Colorado Requires Annual Notice to Employees About Earned Income Tax and Other Federal and State Tax Credits

By:  Kim Adamson

The Colorado Department of Revenue requires the Notice of Federal and State Refundable Tax Credits to be distributed to employees annually, at the same time as the state Form W-2, which is due on or before January 31st for the previous tax year. The Colorado Department of Revenue has released a new model notice (DR 0995 11/28/23) to satisfy the notice requirement. The current model notice and instructions may be found at the following link:

Colorado enacted legislation (House Bill 23-1006) that requires employers to provide an annual notice to employees who receive a Colorado wage and tax statement (Form W-2) about certain tax credits that may be available to them. For tax years beginning January 1, 2023, and each year after that, employers in Colorado must provide all employees with written notice of the availability of the federal and state earned income tax credits and the federal and state child tax credits. Employers may send the written notice to employees electronically, including by email or text message. The written notice must be in English and any other language a company typically uses to communicate with its employees. According to current regulations, the notice must include any additional content the Department of Revenue requires. Colorado employers should review the model notice instructions carefully and distribute the notice to employees accordingly.

Employers should watch for developments in case the Department of Revenue issues regulations, guidance, or an updated sample notice and should develop practices to ensure the notice requirement is met.