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January 26, 2024 SB 24-016
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0543
Sen. Zenzinger; Smallwood
Rep. Snyder
Date:
Bill Status:
Fiscal Analyst:
January 26, 2024
Senate Finance
Elizabeth Ramey | 303-866-3522
elizabeth.ramey@coleg.gov
Bill Topic: TAX CREDITS FOR CONTRIBUTIONS VIA INTERMEDIARIES
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
Starting in tax year 2024, the bill expands the donations that would qualify for certain
state income tax credits, and changes the administration of the state homeless
contribution tax credit. Beginning in the current fiscal year, the bill reduces state
revenue. Beginning in FY 2024-25, the bill increases state expenditures.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $113,937 to multiple agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under SB 24-016
Current Year
FY 2023-24
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue General Fund ($239,000) ($478,000) ($478,000)
Total Revenue ($239,000) ($478,000) ($478,000)
Expenditures General Fund - $113,937 $90,257
Centrally Appropriated - $27,171 $25,532
Total Expenditures - $141,108 $115,789
Total FTE - 1.6 FTE 1.5 FTE
Transfers - - -
Other Budget Impacts TABOR Refund ($239,000) ($478,000) ($478,000)
General Fund Reserve - $17,090 $13,539
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January 26, 2024 SB 24-016
Summary of Legislation
Starting in tax year 2024, the bill permits a taxpayer to claim an income tax credit for donations
made through an intermediary that forwards the contribution to a qualified recipient charitable
organization, if the taxpayer could otherwise claim the credit for making the contribution
directly to the recipient organization. An intermediary is a charitable organization that collects
charitable contributions from donors and forwards them to charitable recipient organizations.
The bill allows a tax credit certificate for the state homeless contribution tax credit (HCTC) to
include only the last four digits, rather than all digits, of a taxpayer’s social security number.
Background
Several state income tax credits are available for taxpayers who make certain donations. Under
current law, the bill expands the types of donations that may qualify for the HCTC and the child
care contribution tax credit, although the bill is expected to have little to no impact on the child
care contribution tax credit.
Homeless contribution tax credit. For tax years 2023 through 2026, the HCTC is available to
taxpayers who make a monetary or in-kind contribution to an approved nonprofit organization
or to an approved project administered by the nonprofit organization. Qualifying organizations
or projects include those to assist individuals or families experiencing homelessness or the risk
of homelessness and is equal to 25 percent of the total value of the contribution for projects
located in a nonrural area and 30 percent of the total contribution for projects in rural areas. The
credit is non-refundable, meaning that the amount claimed cannot exceed a taxpayer’s income
tax liability for a given year, but may be carried forward for five years. The homeless contribution
tax credit is administered by the Division of Housing (DOH) in the Department of Local Affairs
(DOLA).
Prior to tax year 2023, a similar income tax credit, administered by the Office of Economic
Development and International Trade, was available for taxpayers making monetary or in-kind
contributions to assist individuals or families experiencing or at risk of homelessness in Colorado
enterprise zones. Donations made through intermediaries were eligible for the tax credit.
House Bill 22-1083 made the HCTC available statewide, and shifted its administration to DOH.
Contributions made through intermediaries were deemed no longer eligible to claim the HCTC.
However, DOH began approving HCTC contributions made via intermediary nonprofit
organizations as eligible for the HCTC in October 2023 for tax year 2023 only. Examples of
intermediary nonprofit organizations include Colorado Gives 365, Mile High United Way, and
Community Shares of Colorado.
According to the DOH, there were 81 organizations that qualified for the HCTC as of
December 20, 2023. For tax year 2023, 3,150 donors contributed a total of $14.6 million for total
estimated tax credits of $3.7 million.
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January 26, 2024 SB 24-016
Child care contribution tax credit. The state child care contribution tax credit is currently
available through tax year 2027 to taxpayers who make a monetary contribution to promote
child care in Colorado. The credit is nonrefundable and is equal to the lesser of 50 percent of the
total contribution, up to $100,000 per taxpayer per year or the taxpayer’s actual income tax
liability. Qualifying contributions include those to facilities, schools, or programs that provide
child care, programs that train child care providers, and grant or loan programs for parents
requiring financial assistance for child care purposes.
Assumptions
The fiscal note assumes the bill will have minimal or no impact on the donations eligible to claim
the child care contribution tax credit based on the nature of qualifying organizations as well as
the unchanged administration of the tax credit.
Based on available data on credit-eligible and ineligible donations in tax year 2023, the fiscal
note assumes that the bill will impact some recurring donors newly eligible to claim the HCTC in
tax years 2024 through 2026 who were made ineligible to claim the HCTC in tax year 2023 due
to the administrative change which removed eligibility for donations made through
intermediaries for most of the tax year. The fiscal note assumes that 405 donors will be once
again eligible to claim the HCTC, with an average credit amount of $1,180 for a total impact in
tax year 2024 of $478,000. The fiscal note assumes that most recurring donors using
intermediary organizations prior to tax year 2023 were made aware of the administrative change
and were able to switch to making direct donations to qualifying organizations in 2023, or else
made their donation from October 2023 to December 2023, when donations through
intermediaries were being accepted by the DOH. The fiscal note assumes that any new donors
who qualified for the credit in tax year 2023 will be unaffected by the bill.
State Revenue
The bill is estimated to reduce state revenue by $239,000 in the current FY 2023-24 (half-year
impact) and by $478,000 in FY 2024-25 and FY 2025-26 on an accrual accounting basis, due to
recurring donors again becoming eligible to claim the HCTC. The bill reduces income tax
revenue, which is subject to TABOR.
State Expenditures
The bill will increase General Fund expenditures by $141,107 in FY 2024-25, by $115,790 in
FY 2025-26, and by smaller amounts in future years. These costs are incurred in the Department
of Revenue (DOR) and the DOH in DOLA as summarized in Table 2 and described below.
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January 26, 2024 SB 24-016
Table 2
Expenditures Under SB 24-016
FY 2024-25 FY 2025-26
Department of Revenue
Personal Services $93,549 $88,337
Operating Expenses $2,048 $1,920
Capital Outlay Costs $13,340 -
Centrally Appropriated Costs
1
$27,171 $25,532
FTE – Personal Services 1.6 FTE 1.5 FTE
DOR Subtotal $136,107 $115,790
Department of Local Affairs
Computer Programming $5,000 -
DOLA Subtotal $5,000 -
Total $141,107 $115,790
Total FTE 1.6 FTE 1.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Revenue. The DOR will require $136,107 and 1.6 FTE in FY 2024-25 and
$115,790 and 1.5 FTE in FY 2025-26, and smaller amounts in future years for tax examiners to
manually review claims for the homeless contribution tax credit. This cost results from income
tax credit certificates no longer being associated with a unique identifier as they are under
current law with a nine-digit social security number, which allows for electronic verification of
credit claims. It is assumed that the number of erroneous claims will decline after the first year of
the credit due to education and outreach as well as claim denials. There are no DOR costs to
manage the expansion of eligible credits for donations made through intermediaries.
Department of Local Affairs, Division of Housing. The Division of Housing (DOH) will have
increased workload for education and outreach regarding changes to the tax credit under the
bill. This increase can be accomplished with existing resources. The database that supports
DOH’s administration of the tax credit will require a modification to capture the last four digits
of a social security number and connect previous records that used the full social security
number. This work will cost $5,000 and be performed in the Office of Information Technology,
which will be reimbursed by DOLA via real-time billing.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs
associated with this bill are addressed through the annual budget process and centrally
appropriated in the Long Bill or supplemental appropriations bills, rather than in this bill. These
costs, which include employee insurance and supplemental employee retirement payments, are
shown in Table 2.
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January 26, 2024 SB 24-016
Other Budget Impacts
TABOR refunds. The bill is expected to decrease the amount of state revenue required to be
refunded to taxpayers by the amounts shown in the State Revenue section above. This estimate
assumes the December 2023 LCS revenue forecast. A forecast of state revenue subject to TABOR
is not available beyond FY 2025-26. Because TABOR refunds are paid from the General Fund,
decreased General Fund revenue will lower the TABOR refund obligation, but result in no net
change to the amount of General Fund otherwise available to spend or save.
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve. Based on this fiscal note,
the bill is expected to increase the amount of General Fund held in reserve by the amounts
shown in Table 1, decreasing the amount of General Fund available for other purposes.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
State Appropriations
For FY 2024-25, the bill requires the following appropriations from the General Fund:
$108,937 to the Department of Revenue, and 1.6 FTE;
$5,000 to the Department of Local Affairs.
State and Local Government Contacts
Information Technology Local Affairs Office of Economic Development
Personnel Revenue
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.