HB 22-1418

HB 22-1418, which has been signed into law, extends tax credit carry-forward periods for certain businesses in Colorado that were heavily impacted by the pandemic. This means companies operating in strategic industries that faced significant financial difficulties due to COVID-19 can apply for a five-year extension on unused job growth and enterprise zone tax credits that would normally expire between 2021 and 2025. However, this doesn’t include contributions made specifically to implement economic development plans. The Economic Development Commission will review applications based on eligibility criteria and economic development commitments from the businesses applying for extensions. The total amount of extended tax credits is capped at $0 for the first two years, then increases to $10 million in year three, and $15 million per year for the last two years of the extension period. This bill aims to support struggling industries by providing financial relief through tax credit carry-forwards.

Official Summary

The act allows a taxpayer who operates in a strategic industry disproportionately impacted by the COVID-19 pandemic and who experienced significant financial hardship due to the COVID-19 pandemic to apply to the economic development commission (commission) for a 5-year extension of the allowable carry-forward period for unused Colorado job growth incentive tax credits and unused enterprise zone tax credits that would otherwise expire between January 1, 2021, and December 31, 2025; except that the tax credit for contributions to enterprise zone administrators to implement economic development plans is not eligible for the 5-year carry-forward extension. The act requires the commission, in consultation with the office of economic development, to establish a process for accepting, reviewing, and approving one-time applications by taxpayers for the extended carry-forward period on a first come, first served, rolling basis subject to taxpayers meeting certain eligibility requirements, which, in the commission's discretion, may include additional economic development commitments to the state. The act caps the total amount of tax credits allowed to be carried forward in the extended period at zero dollars for the first 2 years in the 5-year period, $10 million for the third year, and $15 million per year for the fourth and fifth years. $18,412 is appropriated from the general fund for the 2022-23 state fiscal year to the office of the governor for use by economic development programs. (Note: This summary applies to this bill as enacted.)

Votes