Colorado 2025 Regular Session

Colorado House Bill HB1157 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	First Regular Session
2	2	Seventy-fifth General Assembly
3	3	STATE OF COLORADO
4	4	INTRODUCED
5	5
6	6
7	7	LLS NO. 25-0507.01 Jed Franklin x5484
8	8	HOUSE BILL 25-1157
9	9	House Committees Senate Committees
10	10	Finance
11	11	A BILL FOR AN ACT
12	12	C
13	13	ONCERNING THE EXTENSION OF THE ADVANCED INDUSTRY101
14	14	INVESTMENT TAX CREDIT .102
15	15	Bill Summary
16	16	(Note: This summary applies to this bill as introduced and does
17	17	not reflect any amendments that may be subsequently adopted. If this bill
18	18	passes third reading in the house of introduction, a bill summary that
19	19	applies to the reengrossed version of this bill will be available at
20	20	http://leg.colorado.gov
21	21	.)
22	22	Currently, the advanced industry investment tax credit (credit)
23	23	expires on December 31, 2026. The bill extends the credit until December
24	24	31, 2031. The credit is currently available to a qualified investor that
25	25	makes a qualified investment in a qualified small business that is in an
26	26	advanced industry. On and after January 1, 2028, the credit is also
27	27	available to a qualified investor that makes a qualified investment in a
28	28	HOUSE SPONSORSHIP
29	29	Titone and Lindstedt,
30	30	SENATE SPONSORSHIP
31	31	Snyder and Baisley,
32	32	Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
33	33	Capital letters or bold & italic numbers indicate new material to be added to existing law.
34	34	Dashes through the words or numbers indicate deletions from existing law. qualified small business that is not an advanced industry business,
35	35	operates in the manufacturing sector, generates revenue from operations,
36	36	is a primary employer, is producing a product that is distributed outside
37	37	of Colorado, and, in the judgment of the Colorado office of economic
38	38	development (office), is a commercially scalable and capital-intensive
39	39	business that will bring incremental income to the local economy.
40	40	The bill changes the definition of "qualified investment" by
41	41	eliminating the current prohibition against a qualified investor having
42	42	more than 30% of the voting power in the qualified small business before
43	43	the investor makes a qualified investment and more than 49% of the
44	44	voting power in the qualified small business after making a qualified
45	45	investment.
46	46	The bill changes the definition of "qualified investor" by clarifying
47	47	that an entity subject to income tax may qualify as an investor, except that
48	48	a C corporation, including any limited liability or other legal entity treated
49	49	as a C corporation for federal and state income tax purposes, is not a
50	50	qualified investor. A qualified investor may include a partner,
51	51	shareholder, or beneficiary that is allocated a credit. A qualified investor
52	52	does not include a person that had control of a qualified small business
53	53	for 6 months preceding or following the date of the investment in the
54	54	qualified small business. A founder, employee, or contractor or a spouse
55	55	of a founder, employee, or contractor of a qualified small business is not
56	56	a qualified investor. A person that has invested more than $50,000 in the
57	57	qualified small business or owns more than 10% of the qualified small
58	58	business on a fully diluted basis is not a qualified investor.
59	59	The office administers the credit. The office may certify a small
60	60	business as a qualified small business until October 1, 2031. A small
61	61	business certified as a qualified small business must report to the office
62	62	as requested to confirm the certified small business's status as a qualified
63	63	small business. The office may require a qualified small business to
64	64	provide information to confirm that a qualified investment has been made
65	65	in the qualified small business, the intended use of the qualified
66	66	investment, and the expected number of new employees that will be hired
67	67	by the qualified small business as a result of the qualified investment. A
68	68	qualified small business that receives a qualified investment is required
69	69	to report data relevant to the impact of the credit and development of the
70	70	qualified small business annually to the office for 5 years following a
71	71	qualified investment. The office may assess a penalty against a qualified
72	72	small business that does not meet this reporting requirement.
73	73	The office may issue $4 million in credits per calendar year for the
74	74	years through the 2026 calendar year for which the credit is currently
75	75	available. The bill decreases the cap to $2.5 million per calendar year
76	76	beginning with the 2027 calendar year through the 2031 calendar year.
77	77	If the qualified investor receiving a credit is a trust, the qualified
78	78	investor may allocate the credit between the trust and its beneficiaries in
79	79	HB25-1157
80	80	-2- any manner determined by the trust. The office shall issue a credit
81	81	certificate to a trust beneficiary and a trust beneficiary may claim the
82	82	amount indicated on the credit certificate.
83	83	Be it enacted by the General Assembly of the State of Colorado:1
84	84	SECTION 1. Legislative declaration. (1) The general assembly2
85	85	finds and declares that:3
86	86	(a) Currently, the advanced industries tax credit is available to4
87	87	qualified small businesses in advanced industries but not in scalable5
88	88	manufacturing; and6
89	89	(b) Providing incentives for qualified angel investors to invest in7
90	90	qualified small businesses in scalable manufacturing will:8
91	91	(I) Create new jobs in Colorado;9
92	92	(II) Increase exports and competitiveness in national and global10
93	93	markets;11
94	94	(III) Attract investment in Colorado companies; and12
95	95	(IV) Expand access to capital for innovative and scalable13
96	96	Colorado startups.14
97	97	(2) Therefore, the general assembly further finds and declares that15
98	98	the advanced industries investment tax credit should be expanded to16
99	99	qualified small businesses in scalable manufacturing to encourage17
100	100	investment in scalable manufacturing.18
101	101	SECTION 2. In Colorado Revised Statutes, 24-48.5-112, amend19
102	102	(1)(e) introductory portion, (1)(e)(I), (1)(f), (1)(g)(I), (1.5)(b), (2)(a),20
103	103	(2)(b), (2)(c), (2)(d), and (3)(b); repeal (1)(c), (1)(e)(III), and (1)(e)(IV);21
104	104	and add (1)(h) as follows:22
105	105	24-48.5-112. Advanced industry investment tax credit -23
106	106	administration - legislative declaration - definitions - repeal. (1) As24
107	107	HB25-1157-3- used in this section, unless the context otherwise requires:1
108	108	(c) "Affiliate" means any person or entity that controls, is2
109	109	controlled by, or is under common control with another person or entity.3
110	110	For purposes of this paragraph (c), "control" means the power to4
111	111	determine the policies of an entity whether through ownership of voting5
112	112	securities, by contract, or otherwise.6
113	113	(e) "Qualified investment" means an A MONETARY investment7
114	114	made at any time on or after July 1, 2014, but before January 1, 20278
115	115	J
116	116	ANUARY 1, 2032, in an equity security that meets all of the following9
117	117	requirements:10
118	118	(I) The equity security is common stock, preferred stock, an11
119	119	interest in a partnership or limited liability company, a security that is12
120	120	convertible into an equity security, a convertible debt investment, or other13
121	121	equity security as determined by the office;
122	122	AND14
123	123	(III) The qualified investor and its affiliates do not hold, of record
124	124	15
125	125	or beneficially, immediately before making an investment, equity16
126	126	securities possessing more than thirty percent of the total voting power of17
127	127	all equity securities of the qualified small business; and18
128	128	(IV) The qualified investor and its affiliates hold, of record or19
129	129	beneficially, immediately after making the investment, equity securities20
130	130	possessing less than fifty percent of the total voting power of all equity21
131	131	securities of the qualified small business.22
132	132	(f) "Qualified investor" means an individual, limited liability23
133	133	company, partnership, S corporation, as defined in section 39-22-10324
134	134	(10.5), C.R.S., or other business entity that makes a qualified investment25
135	135	in a qualified small business. "Qualified investor" does not include a C26
136	136	corporation, as defined in section 39-22-103 (2.5), C.R.S. A PERSON27
137	137	HB25-1157
138	138	-4- SUBJECT TO TAX UNDER ARTICLE 22 OF TITLE 39 THAT MAKES A QUALIFIED1
139	139	INVESTMENT IN A QUALIFIED SMALL BUSINESS , EXCEPT THAT A C2
140	140	CORPORATION, AS DEFINED IN SECTION 39-22-103 (2.5), INCLUDING ANY3
141	141	LIMITED LIABILITY COMPANY OR OTHER LEGAL ENTITY TREATED AS A C4
142	142	CORPORATION FOR STATE AND FEDERAL INCOME TAX PURPOSES , IS NOT A5
143	143	QUALIFIED INVESTOR. A QUALIFIED INVESTOR MAY INCLUDE A PARTNER ,6
144	144	SHAREHOLDER, OR BENEFICIARY THAT IS ALLOCATED A CREDIT PURSUANT7
145	145	TO SECTION 39-22-532 (7). A QUALIFIED INVESTOR MAY BE A8
146	146	PARTNERSHIP, WHICH INCLUDES ANY LIMITED LIABILITY COMPANY OR9
147	147	OTHER LEGAL ENTITY TREATED AS A PARTNERSHIP FOR STATE AND10
148	148	FEDERAL INCOME TAX PURPOSES, OR AN S CORPORATION, WHICH INCLUDES11
149	149	ANY LIMITED LIABILITY COMPANY OR OTHER LEGAL ENTITY TREATED AS12
150	150	AN S CORPORATION FOR STATE AND FEDERAL INCOME TAX PURPOSES . A13
151	151	QUALIFIED INVESTOR DOES NOT INCLUDE A PERSON THAT HAS CONTROL OF14
152	152	A QUALIFIED SMALL BUSINESS FOR SIX MONTHS PRECEDING OR FOLLOWING15
153	153	THE DATE OF THE INVESTMENT IN THE QUALIFIED SMALL BUSINESS . FOR16
154	154	PURPOSES OF THIS SUBSECTION (1)(f), "CONTROL" MEANS THE POWER TO17
155	155	DETERMINE THE POLICIES OF THE QUALIFIED SMALL BUSINESS , WHETHER18
156	156	THROUGH OWNERSHIP OF VOTING SECURITIES , BY CONTRACT, OR19
157	157	OTHERWISE, INCLUDING INVOLVEMENT IN THE QUALIFIED SMALL20
158	158	BUSINESS'S OPERATIONS. A FOUNDER, EMPLOYEE, OR CONTRACTOR OR THE21
159	159	SPOUSE OF A FOUNDER, EMPLOYEE, OR CONTRACTOR OF A QUALIFIED22
160	160	SMALL BUSINESS IS NOT A QUALIFIED INVESTOR . A PERSON THAT HAS23
161	161	INVESTED MORE THAN FIFTY THOUSAND DOLLARS IN THE QUALIFIED SMALL24
162	162	BUSINESS OR OWNS MORE THAN TEN PERCENT OF THE QUALIFIED SMALL25
163	163	BUSINESS ON A FULLY DILUTED BASIS IS NOT A QUALIFIED INVESTOR .26
164	164	(g) "Qualified small business" means a corporation, limited27
165	165	HB25-1157
166	166	-5- liability company, partnership, or other business entity that:1
167	167	(I) Is in an advanced industry,
168	168	AS DEFINED IN SECTION 24-48.5-1172
169	169	(2)(a),
170	170	OR, ON OR AFTER JANUARY 1, 2028, IS IN SCALABLE3
171	171	MANUFACTURING, AS DEFINED IN SUBSECTION (1)(h) OF THIS SECTION;4
172	172	(h) "S
173	173	CALABLE MANUFACTURING " MEANS A BUSINESS THAT:5
174	174	(I) I
175	175	S NOT AN ADVANCED INDUSTRY BUSINESS ;6
176	176	(II) O
177	177	PERATES IN THE MANUFACTURING SECTOR ;7
178	178	(III) I
179	179	S GENERATING REVENUE FROM OPERATIONS ;8
180	180	(IV) I
181	181	S A PRIMARY EMPLOYER PRODUCING A PRODUCT THAT IS9
182	182	CURRENTLY SOLD OUTSIDE OF COLORADO; AND10
183	183	(V) I
184	184	S, IN THE JUDGMENT OF THE OFFICE , A COMMERCIALLY11
185	185	SCALABLE AND CAPITAL -INTENSIVE BUSINESS THAT WILL BRING12
186	186	INCREMENTAL INCOME TO THE LOCAL ECONOMY .13
187	187	(1.5) In accordance with section 39-21-304 (1), which requires14
188	188	each bill that extends an expiring tax expenditure to include a tax15
189	189	preference performance statement as part of a statutory legislative16
190	190	declaration, the general assembly hereby finds and declares that:17
191	191	(b) The specific legislative purpose of the tax credit allowed by18
192	192	this section is to encourage investment in small businesses located in19
193	193	Colorado in advanced
194	194	OR SCALABLE MANUFACTURING industries,20
195	195	including in quantum fields, and in particular in small businesses in21
196	196	advanced
197	197	OR SCALABLE MANUFACTURING industries, including in22
198	198	quantum fields, located in a rural area or economically distressed area of23
199	199	the state; and24
200	200	(2) (a) The office shall receive and evaluate applications that are25
201	201	submitted by qualified investors to receive an advanced industry26
202	202	investment tax credit for qualified investments made in a qualified small27
203	203	HB25-1157
204	204	-6- business THAT HAS BEEN EVALUATED AND CERTIFIED AS ELIGIBLE TO1
205	205	RECEIVE QUALIFIED INVESTMENTS FOR THE PURPOSES OF THIS SECTION .2
206	206	(b) To be eligible for an advanced industry investment tax credit,3
207	207	a qualified investor must file a completed application with the office4
208	208	within ninety days after making a qualified investment
209	209	IN A CERTIFIED5
210	210	AND QUALIFIED SMALL BUSINESS. The office shall prescribe the manner6
211	211	and form of the application. The office shall note the time and date of7
212	212	each application received. In addition to any other requirements8
213	213	established by the office, the application must include the name, address,9
214	214	and federal income tax identification number of the applicant, the number
215	215	10
216	216	of new employees hired by the qualified small business as a result of the11
217	217	qualified investment, and any additional information that the office12
218	218	requires. T
219	219	HE OFFICE MAY REQUIRE THE QUALIFIED INVESTOR TO PROVIDE13
220	220	INFORMATION TO CONFIRM THAT A QUALIFIED INVESTMENT HAS BEEN14
221	221	MADE IN A QUALIFIED SMALL BUSINESS , THE INTENDED USE OF THE15
222	222	QUALIFIED INVESTMENT, AND THE EXPECTED NUMBER OF NEW EMPLOYEES16
223	223	THAT WILL BE HIRED BY THE QUALIFIED SMALL BUSINESS AS A RESULT OF17
224	224	THE QUALIFIED INVESTMENT.18
225	225	(c) A business may request
226	226	SHALL SUBMIT AN APPLICATION TO the19
227	227	office to determine whether it is a qualified small business. Upon20
228	228	receiving the request or upon receipt of an application for an advanced21
229	229	industry investment tax credit from a qualified investor, the office shall22
230	230	determine whether the business that is named in the application or written23
231	231	request is a qualified small business. After determining the qualifications,24
232	232	the office shall certify the qualified small business as being eligible to25
233	233	receive qualified investments for purposes of this section. A
234	234	CERTIFIED26
235	235	SMALL BUSINESS MUST REPORT TO TH E OFFICE AS REQUESTED BY THE27
236	236	HB25-1157
237	237	-7- OFFICE TO CONFIRM THE CERTIFIED SMALL BUSINESS 'S STATUS AS A1
238	238	QUALIFIED SMALL BUSINESS. THE OFFICE MAY CERTIFY A SMALL BUSINESS2
239	239	THROUGH OCTOBER 1, 2031. The certification for a qualified small3
240	240	business that is certified after July 1, 2014, is valid until January 1, 2027;4
241	241	except that the certification is revoked if the business no longer meets the5
242	242	qualifications. A business shall notify the office within thirty business6
243	243	days from the date that it no longer meets the qualifications. A
244	244	QUALIFIED7
245	245	SMALL BUSINESS THAT RECEIVES A QUALIFIED INVESTMENT SHALL REPORT8
246	246	DATA RELEVANT TO THE IMPACT OF THE TAX CREDIT AND DEVELOPMENT9
247	247	OF THE QUALIFIED SMALL BUSINESS ANNUALLY TO THE OFFICE FOR A10
248	248	FIVE-YEAR PERIOD FOLLOWING AN INITIAL QUALIFIED INVESTMENT . If the11
249	249	certification is revoked
250	250	OR A BUSINESS FAILS TO MEET ITS REPORTING12
251	251	REQUIREMENTS, the office may assess a penalty against the business that13
252	252	is equal to the amount of the advanced industry investment tax credits14
253	253	authorized after the date that the business no longer meets the15
254	254	qualifications. The state treasurer shall deposit the penalty into the state16
255	255	general fund. If the certification is revoked, subsequent investments in the17
256	256	business do not qualify for a tax credit. All tax credits issued before the18
257	257	revocation of the certification remain valid. The office shall not deny any19
258	258	application for a tax credit on the basis of the revocation of the20
259	259	certification if the investment was made before the date of the revocation.21
260	260	(d) As part of the application for an advanced industry investment22
261	261	tax credit, the applicant and the qualified small business that receives the23
262	262	investment must each provide written authorization to permit the24
263	263	department of revenue to provide tax information to the office for the25
264	264	purpose of determining if there are any misrepresentations on the26
265	265	application. The authorization is limited to disclosure of income tax27
266	266	HB25-1157
267	267	-8- information for the latest two years for which returns were filed with the1
268	268	department of revenue preceding the date the application is filed and for2
269	269	all tax years through the year in which the investment was made for3
270	270	which a return was not filed as of the date of the application. The4
271	271	applicant must also provide in the written authorization income tax5
272	272	information for all tax years in which the applicant actually claims a tax6
273	273	credit or carries forward a tax credit on a return filed with the department7
274	274	of revenue. An applicant that is a partnership, limited liability company,8
275	275	S corporation, or similar pass-through entity and OR TRUST that may9
276	276	allocate the credit among the ITS partners, shareholders, members, or10
277	277	other constituent qualified investors BENEFICIARIES pursuant to section11
278	278	39-22-532 (7) must provide a written authorization with content similar12
279	279	to the authorization, and in the same manner, as any other applicant is13
280	280	required to provide. If an applicant or qualified small business fails to14
281	281	comply with this subsection (2)(d), an applicant is ineligible for a tax15
282	282	credit.16
283	283	(3) (b) (I) The total amount of the advanced industry investment17
284	284	tax credits shall not exceed three hundred seventy-five thousand dollars18
285	285	for the 2014 calendar year; seven hundred fifty thousand dollars for each19
286	286	calendar year from 2015 through 2022; and four million dollars for each20
287	287	calendar year from 2023 through 2026;
288	288	AND TWO MILLION FIVE HUNDRED21
289	289	THOUSAND DOLLARS FOR EACH CALENDAR YEAR FROM 2027 THROUGH22
290	290	2031; except that, if the total amount of the credits for 2018 or a later23
291	291	calendar year through 2022 is less than the maximum amount, then the24
292	292	maximum amount for the next year is increased by an amount equal to the25
293	293	remaining, unused tax credits from the prior year. The office shall26
294	294	authorize the tax credits in the order that
295	295	COMPLETE applications are27
296	296	HB25-1157
297	297	-9- received by the office and shall deny any application received after the1
298	298	limit has been met. The office may partially authorize the last tax credit2
299	299	that is awarded up to the limit.3
300	300	(II) The total amount of the tax credit for each qualified4
301	301	investment
302	302	IN A QUALIFIED SMALL BUSINESS shall not exceed one hundred5
303	303	thousand dollars. T
304	304	HE AGGREGATE AMOUNT OF THE CREDIT ALLOWED TO6
305	305	THE PARTNERS OR SHAREHOLDERS OF A PARTNERSHIP OR S CORPORATION7
306	306	THAT MAKES A QUALIFIED INVESTMENT MUST NOT EXCEED ONE HUNDRED8
307	307	THOUSAND DOLLARS. A qualified investor may not claim more than one9
308	308	tax credit per qualified small business, but
309	309	REGARDLESS OF WHETHER THE10
310	310	QUALIFIED INVESTMENT IS MADE DIRECTLY BY THE QUALIFIED INVESTOR11
311	311	OR INDIRECTLY THROUGH ANOTHER ENTITY . A QUALIFIED INVESTOR may12
312	312	be eligible for a tax credit for qualified investments in different qualified13
313	313	small businesses in the same or a different year.14
314	314	SECTION 3. In Colorado Revised Statutes, 39-22-532, amend15
315	315	(7) as follows:16
316	316	39-22-532. Advanced industry investment tax credit -17
317	317	definitions. (7) If a qualified investor receiving a credit allowed in this18
318	318	section is a partnership limited liability company, OR S corporation, or19
319	319	similar pass-through entity, the qualified investor may allocate the credit20
320	320	among its partners
321	321	OR shareholders members, or other constituent
322	322	21
323	323	qualified investors in any manner agreed to by such partners OR22
324	324	shareholders. members, or other constituent qualified investors. IF THE23
325	325	QUALIFIED INVESTOR RECEIVING THE CREDIT ALLOWED BY THIS SECTION24
326	326	IS A TRUST, THE QUALIFIED INVESTOR MAY ALLOCATE THE CREDIT25
327	327	BETWEEN THE TRUST AND ITS BENEFICIARIES IN ANY MANNER DETERMINED26
328	328	BY THE TRUST. The qualified investor shall certify to the Colorado office27
329	329	HB25-1157
330	330	-10- of economic development the amount of the credit allocated to each1
331	331	partner, shareholder, member, or other constituent qualified investor, OR2
332	332	BENEFICIARY and the office shall issue credit certificates in the3
333	333	appropriate amounts to each partner, shareholder, member, or other4
334	334	constituent qualified investor, OR BENEFICIARY. Each partner, shareholder,5
335	335	member, or other constituent qualified investor OR BENEFICIARY shall be6
336	336	allowed to claim such amount subject to any restrictions set forth in this7
337	337	section and section 24-48.5-112.8
338	338	SECTION 4. Act subject to petition - effective date. This act9
339	339	takes effect at 12:01 a.m. on the day following the expiration of the10
340	340	ninety-day period after final adjournment of the general assembly; except11
341	341	that, if a referendum petition is filed pursuant to section 1 (3) of article V12
342	342	of the state constitution against this act or an item, section, or part of this13
343	343	act within such period, then the act, item, section, or part will not take14
344	344	effect unless approved by the people at the general election to be held in15
345	345	November 2026 and, in such case, will take effect on the date of the16
346	346	official declaration of the vote thereon by the governor.17
347	347	HB25-1157
348	348	-11-