| Summary |
The bill creates new and modifies existing state tax incentives to
maximize federal government funding for taxpayers engaged in
semiconductor and advanced manufacturing in Colorado. Section 1 of the
bill creates a refund mechanism, available from fiscal year 2023-24
through fiscal year 2028-29, that allows a taxpayer engaged in
semiconductor or advanced manufacturing to apply for conditional
approval of one or more types of income tax credits based on a specified
project in the state and includes the maximum amount of credit for which
the taxpayer may claim a refund of 80% . The income tax credit types that
may be the basis for such a refund are:
•
The three enterprise zone credits for qualified investments,
business facility employees, and expenditures for research
and experimental activities;
•
The Colorado job growth incentive income tax credit; and
•
Three semiconductor manufacturing zone (CHIPS zone)
credits for qualified investments, business facility
employees, and expenditures for research and experimental
activities, which zones are created in Section 5.
Semiconductor and advanced manufacturers must apply to the Colorado
economic development commission (commission) for a refund certificate
approving their project and setting the maximum amount of income tax
credits that the manufacturer may claim as a refund in connection with the
project. Approved projects must timely commence and credits must be
earned within twelve years of approval by the commission. In reviewing
applications, the commission must prioritize taxpayers engaged in
semiconductor or advanced manufacturing that have received or applied
to receive matching funds under the American Rescue Plan Act of
2021, the Creating Helpful Incentives to Produce Semiconductors and
Science Act of 2022 (CHIPS Act), or other similar federal legislation.
The total amount of all refund certificates approved by the
commission cannot exceed $15 million per fiscal year; except that, if less
than $15 million is approved at the end of any fiscal year, the remaining
amount is available for approval in the next fiscal year. The total amount
of all refund certificates approved by the commission for all fiscal years
from July 1, 2023, through June 30, 2029, cannot exceed $75 million.
Section 2 creates, within the office of economic development
(office), a temporary task force comprised of state legislators,
representatives of the office, and citizens with industry experience to
study the effectiveness of financial incentives and other resources
intended to attract and promote the development of advanced
manufacturing and other science, technology, engineering, or math
(STEM) companies in Colorado during the 2023 legislative interim. The
task force is required to report its findings to the general assembly and the
governor by a specified date.
Sections 3 through 5 amend the enterprise zone income tax
credits for qualified investments, business facility employees, and
research and experimental activities to incorporate the refund mechanism
created in section 1.
Section 6 creates the CHIPS zone tax credit program. Similar to
the enterprise zone tax credit program, a local government may propose
an area for designation as a CHIPS zone, which designation may promote
the local economy through incentivizing businesses to locate in the area.
A taxpayer located in a CHIPS zone may be eligible to claim an income
tax credit under existing enterprise zone statutes for the taxpayer's
qualified investments, business facility employees, or research and
experimental activities. However, the tax benefits of CHIPS zones are
only available to taxpayers engaged in semiconductor manufacturing, as
that term is defined under the CHIPS Act.
All CHIPS zone tax credits must be precertified by the CHIPS
zone administrator. All such credits may be used to offset a taxpayer's
liability or carried forward for a period not to exceed 12 years. Or, if the
credits are included in a refund certificate approved by the commission
pursuant to section 1, they may be used to claim a refund of 80% of the
total amount of the credits.
CHIPS zones may be modified or terminated in the discretion of
the commission between income tax years 2023 and 2040; however, all
CHIPS zones will terminate as a matter of law on December 31, 2040.
Section 7 modifies the Colorado job growth incentive tax credit to
provide for an award of credit to taxpayers engaged in an advanced
manufacturing or semiconductor manufacturing project that brings a net
job growth of a least 20 jobs with an average yearly wage of at least 75%
of the average yearly wage of the county in which the taxpayer is located.
Such taxpayers are the only subset of recipients of the Colorado job
growth incentive tax credit that may pursue a refund in accordance with
section 1.
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