Colorado recently released an updated version of its FYI General 11 Publication, Colorado Civil Tax Penalties and Interest. The penalties and interest discussed in this publication cover a wide array of tax types, including withholding tax.
Penalties for late payment of withholding taxes remains unchanged from the previous version of this publication: the greater of $5 or a percentage of the unpaid tax equal to 5% plus 0.5% for each full or partial month the tax remains unpaid, not to exceed a total of 12%.
Interest has increased since the last version of this publication, from 6% to 7% for the regular interest rate, and 3% to 4% for the discounted rate. The regular rate is generally applicable to tax underpayments or past due payments, while the discounted rate applies to those who:
- Pay the tax prior to the issuance of a notice of deficiency
- Pay or enter into an agreement to pay the tax within 30 days of the issuance of a notice of deficiency for the unpaid tax.