42A1891CEA76B228872584410072FF7E Hearing Summary

Mr. Standley introduced the Agricultural Lease Deduction. Discussion ensued regarding the expiration of the expenditure and whether it should be a deduction or credit.

Mr. Standley introduced the Huger Relief Income Tax Credit, as well as the Crop and Livestock Contribution Corporate Income Tax Credit, which were reviewed together, the first of which is expiring in January 2020 and neither of which are widely taken.

Ms. Colin explained the nature of the effectiveness category and Mr. Standley introduced the sacramental wine excise tax exemption, and the different treatment of different groups - supply store versus liquor store purchases.

Mr. Standley discussed the Fraternal Society Exemption and explained how the tax applies to the insurance policies they sell on a non-profit basis.

Mr. Standley introduced the Insurance Premium Tax Expenditures and the types of taxes it is subject to and not. A discussion ensued regarding the application of the expenditure, as well as how the revenue impact was derived from not paying income tax.

Mr. Standley discussed the Child Care Expense Credit and the Low Income Child Care Expense Credit , which were reviewed together and are tied to the same federal tax credits. A discussion regarding the fiscal impacts of restructuring the credit ensued, particularly on specific income brackets.

Mr. Pierce Lively, from the Office of Legislative Legal Services, was called to the table to discuss House Bill 19-1164.  During the discussion, Mr. Greg Sobetski, from LCS, came to the table to discuss HB 18-1208 and its fiscal impact..

Mr. Standley continued with a discussion of the On-Demand Aircraft Used Outside State Exemption. He explained that the exemption has already expired, but that it previously had exempted purchases of these aircraft from the state sales and use tax. OSA identified only two taxpayers who could have benefitted from this exemption, but neither taxpayer appears to have taken advantage of the exemption during the period for which it was in effect. He explained that other on-demand air carriers would not have qualified for the exemption because they operated only within the state. A bill to modify the credit, HB 18-1283, was passed by the General Assembly, but vetoed by Governor Hickenlooper following the 2018 session.

Mr. Standley introduced the Historic Property Preservation Credit, which is set to expire on January 1, 2020. This credit and the similar Preservation of Historic Structures Credit have different eligibility requirements, and OSA suggests that the General Assembly may consider harmonizing the requirements to allow taxpayers to qualify for both credits.

Mr. Standley proceeded to discuss the Deduction for Wages and Salaries Due to Internal Revenue Code Section 280C. Under that section, taxpayers who claim one of the federal credits listed in section 280C are required to add-back the share of the business income that they would have otherwise deducted. Colorado allows these taxpayers to access the federal deduction that they are not allowed to access at the federal revenue while also claiming the credits in section 280C. He suggested that the expenditure may be broadened to incorporate other business types than are currently included, or that the General Assembly may wish to broaden the deduction to incorporate the entire foregone federal deduction, not merely the portion related to wage and salary expenses.

Mr. Standley continued with a discussion of the State Income Tax Refund Deduction for Individuals, Estates, and Trusts. This allows state income taxpayers to deduct the amount of their state income tax refund from their federal taxable income when computing their Colorado taxable income. The deduction is limited to $10,000 for individuals, estates, and trusts, though no equivalent cap applies for corporations. OSA suggests that the General Assembly may want to revisit this limitation.

Mr. Standley introduced the Non-Profit Transit Agency Fuel Tax Exemption. This expenditure exempts liquefied petroleum gas and natural gas that is used by non-profit transit agencies. OSA suggests that the General Assembly may want to revisit the expenditure since there are very few vehicles to which the exemption applies. Currently, no non-profit transit agencies operate vehicles powered by liquefied petroleum gas, and transit vehicles using natural gas often use blended natural gas products, which do not qualify for the exemption. OSA suggests that the exemption could even be broadened to include all fuel types at a relatively low fiscal cost.

Committee members thanked representatives of the OSA for their work on the tax expenditure evaluations and for their presentations to the committee.