2023 Colorado Revised Statutes › Title 39 - TAXATION (§§ 39-1-101 — 39-37-301) › SPECIFIC TAXES (§§ 39-20-101 — 39-37-301) › INCOME TAX (§§ 39-22-101 — 39-22-5508) › Article 22 - Income Tax (§§ 39-22-101 — 39-22-5508) › Part 5 - SPECIAL RULES (§§ 39-22-501 — 39-22-570) › Section 39-22-562 - [Repealed 12/31/2037] Apprenticeship tax credit - tax preference performance statement - legislative declaration - definitions - rules - repeal

(1)
(a)
The general assembly finds and declares that:
(I)
Colorado is committed to accelerating new apprenticeship program growth on a diverse basis, especially in new and emerging industries that have been traditionally underrepresented in registered apprenticeships; and
(II)
Many employers are interested in providing high-quality registered apprenticeships to address their skilled worker shortages but face financial barriers, especially small businesses.
(b)
In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purpose of the tax credit provided for in this section is to induce certain designated behavior by taxpayers and to provide a reduction in income tax liability for certain businesses that hire apprentices. Specifically, this tax expenditure is intended to incentivize the hiring of apprentices and growth of registered apprenticeship programs in new and emerging industries.
(c)
The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(b) of this section based on the number and value of the credits claimed.
(2)
As used in this section, unless the context otherwise requires:
(a)
"Apprentice" has the same meaning as set forth in section 8-15.7-101 (1).
(b)
"Certificate of registration" has the same meaning as set forth in section 8-15.7-101 (6).
(c)
"Credit" means the credit against income tax created in this section.
(d)
"Department" means the department of revenue.
(e)
"Employee" has the same meaning as set forth in section 39-22-604 (2)(a); except that "Employee" includes only those individuals who perform services for the taxpayer for at least one thousand forty hours per income tax year.
(f)
"New and emerging industry" does not include the building and construction trades as described in section 8-15.7-105 (4).
(g)
"Qualified taxpayer" or "taxpayer" means a person subject to tax pursuant to this article 22 that is doing business in this state and that employs an apprentice in the relevant tax year.
(h)
"Registered apprenticeship program" has the same meaning as set forth in section 8-15.7-101 (13).
(i)
"Small business" means a business with fewer than fifty employees.
(j)
"State apprenticeship agency" or "SAA" has the same meaning as set forth in section 8-15.7-101 (16).
(3)
(a)
Subject to the limitations set forth in subsection (3)(b) of this section, for income tax years commencing on or after January 1, 2025, but before January 1, 2035, a qualified taxpayer in a new and emerging industry is allowed an apprenticeship tax credit against the income tax imposed by this article 22 for each apprentice who is an employee of the taxpayer in this state for no less than six months during the taxpayer's income tax year. The credit is equal to up to six thousand three hundred dollars for six months of employment plus up to one thousand fifty dollars for each additional month of employment, for a maximum of twelve thousand six hundred dollars per apprentice per income tax year; except that the taxpayer shall not claim a credit for:
(I)
More than ten apprentices per income tax year;
(II)
The same apprentice for more than two consecutive income tax years; and
(III)
An apprentice for months when the apprentice did not receive wages from the taxpayer.
(b)
A qualified taxpayer must either:
(I)
Have established a registered apprenticeship program in good standing with the SAA and received a certificate of registration from the State apprenticeship agency; or
(II)
Be an employer-partner of a registered apprenticeship program in good standing with the SAA as verified by the qualified taxpayer's inclusion on the Colorado state apprenticeship resource directory pursuant to section 8-83-308.
(c)
To claim the credit, the taxpayer must reserve the credit as set forth in subsection (4) of this section and annually apply for and receive an income tax credit certificate from the state apprenticeship agency pursuant to subsection (5) of this section.
(4)
(a)
To claim a credit pursuant to this section, a taxpayer must submit an application for the reservation of a tax credit to the SAA in the form and manner prescribed by the SAA.
(b)
The SAA shall review all submitted applications to:
(I)
Determine whether the applicant is a qualified taxpayer;
(II)
Determine whether the applicant has complied with the requirements of subsection (3)(b) of this section;
(III)
Determine whether the individual for whom the application is submitted is an apprentice, is an employee, and complies with any standards set forth in article 15.7 of title 8; and
(IV)
Calculate the number of months each prospective apprentice is expected to be employed.
(c)
(I)
Based upon the number of apprentices the qualified taxpayer expects to employ, and the number of months each apprentice is expected to be employed, the SAA may reserve for the benefit of each qualified taxpayer all or part of the credit amount requested by the qualified taxpayer; except that the SAA shall not reserve an amount in excess of the credit allowed by subsection (3)(a) of this section.
(II)
The aggregate amount of credits reserved for all qualified taxpayers must not exceed fifteen million dollars per calendar year. The SAA may reserve credits for the current or any future calendar year based upon the expected employment dates indicated in a qualified taxpayer's application. For a qualified taxpayer whose income tax year is not a calendar year, the reservation is effective for the income tax year that begins during the calendar year for the reservation.
(III)
If, for any calendar year, the aggregate amount of reservations for tax credits the SAA has approved is equal to the total amount of tax credits available for reservation for a current or future calendar year, the SAA shall notify all qualified taxpayers that have submitted applications then awaiting approval or that have submitted applications for approval after the calculation is made that additional approvals of applications for reservations of tax credits shall not be granted for the calendar year. The pending applications must remain pending in the order received for up to two years after the date the original application is received by the SAA and shall be considered for reservations of tax credits in the event that additional credits become available pursuant to subsection (5)(b) of this section.
(d)
(I)
If the SAA reserves credits for the benefit of a qualified taxpayer, the SAA shall notify the qualified taxpayer of the reservation and the amount reserved. The reservation of tax credits does not entitle the qualified taxpayer to an issuance of a tax credit certificate until the qualified taxpayer complies with all of the requirements of this section or standards of the SAA for the issuance of a tax credit certificate.
(II)
The SAA shall notify any qualified taxpayer for which the SAA did not reserve a credit under subsection (4)(c) of this section of its decision in writing. If the SAA determines that a qualified taxpayer's application is incomplete or that the application does not comply with the requirements of this section or the standards established by the SAA, The SAA shall remove the application from the review process and notify the qualified taxpayer in writing of its decision.
(5)
(a)
(I)
A qualified taxpayer shall submit an application to the SAA for an income tax credit certificate to claim the credit allowed by this section on a form and in a manner prescribed by the SAA. The application must include identifying information for each apprentice employed in the state for which the qualified taxpayer is submitting an application for a tax credit, the amount of credit requested, and sufficient information to allow the SAA to make a determination that:
(A)
The taxpayer meets the requirements set forth in this section;
(B)
The apprentice for whom the application is submitted meets the standards set forth in article 15.7 of title 8; and
(C)
The apprentice for whom the application is submitted has not been the subject of a taxpayer's application for more than two income tax years.
(II)
Except as provided in subsection (5)(b)(II) of this section, the SAA:
(A)
May issue one income tax credit certificate per income tax year to each qualified taxpayer that, at a minimum, specifies the taxpayer's identifying information and the total amount of the credit allowed; and
(B)
Shall not issue an income tax credit certificate in excess of the amount reserved for the qualified taxpayer for the calendar year pursuant to subsection (4) of this section.
(b)
If the actual aggregate amount of income tax credit certificates issued for a calendar year is less than the maximum aggregate amount of credits allowed to be reserved for all qualified taxpayers, the SAA shall apply the remaining balance in the following order:
(I)
Reserve the remaining balance for any applications pending in order of priority pursuant to subsection (4)(c)(III) of this section; and
(II)
Issue an additional tax credit certificate up to the amount allowed pursuant to subsection (3)(a) of this section to any qualified taxpayer whose actual credit earned exceeded the amount reserved pursuant to subsection (4) of this section.
(c)
(I)
The SAA shall maintain a database of any information determined necessary by the SAA to evaluate the effectiveness of the income tax credit allowed in this section in meeting the purpose set forth in subsection (1)(b) of this section and shall provide such information, and any other information that may be needed, if available, to the state auditor as part of the state auditor's evaluation of the tax expenditure required by section 39-21-305.
(II)
The SAA shall, in a sufficiently timely manner to allow the department to process returns claiming the income tax credit allowed in this section, provide the department with an electronic report for the preceding tax year listing each qualified taxpayer to which the SAA issued an income tax credit certificate and that includes the following information:
(A)
The taxpayer's name;
(B)
The amount of the income tax credit that the tax credit certificate indicates the taxpayer is eligible to claim; and
(C)
The taxpayer's social security number or the taxpayer's Colorado account number and federal employer identification number.
(III)
(A)
The SAA shall prescribe forms and promulgate rules pursuant to article 4 of title 24 establishing the standards for which an income tax credit certificate under this subsection (5) is issued.
(B)
In establishing the standards required by subsection (5)(c)(III)(A) of this section, the SAA shall obtain input from employers and apprentices on elements of program quality for registered apprenticeship programs in new and emerging industries.
(C)
Qualified taxpayers that have previously claimed the income tax credit and seek to claim the income tax credit in future tax years shall provide information regarding how they have satisfied the standards issued pursuant to subsection (5)(c)(III)(A) of this section related to program quality in their reapplication for the income tax credit.
(IV)
The SAA shall conduct outreach to small businesses to ensure they are aware of the tax credit and provide technical assistance to minimize the administrative burden of submitting an application for the reservation of a tax credit.
(6)
To claim the credit authorized by this section, a taxpayer shall file the income tax credit certificate with the taxpayer's state income tax return. The amount of the credit that the taxpayer may claim pursuant to this section is the amount stated on the income tax credit certificate.
(7)
If a taxpayer claims the credit allowed in this section, the taxpayer shall not claim a credit for the same apprentice pursuant to section 39-22-531, 39-30-105.1, or 39-30.5-105.
(8)
If an income tax credit authorized in this section exceeds the income tax due on the income of the taxpayer for the taxable year, the excess credit shall not be carried forward and must be refunded to the taxpayer.
(9)
This section is repealed, effective December 31, 2037.
Added by 2024 Ch. 164,§ 1, eff. 5/10/2024.
Added by 2024 Ch. 163,§ 1, eff. 5/10/2024.