C.R.S. § 39-36-101 Short title
39-36-101. Short title. The short title of this article 36 is the "CHIPS Zone Act".
CHIPS Zone Act
C.R.S. tit. 39, art. 36
in effectC.R.S. § 39-36-102 Tax preference performance statement - legislative declaration
39-36-102. Tax preference performance statement - legislative declaration. (1) The general assembly finds and declares that:
(a) Semiconductors, or chips, are tiny electronic devices that are fundamental to modern industrial and national security activities. These devices power tools as simple as a light switch and as complex as a fighter jet or a smartphone. Semiconductors are also essential building blocks in emerging technologies such as artificial intelligence, 5G communications, and quantum computing.
(b) In 2022, the federal government enacted the "Creating Helpful Incentives for Producing Semiconductors and Science Act", or "CHIPS and Science Act", providing for over fifty billion dollars to be expended in strengthening and revitalizing the country's position in semiconductor research, development, and manufacturing;
(c) The "CHIPS and Science Act" is expected to unlock hundreds of billions of dollars of private sector semiconductor investment across the country;
(d) Enactment of a semiconductor manufacturing zone, or CHIPS zone, program of tax incentives will maximize the opportunity for Colorado businesses to draw down federal dollars under the CHIPS Act and capture some of the billions of dollars of private funds expected to be spent in growing the country's semiconductor manufacturing industry;
(e) The three tax credits available under the program, for qualified investments, business facility employees, and expenditures in research and experimental activities, will encourage investment to expand Colorado's semiconductor manufacturing capacity and make Colorado a new center for innovation and research in this critical industry;
(f) Investing in semiconductor manufacturers in this manner also means investing in Colorado workers, as growth in the semiconductor manufacturing sector will necessarily result in the creation and retention of high-skilled, well-compensated manufacturing jobs in the state;
(g) In accordance with section 39-21-304 (1), which requires any bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly further declares that:
(I) The general legislative purposes of the tax credits allowed by this article 36 are:
(A) To induce certain designated behavior by taxpayers;
(B) To improve industry competitiveness; and
(C) To create or retain jobs;
(II) The specific legislative purposes of the tax credits allowed by this article 36 are:
(A) To improve the competitiveness of Colorado's semiconductor manufacturing industry;
(B) To induce investment in new and existing semiconductor manufacturing businesses in the state; and
(C) To create well-paying jobs in the private sector as a result of such investment; and
(III) The tax credit certification forms required from taxpayers to be executed by the CHIPS zone administrator pursuant to section 39-36-104 (5), the annual reports that the zone administrator is required to make to the Colorado economic development commission pursuant to section 39-36-104 (3)(b), and the annual reports that the director of the Colorado office of economic development must make to the general assembly and the legislative audit committee under section 39-36-104 (3)(c), will provide objective economic development data points that will allow the general assembly and the state auditor to measure the effectiveness of the CHIPS zone tax credits.
C.R.S. § 39-36-103 Definitions
39-36-103. Definitions. As used in this article 36, unless the context otherwise requires:
(1) "Certification" means the written tax credit certificate documenting a taxpayer's income tax credit claim pursuant to section 39-30-104, 39-30-105.1, or 39-30-105.5 and the estimated value of each credit certified by the CHIPS zone administrator, for which the taxpayer received precertification in accordance with section 39-36-104 (5)(b).
(2) "CHIPS Act" means the federal "Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022", Pub.L. 117-167, as amended.
(3) "CHIPS zone" means a semiconductor manufacturing zone approved by the commission pursuant to section 39-36-104 (2)(a).
(4) "Commission" means the Colorado economic development commission created in section 24-46-102 (1).
(5) "Department" means the Colorado department of revenue.
(6) "Director" means the director of the office.
(7) "Office" means the Colorado office of economic development created in section 24-48.5-101.
(8) "Precertification" means the written precertification of a taxpayer's proposed project and any related income tax credit claims pursuant to section 39-30-104, 39-30-105.1, or 39-30-105.5, by the CHIPS zone administrator in reliance on the taxpayer's representations pursuant to section 39-36-104 (5)(a).
(9) "Refund certificate" has the same meaning as set forth in section 24-46-108 (1)(i).
(10) "Semiconductor manufacturing" has the same meaning as set forth in section 24-46-108 (1)(j).
(11) "Taxpayer" means a person engaged in semiconductor manufacturing that is subject to tax under article 22 of this title 39.
C.R.S. § 39-36-104 Zones established - zone administrator - review - termination
39-36-104. Zones established - zone administrator - review - termination. (1) (a) For income tax years commencing on or after January 1, 2023, but before January 1, 2036, any municipality, county, or group of contiguous municipalities or counties may propose an area of such municipality, county, or group of municipalities or counties to be designated as a CHIPS zone in accordance with the policies and procedures established by the office and pursuant to this article 36.
(b) To propose an area for designation as a CHIPS zone, a local government shall submit a development plan to the director. The plan must include the following items:
(I) The boundaries of the proposed zone;
(II) The proposed zone's potential for semiconductor manufacturing business development and job creation;
(III) How the proposed zone will support and be consistent with maintenance of the area's economy; and
(IV) Any other pertinent information the director or the commission may require, which may include information related to local planning, capacity, and infrastructure.
(2) (a) The commission, after consultation with the office, may approve the designation of a CHIPS zone.
(b) All decisions concerning the designation or termination of a CHIPS zone or any portion of a CHIPS zone shall be made by the commission upon the recommendation of the office.
(3) (a) The director, or the director's designee, shall serve as the zone administrator for all approved CHIPS zones. The commission shall work with the zone administrator to ensure that each zone has economic development objectives with outcomes that can be measured.
(b) The zone administrator shall submit an annual report to the commission summarizing the zone administrator's review of documentation, including the most recent statistics available for taxpayers claiming CHIPS zone credits, on:
(I) The number of semiconductor manufacturing jobs created in the zone;
(II) The number of such jobs retained in the zone;
(III) The average annual compensation level, including benefits, of the semiconductor manufacturing jobs created or retained within the zone;
(IV) An analysis of capital investment in the zone, including the amount of investment in qualifying property for which tax credits are claimed pursuant to section 39-30-104;
(V) The number of business facility employees for which tax credits are claimed pursuant to section 39-30-105.1;
(VI) The amount of investment tax credits claimed pursuant to section 39-30-104 and the amount of credits for employees claimed pursuant to section 39-30-105.1;
(VII) The number and amount of tax credits based on expenditures for research and experimental activities claimed pursuant to section 39-30-105.5; and
(VIII) Any other information reasonably required by the commission to evaluate the effectiveness of each zone in accomplishing the economic objectives of the zone.
(c) Notwithstanding the requirement in section 24-1-136 (11)(a)(I), the director, or the director's designee, on behalf of the commission, shall submit an annual report to the general assembly on or before November 1, 2023, and on or before November 1 of each calendar year thereafter through November 1, 2036, summarizing the information submitted by the zone administrator to the commission each year pursuant to subsection (3)(b) of this section. The director, or the director's designee, on behalf of the commission shall make an annual presentation to the legislative audit committee that reviews and summarizes the information in the report submitted to the general assembly pursuant to this subsection (3)(c).
rizing the information submitted by the zone administrator to the commission each year pursuant to subsection (3)(b) of this section. The director, or the director's designee, on behalf of the commission shall make an annual presentation to the legislative audit committee that reviews and summarizes the information in the report submitted to the general assembly pursuant to this subsection (3)(c).
(d) The state auditor shall submit a report to the governor and the general assembly, at the discretion of the state auditor and the legislative audit committee, evaluating the implementation of the CHIPS zone program, making recommendations for statutory changes, if any, and including any information requested by the governor or the general assembly. The evaluation must be based upon the data included in the annual report submitted by the director on behalf of the commission to the general assembly pursuant to subsection (3)(c) of this section and objective, verifiable data submitted by the zone administrator and maintained by the office or obtained from the department. The report must also include information concerning the number and amount of tax credits claimed and allowed under the program. For purposes of preparing the report required by this subsection (3)(d), the state auditor shall have access to all records and documents applicable to the program, whether maintained by the commission, office, local governments, or the zone administrator.
(e) Taxpayers claiming CHIPS zone credits shall provide information reasonably required by the zone administrator, the office, or the commission to evaluate the effectiveness of each zone in accomplishing the measurable economic development objectives to be achieved in the zone.
(4) (a) Subject to the requirements of subsection (5) of this section, every taxpayer that performs an act in a CHIPS zone that would qualify for the income tax credit under section 39-30-104, 39-30-105.1, or 39-30-105.5 if the act was performed in an enterprise zone, created pursuant to section 39-30-103 or 39-30-103.2, is allowed the credit pursuant to the corresponding section and this article 36 with respect to that act.
(b) Notwithstanding subsection (4)(a) of this section or any other provision in this article 36, a taxpayer may not claim an income tax credit pursuant to this article 36 for performing an act in an enterprise zone for which the taxpayer is allowed to claim an income tax credit pursuant to article 30 of this title 39.
(5) (a) Before a taxpayer engages in any activity in a CHIPS zone for which the taxpayer intends to claim an income tax credit pursuant to section 39-30-104, 39-30-105.1, or 39-30-105.5, an authorized company official of the taxpayer's business or the taxpayer who is the owner of the business must submit a precertification form to the CHIPS zone administrator as specified in subsection (3)(a) of this section in accordance with the precertification process set forth in section 39-30-103 (7).
(b) (I) A taxpayer that engages in an activity in a CHIPS zone that was precertified pursuant to subsection (5)(a) of this section for which the taxpayer intends to claim an income tax credit pursuant to section 39-30-104, 39-30-105.1, or 39-30-105.5, must submit to the CHIPS zone administrator all necessary records and information to establish that the taxpayer is entitled to the income tax credit and all documentation required to be included in the CHIPS zone administrator's annual report pursuant to subsections (3)(b)(I) through (3)(b)(VII) of this section.
(II) The CHIPS zone administrator, taking into consideration the economic development objectives established pursuant to subsection (3)(a) of this section for the zone in which the taxpayer engaged in the activity to be certified, shall approve or deny the taxpayer's certification request in writing within thirty days of its submission.
o subsections (3)(b)(I) through (3)(b)(VII) of this section.
(II) The CHIPS zone administrator, taking into consideration the economic development objectives established pursuant to subsection (3)(a) of this section for the zone in which the taxpayer engaged in the activity to be certified, shall approve or deny the taxpayer's certification request in writing within thirty days of its submission.
(c) A taxpayer shall submit the approved certification from the CHIPS zone administrator, including all information required under subsections (5)(a) and (5)(b) of this section, along with any additional documentation required under section 39-36-106 (1)(b) or otherwise required by law, to the department no later than the due date, including extensions, for filing the taxpayer's state income tax return for the tax year in which a tax credit allowed under this article 36 is claimed.
(6) (a) Notwithstanding subsection (2)(b) of this section, all CHIPS zones approved by the commission pursuant to subsection (2)(a) of this section, terminate automatically on December 31, 2040.
(b) A taxpayer that completes an activity in a CHIPS zone that was precertified pursuant to subsection (5)(a) of this section prior to the date of termination of the CHIPS zone under subsection (6)(a) of this section may seek certification to claim an income tax credit pursuant to section 39-30-104 or 39-30-105.1 in accordance with the process set forth in section 39-30-103 (6)(a). Nothing in this subsection (6)(b) authorizes the commission to grant tax benefits that have been repealed by the general assembly or to grant tax benefits in excess of the limits of established law.
C.R.S. § 39-36-105 Electronic submissions - certification data to department of revenue
39-36-105. Electronic submissions - certification data to department of revenue. (1) (a) On or before September 1, 2023, and on or before September 1 of each calendar year thereafter through September 1, 2035, the director, or the director's designee, shall transmit to the department data regarding income tax credits allowed pursuant to this article 36 that are certified by the CHIPS zone administrator from January 1 through June 30 of the same calendar year.
(b) On or before March 31, 2024, and on or before March 31 of each calendar year thereafter through March 31, 2036, the director, or the director's designee, shall transmit to the department data regarding income tax credits allowed pursuant to this article 36 that are certified by the CHIPS zone administrator from July 1 through December 31 of the previous calendar year.
(c) The data required to be transmitted by the director, or the director's designee, to the department under subsections (2)(a) and (2)(b) must be in the form of electronic reports that include the following information:
(I) The taxpayer's name;
(II) The taxpayer's Colorado account number and federal employer identification number;
(III) The type and amount of each income tax credit allowed under this article 36 and certified by the CHIPS zone administrator for the taxpayer for the tax year; and
(IV) Any associated taxpayers' names, Colorado account numbers, and federal employer identification numbers or social security numbers if the credit allowed under this article 36 is allocated from a pass-through entity to its partners, shareholders, members, or other constituent taxpayers.
C.R.S. § 39-36-106 Department of revenue - electronic filings - report - rules
39-36-106. Department of revenue - electronic filings - report - rules. (1) (a) For the 2023 income tax year and each income tax year thereafter through the 2035 income tax year, any taxpayer that claims one or more income tax credits pursuant to this article 36 shall file a state income tax return with the department in an electronic format.
(b) A taxpayer must submit the electronic state income tax return required under subsection (1)(a) of this section together with:
(I) A certification form executed by the CHIPS zone administrator pursuant to section 39-36-104 (5)(b) for each income tax credit claimed pursuant to this article 36;
(II) Any waiver certificate issued by the commission to the taxpayer under section 39-30-104 (2)(c)(III)(B) waiving the limit on the amount of the taxpayer's qualified investment tax credit for the income tax year;
(III) A refund election statement on a form prescribed by the department for each tax credit claimed pursuant to this article 36 for which the taxpayer elects to receive a refund pursuant to section 24-46-108;
(IV) A refund certificate issued by the commission to the taxpayer under section 24-46-108 approving each income tax credit claimed pursuant to this article 36 for which the taxpayer elects to receive a refund; and
(V) A carryforward schedule including the type and amount of each income tax credit claimed pursuant to this article 36 that the taxpayer intends to use in a subsequent tax year.
(2) The documents required under subsection (1)(b) of this section must be filed with the department not later than the due date, including extensions, for filing the taxpayer's state income tax return for the income tax year in which the income tax credits are claimed pursuant to this article 36.
(3) (a) For the 2023 income tax year and each income tax year thereafter through the 2035 income tax year, the department shall aggregate and report data on all of the income tax credits that are claimed pursuant to this article 36 for each income tax year. The department shall categorize such aggregated data by the date that the income tax credit was certified by the CHIPS zone administrator, the specific income tax credit allowed pursuant to this article 36 that each taxpayer was authorized to claim, and the total amount of the income tax credits claimed for each income tax credit allowed pursuant to this article 36.
(b) The department shall submit the data collected pursuant to subsection (1)(b)(V) of this section and the data aggregated pursuant to subsection (3)(a) of this section to the office on August 1, 2023, and on August 1 each year thereafter through August 1, 2036.
(4) The executive director of the department, in consultation with the commission and the office, may promulgate rules as necessary for the department to administer and enforce any provisions of this article 36.
C.R.S. § 39-36-107 Repeal of article
39-36-107. Repeal of article. This article 36 is repealed, effective January 1, 2041.
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