"Since the taxpayer had negative income, I just deleted the Colorado return since as an non resident they would not have to file."

If you have something to add, you can always add a new post.  Adding new information after the fact (without any reference to your edit) confuses others who may come here for help with similar questions in the future.

In any case, your client would be required to file a CO return if he/she has CO-source income and is required to file a federal return.  Penalty for willful failure to file is the greater of $75 or 100% of the tax due.

Your statement about your client not having a CO filing requirement, based on what you've told us so far, is not correct.  If your client decides not to file after having been informed of the potential penalty, that's your client's call.