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 39-22-516.7 - [Effective Until 8/7/2024] Tax credit for innovative motor vehicles - tax preference performance statement - definitions - repeal

(1)
As used in this section, unless the context otherwise requires:
(a)
(I)
(A)
"Actual cost incurred" means the actual cost paid by the purchaser for a used motor vehicle or conversion minus any credits, grants, or rebates, including federal credits, grants, or rebates for which the purchaser is eligible, but excluding the credit specified in this section.
(B)
"Actual cost incurred" means the manufacturer's suggested retail price for a new motor vehicle that a person purchases minus any credits, grants, or rebates, including federal credits, grants, or rebates for which the person is eligible, but excluding the credit specified in this section.
(II)
For purposes of a lease, the "actual cost incurred" means the total of payments contracted in the lease for the motor vehicle minus:
(A)
Any security deposit included in the total of payments;
(B)
The rent charge included in the total of payments;
(C)
Any sales tax included in the total of payments;
(D)
Any titling and registration fees included in the total of payments;
(E)
Any disposition fee included in the total of payments;
(F)
Any administrative fee or any other fee that does not reflect the value of the motor vehicle included in the total of payments; and
(G)
Any credits, grants, or rebates, including federal credits, grants, or rebates for which the lessee or lessor is eligible, but excluding the credit specified in this section.
(b)
"Alternative fuel" has the meaning set forth in section
24-30-1104 (2)(c)(III)(A)
.
(c)
"Battery capacity" means the quantity of electricity that a battery is capable of storing, expressed in kilowatt hours, as measured from a one hundred percent state of charge to a zero percent state of charge.
(d)
"Category 1" means an electric motor vehicle and a plug-in hybrid electric motor vehicle.
(e)
"Category 1 A" means a conversion of a motor vehicle to an electric motor vehicle or a plug-in hybrid electric motor vehicle.
(f) and (g)
Repealed.
(g.5)
"Department" means the department of revenue.
(h) to (j)
Repealed.
(k)
"Electric motor vehicle" or "plug-in hybrid electric motor vehicle" means a motor vehicle that:
(I)
Has a gross vehicle weight rating that does not exceed eight thousand five hundred pounds;
(II)
Has a maximum speed capability of at least fifty-five miles per hour; and
(III)
Is propelled to a significant extent by:
(A)
An electric motor that draws electricity from a battery that has a capacity of not less than four kilowatt hours and is capable of being recharged from an external source of electricity; or
(B)
Power derived from one or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use.
(k.5)
"Financing entity" means the entity that finances the purchase or lease of a category 1 vehicle eligible for a credit allowed by this section.
(l)
"Gross vehicle weight rating" or "GVWR" shall have the same meaning as set forth in section
42-2-402 (6)
, C.R.S.
(m)
"Hybrid motor vehicle" means a motor vehicle with a hybrid propulsion system that operates on both electricity and an alternative fuel or traditional fuel.
(n)
Repealed.
(o)
"Light-duty passenger motor vehicle" means a private passenger motor vehicle, including vans, capable of seating twelve passengers or less; except that the term does not include motor homes as defined in section
42-1-102 (57)
, C.R.S., or motor vehicles designed to travel on three or fewer wheels in contact with the ground.
(p)
"Light-duty truck" means a truck between zero and fourteen thousand pounds GVWR.
(p.5)
"Manufacturer's suggested retail price" has the same meaning as set forth in section
42-1-102 (50)
.
(q)
"Medium-duty truck" means a truck with a gross vehicle weight rating greater than fourteen thousand pounds up to twenty-six thousand pounds.
(r)
(I)
"Motor vehicle" means, for tax years commencing prior to January 1, 2017, a self-propelled vehicle with four wheels, including a truck and a hybrid motor vehicle, that is:
(A)
Titled and registered in the state; and
(B)
Required to be licensed or subject to licensing for operation upon the highways of the state.
(II)
"Motor vehicle" means, for tax years commencing on or after January 1, 2017, a self-propelled vehicle with four wheels, including a truck and a hybrid motor vehicle, that is:
(A)
New, not used, unless the motor vehicle is being converted;
(B)
Titled and registered in the state; and
(C)
Required to be licensed or subject to licensing for operation upon the highways of the state.
(r.1)
"Motor vehicle dealer" has the same meaning as set forth in section
44-20-102 (18)
.
(r.3)
(I)
"Purchaser" means the buyer or the lessee of a category 1 vehicle, but, for income tax years commencing before January 1, 2024, does not include the state or any political subdivision of the state. For tax years commencing on or after January 1, 2017, a lessee seeking to claim a credit allowed in this section must enter into a lease with a term of not less than two years.
(II)
For income tax years commencing on or after January 1, 2024, "purchaser" includes a person or a political subdivision of the state that is exempt from taxation under section
39-22-112 (1)
.
(s)
"Traditional fuel" means a petroleum-based motor fuel commonly used on the highways of the state in the year 2008.
(1.5)
(a)
In accordance with section
39-21-304 (1)
, which requires each bill that extends an expiring 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, specifically the sale and purchase or lease of electric motor vehicles, by providing a reduction in income tax liability to the purchaser or lessee or to a motor vehicle dealer or financing entity in connection with the sale and purchase or lease of an electric motor vehicle.
(b)
The general assembly and the state auditor shall measure the effectiveness of the credit in achieving the purposes specified in subsection (1.5)(a) of this section based on the number and value of credits claimed.
(2)
(a)
With respect to the tax years commencing on or after January 1, 2013, but prior to January 1, 2029, there is allowed to any person a credit against the tax imposed by this article 22, not to exceed the amount specified in subsection (4) of this section, for the purchase or lease of a motor vehicle defined as category 1.
(a.3) to (b)
Repealed.
(c)
With respect to the tax years commencing on or after January 1, 2014, but prior to January 1, 2022, there is allowed to any person a credit against the tax imposed by this article, not to exceed the amount specified in subsection (4) of this section, for the conversion of a motor vehicle defined as category 1 A.
(d)
Repealed.
(e)
(I)
A purchaser may assign the tax credit allowed in this section for the purchase or lease of a category 1 or category 1 A vehicle completed on or after January 1, 2017, but prior to January 1, 2024, to a financing entity as follows:
(A)
The assignment to the financing entity must be completed at the time of purchase or lease by entering into an election statement as set forth in subparagraph (III) of this paragraph (e);
(B)
The purchaser must title and register the vehicle in the state as required by state law;
(C)
The purchaser must assign the tax credit to the financing entity and forfeit the right to claim the tax credit on the purchaser's tax return in exchange for good and valuable consideration; and
(D)
The financing entity shall compensate the purchaser for the full nominal value of the tax credit; except that the financing entity may collect an administrative fee not to exceed one hundred fifty dollars for processing the assignment. The compensation paid to the purchaser is considered a refund of state taxes and is not income.
(II)
Notwithstanding section
39-21-108 (3)
, if a purchaser assigns the tax credit to a financing entity pursuant to this paragraph (e), the financing entity receives the full amount of the tax credit that the purchaser is allowed in this section. Any unpaid balance or unpaid debt of the purchaser may not be credited from the amount of the tax credit allowed in this section.
(III)
To complete the tax credit assignment, the purchaser and the financing entity must enter into an election statement that must:
(A)
Identify the vehicle identification number of the category 1 or category 1 A vehicle for which a credit is allowed in this section; and
(B)
Affirm that the requirements specified in subparagraph (I) of this paragraph (e) were met.
(IV)
The financing entity may authorize an agent or a designee to sign the election statement on its behalf.
(V)
The financing entity shall electronically submit a report containing the information contained in the election statement described in subparagraph (III) of this paragraph (e) to the department of revenue within thirty days of the purchase or lease of a category 1 or category 1 A vehicle in such a form and in such a manner as required by the department.
(VI)
The financing entity shall also file the election statement described in subparagraph (III) of this paragraph (e) with the original tax return for the taxable year in which the category 1 or category 1 A vehicle is purchased or leased.
(VII)
The department of revenue, in consultation with the Colorado energy office created in section
24-38.5-101
, C.R.S., shall develop a model report and election statement no later than December 1, 2016.
(VIII)
This subsection (2)(e) is repealed, effective December 31, 2028.
(f)
(I)
A purchaser may assign the tax credit allowed in this section for the purchase or lease of a category 1 vehicle completed on or after January 1, 2024, to a financing entity or to a motor vehicle dealer as follows:
(A)
The assignment to the financing entity or the motor vehicle dealer must be completed at the time of purchase or lease by entering into an election statement as set forth in subsection (2)(f)(III) of this section;
(B)
The purchaser must title and register the vehicle in the state as required by state law;
(C)
The purchaser must assign the tax credit to the financing entity or the motor vehicle dealer and forfeit the right to claim the tax credit on the purchaser's tax return in exchange for the good and valuable consideration described in subsection (2)(f)(I)(D) of this section; and
(D)
The financing entity or the motor vehicle dealer shall compensate the purchaser for the full nominal value of the tax credit including, if applicable, the amounts allowed pursuant to subsections (4)(a)(XI) and (4)(a.5) of this section; except that the financing entity or the motor vehicle dealer may collect an administrative fee not to exceed two hundred fifty dollars for processing the assignment. The compensation paid to the purchaser is considered a refund of state taxes and is not income.
(II)
Notwithstanding section
39-21-108 (3)
, if a purchaser assigns the tax credit to a financing entity or to a motor vehicle dealer pursuant to this subsection (2)(f), the financing entity or the motor vehicle dealer receives the full amount of the tax credit that the purchaser is allowed in this section. Any unpaid balance or unpaid debt of the purchaser may not be credited from the amount of the tax credit allowed in this section.
(III)
To complete the tax credit assignment, the purchaser and the financing entity or the motor vehicle dealer shall enter into an election statement that:
(A)
Identifies the vehicle identification number of the category 1 vehicle for which a credit is allowed in this section;
(B)
Identifies the manufacturer's suggested retail price of the category 1 vehicle for which a credit is allowed in this section;
(C)
Specifies the value of the credit allowed; and
(D)
Affirms that the requirements specified in subsection (2)(f)(I) of this section were met.
(IV)
The financing entity or the motor vehicle dealer may authorize an agent or a designee to sign the election statement on its behalf.
(V)
For the purchase or lease of a category 1 vehicle completed on or after January 1, 2024, the financing entity or the motor vehicle dealer shall electronically submit a report containing the information contained in the election statement described in subsection (2)(f)(III) of this section to the department on a quarterly basis in a form and manner required by the department for all purchases or leases of a category 1 vehicle completed in the reporting period.
(VI)
The financing entity or the motor vehicle dealer shall maintain the election statement described in subsection (2)(f)(III) of this section and produce it upon request by the department for an audit.
(VII)
For income tax years commencing on or after January 1, 2025, the financing entity or motor vehicle dealer may elect advance payments of credits assigned under this subsection (2)(f) as specified in section
39-22-629
.
(3)
If a motor vehicle is leased, the lessee, not the lessor, is allowed to claim the credit allowed pursuant to this section. The lessee may elect to assign the tax credit allowed pursuant to this section for the lease of a category 1 vehicle to a financing entity or to a motor vehicle dealer as specified in subsections (2)(e) or (2)(f), as applicable, of this section.
(4)
The amount of the credit allowed pursuant to this section is calculated as follows:
(a)
Category 1.
(I)
With respect to the tax years commencing on or after January 1, 2013, but prior to January 1, 2017, the actual cost incurred by the taxpayer during the tax year for purchasing or leasing a category 1 motor vehicle multiplied by the battery capacity of the motor vehicle and divided by one hundred, not to exceed six thousand dollars;
(II)
With respect to the tax years commencing on or after January 1, 2017, but prior to January 1, 2020, five thousand dollars for a purchase or two thousand five hundred dollars for a lease;
(III)
With respect to the tax years commencing on or after January 1, 2020, but prior to January 1, 2021, four thousand dollars for a purchase or two thousand dollars for a lease;
(IV)
With respect to the tax years commencing on or after January 1, 2021, but prior to January 1, 2023, two thousand five hundred dollars for a purchase or one thousand five hundred dollars for a lease;
(V)
With respect to the purchase or lease of a category 1 vehicle sold or leased on or after January 1, 2023, but prior to July 1, 2023, two thousand dollars for a purchase or one thousand five hundred dollars for a lease;
(VI)
Except as otherwise provided in subsection (4)(a)(XI) of this section, with respect to the purchase or lease of a category 1 vehicle sold or leased on or after July 1, 2023, but before January 1, 2025, five thousand dollars for a purchase or a lease;
(VII)
Except as otherwise provided in subsection (4)(a)(XI) of this section, with respect to the purchase or lease of a category 1 vehicle sold or leased in tax years commencing on or after January 1, 2025, but before January 1, 2026, three thousand five hundred dollars;
(VIII)
Except as otherwise provided in subsection (4)(a.7) of this section, with respect to the purchase or lease of a category 1 vehicle sold or leased in tax years commencing on or after January 1, 2026, but before January 1, 2027, one thousand five hundred dollars;
(IX)
Except as otherwise provided in subsection (4)(a.7) of this section, with respect to the purchase or lease of a category 1 vehicle sold or leased in tax years commencing on or after January 1, 2027, but before January 1, 2028, one thousand dollars;
(X)
Except as otherwise provided in subsection (4)(a.7) of this section, with respect to the purchase or lease of a category 1 vehicle sold or leased in tax years commencing on or after January 1, 2028, but before January 1, 2029, five hundred dollars; and
(XI)
With respect to a purchase or lease of a category 1 vehicle sold or leased at a location where the credit allowed in this section may be assigned and if the credit is assigned pursuant to subsection (2)(f) of this section in a tax year that commences on or after January 1, 2024, but before January 1, 2026, an additional amount of six hundred dollars may be claimed by a financing entity or motor vehicle dealer when the purchaser assigns the credit to the financing entity or motor vehicle dealer.
(a.3)
Limitation on credit.
No credit is allowed for a purchase or lease made on or after July 1, 2023, but before January 1, 2029, of a Category 1 vehicle that exceeds a manufacturer's suggested retail price of eighty-thousand dollars.
(a.5)
Category 1 for vehicles under $35,000 threshold.
With respect to the purchase or lease of a category 1 vehicle sold or leased in tax years commencing on or after January 1, 2024, but prior to January 1, 2029, with a manufacturer's suggested retail price below thirty-five thousand dollars there is allowed an additional two thousand five hundred dollars of credit in addition to the amount of credit allowed pursuant to subsection (4)(a) of this section.
(a.7)
If the June 2025 revenue forecast, and each June revenue forecast through the June 2027 revenue forecast as prepared by either legislative council staff or the office of state planning and budgeting, projects that state revenues, as defined in section
24-77-103.6 (6)(c)
, will not increase by at least four percent for the next fiscal year, the amount of the credit allowed pursuant to subsection (4)(a)(VIII), (4)(a)(IX), or (4)(a)(X) of this section for any tax year commencing in the calendar year that begins during said next fiscal year is reduced by fifty percent; except that if the amount of reduced credit is equal to or less than five hundred dollars, then no credit is available for such a tax year.
(b)
Category 1 A.
(I)
With respect to the tax years commencing on or after January 1, 2013, but prior to January 1, 2017, seventy-five percent of the actual cost incurred by the taxpayer during the tax year for the conversion of a motor vehicle defined as category 1 A, not to exceed six thousand dollars;
(II)
With respect to the tax years commencing on or after January 1, 2017, but prior to January 1, 2020, five thousand dollars;
(III)
With respect to the tax years commencing on or after January 1, 2020, but prior to January 1, 2021, four thousand dollars;
(IV)
With respect to the tax years commencing on or after January 1, 2021, but prior to January 1, 2022, two thousand five hundred dollars.
(c) to (g)
Repealed.
(5)
With respect to any model year 2004 and newer hybrid motor vehicle, notwithstanding the limitation set forth in subsection (6) of this section, a taxpayer that converts such a motor vehicle to a category 1 A motor vehicle shall be eligible for the category 1 A credit.
(6)
Except as provided in subsection (5) of this section, and notwithstanding the allowance of credits for any tax years commencing on or after January 1, 2013, but prior to January 1, 2014, under this section and section
39-22-516.5
, no more than one tax credit shall be granted pursuant to this section and sections
39-22-516.5
and
39-22-516.8
for any individual motor vehicle.
(7)
If a credit authorized in this section exceeds the income tax due on the income of the taxpayer for the taxable year, the excess credit may not be carried forward and shall be refunded to the taxpayer.
(8)
With respect to tax years commencing on or after January 1, 2017, the taxpayer claiming a credit allowed in this section shall provide the department of revenue with, and the department shall commence tracking, the vehicle identification number of the motor vehicle for which a credit is claimed as allowed in this section.
(9)
Making the purchaser aware of the income tax credit allowed in this section or helping the purchaser assign the income tax credit to a financing entity or to a motor vehicle dealer as allowed in this section does not rise to the level of providing the purchaser with unauthorized tax advice.
(9.5)
With respect to the tax years commencing on or after January 1, 2019, a transportation network company, as defined in section
40-10.1-602 (3)
, or a third-party vehicle supplier that contracts with a transportation network company to provide category 1 motor vehicles for short-term rental to transportation network company drivers, as defined in section
40-10.1-602 (4)
, that enters into long-term leases with a duration of not less than two years for category 1 motor vehicles shall be treated as having purchased each category 1 motor vehicle for purposes of the credit calculation specified in subsection (4)(a) of this section if the vehicles are offered to transportation network company drivers, as defined in section
40-10.1-602 (4)
, for short-term rental periods of not more than sixty days.
(10)
A purchaser, as set forth in subsection (1)(r.3)(II) of this section, who claims the credit under this section shall file a return pursuant to section
39-22-601 (7)(b)
.
(11)
A purchaser who claims a tax credit under this section or who assigns a tax credit pursuant to subsection (2)(f) of this section is entitled to additionally receive any rebate that is part of an electric vehicle program pursuant to sections
40-3-116
and
40-5-107
.
(12)
This section is repealed, effective December 31, 2033.
Amended by 2023 Ch. 437,§ 1, eff. 8/7/2023.
Amended by 2023 Ch. 167,§ 2, eff. 5/11/2023.
Amended by 2020 Ch. 216, § 67, eff. 6/30/2020.
Amended by 2019 Ch. 386, § 2, eff. 8/2/2019.
L. 2013: Entire section added, (HB 13-1247), ch. 1067, p. 1067, § 2, effective May 15. L. 2014: (1)(h), (1)(i), (1)(j), (1)(n), (2)(a), (2)(d), (4)(e), (4)(f), (4)(g), and (6) amended and (2)(a.5) added, (HB 14-1326), ch. 1674, p. 1674, § 3, effective June 6; (1)(a)(I)(A) amended, (HB 14-1326), ch. 1677, p. 1677, § 4, effective 12/31/2019. L. 2016: (1)(k.5), (1)(r.3), (2)(a.3), (2)(e), (9), and (10) added and (1)(r), (2)(a), (2)(c), (3), (4)(a), (4)(b), (4)(c), (4)(d), and (8) amended, (HB 16-1332), ch. 955, p. 955, § 1, effective June 6. L. 2019: (1)(k)(III), (2)(a), (4)(a)(IV), and (10) amended and (4)(a)(V) and (9.5) added, (HB 19-1159), ch. 3444, p. 3444, § 2, effective August 2. L. 2020: (6) amended, (HB 20-1402), ch. 1058, p. 1058, § 67, effective June 30; (1)(b) amended, (HB 20 -1167), ch. 192, p. 192, § 3, effective September 14.
(1) Subsection (2)(b)(II) provided for the repeal of subsection (2)(b), effective December 31, 2018. (See L. 2013, p. 1067.)
(2) Subsections (1)(h)(II), (1)(i)(II), (1)(j)(II), (1)(n)(II), (2)(a.5)(II), (2)(d)(II), (4)(e)(II), (4)(f)(II), and (4)(g)(II) provided for the repeal of subsections (1)(h), (1)(i), (1)(j), (1)(n), (2)(a.5), (2)(d), (4)(e), (4)(f), and (4)(g), respectively, effective December 31, 2019. (See L. 2014, p. 1674.)
2023 Ch. 437, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
This section is set out more than once due to postponed, multiple, or conflicting amendments.
(1) For the legislative declaration in the 2013 act adding this section, see section 1 of chapter 226, Session Laws of Colorado 2013. (2) For the legislative declaration in HB 14-1326, see section 1 of chapter 357, Session Laws of Colorado 2014. (3) For the legislative declaration in HB 19-1159, see section 1 of chapter 386, Session Laws of Colorado 2019.