Colorado Court of Appeals, 3rd Div., No. 13CA1656, October 23, 2014: Colorado’s 4-year limitation on challenging a claimed conservation easement tax credit runs from when the credit is first claimed.
Colorado taxpayers may claim a state income tax credit, which may be carried forward for up to twenty years, for donating a qualifying conservation easement to a governmental entity or charitable organization. § 39-22-522(2), (5), & (7), C.R.S. 2014. The applicable general statute of limitations provides that “the assessment of any tax, penalties, and interest shall be made within one year after the expiration of the time provided for assessing a deficiency in federal income tax. . . .” § 39-21-107(2), C.R.S. 2014. The time for assessing a deficiency in federal income tax is three years, 26 U.S.C. § 6501(a) (2012. Thus, the Colorado limitations period is four years.
The Colorado Department of Revenue and several taxpayers fund their way into court in a dispute over how long the DOR could challenge the validity and value of the CE tax credits: in each of up to 20 years year in which the credit is claimed, or only within four years from the first time the credits are claimed? What triggers the commencement of the four-year limitations period?
The court held that the Department of Revenue must determine the value and validity of a claimed conservation easement tax credit within four years from when the credit is first claimed.
Decision available at http://www.cobar.org/opinions/opinion.cfm?opinionid=9555&courtid=1.