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Enterprise Zone (EZ) Tax Credits in Southeast Colorado

Friday, October 24th, 2014 Published By: Cynthia Nieb 0 Comments

The Colorado Enterprise Zone Tax Credits (EZ) Program created by the Colorado Legislature is intended to encourage a business to locate in a distressed geography and stay in a distressed geography AND only offer an incentive to the businesses that have a positive impact on the local economy. Private-sector business activity encouraged by these income tax incentives brings job opportunities and capital investment. The private investment results in tax revenue for school districts, cities, counties and the state.

To accomplish this, the legislature tied each of the EZ incentives to an activity that has a positive impact on the economy. The activity that is required to earn a credit is just a way of identifying the businesses that are improving local economic conditions, it is not intended to be used to illicit a behavior other than the choice of location (i.e. It would not be expected that a $500 jobs credit would drive a business owner to create a job that they otherwise would not have created.).

Below is a list of the activities that the legislature uses to identify the businesses that have a positive impact on their local economy:

purchase equipment….the tax revenue that is paid on qualifying investments typically far exceeds the amount of credits for the entire program (Investment Tax Credit)

perform job training….this develops a skilled workforce in the distressed area and if the business leaves, the skilled workforce is typically retained as an asset to the local economy (Job Training Credit)

rehabilitate an old, vacant building….this removes blight and replaces a building that is 20 years old and has been vacant for 2 years, with a building that can house jobs (Vacant Building Rehabilitation Credit)

create a job….in addition to improving the quality of life for the population, new employees pay taxes to the state and local governments (Jobs Credit, Agricultural Processing Jobs Credit)

perform research and development….creating new products and services that are purchased by customers outside of the local economy brings new money into the economy (R&D Credit)

create a job with benefits….quality job creation that provides benefits receives an additional incentive (Health Insurance Credit)

license and register their commercial vehicles in state….this brings additional revenue to the state (Commercial Vehicle Investment Tax Credit)

The Enhanced Rural Enterprise Zone (EREZ) program provides additional state income tax credits to businesses to promote and encourage new job creation in designated economically lagging rural EZ counties. The counties in southeastern Colorado that are designated as EREZ are Baca, Bent, Crowley, Kiowa, Otero and Prowers (Region 6).

Enterprise Zone Contribution Projects encourage community participation and public private partnerships to revitalize Enterprise Zones. EZ Contribution Projects must directly link to job creation and retention and/or business expansion in an EZ. There are several EZ Contribution Projects in Region 6: Arkansas Valley Community Center (Inspiration Field), Rocky Ford Grand Theater Restoration, Bent County Development Foundation, Las Animas Baseball Complex, Las Animas Community Center, City of Lamar – North Gateway Park, Fort Lyon Supportive Residential Community, Kiowa County Business Marketing, Lamar Community College Workforce Development, Lamar Healthcare Hub Expansion, Bent County Golf Course, Pioneer Historical Society of Bent County, Prowers County Development Inc.

Businesses wanting to claim any of the Colorado EZ income tax credits (excluding the Contribution Project credit), must annually pre-certify prior to beginning an activity to be eligible to claim EZ tax credits. At the end of the income tax year, a business must then complete a certification application and receive approval from the local EZ Administrator. Pre-certification (available now) and Certification are applied for online. Certification documents should be submitted with one’s Colorado income tax filing.

Applications, Pre-certifications, Certifications and Additional Information is available at www.advancecolorado.com/ez or by calling Danelle Berg, Otero County Economic Development, 719-241-4992.

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