EZ References

EZ References

Regulations

Enterprise Zone Regulations are on the Colorado Secretary of State website

Statutes

Read the statutes, click here.

Colorado Department of Revenue

The Colorado Department of Revenue (DOR) is the rule making authority for Enterprise Zone tax credits. Questions about eligible investments may be answered through a Letter Ruling. DOR is the authority on tax forms and filings.

Contact DOR

DOR FYIs

These FYIs may not provide the current credit rate, but do contain useful information for calculating net new employees, understanding what business personal property is eligible under the Investment Tax Credit, and other useful information.

Legislative Changes

This section details changes that the Colorado General Assembly has made to the Enterprise Zone (EZ) Program:

Investment Tax Credit limit adjusted  House Bill 13-1265

New Employee Tax Credit no longer dependent on New Business Facility definition  House Bill 13-1142
Eliminated New Business Facility requirements on the 3 NBF credits. Any business in an EZ may earn the tax credit on net new employees.

Raised credit amount on 3 EZ Tax Credits Senate Bill 13-286

  • Places a limit on the amount that can be claimed for the EZ Investment Tax Credits at $750,000 per year.
  • Increases Jobs Credit from $500 to $1,100.
  • Increases Health Insurance Credit from $200 to $1,000.
  • Increases Job Training Tax Credit from 10% to 12%.
  • The statewide boundary review is moved up from 2016 to 2014.

Carry Forward Provision for Renewable Energy Companies
Extends the carry forward provision for the EZ Investment Tax Credit for renewable energy companies from 12 years to 20 years. House Bill 13-1190 Effective retroactively January 1, 2013

Pass Through Organizations and EZ Contribution Projects
Allows intermediary non-profits to accept donations and pass them through to EZ Contribution Projects.  Note: EZ Contribution Projects will need to work with their local EZ Administrator before changing any established local processes or reporting requirements. House Bill 13-1190

Required Review of Enterprise Zone Boundaries
The Executive Director of OEDIT shall review EZ designations at least once every 5 years to determine if EZ boundaries meet at least one of the three statutory criteria for determining economic distress.  Modifications to boundaries that are needed as a result of a review shall not be made in a high unemployment period. Senate Bill 10-162 Pre-Certification

Pre-Certification
Businesses are required to receive pre-certification each year prior to earning EZ business tax credits, and then must receive final certification from their local EZ Administrator after earning the credit.

File State Income Taxes Electronically
Businesses claiming EZ tax credits are required to file electronically with the Department of Revenue.

Zone Size Limits
Establishes a standard method for calculating a zone’s population, and sets the population limit for urban zones at 115,000 persons and for rural zones at 150,000 persons.

Program Evaluation
Removes ineffective and broad economic indicators from EZ statute.

NAICS Coding
Changes industry coding for EZ businesses from the SIC code to the more commonly used NAICS code.

Zone Administrator Fee Policy Oversight
Authorizes zones to charge reasonable fees to Contribution Project Organizations if desired, and gives authority to the Colorado Economic Development Commission (EDC) to approve fee policies.

Legislative History

1986 – Senate Bill 86-95 (Original Urban and Rural Enterprise Zone Act):

  • Provided for a “pilot program” of eight zones.
  • Established eligibility criteria for zone designation, including high unemployment, low per capita income, and slow population growth, as compared to the state average for each criteria.
  • Original tax credits included an investment tax credit, new business facility employee credit, and a higher ceiling for manufacturing equipment sales and use tax exemption than the statewide limit in effect at the time.
  • Program scheduled to sunset in 1990.

1987 – Senate Bill 87-25:

  • Extends the availability of the new business facility employee tax credit till the end of the 1994 fiscal year

1987 – House Bill 87-1274:

  • Amended statute to allow for an increase from 8 zones to 12 zones
  • Provided for additional tax credits and incentives, including a health insurance new employee credit, agricultural processing new employee credit, and authorized local governments to offer additional property and sales tax incentives.
  • Extended Program sunset to 1995.

1988 – Senate Bill 88-31:

  • Provided for an additional Research and Development tax credit.

1989 – House Bill 89-1349:

  • Authorized credits for contributions made to economic development projects and for rehabilitating older, vacant buildings.
  • Extended the new business facility employee tax credit to expanding businesses.
  • Program sunset changed to 1994. Enterprise Zone Program Performance Audit

1990 – House Bill 90-1171:

  • Amended statute to allow for the designation of four additional zones. This brought the total allowable zones to 16.
  • Extended Program sunset to 1998.

1990 – Senate Bill 90-161:

  • Authorized tax credit for contributions to child care facilities.

1991 – Senate Bill 91-131:

  • Sales and use tax exemption for manufacturing machinery extended to mining equipment in Enterprise Zones.

1991 – House Bill 91-1005:

  • Removed sunset clause. The Enterprise Zone Program became a permanent state economic development program. The General Assembly removed the sunset clause to encourage long-term business investments in Enterprise Zones.

1992 – House Bill 92-1026:

  • New business facility employee credit made non-refundable and allowed the credit to carry forward for up to five years.

1994 – House Bill 94-1163:

  • Commercial vehicle drivers based in Enterprise Zones treated as if working full time in zone for purposes of calculating the new business facility employee credit.

1994 – Senate Bill 94-64:

  • Authorized additional credit for contributions made to homeless employment support services programs.

1994 – Senate Bill 94-182:

  • Authorized any county, city or municipality to negotiate with any qualifying taxpayer for a tax credit or incentive payment.

1995 – House Bill 95-1028:

  • Made purchases of machinery or tools for use in manufacturing in excess of $500.00 tax exempt

1995 – Senate Bill 95-221:

  • Authorized any county, city or municipality to negotiate with new or expanding businesses for (1) any tax credit or incentive payment, and (2) a sales tax refund on new machinery or tools.

1996 – Senate Bill 96-193:

  • Shifted authority over zone boundary changes from the Department of Local Affairs to the Economic Development Commission.
  • Provided the Economic Development Commission with the authority to terminate non-qualifying zone areas.
  • Expanded the maximum population allowed in each zone from 50,000 to 80,000.
  • Reduced the contribution tax credit from 50 percent of contribution to 25 percent.
  • Required the Economic Development Commission to annually review all proposed contribution projects.
  • Restricted contribution projects to those projects directly related to job creation or preservation.
  • Authorized a new 10 percent credit for investments in employee job training programs located in zones and a 10 percent credit for enterprise zone employer school-to-work expenses.
  • Extended the carry-forward periods for unused investment tax credits and the new business facility employee health insurance credits.
  • Added a number of reporting requirements for local zone administrators and created transition mechanisms to phase out tax credits from taxpayers located in terminated areas and resulting from the reduction in the contribution credit.

1997 – House Bill 97-1152:

  • The 10 percent school-to-work credit was made available to employers statewide.

1998 – Senate Bill 98-7:

  • Made the contribution credit to homeless employment support services programs permanent. The credit was originally intended to expire in 1998.

1998 – Senate Bill 98-154:

  • The 25 percent credit for contributions to promote child care was expanded statewide.

1999 – Senate Bill 99-033 (Legislative Audit Committee Bill):

  • Established a minimum 5-year cycle for zone boundary review by the Economic Development Commission, beginning with the availability of 2000 Census socioeconomic data.
  • Authorized the Economic Development Commission to only review new or modified proposals for designation as an enterprise zone contribution project, rather than annually re-approving all projects.
  • Increased Enterprise Zone reporting requirements.
  • Beginning September 1, 2001 and every two years thereafter, required the State Auditor to review the Department of Local Affairs’ annual report to the General Assembly.
  • Required the State Auditor to evaluate the implementation and effectiveness of the Program at least every five years.

2000 – Senate Bill 00-99 (Office of Economic Development Reorganization Bill):

  • Created the Colorado Office of Economic Development within the Governor’s Office.
  • Transferred the rights, powers and functions of the Economic Development Commission, which was located within the Department of Local Affairs, to the Colorado Office of Economic Development.
  • Created the Colorado Economic Development Commission within the Colorado Office of Economic Development.
  • Authorizes the Colorado Office of Economic Development to execute certain functions related to Enterprise Zone designation.

2002 – House Bill 02-1161:

  • Created Enhanced Rural Enterprise Zones.
  • Authorized increased tax credits for the new business facility employee and agricultural new business facility employee credits for businesses located in counties within existing enterprise zones and meeting specified criteria.
  • Increased maximum population limit within rural enterprise zones from 80,000 to 100,000.
  • Added “community development” as a category of projects which are eligible for the contribution tax credit.
  • Made enterprise zone certification forms completed by taxpayers public records.
  • Created a new-business tax credit for Enhanced Rural Enterprise Zones.

2002 – House Bill 02-1399:

  • Repealed requirement that within 12 months after the release of 2000 Census socioeconomic data and every five years thereafter, that the Department of Local Affairs establish criteria, procedures, and a termination schedule for zones that no longer meet the criteria.
  • Repealed the requirement that the Colorado Economic Development Commission terminate zones based on recommendations by the Department of Local Affairs.
  • Extended maximum period that credits earned by taxpayers in terminated areas could be used to 10 years.

2004 – Senate Bill 04-003:

  • Eliminated the requirement that the Office of the State Auditor conduct a two year review of the Department of Local Affairs’ annual report and added a requirement that the Department of Local Affairs make an annual presentation to the Legislative Audit Committee reviewing and summarizing the information contained in the Department of Local Affairs’ annual report.

2005 – House Bill 05-1048:

  • Limited a Special District’s ability to enter into an agreement for a rehabilitation of vacant buildings tax credit to instances when the taxpayer enters into such an agreement with the municipality.

2007 – House Bill 07- 1027:

  • Made the economic development contribution tax credit available beginning January 1, 1989. The credit was formerly available beginning January 1, 2000.

2007 – House Bill 07-1312:

  • Made the new business facility employee tax credit available to the business where the employee worked, even if an employee leasing company withheld the taxes from that employee’s paycheck.

2008 – Senate Bill 08-107:

  • Eliminates the requirement that the state auditor has to perform an audit every 5 years.

2008 – House Bill 08-1305:

  • Transferred the responsibility of administering the program from Department of Local Affairs to the Office of Economic Development and International Trade.

2009 – Senate Bill 09-234:

  • Directs the Economic Development Commission to recommend criteria for changes in boundaries or new zones
  • Requires commission to submit a report to the general assembly with recommendations in regards to the enterprise zone program.

2010 – Senate Bill 10-162:

  • Increase population for urban enterprise zone to 115,000 people and 150,000 people for rural enterprise zones.
  • Starting in 2012, a taxpayer is required to complete a pre-certification process prior to beginning activity for which a taxpayer could earn credits for.
  • Enterprise Zone Administrators must create a policy and have that policy approved by the EDC to collect a fee for processing contributions for contribution projects.

2010 – House Bill 10-1200:

  • A taxpayer may only claim a the Investment Tax Credit in the amount of $500,000 in one year for the 2011,2012 and 2013 income tax years. A taxpayer is required to defer any ITC credit in excess of $500,000 for any tax year starting in 2014.  Investment Tax Credits can now be carried forward for up to 12 years from the year the credit was earned.

2012 – House Bill 12-1241:

  • Created a review task force for the effectiveness of the Enterprise Zone Program.

2013 – Senate Bill 13-286:

  • Extends the carry forward period for investments in renewable energy generation to 22 years from the date of the investment.

2013 – House Bill 13-1142:

  • Repeals the enterprise zone task force.
  • Requires the Economic Development Commission review Enterprise Zone designations at least once every 10 years.
  • Clarifies that the amount a tax payer may use against their tax liability in a single year does not limit the amount of tax credit an individual or entity can earn or carry forward.
  • Allows the taxpayer to appeal to the commissions for a credit in excess of the $750,000 limit.\
  • Requires EDC to post information yearly regarding certified investment tax credits on OEDIT’s website.
  • Increases the net new employee tax credit from $550 to $1,100 starting on January 1st, 2014.
  • Increase the tax credit for employers who provide health insurance to their employees from $200 to $1,000.
  • – House Bill 13-1190:
  • Allows taxpayers to make the donation to an intermediary nonprofit organization if such organization is obligated to disburse the contribution as directed by the taxpayer to a recipient nonprofit organization.

2013 – House Bill 13-1265:

  • Removes the requirement for companies to meet the “new business facility” definition to receive the New Business Employees Tax Credit.

2014 – House Bill 14-1163:

  • Limits the amount of tax credits one can claim in a given tax year from the investment tax credit to $750,000.
  • Allows a carry forward period of 14 years from the year the tax credit was earned.

2015 – House Bill 15-1219:

  • Creates 80% cash refund for investments made in renewable energy generation for investments that have been fully installed by the end of 2020.

2017 – House Bill 17-1356:

  • Allows certain businesses that make a $100 million strategic capital investment to make some of their tax credits transferable.
    • Enterprise zone income tax credit, Income tax credit for new EZ business employees, and Research & Development tax credit
EZ References