No. 88-06 AG Alpha No. RV AD AGAQW - November 3, 1988

Waiver of Amount applied to Underpayment of Estimated Tax

Summary
The added amount which the executive director must impose to an underpayment of estimated tax, pursuant to Section 39-22-605(5), C.R.S. (1988 Supp.), at the rate provided in Section 39-21-110.5, C.R.S. (1982) cannot be waived unless the rate imposed is in excess of the amount permitted under Section 39-21-110.5, C.R.S. (1982). If excessive, the excessive director can take action disapproving the excess amount pursuant to Section 39-21-103, C.R.S. (1982 & 1988 Supp.).


FORMAL
OPINION

of

DUANE WOODARD
Attorney General

No. 88-6

AG Alpha No. RV AD AGAQW

November 3, 1988

Amelie A. Buchanan
Deputy Director
Department of Revenue
1375 Sherman Street, No. 404
Denver, Colorado 80261

 

RE: Waiver of Amount applied to Underpayment of Estimated Tax

Dear Ms. Buchanan:

This opinion letter is in response to your letter of October 17, 1988 wherein you ask whether the Executive Director of the Department of Revenue may waive the amount required by Section 39-22-605(5), C.R.S. (1988 Supp.) to be added to the underestimated tax.

 

QUESTION PRESENTED AND CONCLUSION

You ask the following specific question:

May the Executive Director of the Department of Revenue waive the charge provided in Section 39-22-605(5), C.R.S. (1988 Supp.)?

 

My conclusion is "No."

 

ANALYSIS

Section 39-22-605(5), C.R.S. (1988 Supp.) provides that in the event of underpayment of estimated tax due the State of Colorado, as computed pursuant to Section 39-22-605(4), C.R.S. (1988 Supp.), there "shall be added" to the tax due "an amount determined at the rate imposed under section 39-21-110.5 on the amount of underpayment in excess of one thousand dollars...." When used in a statute, the word "shall" "involves a 'mandatory connotation' and hence is the antithesis of discretion or choice." People v. Guenther, 740 P.2d 971, 975 (Colo. 1987); and, is construed to be imperative rather than permissive in nature. Swift v. Smith, 119 Colo. 126, 201 P.2d 609, 614 (Colo. 1948). Moreover, there is an absence of statutory authority for the executive director to waive the added amount imposed under Section 39-22-605(5), C.R.S. (1988 Supp.) at the Section 39-21-110.5, C.R.S. (1982) rate of interest. It is noted that Section 39-26-118(9), C.R.S. (1982), which authorizes the executive director to waive certain penalties and excess interest, is applicable only to articles 21 and 26 of title 39 and not to article 22 wherein the authority for the imposition in issue falls. Likewise, Section 39-22-621(2)(j), C.R.S. (1988 Supp.) does not apply to estimated tax since Section 39-22-621(2)(k), C.R.S. (1982) specifically states that the "provisions of this section shall not apply to any estimated tax required to be paid by or under the provisions of Sections 39-22-605 and 39-22-606."

The use of the term "shall" in Section 39-22-605(5), C.R.S. (1988 Supp.), coupled with the absence of any waiver authority pertaining to that statute, leads me to conclude that if an underpayment occurs and a tax is due under the statute, the executive director must impose, and cannot waive, an amount at the rate specified in Section 39-21-110.5, C.R.S. (1982).

In reaching this conclusion, it is recognized that in the construction of statutes public interest is favored over private interest, see 2-4-201(e), C.R.S. (1980). The legislature has set forth the requirements that taxpayers must follow in the declaration and payment of estimated taxes both as to individual (Section 39-22-605, C.R.S. (1982 & 1988 Supp.) and corporations (Section 39-22-606, C.R.S. (1982)). These statutes are in the public interest. To construe the questioned statute as one that can be waived would be in the private interest and to the detriment of the public. If the taxpayer withholds payments due the state he not only deprives the state of interest on the delinquent payments but is unjustly enriched himself by sound investment of the money due the state.

 

SUMMARY

The added amount which the executive director must impose to an underpayment of estimated tax, pursuant to Section 39-22-605(5), C.R.S. (1988 Supp.), at the rate provided in Section 39-21-110.5, C.R.S. (1982) cannot be waived unless the rate imposed is in excess of the amount permitted under Section 39-21-110.5, C.R.S. (1982). If excessive, the excessive director can take action disapproving the excess amount pursuant to Section 39-21-103, C.R.S. (1982 & 1988 Supp.).

Sincerely,

DUANE WOODARD
Attorney General

DW:4878:wp
AG Alpha No. RV AD AGAQW
AG File No. OLS8805673/AQW

TAXATION AND REVENUE
WAIVERS
INTEREST

Section 39-22-605(5), C.R.S. (1988 Supp.)

REVENUE, DEPT. OF

The Executive Director of the Department of Revenue may not waive the charge provided in Section 39-22-605(5), C.R.S. (1988 Supp.).

Identity Theft

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