Colorado Capitol Report

“Fix” to House Bill 20-1420 on Tax Exemptions Passes Today

“Fix” to House Bill 20-1420 on Tax Exemptions Passes Today

This week, the Colorado General Assembly convened for three days and will recess again until February 16, 2021 due to the current COVID-19 pandemic.  On Monday (1/11/21), Colorado Chamber staff received a draft bill intended to “fix” some concerns  raised with House Bill 20-1420 regarding tax credits, exemptions and the CARES Act and which passed during the final week of the 2020 Legislative Session.  The “fix” bill was introduced on Wednesday to be debated by the Legislature during the three days.

Colorado Chamber staff and members of the Chamber’s Tax Council met with the bill sponsors and the Governor’s staff regarding the bill and raised concerns with the draft.  Some amendments were adopted to the bill and the bill has passed both the House and Senate today.

Explanation of LLS 0711:

An unintended consequence of House Bill 20-1420 and the accompanying DOR administrative rule was that certain businesses who carried back to previous tax years the CARES Act’s expanded net operating loss, excess business loss, business interest, and qualified improvement property depreciation deductions on their federal returns ended up losing their ability to access some of their “saved” deductions on their state returns, i.e. in terms of state income tax liability, they emerged worse off than before the CARES Act, which was not the intent of the bill.

HB 21-1002 fixes this error by allowing businesses to carry forward these “saved” deductions on their state returns up to a certain amount each year ($350k in the first year and $150k in years 2-5 with no cap thereafter).

Please contact Loren Furman at [email protected] or at 303-888-9387 if you have any questions/concerns regarding this matter.