Colorado’s tax system is structured around a flat corporate income tax rate, complemented by a pass-through entity tax and a framework for estimated payments, penalties, and interest. The state imposes a 4.4% corporate income tax on C corporations, S corporations, and LLCs treated as corporations for federal tax purposes. These entities must file Form DR 0112 with the Colorado Department of Revenue by the 15th day of the fourth month after the close of the tax year. Extensions are available via Form DR 0158-C, granting an automatic six months to file but not to pay.
For pass-through entities—partnerships, LLPs, and LLCs treated as partnerships—Colorado levies a 4.5% income tax on each owner’s or partner’s share, reported through Form DR 0106. S corporations also fall under this category. Extensions are available via Form DR 0158-N, pushing the deadline to October 15.
Estimated tax payments are mandatory for corporations with expected liabilities over USD 5,000 and pass-through entities with liabilities over USD 1,000. Payments are calculated using Form DR 0112EP for corporations and Form DR 1060EP for pass-through entities. The required amount is the lesser of 70% of the current year’s liability or 100% of the prior year’s liability, assuming a 12-month tax year and a timely filed return.
Colorado enforces strict compliance through penalties and interest. Late filing incurs the greater of USD 5 or 5% of the unpaid tax, plus 0.5% for each additional month, capped at 12%. Interest accrues at 3% on unpaid balances, as set by the Department of Revenue.
This blog explores Colorado’s corporate income tax, pass-through entity tax, estimated payments, and penalties in detail.
Corporate Income Tax
Colorado applies a flat tax rate of 4.4% on taxable income derived from business activities within the state. This applies to C corporations, S corporations, and LLCs treated as corporations for federal tax purposes.
Form & Due Date:
- Corporations must file Form DR 0112 – Colorado Corporation Income Tax Return.
- The due date is the 15th day of the fourth month following the end of the tax year.
This uniform system simplifies the corporate income tax structure while ensuring that all corporate entities contribute proportionally to state revenue.
Extension to File
Colorado grants corporations the ability to extend filing deadlines.
- Corporations use Form DR 0158-C to request an automatic six-month extension.
- The extension moves the deadline from the 15th day of the fourth month to the 15th day of the tenth month after the tax year ends.
It is important to note that an extension applies only to filing, not to payment. Taxes must still be paid by the original due date to avoid penalties and interest.
Pass Through Entity Tax
Colorado imposes a 4.5% income tax rate on the income of pass-through entities. This rate applies to partnerships, LLPs, LLCs treated as partnerships, and S corporations. The tax is assessed on each owner’s or partner’s share of income, proportionate to their ownership percentage.
Form & Due Date:
- These entities must file Form DR 0106 – Colorado Partnership / S Corporation Tax Return.
- The deadline is the 15th day of the fourth month following the end of the tax year.
This system ensures that income flows directly to owners while maintaining tax compliance at the entity level.
About Pass-through entity Form & Due date
Colorado requires timely filing by all pass-through entities. The return provides a detailed allocation of income, deductions, and credits among owners or shareholders.
- Form DR 0106 captures the entity’s annual financial activity.
- Each partner or shareholder receives documentation for inclusion on their individual state return.
The deadline aligns with corporate returns, ensuring consistency across business structures.
Extension
Pass-through entities may also extend filing deadlines.
- Form DR 0158-N – Application for Extension of Time to File a Colorado Individual Income Tax Return is used by S corporations, partnerships, LLPs, and LLCs.
- This form grants an automatic six-month extension, shifting the deadline from the original due date to October 15.
Like corporate entities, pass-through businesses must pay their taxes on time, as extensions only delay the filing, not the payment.
Estimated Tax Payment
Colorado requires estimated tax payments when liabilities are expected to exceed specific thresholds.
- Corporations: Must make estimated payments if net tax liability exceeds USD 5,000. Payments are reported using Form DR 0112EP – Corporate Estimated Income Tax.
- Pass-through entities: Must make estimated payments if liability exceeds USD 1,000. Payments are calculated on Form DR 1060EP.
The required annual payment is the smaller of:
- 70% of the current year’s net Colorado tax liability, or
- 100% of the prior year’s net Colorado tax liability (if the prior year was a 12-month tax year and a return was filed).
This safe harbor method provides flexibility while ensuring consistent state revenue collection.
Penalty and Interest
Colorado enforces compliance through penalties and interest for late filings or unpaid taxes.
- Late Filing Penalty: The greater of USD 5 or 5% of the unpaid tax, plus 0.5% for each additional month or part of a month, capped at 12% total.
- Interest: Unpaid balances accrue interest at 3%, as established by the Colorado Department of Revenue.
This framework encourages timely compliance and ensures the state recovers its due revenue.
Conclusion
Colorado’s tax compliance system combines simplicity with strict enforcement. A flat corporate income tax of 4.4% applies to corporations, while pass-through entities are subject to a 4.5% tax on income allocated to owners. Filing deadlines for both corporations and pass-through entities fall on the 15th day of the fourth month after the tax year, with six-month extensions available.
Estimated payments are mandatory once liabilities exceed USD 5,000 for corporations or USD 1,000 for pass-through entities. Failure to comply triggers penalties and interest that escalate quickly, reinforcing the need for businesses to meet filing and payment obligations on time.
By staying aware of filing deadlines, extension options, and payment thresholds, businesses can maintain good standing in Colorado’s tax system. This approach not only avoids unnecessary costs but also allows companies to focus on operations in a state known for its consistent tax structure.
