C.R.S. § 39-22-553 — Geothermal electricity generation production tax credit - tax preference performance statement - legislative declaration - definitions - repeal

(1) (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses or individuals by providing a financial incentive for production of geothermal electricity generation and related infrastructure. (b) The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purpose specified in subsection (1)(a) of this section based on the information required to be maintained by and reported to the state auditor by the office pursuant to subsection (4)(b)(I) of this section and based on the number and value of the credits claimed. (2) Definitions. As used in this section, unless the context otherwise requires: (a) Colorado energy office or office means the Colorado energy office created in section 24-38.5-101. (b) Department means the department of revenue. (c) Qualified entity means any of the following people or entities that produce electricity derived from geothermal energy for sale or use: (I) A person engaged in a trade or business that is subject to tax pursuant to this article 22; (II) A person or political subdivision of this state that is exempt from tax pursuant to section 39-22-112 (1); or (III) A tribal government. (d) Tribal government means a federally recognized Indian tribe, including its business operations and wholly owned entities, with reservation lands within the state of Colorado or operating within the state. (3) For income tax years commencing on or after January 1, 2024, but before January 1, 2033, a qualified entity is allowed a credit against the income taxes imposed by this article 22 in an amount equal to three one-thousandths of a dollar per kilowatt hour of geothermal electricity that is produced by the qualified entity in the state in the tax year. In order to claim the credit, the qualified entity shall apply for and receive a tax credit certificate from the office pursuant to subsection (4) of this section. (3.5) The office shall annually review and evaluate the effectiveness of the tax credit and may modify the amounts set forth in subsection (3) of this section. The office shall maintain the current applicable tax credit on its website and shall provide the applicable tax credit in writing to the department no later than December 31, 2024, and each December 31 thereafter through December 31, 2031. (4) (a) A qualified entity shall submit an application to the office for a tax credit certificate to claim the tax credit allowed by this section on a form and in a manner prescribed by the office. The application must include sufficient information to allow the office to determine that the applicant is a qualified entity and to certify the amount of the tax credit for which the tax credit certificate is applied. (b) (I) The office shall maintain a database of any information necessary to evaluate the effectiveness of the tax credit allowed by this section in meeting the purpose set forth in subsection (1)(a) of this section, and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of this tax expenditure pursuant to section 39-21-305. (II) The office shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report of each qualified entity to which the office issues a tax credit certificate for the preceding tax year that includes the following information: (A) The taxpayer's name; (B) The amount of the credit; and (C) The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number. (5) In order to claim the credit authorized by this section, the qualified entity shall file the tax credit certificate with the qualified entity's state income tax return and, if the qualified entity is exempt from tax pursuant to section 39-22-112 (1), the qualified entity shall file a return pursuant to section 39-22-601 (7)(b). The amount of the credit that the qualified entity may claim pursuant to this section is the amount stated on the tax credit certificate. (6) A qualified entity that claims the credit allowed by this section may not claim the credit allowed by section 39-30-104 for the same project. (7) If a credit authorized in this section exceeds the income tax due on the income of the qualified entity for the taxable year, the excess credit may not be carried forward and must be refunded to the qualified entity. (8) This section is repealed, effective December 31, 2038. Source: L. 2023: Entire section added, (HB 23-1272), ch. 167, p. 790, § 7, effective May 11. L. 2024: (2)(c) and (3) amended and (2)(d) and (3.5) added, (SB 24-214), ch. 191, p. 1102, § 17, effective May 17. Cross references: For the legislative declaration in HB 23-1272, see section 1 of chapter 167, Session Laws of Colorado 2023.