For income tax years commencing on or after January 1, 2018, but prior to January 1, 2022, the bill creates a state income tax credit for a donation a taxpayer makes to a sponsor that is used solely for the costs associated with an employer-assisted eligible activity in a rural area. The bill defines 'sponsor' to mean the Colorado Housing and Finance Authority, a housing authority operated by a county or municipality, or a nonprofit corporation that has been designated as community development corporation under the federal tax code.
The amount of the credit allowed by the bill is 20% of the approved amount of the donation as documented in a form and manner acceptable to the department of revenue (department); except that the aggregate amount of the credit awarded to any one taxpayer is limited to $400 in any one income tax year.
If the amount of the credit allowed exceeds the amount of the taxpayer's income tax liability in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in such income tax year is not allowed as a refund but may be carried forward and applied against the income tax due in each of the 5 succeeding income tax years, but must first be applied against the income tax due for the earliest of the income tax years possible.
A taxpayer claiming the credit allowed by the bill is required to submit, maintain, and record any information that the department may require by rule regarding the taxpayer's donation to the sponsor, including the certificate received evidencing the donation. The bill specifies various verification procedures that the taxpayer and sponsor must follow for the taxpayer to be able to claim the credit.
The bill requires each sponsor that has issued certificates evidencing donations in a calendar year in the cumulative amount of $10,000 or more to report to the general assembly by the deadlines specified in the bill on the overall economic activity, usage, and impact to the state from the employer-assisted eligible activity for which it has certified a donation eligible for a tax credit under the bill.
The bill requires the department and the division of housing within the department of local affairs (division) to promulgate any rules necessary to facilitate the effective implementation of this tax credit. The department and the division may each develop policies and procedures necessary to facilitate the effective implementation of the tax credit.
The bill prohibits a taxpayer from claiming the tax credit under the bill for a donation for which the taxpayer is claiming any other state tax credit or deduction.
By the deadlines specified in the bill, the division is required to provide the department with an electronic report on the taxpayers who have received a tax credit under the bill for the calendar year that conforms to the income tax year for which the credit is allowed. The bill specifies information the report must contain.
The statutory provisions created by the bill are repealed, effective July 1, 2031.
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)