Enterprise Zone Legislation
During the 2010 Legislative Session, there were several bills that were passed resulting in significant changes to Enterprise Zone Tax Credits and the process by which Enterprise Zone tax forms are certified. The following list provides information on each change, the date the change will take effect and the requirements.
Senate Bill 10-162
(Effective January 1, 2012)
Pre-certification
Establishes a requirement that businesses receive Pre-certification each year prior to earning EZ business tax credits.
This requirement will take effect for EZ business tax credits that will be earned on or after January 1, 2012. An online system is available to receive Pre-certification and Certification of EZ business tax credits at the www.advancecolorado.com/ez page of this website.
A business that plans to earn an EZ tax credit must receive Pre-certification each year prior to earning the credit and then must receive final Certification from their local EZ Administrator after earning the credit.
Note: An EZ tax credit is "earned" when the activity required to receive the credit is completed such as a job is created, an investment is made, an employee is trained, a building is rehabilitated, etc. These activities cannot take place prior to receiving Pre-certification to be eligible for an EZ tax credit.
Here is the typical process to be completed for activities intended to earn an EZ business tax credit that will occur in 2012 or later:
1) To receive Pre-certification, the business owner or authorized company official will submit a request for Pre-certification. This can be done using the online system available at www.advancecolorado.com/ez.
2) The local EZ Administrator will review the submitted Pre-certification request, and will verify that the business is located in their local EZ and if so, will approve the Pre-certification. The expected processing time is between 3-4 business days. If a Pre-certification request is approved via the online system, an approval email will be sent to the email address provided by the tax preparer with the Pre-certification request. This approval email will provide a unique Pre-certification approval number.
3) After receiving Pre-certification approval, the business may earn an EZ tax credit by performing the activity necessary to receive the tax credit.
4) If the busines performs an activity to earn an EZ tax credit, the business must receive final Certification after performing the activity. This can be done by returning to the online system for final Certification from their local EZ Administrator. The online system will ask for the unique Pre-certification approval number in order to complete the request for final Certification. Once a business has received final Certification they may claim the tax credit on their state income taxes through the Department of Revenue.
Pre-certification Details:
- Only Certification is required if all activities that earned an EZ tax credit were performed in 2011 or prior.
- A taxpayer that completes an activity performed in 2011 or prior, for which the taxpayer intends to claim an Enterprise Zone tax credit shall submit to the EZ Administrator on or before December 31, 2012 any information related to such completed activity that is necessary to receive certification from the EZ Administrator.
- Pre-certification and Certification are both required for activities performed in 2012 or later.
- If your tax year includes activities performed during 2011 and 2012 please complete the Pre-certification process prior to performing the activities that will occur in 2012.
File State Income Taxes Electronically
Requires businesses claiming EZ tax credits to file electronically with the Department of Revenue (DOR).
Once a business has received the final "certified" EZ tax credit form, a business that is claiming an EZ tax credit will be required to file their income taxes electronically, unless the business will experience an "undue hardship because the taxpayer does not have access to a computer, or does not have sufficient internet access, internet capability, or computer knowledge to file income taxes electronically".
Zone Size Limits
Establishes a standard method for calculating a zone’s population and sets the population limit for urban zones at 115,000 persons and for rural zones at 150,000 persons.
Program Evaluation
Removes ineffective and broad economic indicators from EZ statute.
NAICS Coding
Changes industry coding for EZ businesses from the SIC code to the more commonly used NAICS code.
Zone Administrator Fee Policy Oversight
Authorizes zones to charge reasonable fees to Contribution Project Organizations (if desired), and gives authority to the Colorado Economic Development Commission (EDC) to approve fee policies.
Electronic Certification Process
Requires the Office of Economic Development and International Trade (OEDIT) to work with the EDC and Department of Revenue to implement a method for electronic pre-certification and certification prior to January 1, 2013 in order to streamline the process for taxpayers and EZ Administrators. Update: This system has been implemented and a link to the system is available on the EZ homepage at www.advancecolorado.com/ez.
View Bill:
House Bill 10-1200
(Effective January 1, 2011)
Sets a temporary requirement that businesses defer claiming an EZ Investment Tax Credit (ITC) that exceeds $500,000 in years 2011, 2012, and 2013. Businesses are “allowed to claim the deferred credit as an ITC carryover for 12 income tax years following the year the credit was originally allowed plus 1 additional income tax year for each income tax year that the credit was deferred.”
View Bill:
House Bill 10-1285
(Effective July 1, 2011)
Commercial trucks, truck tractors, tractors, or semitrailers that meet all of the following requirements as well as associated parts purchased on or after July 1, 2011 shall be deemed to be used solely and exclusively in an EZ if predominantly housed and based in an EZ for 12 months following its purchase:
1) The vehicle is sold as new on or after July 1, 2011, and
2) Is of model year 2010 or later, and
3) Has a gross vehicle weight rating of 54,000+ lbs., and
4) Is designated as Class A personal property per C.R.S. 42-3-106(2)(a), and
5) Is licensed and registered in Colorado.
Commercial vehicles and associated parts, meeting the requirements above are eligible for a State Income tax credit equal to 1.5% of the qualified investment pending certification by the Colorado Economic Development Commission (EDC). Visit the Tax Credits page of our website to view the Fact Sheet and Application.
As noted above, SB 10-162 establishes a requirement that businesses obtain pre-certification prior to earning EZ business tax credits starting January 1, 2012.
Qualifying investment that occur on or after January 1, 2012 requires pre-certification per C.R.S. 39-30-103(7)(a) and the EZ Commercial Vehicle Investment Tax Credit form shall be submitted to OEDIT (not EZ Administrator) for "pre-certification" by the EDC prior to making qualified investments. Then, after the Commercial Vehicle Investment Tax Credit has been "earned" and the qualified investment has been housed and predominantly based in the EZ for 12 months, the form must be submitted to OEDIT for the EDC's consideration and final form certification.
View Bill: