To make the election for tax years commencing on or after January 1, 2022, but prior to January 1, 2026, a partnership or S corporation should check the applicable box on its Colorado Partnership and S Corporation and Composite Nonresident Income Tax Return (DR 0106). A partnership or S corporation that wishes to make the election prior to filing their return may do so by filing the SALT Parity Act Election Form (DR 1705). Forms and instructions are available on the Business Income Tax Forms web page.
Partnerships and S corporations must complete a Colorado K-1 (DR 0106K) for each of its partners or shareholders for each tax year. The partnership or S corporation must file the completed Colorado K-1s with the Department. Filing instructions are available on the Filing Requirement Changes for Partnerships and S Corporations web page. The partnership or S corporation must also furnish each partner and shareholder with a copy of the Colorado K-1 reporting their share of income, deductions, modifications, and credits.
An electing pass-through entity is not required to file a Colorado Nonresident Partner or Shareholder Agreement (DR 0107) or remit payment with a Statement of Colorado Tax Remittance for Nonresident Partner or Shareholder (DR 0108) for the tax year with respect to any nonresident partners or shareholders. Additionally, an electing pass-through entity may not file a composite return for its nonresident partners or shareholders for the tax year of the election. Each partner or shareholder must file their own Colorado income tax return.