Impacts of COVID-19 for Colorado – 2021

Thoughtware Alert Published: May 03, 2021 | Updated: Jun 08, 2021
SALT GOV COVID TW - 1

Information current as of April 7, 2021.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Colorado

  • Colorado issued information on Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program (PPP) loans for income tax purposes. The exclusion of covered loans from gross income under the federal CARES Act was a prospective provision in effect during the tax year. As such, the covered loans excluded from federal taxable income are similarly excluded from Colorado taxable income. The COVID-Related Tax Relief Act of 2020 changed the Small Business Act to prevent the denial of deductions and basis increases, and the reduction of tax attributes, because of the exclusion of covered loan forgiveness from gross income. This act became law on December 27, 2020, and retrospectively applied to taxable years ending after the enactment of the CARES Act. The retrospective amendments don’t affect the Colorado tax liability of taxpayers whose tax years ended before December 27, 2020.
    • Colorado DOR, CARES Act PPP Loans; March 11, 2021.
  • Colorado will extend the individual income tax payment and filing deadline to May 17, 2021. Individuals will have the option to pay any 2020 income tax payments that would normally be due on April 15, 2021, by May 17, 2021, without penalty or interest. This extension applies to money owed by individual taxpayers only for the 2020 income tax year. The extension won’t apply to estimated payments for the 2021 income tax year due from individuals and corporations on April 15, 2021. The extension also doesn’t apply to returns and payments for other tax types and taxpayers, including income tax for C corporations, partnerships, S corporations, fiduciaries, and severance tax. Individual taxpayers don’t need to file any forms or call the DOR to qualify for this automatic state tax payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline are automatically granted a filing extension until October 15, but that doesn’t grant an extension of time to pay taxes due.
    • Colorado DOR, News Release; March 18, 2021.
    • Governor’s Executive Order No. D 2021 075, March 30, 2021.
    • Colorado Code Emergency Regs. §§39-22-608-2 and 39-22-609-1, effective April 1, 2021.
    • Governor’s Executive Order No. D 2021 091, April 28, 2021. 
  • Colorado issued information that taxpayers must add back to their 2020 state income tax return the amount of unemployment compensation excluded from their federal taxable income per the American Rescue Plan Act of 2021.
    • Colorado DOR, News Release; April 1, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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