Does Colorado Accept Federal Extension for Partnerships?

Navigating tax obligations for partnerships involves both federal and state requirements. Many partnerships seek extensions to file their tax returns, providing additional time to prepare documentation. While a federal extension offers relief at the national level, partnerships often wonder how this impacts their state-level filing duties in Colorado. Understanding Colorado’s specific rules for partnership tax extensions is important for compliance and avoiding penalties.

Colorado’s Approach to Partnership Federal Extensions

Colorado offers an automatic extension for partnerships to file their state income tax returns. If a federal extension is properly filed with the Internal Revenue Service (IRS) for a partnership (using IRS Form 7004), Colorado grants a corresponding six-month extension for the state return. For calendar year filers, the original filing deadline for the Colorado Partnership and S Corporation Tax Return (Form DR 0106) is April 15th, and this automatic extension moves it to October 15th. This extension applies to the time to file the return, not the time to pay any taxes owed.

Even with an extension to file, any tax liability must be paid by the original due date to avoid penalties and interest. For partnerships, Colorado requires the filing of Form DR 0106, the Partnership and S Corporation Tax Return. For tax years beginning on or after January 1, 2022, partnerships must also provide Colorado K-1s (Form DR 0106K) for each partner. If no tax payment is due, a separate state extension form is not required, as the extension to file is automatically granted.

Obtaining a Colorado Partnership Extension

Securing a Colorado partnership extension is straightforward due to the state’s automatic extension policy. For partnerships that need to make an extension payment, Colorado provides Form DR 0158-N, “Automatic Filing Extension for Composite Nonresident Income Tax Return,” or Form DR 0106EP for estimated payments. These forms are used to submit any tax payment that may be due by the original filing deadline, even if the return itself is not yet prepared.

Partnerships can submit extension payments and forms through the Colorado Department of Revenue’s online portal, Revenue Online. Alternatively, payments can be mailed to the Colorado Department of Revenue with the appropriate voucher. When mailing a payment with Form DR 0158-N, it is important to include the partnership’s Colorado Account Number or Federal Employer Identification Number (FEIN) on the check or money order.

Key Dates and Financial Obligations

To avoid penalties, partnerships must pay at least 90% of their tax liability by the original due date. If this threshold is not met, penalties and interest are assessed on the underpaid amount. Interest accrues from the original due date until the tax is paid, and penalty rates can reach up to 12% for failure to pay. Estimated tax payments for partnerships, especially those filing composite returns or electing entity-level taxation under the SALT Parity Act, are due quarterly on April 15, June 15, September 15, and December 15. These payments can be made using Form DR 0106EP or through Revenue Online.