The Colorado Department of Revenue, to the surprise of many, announced that effective as of February 28, 2018, it was rescinding all prior Revenue Bulletins and Policy Positions previously published by the Department.
In Colorado Revenue Bulletin 18-01, the Department stated that these prior publications were “out of date” and “do not represent an official articulation of any position held by the Department nor does the Department consider them binding with respect to any tax matter.” It then explained further, that the “previously published Revenue Bulletins and Policy Positions should not be relied on for any purpose” and advised taxpayers to consult the rules and regulations or request a Private Letter Ruling (PLR) or General Information Letter (GIL) for specific guidance.[1] Note, Revenue Bulletin 18-01 does not rescind the FYI publications, only publications that were issued and titled specifically as “Revenue Bulletin” or “Policy Determination.”
This of course has led to numerus questions and speculation such as: why, why now, and is this retroactive? The Department maintains that this was purely a “housekeeping” move on its part as it was difficult to maintain and update all prior publications. While true that Taxpayer guidance requires maintenance, it seems curious the Department would rescind all such publications rather than take a “targeted” approach.
More importantly, the open question now is can taxpayers rely on these rulings for tax periods prior to February 28, 2018? For example, what if a taxpayer relied upon this guidance in a prior year and is currently under audit? The flush language of the Bulletin implies that is repealing the prior guidance retroactively. If true, this raises both Constitutional and Taxpayer Bill of Rights issues.
Earlier this year, the Department told the Colorado taxpayer community that it was working to be more transparent. However, rescinding all prior Revenue Bulletins and Policy Positions without warning seems to tell a different tale and may point to future changes in the Colorado taxing regime.
[1] Note, PLRs are binding upon the Department only with respect to the specific taxpayer that requested the PLR. GILs are for informational purposes only and are not binding on the Department.
