C.R.S.
Section 24-46-108
Refundable income tax credits for certain businesses located in the state
- definitions
- repeal
(1)
As used in this section, unless the context otherwise requires:(a)
“Advanced manufacturing” means the use of innovative technologies and processes to enhance existing and create new products, including, but not limited to, production activities that depend on automation, computation, enhanced prototyping, lasers, networking, robotics, sensing, simulation, and software, and other similar activities as may be determined by the commission, in this state.(b)
“ARPA” means the federal “American Rescue Plan Act of 2021”, Pub.L. 117-2, as amended.(c)
“CHIPS Act” means the federal “Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022”, Pub.L. 117-167, as amended.(d)
“Department” means the department of revenue.(e)
“Income tax credit” means an income tax credit allowed to a taxpayer under section 39-30-104, 39-30-105.1, 39-30-105.5, or 39-22-531 (2) and (3)(a)(I)(D).(f)
“Investor” means a partner, shareholder, or member of a tax payer that is a partnership, limited liability company, S corporation, or other similar pass-through entity.(g)
“Office” means the Colorado office of economic development created in section 24-48.5-101.(h)
“Project” means a taxpayer’s advanced manufacturing or semiconductor manufacturing business activities.(i)
“Refund certificate” means a written, conditional approval by the commission that is associated with a taxpayer’s approved project and that sets forth the maximum amount of income tax credits that the taxpayer may claim as a refund in accordance with this section.(j)
Intentionally left blank —Ed.(I)
“Semiconductor manufacturing” means the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors, materials used to manufacture or enhance semiconductors, or semiconductor manufacturing equipment in this state for which a taxpayer may receive federal financial assistance under the CHIPS Act.(II)
The definition of “semiconductor manufacturing” for purposes of this section may be modified or expanded by the commission, including to reflect any differences between the definition in subsection (1)(j)(I) of this section and the definition of “semiconductor manufacturing” that may be used by the United States department of commerce in implementing the CHIPS Act.(k)
“Taxpayer” means a person engaged in advanced manufacturing or semiconductor manufacturing that is subject to tax under article 22 of title 39.(2)
Intentionally left blank —Ed.(a)
Subject to the limitations set forth in subsection (2)(b) of this section, for state fiscal years 2023-24 through 2028-29, the commission may approve and issue a refund certificate if the applicant demonstrates that the applicant is a taxpayer that is engaged in or will engage in a project eligible for an income tax credit. Subject to the conditions in subsection (7) of this section and any other conditions established by the commission, a taxpayer that holds a refund certificate may claim a refund of eighty percent of the income tax credit types listed on the refund certificate that are earned by the taxpayer during the twelve years following the commission’s approval and are not used to offset the taxpayer’s state income taxes due. The limitations on the amount of credit allowed per income tax year set forth in sections 39-30-104 (2)(c) and 39-30-105.5 (2) do not apply to income tax credits refunded under this section. Refunds of the income tax credits claimed pursuant to this section are a reduction in tax revenue.(b)
The commission shall approve refund certificates pursuant to this section subject to the following limitations:(I)
The maximum total amount of income tax credits for which the commission may approve refund tax credit certificates for all taxpayers is fifteen million dollars per fiscal year; except that, if the commission approves refund certificates for less than fifteen million dollars of income tax credits during any fiscal year, the remaining authorized but unencumbered amount of income tax credits is added to the maximum amount of income tax credits for which the commission may approve refund certificates during the next fiscal year;(II)
The maximum total amount of income tax credits for which the commission may approve refund certificates for all taxpayers for all fiscal years from July 1, 2023, through June 30, 2028, is seventy-five million dollars; except that, if the commission has approved refund certificates for less than seventy-five million dollars of income tax credits on June 30, 2028, the commission may approve refund certificates for new and existing applicants equal to the remaining amount through the fiscal year ending June 30, 2029; and(III)
Compliance with the limitations set forth in this subsection (2)(b) shall be calculated based on the total amount of the income tax credits included in the refund certificates and not eighty percent of such amount.(c)
Intentionally left blank —Ed.(I)
A taxpayer that receives a refund certificate shall notify the commission promptly if the project included in the certificate is canceled, modified, or otherwise becomes ineligible for the estimated credit, in which case the refund certificate may be canceled or modified.(II)
A refund certificate may be revoked or modified if a taxpayer that receives a refund certificate does not commence the project approved therein within two years of the commission’s approval of the refund certificate or otherwise fails to meet the terms of the refund certificate.(III)
Notwithstanding the limitations in subsection (2)(b) of this section, if a taxpayer’s refund certificate is canceled or modified pursuant to subsection (2)(c)(I) of this section or revoked or modified pursuant to (2)(c)(II) of this section, the amount of the canceled, revoked, or modified income tax credits shall be available to the commission to use in approving other taxpayers’ applications for a refund certificate.(3)
A taxpayer must apply to the commission for a refund certificate allowed under subsection (2)(a) of this section in accordance with deadlines, policies, and procedures established by the office, in consultation with the commission, as follows:(a)
A taxpayer must submit an application including all information and documentation required for a pending project under this subsection (3) to the commission prior to obtaining precertification of any income tax credit for the project pursuant to section 39-30-103 (7) or 39-36-104 (5)(a) or on or before the first day of the taxpayer’s credit period under section 39-22-531 (1)(d)(II), as applicable; and(b)
An application for a refund certificate must be submitted in a form prescribed by the office and must include:(I)
Each income tax credit type for which the taxpayer intends to request a refund;(II)
A description of the project that will support each income tax credit type, including:(A)
The location of the project;(B)
The investment to be made for the project;(C)
The jobs to be created by the project; and(D)
The anticipated total amount of income tax credits to be generated by the project.(III)
Identification of the type and estimated or actual amount of any additional income tax credits or other financial assistance from any federal, state, or local government agency received, applied for, or intended to be applied for by the taxpayer related to the same project; and(IV)
Any other information the office or the commission may reasonably require for evaluation of the taxpayer’s application for a refund certificate.(c)
Nothing in subsection (3)(b) of this section requires the disclosure to the public of any information that reveals the amount of compensation paid to any individual employee of a business, any Colorado income tax return, any information regarding expenditures on research and development, or other proprietary information of a business included in a taxpayer’s application.(4)
In reviewing applications submitted pursuant to subsection (3)(b) of this section, the commission shall prioritize applications deemed eligible for a refund certificate as follows:(a)
For fiscal years 2023-24 and 2024-25, the commission shall give highest priority to taxpayers engaged in semiconductor manufacturing that have received or are expected to receive matching money under ARPA, the CHIPS Act, or other federal legislation that provides incentives for semiconductor manufacturing; and(b)
For fiscal years 2025-26 through 2028-29, the commission shall give highest priority to taxpayers engaged in advanced manufacturing or semiconductor manufacturing that have received or are expected to receive matching money under ARPA, the CHIPS Act, or other federal legislation that provides incentives for advanced manufacturing or semiconductor manufacturing.(5)
The commission, taking into consideration the priority assessment conducted pursuant to subsection (4) of this section, shall approve or deny applications for refund certificates in its discretion based on the following criteria:(a)
Whether the taxpayer was previously awarded a refund certificate under this section;(b)
The type and amount of all federal, state, and local financial assistance received, applied for, or intended to be applied for by the taxpayer, as disclosed pursuant to subsection (3)(b)(III) of this section, and the manner in which the governmental entity offering the applicable financial assistance has benefitted or may benefit therefrom;(c)
The size of the taxpayer’s current operation in the state relative to the state as a whole and the region of the state in which the taxpayer is based;(d)
Any strategic economic benefits that the taxpayer provides with existing operations to the state or region in terms of supply chain, benefits to other industries, or other spillover benefits; and(e)
Any additional forthcoming economic development benefits that the taxpayer may provide to the state or region based on commitments that the taxpayer has recently made or proposes to make in the near term.(6)
Intentionally left blank —Ed.(a)
The commission may approve all, part, or none of the amount of a taxpayer’s application for a refund certificate made pursuant to subsection (3)(b) of this section. If the commission approves a taxpayer’s application in part, the commission may approve additional refund certificates up to the full amount of the taxpayer’s original application in a subsequent fiscal year through fiscal year 2028-29.(b)
Upon approval by the commission, and after the satisfaction of any contingencies imposed pursuant to subsection (10) of this section, the office shall issue a refund certificate that describes the taxpayer’s approved project, including the information required under subsection (3)(b)(II) of this section, and sets forth the maximum amount of income tax credits that the taxpayer may claim as a refund in accordance with this section.(c)
If a taxpayer receiving a refund certificate pursuant to this section is a partnership, limited liability company, S corporation, or other similar pass-through entity, the taxpayer may allocate the approved maximum total amount of credit which the taxpayer might earn and use to claim a refund in connection with the taxpayer’s project among its investors in any manner agreed to by the investors. The taxpayer shall certify to the office the amount of credit allocated to each investor and the office shall issue refund certificates in the appropriate amounts to each investor. Each investor is allowed to claim a refund of eighty percent of the amount of the credit subject to any restrictions set forth in this section.(7)
To claim a refund in connection with an approved refund certificate, a taxpayer must:(a)
Commence the project approved by the commission in the refund certificate before the refund certificate is canceled, revoked, or modified by the commission pursuant to subsection (2)(c) of this section;(b)
Earn one or more income tax credits in connection with the approved project in accordance with section 39-30-104, 39-30-105.1, 39-30-105.5, or 39-22-531 (2) and (3)(a)(I)(D), not later than twelve years from the date the refund certificate for the income tax credit is approved by the commission;(c)
Apply the income tax credits to the taxpayer’s state income tax liability, if any, for the income tax year in which a refund is claimed;(d)
Submit all required records and information to the department on or before the due date, including extensions, for filing the taxpayer’s state income tax return for the income tax year in which an income tax credit in excess of the amount applied for pursuant to subsection (7)(c) of this section will be refunded, including:(I)
All records and information necessary to claim the income tax credit earned in connection with the taxpayer’s approved project, including the required certification under section 39-30-103 (7) or 39-36-104 (5);(II)
The refund certificate associated with the project through which the taxpayer earned the income tax credit and the amount of the credit;(III)
A refund election statement on a form prescribed by the department; and(IV)
Any additional documentation required by section 39-36-106 (1)(b) or otherwise required by law;(e)
Subject to the limitation in subsection (8) of this section, agree to receive a refund of the eighty percent of the amount of the credit remaining after applying the credit under subsection (7)(c) of this section and forgo the remaining twenty percent of the amount claimed as a refund; and(8)
A taxpayer may not claim cumulative refunds in excess of the maximum total amount of income tax credits that the commission has approved in the refund certificate. Any credit earned in excess of the amount in the refund certificate and forgone under subsection (7)(e) of this section is retained by the taxpayer and may be used in accordance with the statute pursuant to which it was earned.(9)
On or before September 30, 2023, and on or before September 30 of each calendar year thereafter through September 30, 2029, the commission shall provide the department all records and information required by the department to establish that a taxpayer is approved to claim refundable income tax credits up to the maximum total amount approved by the commission in connection with the taxpayer’s project as set forth in the taxpayer’s refund certificate for the preceding calendar year or any fiscal year ending in the preceding calendar year. The report must contain the following information for each taxpayer:(a)
The taxpayer’s name;(b)
The taxpayer’s Colorado account number and federal employer identification number;(c)
Each income tax credit type for which the taxpayer may request a refund, as identified pursuant to subsection (3)(b)(I) of this section and in the taxpayer’s refund certificate;(d)
A description of the taxpayer’s project, including the information from subsection (3)(b)(II), approved in the refund certificate as the basis for the taxpayer’s income tax credit claim; and(e)
The maximum total amount of credit the taxpayer may use to claim a refund pursuant to this section as stated in the refund certificate.(10)
The commission, in consultation with the office, may establish additional policies, procedures, requirements, and guidelines to administer the application process for and approval of refund certificates pursuant to this section including, but not limited to:(a)
A limit on the total refund amount that may be approved by the commission for a single taxpayer in a given year;(b)
A limit on the total refund amount that may be approved by the commission for a single taxpayer for multiple years or all years for which the taxpayer has applied for a refund certificate;(c)
A limit on the total refund amount that may be approved by the commission for a specified semiconductor or advanced manufacturing activity;(d)
The adoption of new or modification of existing policies, procedures, requirements, or guidelines to align with federal statutes, regulations, or guidelines as needed to facilitate taxpayer eligibility for federal financial assistance under ARPA, the CHIPS Act, and other similar federal legislation, including by ensuring that the tax incentives available pursuant to this section qualify as “covered incentives” according to 15 U.S.C. sec. 4651 (3); or(e)
Contingencies that must be satisfied by the taxpayer before the taxpayer can obtain a refund certificate.(11)
This section is repealed, effective January 1, 2045.
Source:
Section 24-46-108 — Refundable income tax credits for certain businesses located in the state - definitions - repeal, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-24.pdf (accessed Oct. 20, 2023).
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