SKR+Co Alert
Colorado is now requiring pre-certification for all enterprise zones
November 14, 2011
Colorado Enterprise Zones – Purpose
Colorado's Enterprise Zone program provides tax incentives to encourage businesses to locate and expand in designated economically distressed areas of the state. There are 16 Enterprise Zones and 2 sub-zones in Colorado. The taxpayer must be located in an enterprise zone to take advantage of many of these credits. To view the EZ Map, Click Here.
Colorado EZ Tax Credits
Here are the available credits:
|
TAX CREDIT |
CREDIT AMOUNT |
FORM |
FACT SHEETS |
|
Investment Tax Credit |
3% of equipment purchases |
||
|
Job Training Tax Credit |
10% of qualified training expenses |
||
|
New Business Facility (NBF) Jobs Credit |
$500 per new job |
||
|
NBF Ag Processing Jobs Credit |
$1,000 total per new a.p. job |
||
|
NBF Health Insurance Credit |
$200 x 2 years per new h.i. job |
||
|
R&D Increase Tax Credit |
3% of increased R&D expenditures |
||
|
Vacant Building Rehabilitation Tax Credit |
25% of rehabilitation expenditures |
||
|
Manufacturing / Mining Sales and Use |
Expanded S&U tax exemption in EZ |
||
|
Commercial Vehicle Investment Tax |
1.5% of commercial vehicle |
||
|
Contribution Tax Credit |
25% of cash (12.5% in-kind) donations |
New EZ Pre-Certification Requirement
If your business will perform an activity on or after January 1, 2012 that will earn an EZ business tax credit, Colorado Revised Statute 39-30-103(7)(a) requires that your business receive pre-certification prior to commencing the activity that will earn the credit. Pre-certification is not required for the Contribution Tax Credit or the Manufacturing/Mining Sales and Use Tax Exemption.
Since pre-certification must be completed before activities are performed (i.e. purchase of equipment), we recommend that all businesses located in an enterprise zone pre-certify by 12/31/2011.
EZ Pre-Certification Details
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Pre-certification will require that a business provides basic information on their business such as the location of the facility that anticipates earning an EZ tax credit, and will require per statute, the business owner or authorized company official to attest to the following: "I, the business owner / authorized company official, certify that I am aware of the Enterprise Zone program, that Enterprise Zone tax credits are a contributing factor to the startup, expansion or relocation of my business in the Enterprise Zone, and I acknowledge that this Pre-certification is for activities that shall commence after the date that Pre-certification is granted by my local Enterprise Zone Administrator through the end of my business’s current income tax year."
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Only the Certification (current process) is required if all activities that earned an EZ tax credit were performed in 2011 or prior.
-
Pre-certification (new process to be completed before activities are performed) and Certification (current and future process to be completed after activities are performed) are both required for activities performed in 2012 or later.
- Instructions and forms for requesting Pre-certification are not available at this time but are expected to be available in December. We will keep you apprised of any further developments.
Electronic EZ Certification Process
Forms DR0074, DR0076 and DR0077 can be certified electronically through the Colorado Web Portal (Click HERE to access.) Please remember to print a copy of the form before submitting. Upon receipt, an email will be sent approving your certificate, which you also need to print. Both the applicable form(s) and approval email must be sent to the Colorado Department of Revenue upon filing your income tax return.
Electronic Filing Requirement of State Income Taxes
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.”
EZ Investment Tax Credits Exceeding $500,000
(Effective January 1, 2011)
Colorado House Bill 10-200 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.”
Our Recommendation
Since pre-certification must be completed before activities are performed (i.e. purchase of equipment), we recommend that all businesses located in an enterprise zone pre-certify by 12/31/2011.
For More Information…
The Colorado Office of Economic Development and International Trade (OEDIT) oversees the EZ program as staff for the Economic Development Commission. For more information on the EZ Program, visit the Colorado Enterprise Zone website (www.advancecolorado.com/ez). As your business consultant and tax advisor, we would also be happy to discuss any questions you might have. Call us at (719) 630-1186 or through our Secure Email.
