(1) New business income tax credit. (a) (I) If a new business locates in a rural jump-start zone during the income tax years commencing on or after January 1, 2016, but before January 1, 2026, and the commission has approved the new business for the rural jump-start zone program benefits as specified in section 39-30.5-104 (7)(a), then except as provided in subsection (1)(a)(II) of this section, the new business is entitled to receive an annual income tax credit in an amount equal to one hundred percent of the income taxes imposed by article 22 of this title 39 on the income derived from its activities in the rural jump-start zone for four consecutive income tax years beginning with the first income tax year designated by the commission in the first credit certificate. The commission shall conduct an annual review to verify that the new business continues to meet the requirements set forth in this article 30.5 and shall issue a credit certificate to the new business for every income tax year during the four-year period only if the commission is satisfied the requirements are being met.
(II) A new business may seek an extension of the four-year benefits period specified in subsection (1)(a)(I) of this section by completing a written application to the commission. The extension may not exceed an additional four years. The application for extension must include an explanation of the new business' need for the extension and any other information the commission deems necessary. In deciding whether to grant the extension, the commission must consider the state of the economy in the rural jump-start zone, the estimated demand for tax credits allowed in this section for other new businesses, and the importance of these credits in incentivizing the new business. The extension application must be considered at a regularly scheduled meeting of the commission where the public is allowed to comment.
To claim the income tax credit allowed in this section, the new business shall attach acopy of the credit certificate to its state income tax return. No tax credit is allowed under this section unless the new business provides the copy of the credit certificate with its filed state income tax return.
If a new business has income both from operations within the rural jump-start zoneand operations outside of the rural jump-start zone, the new business shall apportion its income between the operations within and outside the rural jump-start zone in accordance with rules promulgated by the department in order to calculate the amount of income tax credit. Such rules shall calculate the value of the credit, as nearly as practicable, to be equal to the tax due on the income generated by the new business that relates to its activities in the rural jump-start zone on the basis of the new business' property and payroll in the rural jump-start zone relative to its property and payroll everywhere.
The commission shall, in a sufficiently timely manner to allow the department toprocess returns claiming the income tax credits allowed by this section, provide the department with an electronic report of each new business that the commission approved for the rural jumpstart zone program benefits as specified in section 39-30.5-104 (7)(a) for the preceding calendar year that includes the following information:
The taxpayer's name; and
The taxpayer's social security number or the taxpayer's Colorado account numberand federal employer identification number.
(e) If a new business receiving an income tax credit allowed in this subsection (1) is a partnership, limited liability company, S corporation, or similar pass-through entity, the commission shall issue credit certificates that allocate the credit among the new business' partners, shareholders, members, or other constituent entities in accordance with their ownership interests. The new business shall certify to the commission, and the commission shall provide to the department no later than the January 15 following each income tax year for which the new business is claiming a credit, the identity and ownership percentage, including such identifying information as the department may require, of each partner, shareholder, member, or other constituent entity of the new business.
(2) New hire income tax credit. (a) (I) Except as provided in section 39-30.5-104 (7)(b)(II) and subsection (2)(a)(II) of this section, if a new hire is employed by a new business, and the commission has approved the new business for the rural jump-start zone program benefits as specified in section 39-30.5-104 (7)(a), for income tax years commencing on or after January 1, 2016, but before January 1, 2026, new hires are entitled to receive an income tax credit in an amount equal to one hundred percent of the income taxes imposed by article 22 of this title 39 on the new hire's wages paid by the new business for work performed in the rural jump-start zone for four consecutive income tax years beginning with the first income tax year in which the new hire is employed by the new business. The commission shall conduct an annual review to verify that the new hire and the new business continue to meet the requirements set forth in this article 30.5 and shall issue a credit certificate to the new business for each new hire for every income tax year during the four-year period only if the commission is satisfied the requirements are being met.
(II) A new business may seek an extension of the four-year benefits period specified in subsection (2)(a)(I) of this section by completing a written application to the commission. The extension may not exceed an additional four years. The application for extension must include an explanation of the new business' need for the extension and any other information the commission deems necessary. In deciding whether to grant the extension, the commission must consider the state of the economy in the rural jump-start zone, the estimated demand for tax credits allowed in this section for other new businesses, and the importance of these credits in incentivizing the new business. The extension application must be considered at a regularly scheduled meeting of the commission where the public is allowed to comment.
To claim the income tax credit allowed in this section, the new hire shall attach acopy of the credit certificate to the new hire's state income tax return. No tax credit is allowed under this section unless the new hire provides the copy of the credit certificate with his or her filed state income tax return.
The commission shall, in a sufficiently timely manner to allow the department toprocess returns claiming the credit allowed by this section, provide the department with an electronic report of each new hire receiving a credit certificate as allowed in this section for the preceding calendar year that includes the following information:
The new hire's name; and
The new hire's social security number.
(3) New business sales and use tax refund. (a) Each new business is eligible for a refund for all sales and use taxes imposed under parts 1 and 2 of article 26 of this title 39 on the purchase of all tangible personal property acquired by the new business and used exclusively within the rural jump-start zone. Except as provided in subsection (3)(b) of this section, the new business is eligible for the refund allowed in this subsection (3)(a) for four consecutive years beginning with the date the commission approved the new business for the rural jump-start zone program benefits as specified in section 39-30.5-104 (7)(a).
A new business may seek an extension of the four-year period specified in subsection(3)(a) of this section by completing a written application to the commission. The extension may not exceed an additional four years. The application for extension must include an explanation of the new business' need for the extension and any other information the commission deems necessary. In deciding whether to grant the extension, the commission must consider the state of the economy in the rural jump-start zone, the estimated demand for sales and use tax refunds allowed in this section for other new businesses, and the importance of the refund in incentivizing the new business. The extension application must be considered at a regularly scheduled meeting of the commission where the public is allowed to comment.
The commission shall provide the department with a list of every new business eligible for the sales and use tax refund allowed in this subsection (3).
(4) Restrictions on other credits. Notwithstanding any law to the contrary, if a new business claims the rural jump-start zone program benefits allowed in this section, the new business may not claim any other tax incentive that the new business is eligible for in this title as a result of establishing the new business in the state, including tax incentives for the new hires hired by the new business.
Source: L. 2015: Entire article added, (SB 15-282), ch. 186, p. 614, § 1, effective May 13. L. 2020: (1)(a), (2)(a), (3)(a), and (3)(b) amended, (HB 20-1003), ch. 234, p. 1134, § 4, effective September 14.
Editor's note: Section 7(2) of chapter 234 (HB 20-1003), Session Laws of Colorado 2020, provides that the act changing this section applies to applications submitted on or after September 14, 2020.