Colorado IRS Tax Attorney

CO Tax Landscape

Colorado taxes income at a flat 4.4% rate on federal taxable income, one of the simpler state structures in the country, but simplicity at the state level offers no protection from the IRS, and Colorado taxpayers regularly confuse the two. The Colorado Department of Revenue (CDOR) assesses, audits, and collects independently of the federal government; a clean state record does not stop a federal audit, lien, or wage levy, and a federal adjustment typically triggers a Colorado assessment because the state starts from federal taxable income. Colorado's economy concentrates federal risk in a few identifiable places. The licensed cannabis industry operates under IRC Section 280E, which bars ordinary business deductions for sellers of federally controlled substances and makes dispensaries and cultivators among the most heavily examined businesses in the state, often facing six-figure deficiencies. The Denver and Boulder technology corridor generates equity-compensation issues, including ISO and NSO exercises, AMT exposure, 83(b) timing, and contractor-versus-employee disputes that draw payroll-tax and Form 1099 scrutiny. Colorado Springs' military and defense-contractor community raises combat-zone exclusion, per diem, and contractor 1099 questions. The mountain resort and short-term-rental economy produces tip-reporting gaps, Schedule C underreporting, and rental-income omissions that IRS matching programs flag. Colorado's pass-through entity election under the SALT Parity Act interacts with the federal SALT cap and is a recurring audit flashpoint, and the state's early acceptance of cryptocurrency for tax payments reflects a crypto-heavy population whose exchange reporting the IRS now enforces. The IRS Denver field office pursues 280E examinations, high-income non-filers, Trust Fund Recovery Penalty cases against business owners, and crypto reporting. Segal, Cohen & Landis represents Colorado clients in all of it from Beverly Hills, because federal controversy is conducted before the IRS, IRS Appeals, and the U.S. Tax Court, none of which requires a Colorado address.