(1) A reserve, in an amount to be determined periodically by the controller, shall be set aside and maintained by the state treasurer from taxes collected under this article and held by the state treasurer for the prompt payment of all refunds.

(2)

(a) The department of revenue shall pay refunds within the applicable time period specified in paragraph (b) of this subsection (2). For purposes of this subsection (2), the date of filing shall be the date of receipt of any income tax return by the department of revenue; except that the date of filing of any income tax return received during the month of April shall be deemed to be May 1.

(b)

(I) Refunds for income tax returns filed by January 31 of any given year shall be made within fourteen calendar days of the date of filing.

(II) Refunds for income tax returns filed after January 31 but prior to or on the last day of February of any given year shall be made within twenty-one calendar days of the date of filing.

(III) Refunds for income tax returns filed after the last day of February but prior to or on March 31 of any given year shall be made within twenty-eight calendar days of the date of filing.

(IV) Refunds for income tax returns filed after March 31 of any given year shall be made within forty-five calendar days of the date of filing.

(3) If any refund due under this article is not paid when due, interest shall be added thereto at the rate imposed under section 39-21-110.5 from the due date of the refund, as prescribed in subsection (2) of this section, until the refund is mailed to the taxpayer by the department of revenue. In addition to the interest, a penalty equal to five percent of the amount of tax to be refunded shall be added.

(4)

(a) The provisions of subsection (2) of this section shall not apply:

(I) To any return that is being audited;

(II) To any return that may take longer than normal to process due to the mathematical or clerical errors contained in said return;

(III) To unforeseen delays caused by the failure of processing equipment;

(IV) Because of a tax credit allowed in section 39-22-531;

(V) Because the taxpayer claimed an enterprise zone tax credit pursuant to article 30 of this title 39 and the department of revenue is awaiting confirmation from the Colorado office of economic development that the taxpayer is eligible for such credit; or

(VI) To any return where there is a suspicion of identity theft or other refund-related fraud.

(b) The department of revenue shall make a determination, in good faith, whether any of the exceptions set forth in subsection (4)(a) of this section apply.

(5) Repealed.