C.R.S. § 39-36-104 — Zones established - zone administrator - review - termination

(1) (a) For income tax years commencing on or after January 1, 2023, but before January 1, 2036, any municipality, county, or group of contiguous municipalities or counties may propose an area of such municipality, county, or group of municipalities or counties to be designated as a CHIPS zone in accordance with the policies and procedures established by the office and pursuant to this article 36. (b) To propose an area for designation as a CHIPS zone, a local government shall submit a development plan to the director. The plan must include the following items: (I) The boundaries of the proposed zone; (II) The proposed zone's potential for semiconductor manufacturing business development and job creation; (III) How the proposed zone will support and be consistent with maintenance of the area's economy; and (IV) Any other pertinent information the director or the commission may require, which may include information related to local planning, capacity, and infrastructure. (2) (a) The commission, after consultation with the office, may approve the designation of a CHIPS zone. (b) All decisions concerning the designation or termination of a CHIPS zone or any portion of a CHIPS zone shall be made by the commission upon the recommendation of the office. (3) (a) The director, or the director's designee, shall serve as the zone administrator for all approved CHIPS zones. The commission shall work with the zone administrator to ensure that each zone has economic development objectives with outcomes that can be measured. (b) The zone administrator shall submit an annual report to the commission summarizing the zone administrator's review of documentation, including the most recent statistics available for taxpayers claiming CHIPS zone credits, on: (I) The number of semiconductor manufacturing jobs created in the zone; (II) The number of such jobs retained in the zone; (III) The average annual compensation level, including benefits, of the semiconductor manufacturing jobs created or retained within the zone; (IV) An analysis of capital investment in the zone, including the amount of investment in qualifying property for which tax credits are claimed pursuant to section 39-30-104; (V) The number of business facility employees for which tax credits are claimed pursuant to section 39-30-105.1; (VI) The amount of investment tax credits claimed pursuant to section 39-30-104 and the amount of credits for employees claimed pursuant to section 39-30-105.1; (VII) The number and amount of tax credits based on expenditures for research and experimental activities claimed pursuant to section 39-30-105.5; and (VIII) Any other information reasonably required by the commission to evaluate the effectiveness of each zone in accomplishing the economic objectives of the zone. (c) Notwithstanding the requirement in section 24-1-136 (11)(a)(I), the director, or the director's designee, on behalf of the commission, shall submit an annual report to the general assembly on or before November 1, 2023, and on or before November 1 of each calendar year thereafter through November 1, 2036, summarizing the information submitted by the zone administrator to the commission each year pursuant to subsection (3)(b) of this section. The director, or the director's designee, on behalf of the commission shall make an annual presentation to the legislative audit committee that reviews and summarizes the information in the report submitted to the general assembly pursuant to this subsection (3)(c). (d) The state auditor shall submit a report to the governor and the general assembly, at the discretion of the state auditor and the legislative audit committee, evaluating the implementation of the CHIPS zone program, making recommendations for statutory changes, if any, and including any information requested by the governor or the general assembly. The evaluation must be based upon the data included in the annual report submitted by the director on behalf of the commission to the general assembly pursuant to subsection (3)(c) of this section and objective, verifiable data submitted by the zone administrator and maintained by the office or obtained from the department. The report must also include information concerning the number and amount of tax credits claimed and allowed under the program. For purposes of preparing the report required by this subsection (3)(d), the state auditor shall have access to all records and documents applicable to the program, whether maintained by the commission, office, local governments, or the zone administrator. (e) Taxpayers claiming CHIPS zone credits shall provide information reasonably required by the zone administrator, the office, or the commission to evaluate the effectiveness of each zone in accomplishing the measurable economic development objectives to be achieved in the zone. (4) (a) Subject to the requirements of subsection (5) of this section, every taxpayer that performs an act in a CHIPS zone that would qualify for the income tax credit under section 39-30-104, 39-30-105.1, or 39-30-105.5 if the act was performed in an enterprise zone, created pursuant to section 39-30-103 or 39-30-103.2, is allowed the credit pursuant to the corresponding section and this article 36 with respect to that act. (b) Notwithstanding subsection (4)(a) of this section or any other provision in this article 36, a taxpayer may not claim an income tax credit pursuant to this article 36 for performing an act in an enterprise zone for which the taxpayer is allowed to claim an income tax credit pursuant to article 30 of this title 39. (5) (a) Before a taxpayer engages in any activity in a CHIPS zone for which the taxpayer intends to claim an income tax credit pursuant to section 39-30-104, 39-30-105.1, or 39-30-105.5, an authorized company official of the taxpayer's business or the taxpayer who is the owner of the business must submit a precertification form to the CHIPS zone administrator as specified in subsection (3)(a) of this section in accordance with the precertification process set forth in section 39-30-103 (7). (b) (I) A taxpayer that engages in an activity in a CHIPS zone that was precertified pursuant to subsection (5)(a) of this section for which the taxpayer intends to claim an income tax credit pursuant to section 39-30-104, 39-30-105.1, or 39-30-105.5, must submit to the CHIPS zone administrator all necessary records and information to establish that the taxpayer is entitled to the income tax credit and all documentation required to be included in the CHIPS zone administrator's annual report pursuant to subsections (3)(b)(I) through (3)(b)(VII) of this section. (II) The CHIPS zone administrator, taking into consideration the economic development objectives established pursuant to subsection (3)(a) of this section for the zone in which the taxpayer engaged in the activity to be certified, shall approve or deny the taxpayer's certification request in writing within thirty days of its submission. (c) A taxpayer shall submit the approved certification from the CHIPS zone administrator, including all information required under subsections (5)(a) and (5)(b) of this section, along with any additional documentation required under section 39-36-106 (1)(b) or otherwise required by law, to the department no later than the due date, including extensions, for filing the taxpayer's state income tax return for the tax year in which a tax credit allowed under this article 36 is claimed. (6) (a) Notwithstanding subsection (2)(b) of this section, all CHIPS zones approved by the commission pursuant to subsection (2)(a) of this section, terminate automatically on December 31, 2040. (b) A taxpayer that completes an activity in a CHIPS zone that was precertified pursuant to subsection (5)(a) of this section prior to the date of termination of the CHIPS zone under subsection (6)(a) of this section may seek certification to claim an income tax credit pursuant to section 39-30-104 or 39-30-105.1 in accordance with the process set forth in section 39-30-103 (6)(a). Nothing in this subsection (6)(b) authorizes the commission to grant tax benefits that have been repealed by the general assembly or to grant tax benefits in excess of the limits of established law. Source: L. 2023: Entire article added, (HB 23-1260), ch. 227, p. 1191, § 7, effective May 20.