What Colorado Employers Need to Know About the New Requirement for an Earned Income Tax Notice

By Community Manager posted 04-19-2023 02:25 PM


We at Employers Council have been getting questions about the new requirement for a notice in Colorado related to income tax credits. Colorado’s lieutenant governor signed House Bill 23-1006 into law on March 31, 2023. It is important to note that it does not take effect until the day after 90 days following adjournment of the Legislature this year. The Legislature is scheduled to adjourn on May 8, 2023, making the bill effective on August 7, 2023. We anticipate, per the language of the bill, that the state Department of Revenue will publish a sample notice after August 7. Therefore, it is premature to issue such a notice at this time. 

The original statute (C.R.S. 38-22-604) says that employers must annually issue a statement to employees about wages withheld. Historically, providing a W-2 form to employees has sufficed for compliance. With the new notice requirements, it is likely that this notice can be issued with the W-2 next year. The statute references “income tax years commencing on and after January 1, 2023.” As with W-2s, that means calendar year 2024.  

After the state issues the sample notice, employers will need to provide it at least once annually. Employers can provide the written notice to employees electronically, including via email or text message. The written notice must be in English and in any other language that the employer typically uses to communicate with the employee to whom the notice is sent. 

Employers Council will keep you informed when the sample notice is issued.