Important 2012 Legislative Changes
During the 2010 Legislative Session, there were several bills that were passed resulting in significant changes to Enterprise Zone Tax Credits and the process by which Enterprise Zone tax forms are certified. The following list provides information on each change, the date the change will take effect and the requirements.
Senate Bill 10-162
(Effective January 1, 2012)
Establishes a requirement that businesses receive pre-certification each year prior to earning EZ business tax credits.
This requirement will take effect for credits that will be earned on or after January 1, 2012.
A business that plans to earn an EZ tax credit must receive pre-certification each year prior to earning the credit and then submit the tax form to their local EZ Administrator for final certification after earning the credit. Note: An EZ tax credit is “earned” when the activity required to receive the credit is completed such as a job is created, an investment is made, an employee is trained, a building is rehabilitated, etc. These activities cannot take place prior to receiving pre-certification to be eligible for an EZ tax credit.
To receive pre-certification, visit www.advancecolorado.com/ez. The business owner or authorized company official will have to fill in the location of their business, provide an electronic signature, then submit. This pre-certification applies to all activity conducted as it pertains to tax forms DR0074, DR0076 and/or DR0077 (depending on which credit will be earned). The local EZ Administrator will verify that the business is in the zone, and if so, electronically approve the form (usually in 1-2 business days). After receiving the pre-certification approval via e-mail, the business may earn an EZ tax credit by performing the activity necessary to receive the tax credit. After performing the activity to earn the EZ tax credit, a business must return to the on-line process, and complete the certification form which is submitted to their local EZ Administrator for final certification. Once a business has received the final approved “certified” e-mail, they may claim the tax credit on their state income taxes through the Department of Revenue.
Pre-certification will include:
1) EZ Administrator verification that the business is in the zone.
2) Business owner certification that they are aware of the EZ program.
3) Business owner certification that the EZ program is a “contributing factor to their start-up, expansion or relocation”.
4) Business owner certification that pre-certification is for activities that shall commence after the EZ Administrator signs the form to pre-certify.
File State Income Taxes Electronically
Requires businesses claiming EZ tax credits to file electronically with the Department of Revenue (DOR).
Once a business has received the final “certified” EZ tax credit email, a business that is claiming an EZ tax credit will be required to file their income taxes electronically, unless the business will experience an “undue hardship because the taxpayer does not have access to a computer, or does not have sufficient internet access, internet capability, or computer knowledge to file income taxes electronically”.
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.
Removes ineffective and broad economic indicators from EZ statute.
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.
Electronic Certification Process
Requires the Office of Economic Development and International Trade (OEDIT) to work with the EDC and Department of Revenue to implement a method for electronic pre-certification and certification prior to January 1, 2013 in order to streamline the process for taxpayers and EZ Administrators. Update: This system has been implemented and a link to the system is available on the EZ homepage at www.advancecolorado.com/ez.
House Bill 10-1285
Commercial trucks, truck tractors, tractors, or semitrailers that meet all of the following requirements as well as associated parts purchased on or after July 1, 2011 shall be deemed to be used solely and exclusively in an EZ if predominantly housed and based in an EZ for 12 months following its purchase:
1) The vehicle is sold as new on or after July 1, 2011, and
2) Is of model year 2010 or later, and
3) Has a gross vehicle weight rating of 54,000+ lbs., and
4) Is designated as Class A personal property per C.R.S. 42-3-106(2)(a), and
5) Is licensed and registered in Colorado.
Commercial vehicles and associated parts, meeting the requirements above are eligible for a State Income tax credit equal to 1.5% of the qualified investment pending certification by the Colorado Economic Development Commission (EDC). Visit the Tax Credits page of our website to view the Fact Sheet and Application.
As noted above, SB 10-162 establishes a requirement that businesses obtain pre-certification prior to earning EZ business tax credits starting January 1, 2012.
Qualifying investment that occur on or after January 1, 2012 requires pre-certification per C.R.S. 39-30-103(7)(a) and the EZ Commercial Vehicle Investment Tax Credit form shall be submitted to OEDIT (not EZ Administrator) for “pre-certification” by the EDC prior to making qualified investments. Then, after the Commercial Vehicle Investment Tax Credit has been “earned” and the qualified investment has been housed and predominantly based in the EZ for 12 months, the form must be submitted to OEDIT for the EDC’s consideration and final form certification.
For more information on the Enterprise Zone, please contact:
Adams County Economic Development
12200 Pecos Street, Suite 100
Westminster, CO 80234
Phone: 303-453-8518 Fax: 303-453-8505