Withholding/Payroll Tax | Letter Rulings

Private Letter Rulings and General Information Letters

Businesses and individuals can request a general information letter or private letter ruling on any tax administered by the department. General information letters are general discussions of tax issues that are not specifically addressed in other department publication, such as FYIs, rules and regulations, or form instructions. General Information Letters are general statements of department understanding and cannot be relied upon as binding guidance. Private letter rulings are specific determinations of the tax consequences of a proposed or completed transaction. Unlike general information letters, private letter rulings are binding on the department and, therefore, provide taxpayers with greater certainty for their business and personal taxes. However, private letter rulings can only be relied upon by the party to whom the ruling is issued. Private letter rulings cannot be relied upon by any taxpayer other than the taxpayer to whom the ruling is made. For more information about general information letters and private letter rulings including fee amounts and how to submit a request, please see department regulation 24-35-103.5
Subchapter S corporations are not subject to Colorado income tax.  A Subchapter S corporation is not required to register an income tax account or withholding account with the Department. A Subchapter S shareholder may have an obligation to file an income tax return and pay Colorado income taxes if the person is a resident or, if not a resident, whether the nonresident has any income from the sources described in §39-22-109. C.R.S.
In general, a seller has sales tax nexus in Colorado if it has employees or independent contractors in this state, even if their activities are completely unrelated to the sales transactions.  A contract carrier, unlike a common carrier, can also create substantial nexus with Colorado (and the local jurisdictions into which it delivers goods) if Company regularly ships goods via a contract carrier into Colorado. A company has substantial nexus for purposes of income tax if it has property, payroll, or sales in Colorado that exceed a certain dollar thresholds. Employees in Colorado for less than a day do not give rise to a wage withholding obligation. However, if the employee performs services for more than a single day in Colorado, they are required to file and pay Colorado income tax, and the employer is required to withhold and remit Colorado income tax.