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In Colorado, failure to pay tax on gaming proceeds in violation of state tax provisions is a criminal offense. Failure to pay taxes under the Colorado Limited Gaming Act can be a misdemeanor or felony offense, depending on the reason for failing to pay. Felony failure to pay gaming taxes is punishable by up to 3 years in prison and a fine of up to $100,000.
Under the Colorado Limited Gaming Act (CLGA), there is a gaming tax imposed on the adjusted gross proceeds for gaming allowed under state law. This tax rate is set by the Division of Gaming and applies to the nearly 40 casinos in Central City, Black Hawk, and Cripple Creek. The rate of gaming tax is based on a graduated scale ranging from 0.25% to 20% of adjusted gross proceeds.
2. Who is responsible for paying gaming taxes in Colorado?
The Colorado limited gaming casinos in Central City, Black Hawk, and Cripple Creek are required to pay gaming taxes on a monthly basis, with casinos required to file returns by the 15th day of the following month. Failure to pay gaming taxes or fraudulent attempts to evade taxes are criminal offenses in Colorado.1
There are gaming casino establishments operated by the Ute Mountain Ute Tribe in Towaoc and the Southern Ute Indian Tribe in Ignacio. The tribes have agreed to limited gaming with similar limits to the state casinos, but the tribes are not subject to gaming taxation and are not required to report their revenues to the state of Colorado.
The law that criminalizes failure to pay gaming taxes or fraudulent filing applies to any person who violates the gaming tax regulations. For the purpose of this law, a “person” includes “corporate officers having control or supervision of, or responsibility for, completing tax returns or making payments” under the Colorado Limited Gaming Act.2
Individuals may also be responsible for paying income tax on gambling winnings, depending on state and federal tax law. Failure to pay income tax on required gambling income may be subject to fines and penalties under applicable tax laws. For tax reporting requirements for individuals with gambling debts and winnings, talk to your tax attorney or tax advisor.
3. What are the penalties for failure to pay gaming taxes in Colorado?
The penalties for failure to pay gaming taxes depend on the reason for failure to pay and the defendant’s criminal history. Failure to pay taxes due under the Colorado Limited Gaming Act within 30 days after the date the tax becomes due is a class 2 misdemeanor. Similarly, failure to file a return required by the CLGA within 30 days after the return is due is also a class 2 misdemeanor. However, a second or subsequent violation within a 12-month period is considered a class 5 felony.3
The penalties for a conviction of a class 2 misdemeanor for tax violations of the CLGA include up to 120 days in jail and/or a fine of up to $750.
Any person who makes a false or fraudulent return in an attempt to evade or defeat gaming taxes commits a class 5 felony. It is also a class 5 felony to aid, assist, counsel, or advise the preparation of a claim or other false or fraudulent document or return as required for taxation under the CLGA.4
The penalties for conviction of a class 5 felony for tax violations of the CLGA include 1 to 3 years in prison and a fine of up to $100,000. In addition, there is a mandatory parole period of 2 years for a class 5 felony conviction.
Any person who is convicted of failure to pay taxes on gaming proceeds with a prior conviction for certain gambling offenses may be designated a “repeating gambling offender.”5
4. Related Offenses
4.1. Illegal Gambling C.R.S. 18-10-103
Illegal gambling in Colorado involves gaming or gambling outside casinos or other legal venues. The penalties for unlawful gambling may include charges as a petty offense, misdemeanor, or felony. The penalties depend on the type of gambling involved and the defendant’s criminal history. A class 5 felony conviction for professional gambling may include 1 to 3 years in prison and a fine of up to $100,000.
4.2. Money Laundering C.R.S. 18-5-309
Money laundering involves moving money around to try and evade the government’s ability to track the source of the funds. Money laundering may be used to hide money that was gained from illegal gambling. Money laundering is a class 3 felony in Colorado, and the penalties include 4 to 12 years in prison and fines of up to $750,000.
4.3. Racketeering C.R.S. 18-17-104
Racketeering in Colorado is a pattern of criminal activity generally committed by gangs or organized crime. This includes gambling, loan-sharking, fencing stolen property, or drug distribution. Racketeering is a felony, with penalties including up to 24 years in prison and a fine of up to $1 million.
Call us for help…
If you have been accused of failing to pay taxes on gambling winnings or gaming tax evasion, please contact us at Colorado Legal Defense Group.
C.R.S. 18-20-103(1)(b)-(d). Prior to March 1, 2022, failure to pay taxes due under the Colorado Limited Gaming Act within 30 days after the date the tax becomes due was a class 1 misdemeanor carrying 6 to 18 months in jail and/or $500 to $5,000 in fines. SB21-271.