C.R.S. § 39-30-105.1 — Credit for new enterprise zone business employees - definitions

(1) (a) (I) For any income tax year commencing on or after January 1, 2014, any taxpayer who operates a business facility in an enterprise zone is allowed a credit against the income tax imposed by article 22 of this title in an amount equal to one thousand one hundred dollars per income tax year for each business facility employee, pursuant to subsection (5) of this section, who is working within the zone, prorated according to the number of months the employee was employed by the taxpayer during the income tax year. An employee whose primary duties consist of operating a commercial motor vehicle with a commercial driver's license shall be deemed to be working one hundred percent within the zone if the employee spends no more than five percent of his or her total time at any business of the employer other than the business within the zone. (II) For any income tax year commencing on or after January 1, 2014, any taxpayer who operates a business facility in an enhanced rural enterprise zone is allowed an additional credit against the income tax imposed by article 22 of this title in an amount equal to two thousand dollars per income tax year for each business facility employee who is working within the enhanced rural enterprise zone, prorated according to the number of months such employee was employed by the taxpayer during the income tax year. (III) A business facility qualifying for the credit is allowed the credit for each subsequent tax year for each business facility employee over the number employed in any prior tax year. Any credit is allowed for a maximum of twelve consecutive months for each business facility employee employed by the taxpayer. (b) In addition to the credit available under paragraph (a) of this subsection (1), for any income tax year commencing on or after January 1, 2014, a taxpayer qualified under said paragraph (a) is allowed for the first two full income tax years while located in an enterprise zone a credit in an amount equal to one thousand dollars for each business facility employee who is insured under a health insurance plan or program provided through his or her employer. To be eligible for the credit, the employer must contribute fifty percent or more of the total cost of a health insurance plan or program, and such plan or program must be in accordance with the provisions of article 8 of title 10 or part 1, 2, 3, or 4 of article 16 of title 10, C.R.S., or be a self-insurance program and include partial or complete coverage for hospital and physician services. (2) For business facilities established in an enterprise zone or an enhanced rural enterprise zone, the number of business facility employees engaged or maintained in employment at the business facility for each taxable year for which the credit is claimed must equal or exceed one person. (3) (a) For any income tax year commencing on or after January 1, 2014, any taxpayer who operates a business within an enterprise zone that adds value through manufacturing or processing to agricultural commodities is allowed in addition to the credit allowed under subsection (1) of this section, while located in the enterprise zone, a credit against the income tax imposed by article 22 of this title in an amount equal to five hundred dollars for each additional business facility employee in excess of the maximum number employed in any prior tax year. (b) For any income tax year commencing on or after January 1, 2014, any taxpayer who operates a business within an enhanced rural enterprise zone that adds value through manufacturing or processing to agricultural commodities is allowed in addition to the credit allowed under paragraph (a) of this subsection (3) a credit against the income tax imposed by article 22 of this title in an amount equal to five hundred dollars for each additional business facility employee in excess of the maximum number employed in any prior tax year. (4) (a) (I) Except as provided in sections 24-46-104.3, 24-46-107, and 24-46-108, for any income tax year commencing on or after January 1, 2014, if the total amount of the credits claimed by a taxpayer pursuant to subsections (1)(a)(I), (1)(b), and (3)(a) of this section exceeds the amount of income taxes due on the income of the taxpayer in the income tax year for which the credits are being claimed, the amount of the credits not used as an offset against income taxes in said income tax year or refunded under section 24-46-108 may be carried forward as a credit against subsequent years' tax liability for a period not exceeding five years and is applied first to the earliest income tax years possible. Any amount of the credit that is not used during said period is not refundable to the taxpayer. (II) Except as provided in sections 24-46-104.3, 24-46-107, and 24-46-108 for any income tax year commencing on or after January 1, 2014, if the total amount of credits claimed by a taxpayer pursuant to subsections (1)(a)(II) and (3)(b) of this section exceeds the amount of income taxes due on the income of the taxpayer in the income tax year for which the credits are being claimed, the amount of credits not used as an offset against income taxes in said income tax year and not used to claim a refund under section 24-46-108 may be carried forward as a credit against subsequent years' tax liability for a period not exceeding seven years and is applied first to the earliest income tax years possible. Any amount of the credit that is not used during said period is not refundable to the taxpayer. (b) For purposes of this section, a partnership, S corporation, limited liability company, or other entity electing not to be taxed as a corporation may pass through the credits earned under this section in any tax year to its participating partners, shareholders, or members, hereinafter referred to as the investors of the entity, in any percentage the entity chooses, up to the amount of the credit earned in the tax year. Credits earned but unclaimed in a tax year for which the entity elects to be taxed as a corporation may not be distributed to investors in a later tax year for which the entity elects not to be taxed as a corporation. In any tax year for which the entity elects not to be taxed as a corporation, all credits passed through to investors may be carried forward at the investor level for the carryover periods specified in this section. (c) For purposes of this section, a taxpayer may only claim the business facility employee credit for employees for whom: (I) The taxpayer withholds social security, medicare, and income taxes under the taxpayer's own federal and state taxpayer identification numbers; or (II) The taxpayer is the work-site employer, as defined in section 8-70-114 (2)(a)(VII), C.R.S., and an employee leasing company, as defined in section 8-70-114 (2)(a)(V), C.R.S., as the employing unit for, or coemployer with, the taxpayer, and withholds social security, medicare, and income taxes under the employee leasing company's own federal and state taxpayer identification numbers. (5) (a) The number of business facility employees during any taxable year is determined by dividing by twelve the sum of the number of business facility employees on the last business day of each month of such taxable year. If the business facility is in operation for less than the entire taxable year, the number of business facility employees is determined by dividing the sum of the number of business facility employees on the last business day of each full calendar month during the portion of the taxable year during which the business facility was in operation by the number of full calendar months during the period. (b) Notwithstanding the provisions of paragraph (a) of this subsection (5), for the purpose of determining the credit allowed by this section in the case of a facility that qualifies as a business facility but is a replacement business facility, the number of business facility employees employed in the operation of the facility is reduced by the average number, determined pursuant to paragraph (a) of this subsection (5), of individuals employed in the operation of the facility that the business facility replaces during the three taxable years preceding the taxable year in which commencement of commercial operations occurs at the business facility. (6) As used in this section, unless the context otherwise requires: (a) Building means only structures within which individuals are customarily employed or that are customarily used to house machinery, equipment, or other property. (b) Business facility means a facility that is operated by the taxpayer in the operation of a revenue-producing enterprise. A facility is not considered a business facility in the hands of the taxpayer if the taxpayer's only activity with respect to the facility is to lease it to another person. If the taxpayer operates only a portion of the facility in the operation of a revenue-producing enterprise and leases another portion of the facility to another person or does not otherwise use the other portions in the operation of a revenue-producing enterprise, the portion operated by the taxpayer in the operation of a revenue-producing enterprise is considered a business facility. (c) Business facility employee means a person employed by the taxpayer in the operation of a business facility during the taxable year for which the credit allowed by this section is claimed. A person is deemed an employee if the person performs duties in connection with the operation of the business facility on: (I) A regular, full-time basis; (II) A part-time basis if the person is customarily performing his or her duties at least twenty hours per week throughout the taxable year; or (III) A seasonal basis if the person performs his or her duties for substantially all of the season customary for the position in which the person is employed. (d) Commencement of commercial operations means the first taxable year that the business facility is first available for use by the taxpayer, or first capable of being used by the taxpayer, in the revenue-producing enterprise in which the taxpayer intends to use the business facility. (e) Facility means any factory, mill, plant, refinery, warehouse, feedlot, building, or complex of buildings located within the state, including the land on which the facility is located and all machinery, equipment, and other real and tangible personal property located at or within the facility and used in connection with the operation of the facility. (f) Revenue-producing enterprise means an enterprise that engages in the following: (I) The production, assembly, fabrication, manufacturing, or processing of any agricultural, mineral, or manufactured product; (II) The storage, warehousing, distribution, or sale of any products of agriculture, mining, or manufacturing; (III) The feeding of livestock at a feedlot; (IV) The operation of laboratories or other facilities for scientific, agricultural, animal husbandry, or industrial research, development, or testing; (V) The performance of services of any type; (VI) The administrative management of any of the activities listed in subparagraphs (I) to (V) of this paragraph (f); or (VII) Any combination of any of the activities referred to in subparagraphs (I) to (VI) of this paragraph (f). Source: L. 2013: Entire section added, (HB 13-1265), ch. 164, p. 526, § 2, effective May 3; (1)(a)(I) and (1)(b) amended, (HB 13-1265), ch. 164, p. 530, § 3, effective May 15. L. 2017: (4)(a) amended, (HB 17-1356), ch. 237, p. 973, § 4, effective May 24. L. 2020: (4)(a)(II) amended, (HB 20-1177), ch. 118, p. 492, § 3, effective September 14. L. 2022: (4)(a) amended, (HB 22-1418), ch. 427, p. 3024, § 5, effective August 10. L. 2023: (4)(a)(I) and (4)(a)(II) amended, (HB 23-1260), ch. 227, p. 1188, § 5, effective May 20.