SALT Report 2481 – The Colorado Department of Revenue has updated its guidance regarding the corporate and sales and use tax incentives related to enterprise zones. An enterprise zone is an economically distressed area of Colorado that offers special tax incentives to businesses that expand or relocate in an approved zone. The purpose of the tax incentives is to create new jobs and investments in the zone.
The updated guidance states that taxpayers are required to include the EZ Carryforward Schedule-Form DR 1366 when filing their original or amended tax return in order to claim an enterprise zone tax credit electronically. However, if the e-filing software does not support Form DR 1366, taxpayers may submit it electronically through Revenue Online using the E-Filer Attachment option.
Colorado enterprise zones offer the following tax incentives to businesses that are located in approved zones:
- Investment Tax Credit for businesses located in a Colorado enterprise zone,
- New Business Facility Jobs Credits for new or expanding business facilities located in an enterprise zone that create new jobs,
- A state sales and use tax exemption for manufacturing and mining equipment used in enterprise zones. This exemption is for equipment used directly in the manufacturing or mining, including oil and gas, process. The exemption applies to state sales and use tax and some state-collected local sales tax. See FYI Sales 10 for more information on the manufacturing equipment exemption and FYI Sales 69 for more information on the mining equipment exemption,
- Research and Development Tax Credit for research and development conducted in an enterprise zone,
- Tax Credit for Private Contributions to Enterprise Zone Administrators,
- Tax Credit for the Rehabilitation of Vacant Commercial Buildings located in an enterprise zone, and
- Qualified Job Training Program Investment Credit for taxpayers who invest in a training program
To claim a credit, the zone administrator must first certify that the business is located within an approved enterprise zone. Once certified, the business will be required to submit a copy of the Enterprise Zone Certification with its tax return and indicate the enterprise zone credit it is taking.
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