|Taxpayers located in an Enterprise Zone may qualify as a “New Business Facility” (NBF) if it is: a newly acquired, constructed or leased facility; a qualified expansion facility; or a qualified replacement facility. Once qualified as an NBF, the taxpayer is eligible for NBF new jobs, employer-sponsored health insurance, and agricultural processing new jobs tax credits.
Businesses may qualify as an NBF any of the following four ways:
Excess credits may be carried forward for up to five years.
- New Colorado Business - Be a newly acquired, constructed or leased facility used by the taxpayer to operate a revenue producing enterprise. This includes any factory, mill, plant, refinery, warehouse, feedlot, building or complex of buildings including land, machinery and equipment located at the facility and used in connection with the facility’s operation.
- Qualified Expansion Facility - Taxpayer invests at least $1 million in a non-qualified facility located in the Enterprise Zone; or if less, at least double the taxpayer’s investment in the original facility; or if the expansion adds at least 10 employees or a 10% increase (at least one full time employee) over the previous average annual number of employees.
- Qualified Replacement Facility - A replacement business facility which has relocated from another Colorado location to an Enterprise Zone may qualify if the taxpayer has invested at least $3 million or 300% of the investment in the “old” facility. This only applies if the taxpayer operated the facility for three or more full tax years of the five tax years immediately preceding the opening of the new facility. If a previously qualified new business facility moves from one location in an enterprise zone to another location in the same or a different zone, it does not have to qualify as a replacement facility. It also cannot requalify as a new business facility in order to claim additional employee credits, but can claim NBF credits to the extent it adds additional employees over its previous base.
- In-State Relocations - For credits claimed for tax years beginning on or after January 1, 1997, no Investment Tax Credit is allowed if the investment resulted from the relocation of a business operation from anywhere within Colorado to an Enterprise Zone. This is regardless of whether the original location of the operation was within an Enterprise Zone. However, the credits will be allowed if the relocation meets the criteria for a qualified expansion facility (#2 above) or qualified replacement facility (#3 above).
For more detailed information, refer to Department of Revenue publication FYI Income 10.