Tax Credits
Adams County Enterprise Zone
Adams County Economic Development is the State appointed administrator of the Enterprise Zone territory in Adams County and some portions of Arapahoe County.
Enterprise Zone Overview
The Enterprise Zone is a State of Colorado program which seeks to encourage business in economically distressed geographies. The State of Colorado gives State Income tax credits to businesses located in the Enterprise Zone or who contribute to Enterprise Zone projects to encourage economic growth in the areas that need it the most.
Businesses in the Enterprise Zone may qualify for these nine tax credits:
Enterprise Zone Tax Credits
| Investment Tax Credit (ITC) | 3% of qualified equipment purchases |
| Job Training Credit | 10% of qualified costs |
| New Jobs Credit (NBF) | $500/new job |
| Health Insurance Credit (NBF) | $200/new job |
| New Jobs-Agricultural Processing Credit (NBF) | $500/new job |
| Research & Development Credit | 3% of qualified expenses |
| Vacant Building Rehabilitation Credit | 25% of qualified expenses |
| Contributions | 25% |
| Infrastructure Contributions | 25% |
Tax Credit Information
Colorado's Urban and Rural Enterprise Zone Act of 1986 established a program to encourage new capital investment and job growth in economically distressed areas of the state. The three criteria used to determine these areas are high unemployment rates, slow population growth and low per capita income. Adams County was originally designated in 1988. Companies located in an Enterprise Zone area are eligible for various state income tax credits.
The Adams County zone includes portions of unincorporated Adams County, Arvada, Aurora, Bennett, Brighton, Commerce City, Federal Heights, Northglenn, Thornton and Westminster.
The activities that are eligible for tax credits in a Colorado Enterprise Zone are listed below. For more detailed information, refer to Department of Revenue publication - FYI General 6.
http://www.revenue.state.co.us/fyi/html/generl06.html
Investment Tax Credit
Businesses making investments in tangible personal property, used exclusively in an enterprise zone for at least one year, may claim a credit against their Colorado income taxes equal to 3% of the investment amount. Only equipment purchases qualify for the investment tax credit. Investments in land or structures, or expanding inventory do not qualify.
The credit, which can be taken in any year, is limited and cannot exceed 100% of your state income tax liability up to $5,000 and 50% of your state tax liability above $5,000. If you have more investment tax credit than you can claim in one year, you can carry the unused amount backward up to 3 years or forward up to 12 years.
For more detailed information, refer to Department of Revenue publication - FYI Income 11
http://www.revenue.state.co.us/fyi/html/income11.html.
Job Training Credit
Enterprise zone employers who carry out a qualified job training program for their employees may now claim a tax credit of 10% of eligible training "investment," starting on or after January 1, 1997. A qualified job training program means a structured training or basic education program to improve the job skills of the company's employees. Training may be done on the employer's site or off-site. It may be conducted by the taxpayer or contracted to another entity. The trainees must be working within an enterprise zone. Excess credits may be carried forward for up to 12 years.
For more detailed information, refer to Department of Revenue publication - FYI Income 31
http://www.revenue.state.co.us/fyi/html/income31.html.
New Business Facility Credits
Qualifications for a New Business Facility
You don't have to be a "New Business" to qualify for these credits. Businesses qualifying as a New Business Facility (NBF) can take special job related tax credits. In the case of a leased NBF, the owner of the business qualifies for the tax credit, not the owner of the facility. Change of ownership and/or acquisitions do not qualify as a NBF. These credits include:
- A new jobs credit
- A health insurance credit
- An agricultural processing credit
Businesses may qualify as a NBF any of the following three ways:
- New Colorado Business - Be a newly acquired, constructed or leased facility used by the taxpayer to operate a revenue producing enterprise. This includes any factory, mill, plant, refinery, warehouse, feedlot, building or complex of buildings including land, machinery and equipment located at the facility and used in connection with the facility's operation.
- Qualified Expansion Facility - Expand an existing enterprise zone facility by new investment of at least $1 million; or if less, at least double the taxpayer's investment in the original facility; or if the expansion adds at least 10 employees or a 10% increase (at least one full time employee) over the previous average annual number of employees.
- Qualified Replacement Facility - A replacement business facility is a facility located in an enterprise zone that replaces an old facility located in Colorado, but only if the taxpayer operated the old facility for more than three full tax years of the five tax years immediately preceding the opening of the new facility and investment exceeds $3 million or, if less, 300% of the investment in the old facility.
For more detailed information, see Department of Revenue publication - FYI Income 10
http://www.revenue.state.co.us/fyi/html/income10.html
$500 New Job Tax Credit
To take this credit, businesses must meet the criteria for a NBF described previously. Businesses hiring new employees in connection with a NBF in an enterprise zone may claim a state income tax credit of $500 for each new job. Qualifying facilities may claim the job tax credit each year during the life of the zone for each new job above the maximum number employed in any prior tax year. This credit is claimed on the income tax return filed for the tax period in question. An eligible taxpayer may prorate the credit based on the number of months the new facility is in operation at a rate of $41.67 per new job per month of employment.
For more detailed information, refer to Department of Revenue publication - FYI Income 10
http://www.revenue.state.co.us/fyi/html/income10.html
Employer Sponsored Health Insurance Credit
To take the health insurance credit, businesses must meet the criteria for a NBF. A company can also qualify for an additional credit of $200 for each NBF employee who is insured under a health insurance plan or program provided through the employer. The employer must contribute 50% or more of the total cost of the plan. The taxpayer may only claim this credit for the first two full income tax years after the facility initially qualifies as a NBF. The credit may be carried forward up to 5 years.
For more detailed information, refer to Department of Revenue publication - FYI Income 10
http://www.revenue.state.co.us/fyi/html/income10.html
Agriculture Processing Credit
To take the agricultural processing credit, businesses must meet the criteria for a NBF. This credit is given to any NBF who operates a business within an enterprise zone which adds value through manufacturing or processing agricultural commodities. The taxpayer is allowed an additional credit of $500 for each NBF job.
Only businesses directly engaged in manufacturing or processing agricultural commodities into some form other than that which enters normal agricultural commodity marketing channels qualify for this special incentive. Harvesting, cleaning, packaging, storing, transporting, wholesaling, retailing or otherwise distributing products without changing their form do not qualify.
For more detailed information, refer to Department of Revenue publication - FYI Income 10
http://www.revenue.state.co.us/fyi/html/income10.html
Research and Development Credit
Businesses involved in private expenditures on research and development (R&D) activities in an enterprise zone qualify for a 3% income tax credit. The credit is calculated as 3% of the amount of the increase in the taxpayer's R&D expenditures within the zone over the average of such expenditures conducted during the previous two tax years. The total amount of the credit must be taken over a 4-year period. The taxpayer may claim 25% of the credit in the year the expenditure is made and 25% in each of the following three years. Qualified research must satisfy three types of criteria: It must be technological in nature; be useful in the development of a new or improved product or component of the business; and utilize the process of experimentation.
For more detailed information, refer to Department of Revenue publication - FYI Income 22
http://www.revenue.state.co.us/fyi/html/income22.html
Vacant Building Rehabilitation Credit
A 25% tax credit for eligible expenditures is available for owners or tenants who rehabilitate vacant buildings back into a commercial use within an enterprise zone. To be eligible, a building must be at least 20 years old and completely vacant for at least two years.
A taxpayer must submit a certificate from the enterprise zone administrator and documentation of the qualified expenditures. The credit is limited to $50,000 per building. A separate form is required for this credit, and can be obtained by contacting the enterprise zone administrator.
For more detailed information refer to Department of Revenue publication - FYI Income 24
http://www.revenue.state.co.us/fyi/html/income24.html
Credits for Contributions to Enterprise Zone Projects
Individuals or companies that make monetary or in-kind contributions to an enterprise zone administrator for qualified purposes may take a 25% income tax credit of up to $100,000 per tax year (In-Kind-12.5% up to $50,000). Contributions can be made for marketing of the zone, infrastructure projects, sub-zone activities, homeless shelters or special projects that have been approved be the Economic Development Commission (EDC).
For more detailed information, refer to Department of Revenue publication - FYI Income 23
http://www.revenue.state.co.us/fyi/html/income23.html
Infrastructure Projects
Companies required by local governments to make public infrastructure improvements may make a contribution to the Adams County Enterprise Zone Administrator (ACED) to implement infrastructure improvements within the zone (e.g. water or sewer line extensions, road improvements, etc.) The 25% tax credit is limited to those improvements that will be publicly owned and maintained. ACED must be contacted prior to project initiation. Single user projects do not qualify.
For more detailed information, refer to Department of Revenue publication - FYI Income 23
http://www.revenue.state.co.us/fyi/html/income23.html
FOR MORE INFORMATION ABOUT THE ENTERPRISE ZONE PROGRAM CONTACT THE AGENCIES LISTED BELOW:
Adams County Economic Development
Attn: Brian Levitt, Enterprise Zone Administrator
12050 Pecos Street, Suite 200
Westminster, CO 80234
Phone: 303-450-5106 Fax: 303-252-8230
Email: BLevitt@AdamsCountyED.com
Colorado Office of Local Affairs, EDC
1625 Broadway, #1700
Denver, CO 80202
303-892-3840
www.advancecolorado.com/enterprisezone
Colorado Department of Revenue, Taxpayer Services Division
1375 Sherman Street, Room 204
Denver, CO 80261
303-232-2416
www.taxcolorado.com
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