Withholding tax - transfers of Colorado real property - nonresident transferors.

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(1) Except as otherwise provided in this section, in the case of any conveyance of a Colorado real property interest, the title insurance company or its authorized agent or any attorney, bank, savings and loan association, savings bank, corporation, partnership, association, joint stock company, trust, or unincorporated organization or any combination thereof, acting separately or in concert, that provides closing and settlement services as defined herein shall be required to withhold an amount equal to two percent of the sales price of the Colorado real property interest conveyed or the net proceeds resulting from such conveyance, whichever is less, when:

  1. The transferor is a person and either the return required to be filed with the secretaryof the treasury pursuant to section 6045 (e) of the internal revenue code indicates or the authorization for the disbursement of the funds resulting from such transaction instructs that such funds be disbursed to a transferor with a last-known street address outside the boundaries of this state at the time of the transfer of the title to such Colorado real property interest or to the escrow agent of such transferor; or

  2. (I) The transferor is a corporation which immediately after the transfer of the title tothe Colorado real estate interest has no permanent place of business in Colorado.

(II) For purposes of this section, a corporation has no permanent place of business in Colorado if all of the following apply:

  1. Such corporation is a foreign corporation;

  2. Such corporation does not qualify pursuant to law to transact business in Colorado;and

  3. Such corporation does not maintain and staff a permanent office in Colorado.

(2) No title insurance company or its authorized agent or any attorney, bank, savings and loan association, savings bank, corporation, partnership, association, joint stock company, trust, or unincorporated organization or any combination thereof, acting separately or in concert, that provides closing and settlement services as defined herein shall be required to withhold any amount pursuant to this section:

  1. If the sales price of the Colorado real property conveyed does not exceed one hundred thousand dollars;

  2. When the transferee is a bank or corporate beneficiary under a mortgage or beneficiary under a deed of trust and the Colorado real property interest is acquired in judicial or nonjudicial foreclosure or by deed in lieu of foreclosure;

  3. If the title insurance company or its authorized agent or any attorney, bank, savingsand loan association, savings bank, corporation, partnership, association, joint stock company, trust, or unincorporated organization or any combination thereof, acting separately or in concert, that provides closing and settlement services as defined herein in good faith relies upon a written affirmation executed by the transferor, certifying under penalty of perjury one of the following:

  1. That the transferor, if a person, is a resident of Colorado;

  2. That the transferor, if a corporation, has a permanent place of business in Colorado;

  3. That the Colorado real property being conveyed is the principal residence of thetransferor; or

  4. That the transferor will not owe tax reasonably estimated to be due pursuant to thisarticle from the inclusion of the actual gain required to be recognized on the transaction in the gross income of the transferor.

(3) Any title insurance company or its authorized agent which is required to withhold any amount pursuant to this section and fails to do so shall be liable for the greater of the following amounts for such failure to withhold:

  1. Five hundred dollars;

  2. Ten percent of the amount required to be withheld pursuant to this section, not toexceed two thousand five hundred dollars.

(4) (a) Amounts withheld and payments made in accordance with this section shall be reported and remitted to the department of revenue in such form and at such time as specified by rule and regulation of the executive director. Written affirmations executed pursuant to paragraph (c) of subsection (2) of this section shall be submitted to the department of revenue pursuant to procedures specified by rule and regulation of the executive director.

(b) All of the other provisions of this article shall apply to and be effective as to the provisions of this section to the extent to which they are not inconsistent with this section, and all of the remedies available to the department of revenue for the administration, assessment, enforcement, and collection of tax under other sections of this article and article 21 of this title shall be available to the department of revenue and shall apply to the amounts required to be deducted and withheld pursuant to the provisions of this section, and all of the penalties, both civil and criminal, shall apply to this section.

  1. Whenever a title insurance company or its authorized agent provides escrow servicesas directed by the parties in compliance with the withholding requirements of this section, such title insurance company or its authorized agent shall charge the parties pursuant to the rates in effect at the time and filed with the division of insurance of the department of regulatory agencies as required by law.

  2. For purposes of this section, unless the context otherwise requires:

  1. "Authorized agent" means a title insurance agent, as defined in section 10-11-102 (9),C.R.S., who is responsible for closing and settlement services in the transaction.

  2. "Closing and settlement services" means closing and settlement services as definedin section 10-11-102 (3.5), C.R.S., and section 38-35-125, C.R.S.

  3. "Colorado real property interest" means an interest in real property located in Colorado and defined in section 897 (c)(1)(A)(i) of the internal revenue code.

  4. "Escrow agent" means an agent for the purpose of receiving and transferring funds toa principal.

  5. "Person" means any individual, estate, or trust who may be subject to taxation pursuant to part 1 of this article.

  6. "Sales price" means the sum of all of the following:

  1. The cash paid or to be paid, but shall not include stated or unstated interest or originalissue discount as determined pursuant to sections 1271 to 1275 of the internal revenue code;

  2. The fair market value of other property transferred or to be transferred;

  3. The outstanding amount of any liability assumed by the transferee to which theColorado real property interest is subject immediately before and after the transfer.

(g) "Title insurance company" means the title insurance company, as defined in section 10-11-102 (10), C.R.S., responsible for closing and settlement services in the transaction.

Source: L. 92: Entire section added, p. 2274, § 1, effective July 1. L. 96: (6)(e) amended, p. 337, § 3, effective April 16. L. 2016: (2)(c)(III) amended, (SB 16-189), ch. 210, p. 794, § 111, effective June 6.


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