Annual Reconciliation

What is Annual Reconciliation?

In addition to filing wage withholding returns and making payments throughout the year, employers or entities that issue income payments to individuals must also submit an annual withholding reconciliation with the Department of Revenue. 

What are the due dates?

(due the next business day if the due date falls on a weekend)

DECEMBER 31
Annual pay cycle ends. If your status as an employer/payer ends at any other time during the year, you will need to reconcile within 30 days of that time.

JANUARY 31
In addition to reporting wage withholding tax throughout the year (weekly, monthly or quarterly), employers are required to also submit an annual information return and W-2s to the Colorado Department of Revenue. W-2s must be filed with the Department and furnished to the employee/payee on or before the last day of January. A penalty may be assessed for each W-2 that is filed late. Beginning with calendar year 2016, all employers must submit wage and tax statements to the Department no later than January 31.
 
Employers can submit these statements to the Department electronically through Revenue Online or submit paper copies of the form (DR 1093 or DR 1106). Electronic filing is recommended for all employers and required for those with 250 or more employees. However, employers with fewer than 250 employees may choose to file paper W-2s instead of filing electronically.

Employers filing annual wage withholding statements (W-2s) electronically should not also send paper statements to the Department. In addition, the employer filing electronically only needs to complete the Annual Transmittal of State W-2 Form (DR 1093) if paying additional tax or requesting a refund. (If an employer with fewer than 250 employees cannot submit W-2 forms electronically, it must prepare the Annual Transmittal of State W-2 Forms and submit copies of the paper W-2 forms to the Department. If mailing paper W-2 statements, the form must meet federal filing specifications. 

The employer must verify that the Annual Transmittal of State W-2 Forms is completed correctly. It will indicate if there is a balance due or a refund requested (an amount is shown on line 3A or 3B of the form DR 1093). If a payment is required, it can be made by EFT, through Revenue Online, or by mail. If mailing a payment, be sure to write the business name, Colorado Account Number (CAN) and form number (DR 1093) on the check or money order. If you are requesting a refund, it is preferable that you send in a paper Annual Transmittal of State W-2 Forms directly to the Department.

Note: Previously, employers had to submit paper copies of any W-2 statement with form DR 1093 W-2, Wage and Tax Statement (annual reconciliation), 1099 MISC and DR 1106 on or before the last day of February, and any electronic W-2 statements by the last day of March. Federal legislation that passed in December 2015 requires employers to file forms W–2 and W–3, and any returns or statements required by the IRS to report nonemployee compensation on or before January 31, effective for calendar year 2016 (statements filed in 2017). As required by state law, the Colorado Department of Revenue will follow the new federal deadline of January 31 for filing W-2 forms and 1099 MISC, if required, for annual reconciliation statements. Beginning with calendar year 2016, all employers must submit wage and tax statements to the Department no later than January 31.

What are the steps?

Step 1

Register to be a Withholding Submitter

Step 2

Decide how you will report Year-end Withholding Statements

Step 3

Revenue Online

Paper Year-End Statements

Although not recommended, employers or 1099 payers may submit paper statements along with DR 1093 or DR 1106 if they have fewer than 250 employees/payees. However, the department encourages businesses or their tax providers to register in Revenue Online as a Withholding Submitter and use Revenue Online to report W-2 and 1099 annual reconciliation and submit reconciliation statements. NOTE: For 1099s, send only 1099 statements that list Colorado withholding.

Wage Withholding & Personally Identifiable Information (PII)

The Colorado Department of Revenue (CDOR) is aware of the recent IRS change to allow for the masking or truncation of part of the Social Security Number (SSN) on the federal W-2 form. CDOR requires that the SSN be revealed in full on the W-2 so that our systems can process the information. Masked or truncated W-2 forms will not be processed. 

CDOR collects personally identifiable information (PII) and other information only as necessary to administer our programs.  The information provided by employers will be used only for that purpose.  For more information on how we safeguard PII visit our Taxpayer Security Safeguards page.