C.R.S.
Section 12-15-106
Conservation easement tax credit certificate application process
- definitions
- rules
(1)
For purposes of this section:(a)
“Application” means an application for a tax credit certificate submitted pursuant to section 12-15-105 or this section.(b)
“Conservation purpose” means conservation purpose as defined in section 170 (h) of the federal “Internal Revenue Code of 1986”, as amended, and any federal regulations promulgated in connection with that section.(c)
“Credibility” means the results are worthy of belief and are supported by relevant evidence and logic to the degree necessary for the intended use.(d)
“Deficiency” means noncompliance with a requirement for obtaining a tax credit certificate that, unless the noncompliance is remedied, is grounds for the denial of a tax credit certificate application submitted pursuant to this section.(e)
“Director” means the director of the division of conservation or his or her designee.(f)
“Landowner” means the record owner of the surface of the land and, if applicable, owner of the water or water rights beneficially used thereon who creates a conservation easement in gross pursuant to section 38-30.5-104.(g)
“Tax credit certificate” means the conservation easement tax credit certificate issued pursuant to section 12-15-105 and this section.(2)
Intentionally left blank —Ed.(a)
The division shall establish and administer a process by which a landowner seeking to claim an income tax credit for any conservation easement donation made on or after January 1, 2014, must apply for a tax credit certificate as required by section 39-22-522 (2.5) and (2.7). The purpose of the application process is to determine whether a conservation easement donation for which a tax credit will be claimed:(I)
Is a contribution of a qualified real property interest to a qualified organization to be used exclusively for a conservation purpose;(II)
Is substantiated with a qualified appraisal prepared by a qualified appraiser in accordance with the substance and principles of uniform standards of professional appraisal practice or an alternative method acceptable to the division and the commission; and(III)
Complies with the requirements of this section.(b)
The landowner has the burden of proof regarding compliance with all applicable laws, rules, and regulations.(3)
For the purpose of reviewing applications and making determinations regarding the issuance of tax credit certificates, including the dollar amount of the tax credit certificate to be issued:(a)
Division staff shall review each application and advise and make recommendations to the director and the commission regarding the application.(b)
The director has authority and responsibility to determine the credibility of the appraisal. In determining credibility, the director shall consider, at a minimum, compliance with the following requirements:(I)
The appraisal for a conservation easement donation for which a tax credit is claimed pursuant to section 39-22-522 is a qualified appraisal from a qualified appraiser, as defined in section 170 (f) of the federal “Internal Revenue Code of 1986”, as amended, and any federal regulations promulgated in connection with that section;(II)
The appraisal conforms with the substance and principles of the uniform standards of professional appraisal practice promulgated by the Appraisal Standards Board of the Appraisal Foundation and any other provision of law; and(III)
The appraiser holds a valid license as a certified general appraiser in accordance with part 6 of article 10 of this title 12.(IV)
Repealed.(c)
The director has the authority and responsibility to determine compliance with the requirements of section 12-15-104.(d)
The commission has the authority and responsibility to determine whether a conservation easement donation for which a tax credit is claimed pursuant to section 39-22-522 is a qualified conservation contribution as defined in section 170 (h) of the federal “Internal Revenue Code of 1986”, as amended, and any federal regulations promulgated in connection with that section.(4)
The department of revenue is not authorized to disallow a conservation easement tax credit based on any requirements that are under the jurisdiction of the division, the director, or the commission pursuant to this section.(5)
A complete tax credit certificate application must be made by the landowner to the division and must include:(a)
A copy of the final conservation easement appraisal;(b)
A copy of the recorded deed granting the conservation easement;(c)
Documentation supporting the conservation purpose of the easement;(d)
Any other information or documentation the director or the commission deems necessary to make a final determination regarding the application; and(e)
The fee required pursuant to subsection (6) of this section.(6)
A landowner submitting an application for a tax credit certificate pursuant to this section or an application for an optional preliminary advisory opinion pursuant to subsection (14) of this section shall pay the division a fee as prescribed by the division. The application fee for an optional preliminary advisory opinion may be a different dollar amount than the application fee for a tax credit certificate. The fees must be adequate to pay for the administrative costs of the division and the commission in administering the requirements of this section, but not so high as to act as a disincentive to the creation of conservation easements in the state. The state treasurer shall credit the fees collected pursuant to this subsection (6) to the conservation cash fund created in section 12-15-107. On or before January 1, 2014, and on or before each January 1 thereafter, the division shall certify to the general assembly the amount of any fees prescribed by the division pursuant to this subsection (6).(7)
Intentionally left blank —Ed.(a)
If, during the review of an application for a tax credit certificate, the director or the commission identifies any potential deficiencies, the director or commission shall document the potential deficiencies in a letter sent to the landowner by first-class mail. The division shall send letters documenting potential deficiencies to landowners in a timely manner so that the number of days between the date a completed application is received by the division and the mailing date of the division’s letter to the landowner does not exceed one hundred twenty days.(b)
The landowner has sixty days after the mailing date of the division’s letter to address the potential deficiencies identified by the director and the commission and provide additional information or documentation that the director or the commission deems necessary to make a final determination regarding the application.(c)
The director and the commission have ninety days after the date of receipt of any additional information or documentation provided by the landowner to review the information and documentation and make a final determination regarding the application.(d)
The deadlines prescribed by this subsection (7) may be extended upon mutual agreement between the director and the commission and the landowner.(8)
The director or the commission may deny an application if the landowner:(a)
Has not demonstrated to the satisfaction of the director or the commission that the application complies with any requirement of this article 15;(b)
Does not provide the information and documentation required pursuant to this article 15; or(c)
Fails to timely respond to any written request or notice from the division, the director, or the commission.(9)
If the director reasonably believes that any appraisal submitted in accordance with this section is not credible, the director, after consultation with the commission, may request that the landowner, at the landowner’s expense, obtain either a second appraisal or a review of the appraisal submitted with the application from an appraiser who meets the requirements of part 6 of article 10 of this title 12 and is in good standing with the board of real estate appraisers before making a final determination regarding the application.(10)
If the director and the commission do not identify any potential deficiencies with an application, the director and the commission shall approve the application, and the division shall issue a tax credit certificate to the landowner pursuant to section 12-15-105 in a timely manner so that the number of days between the date a completed application is received by the division and the date the tax credit certificate is issued does not exceed one hundred twenty days. Once a tax credit certificate is issued, the landowner may claim and use the tax credit subject to any other applicable procedures and requirements under title 39.(11)
Intentionally left blank —Ed.(a)
If all potential deficiencies that have been identified are subsequently addressed to the satisfaction of the director and the commission, the director and the commission shall approve the application, and the division shall issue a tax credit certificate to the landowner pursuant to section 12-15-105. Once a tax credit certificate is issued, the landowner may claim and use the tax credit subject to any other applicable procedures and requirements under title 39.(b)
If any potential deficiencies that have been identified are not subsequently addressed to the satisfaction of the director and the commission, the division shall issue a written denial of the application to the landowner documenting those deficiencies that were the specific basis for the denial. The division shall date the written denial and send it by first-class mail to the landowner at the address provided by the landowner on the application. The director may act on behalf of the commission for purposes of administering the process for issuing approvals and denials of applications and for administering subsection (12) of this section.(12)
Intentionally left blank —Ed.(a)
The landowner may appeal to the director either the director’s or the commission’s denial of an application, in writing, within thirty days after the issuance of the denial. This written appeal constitutes a request for an administrative hearing.(b)
If the landowner fails to appeal the denial of an application within thirty days after the issuance of the denial, the denial becomes final, and the division shall not issue a tax credit certificate to the landowner.(c)
Administrative hearings must be conducted in accordance with section 24-4-105. At the discretion of the director, hearings may be conducted by an authorized representative of the director or the commission or an administrative law judge from the office of administrative courts in the department of personnel. All hearings must be held in the county where the division is located unless the director designates otherwise. The decision of the director or the commission is subject to judicial review by the court of appeals and is subject to the provisions of section 24-4-106.(d)
In conducting settlement discussions with a landowner, the director and the commission may compromise on any of the deficiencies identified in the application and supporting documentation, including the dollar amount of the tax credit certificate to be issued. The director shall place on file in the division a record of any compromise and the reasons for the compromise.(e)
The director may promulgate rules pursuant to article 4 of title 24 to effectuate the purposes of this subsection (12).(13)
Intentionally left blank —Ed.(a)
Commencing with the 2014 calendar year, and for each calendar year thereafter, the division shall create a report, which shall be made available to the public, containing the following aggregate information:(I)
The total number of tax credit certificate applications received, approved, and denied in accordance with this section, along with average processing times;(II)
For applications approved in accordance with this section:(A)
The total acreage under easement summarized by the allowable conservation purposes as defined in section 170 (h) of the federal “Internal Revenue Code of 1986”, as amended, and any federal regulations promulgated in connection with that section;(B)
The total appraised value of the easements;(C)
The total donated value of the easements; and(D)
The total dollar amount of tax credit certificates issued.(b)
The division may include additional easement-specific information in the public report that, notwithstanding the provisions of this article 15 or any other law to the contrary, would otherwise be publicly available.(c)
The director is authorized to share publicly available information regarding conservation easements with a third-party vendor for the purpose of developing and maintaining a registry of conservation easements in the state with a corresponding map displaying the boundaries of each easement in the state relative to county boundaries and other relevant mapping information. For purposes of this subsection (13)(c), “publicly available information” means any document showing evidence of its recordation in the records of a county clerk and recorder or other information readily available to the general public. Prior to sharing the information, the director shall consult with the commission regarding the appropriate types of information and the methods used for collecting the information. The department of regulatory agencies shall annually report on the information contained in the registry as a part of its presentation to its committee of reference at a hearing held pursuant to section 2-7-203 (2)(a) of the “State Measurement for Accountable, Responsive, and Transparent (SMART) Government Act”. The information to be shared shall include the following:(I)
Any deeds, contracts, or other instruments creating, assigning, or terminating the easement, including the reception numbers on all instruments;(II)
The location and acreage of each easement, delineated by county;(III)
The name of the original grantor of the easement and the name of the original grantee of the easement;(IV)
Whether the holder of the easement is a certified organization pursuant to section 12-15-104;(V)
The conservation purposes of the easement; and(VI)
If a tax credit was issued.(14)
Intentionally left blank —Ed.(a)
In addition to the tax credit certificate application process set forth in this section, a landowner may submit a proposed conservation easement donation to the division to obtain an optional preliminary advisory opinion regarding the transaction. The opinion may address the proposed deed of conservation easement, appraisal, conservation purpose, or other relevant aspect of the transaction.(b)
The division, the director, and the commission shall review the information and documentation provided in a manner consistent with the scope of their authority and responsibilities for reviewing tax credit certificate applications as outlined in subsection (3) of this section and issue either a favorable opinion or a nonfavorable opinion.(c)
The director or the commission may request that the landowner submit additional information or documentation that the director or the commission deems necessary to complete the review and issue an opinion.(d)
A nonfavorable opinion shall set forth any potential deficiencies identified by the director or the commission and that fall within the scope of the director’s and the commission’s review of the conservation easement transaction. The preliminary opinion is advisory only and is not binding for any purpose upon the division, the director, the commission, or the department of revenue.(14.5)
Intentionally left blank —Ed.(a)
The division shall convene a working group in conjunction with the department of law and the department of revenue to develop proposed statutes and regulations for the following:(I)
An alternative method to the appraisal process set forth in section 39-22-522 (3.3) to establish the amount of tax credits for which a qualified conservation easement contribution would be eligible;(II)
A process to provide retroactive tax credits, payments, or refunds to taxpayers who claimed credits pursuant to section 39-22-522 between January 1, 2000, and December 31, 2013, and whose tax credits were denied in whole or in part, including the development of eligibility criteria for receiving such retroactive tax credits, payments, or refunds; and(III)
Recommendations for administering orphaned conservation easements.(b)
The working group shall consist of eight members. The president of the senate, the minority leader of the senate, the speaker of the house of representatives, and the minority leader of the house of representatives shall each appoint two members to the working group prior to June 1, 2019. In making appointments, consideration should be given to appointing individuals who are certified easement holders, taxpayers who have considered conveying a conservation easement or conveyed a conservation easement and claimed a tax credit, conservation easement appraisers, and conservation attorneys. The working group shall convene its first meeting in a hearing room at the state capitol building at 9:00 a.m. on June 25, 2019. The working group shall select a chairperson at the first meeting. At each meeting of the working group, it shall designate the date, place, and time of its next meeting.(c)
The working group shall submit a report to the rural affairs and agriculture committee of the house of representatives and the agriculture and natural resources committee of the senate by no later than December 1, 2019. The report must include any recommendations for legislation or rule-making to address the issues addressed pursuant to this subsection (14.5).(15)
The division may promulgate rules to effectuate the purpose, implementation, and administration of this section pursuant to article 4 of title 24. The authority to promulgate rules includes the authority to:(a)
Define further in rule the administrative processes and requirements, including application processing and review time frames, for obtaining and issuing an optional preliminary advisory opinion pursuant to subsection (14) of this section; and(b)
Adopt best practices, processes, and procedures used by other entities that regularly review conservation easement transactions, including a practice, process, or procedure deeming qualified conservation easement appraisals approved by these entities based on their independent reviews as credible for purposes of the conservation easement tax credit.(16)
Notwithstanding the provisions of the “Colorado Open Records Act”, part 2 of article 72 of title 24, the division, the director, and the commission shall deny the right of public inspection of any documentation or other record related to information obtained as part of an individual landowner’s application for a tax credit certificate or an optional preliminary advisory opinion pursuant to the requirements of this section, including documentation or other records related to administrative hearings and settlement discussions held pursuant to subsection (12) of this section. The division, the director, and the commission may share documentation or other records related to information obtained pursuant to this section with the department of revenue.(17)
Nothing in this section affects any tax credit that is claimed or used pursuant to section 39-22-522 for conservation easement donations occurring prior to January 1, 2014.
Source:
Section 12-15-106 — Conservation easement tax credit certificate application process - definitions - rules, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-12.pdf (accessed Oct. 20, 2023).
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