First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0415.01 Jason Gelender SENATE BILL 11-073 SENATE SPONSORSHIP Mitchell, HOUSE SPONSORSHIP (None), Senate Committees House Committees State, Veterans & Military Affairs A BILL FOR AN ACT Concerning the modification of policies that result in increased payments to the state. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Section 1 of the bill repeals a department of revenue emergency regulation promulgated in response to the enactment of House Bill 10-1192, which subjected standardized software to the state sales and use taxes. Effective July 1, 2011, sections 2 to 13 of the bill reinstate sales tax exemptions, income tax credits, and other statutory policies that reduce the amount of taxes owed to the state that were repealed, suspended, or otherwise modified by the general assembly during the 2010 legislative session as follows: Sections 2 and 6 eliminate the $26,000,000 aggregate cap on conservation easement tax credits for income tax years commencing during the 2012 and 2013 calendar years. Sections 3 and 7 repeal policy changes intended to increase collection of state sales tax from out-of-state retailers. Section 7 also reinstates state sales and use tax exemptions for standardized software (in conjunction with section 9), certain direct mail advertising materials, and fuels used for industrial purposes (in conjunction with section 11). Section 4 repeals a $250,000 cap on the amount of net operating losses that a corporation may subtract from federal taxable income when calculating Colorado taxable income that would otherwise remain in effect for income tax years commencing prior to January 1, 2014. Section 5 reinstates a repealed state income tax credit for category 7 motor vehicles that meet certain federal guidelines and have a minimum fuel economy of 30 miles per gallon but less than 40 miles per gallon for income tax years commencing during the 2011 calendar year. Section 8 reinstates repealed state sales and use tax exemptions for candy and soft drinks (in conjunction with section 10) and for nonessential articles of tangible personal property furnished to customers who purchase food, meals, or beverages. Section 12 reinstates suspended state sales and use tax exemptions for agricultural compounds consumed by, administered to, or otherwise used in caring for livestock, semen used for agricultural or ranching purposes, and pesticides. Section 13 repeals a $500,000 annual cap on the amount of the state income tax credit that a taxpayer may claim for investing in qualified property within an enterprise zone. Sections 14 and 15 of the bill specify that existing increased penalties for certain traffic infractions occurring within a highway maintenance, repair, or construction zone apply only if one or more workers are present within the zone when the violation occurs. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Repeal of regulation of the department of revenue. (1) Emergency Regulation 39-26-102.13, which emergency rule was adopted June 1, 2010, is repealed, effective on the effective date of this section. (2) The office of legislative legal services shall forward a copy of Senate Bill 11-_____, enacted in 2011, to the secretary of state for purposes of informing the secretary of state of the general assembly's action repealing the rule specified in subsection (1) of this section. The secretary of state shall delete Emergency Regulation 39-26-102.13 from the code of Colorado regulations and include appropriate references of such repeal in the code of Colorado regulations consistent with the provisions of section 24-4-103 (11), Colorado Revised Statutes. SECTION 2. The introductory portion to 12-61-722 (1), Colorado Revised Statutes, is amended to read: 12-61-722. Conservation easement tax credit certificates. (1) The division shall receive claims from and issue certificates to certified conservation easement holders for income tax credits for conservation easements donated during the 2011 2012, and 2013 calendar years year in accordance with the provisions of section 39-22-522 (2.5), C.R.S. Nothing in this section shall be construed to restrict or limit the authority of the division to enforce the provisions of this part 7. The division may promulgate rules in accordance with article 4 of title 24, C.R.S., for the issuance of the certificates. In promulgating any such rules, the division may include but shall not be limited to provisions governing the following: SECTION 3. Repeal. 39-21-112 (3.5), Colorado Revised Statutes, is repealed as follows: 39-21-112. Duties and powers of executive director. (3.5) (a) If any retailer that does not collect Colorado sales tax refuses voluntarily to furnish any of the information specified in subsection (1) of this section when requested by the executive director of the department of revenue or his or her employee, agent, or representative, the executive director, by subpoena issued under the executive director's hand, may require the attendance of the retailer and the production by him or her of any of the foregoing information in the retailer's possession and may administer an oath to him or her and take his or her testimony. If the retailer fails or refuses to respond to said subpoena and give testimony, the executive director may apply to any judge of the district court of the state of Colorado to enforce such subpoena by any appropriate order, including, if appropriate, an attachment against the retailer as for contempt, and upon hearing, said judge has, for the purpose of enforcing obedience to the requirements of said subpoena, power to make such order as, in his or her discretion, he or she deems consistent with the law for punishment of contempts. (b) For purposes of this subsection (3.5), "retailer" shall have the same meaning as set forth in section 39-26-102 (8). (c) (I) Each retailer that does not collect Colorado sales tax shall notify Colorado purchasers that sales or use tax is due on certain purchases made from the retailer and that the state of Colorado requires the purchaser to file a sales or use tax return. (II) Failure to provide the notice required in subparagraph (I) of this paragraph (c) shall subject the retailer to a penalty of five dollars for each such failure, unless the retailer shows reasonable cause for such failure. (d) (I) (A) Each retailer that does not collect Colorado sales tax shall send notification to all Colorado purchasers by January 31 of each year showing such information as the Colorado department of revenue shall require by rule and the total amount paid by the purchaser for Colorado purchases made from the retailer in the previous calendar year. Such notification shall include, if available, the dates of purchases, the amounts of each purchase, and the category of the purchase, including, if known by the retailer, whether the purchase is exempt or not exempt from taxation. The notification shall state that the state of Colorado requires a sales or use tax return to be filed and sales or use tax paid on certain Colorado purchases made by the purchaser from the retailer. (B) The notification specified in sub-subparagraph (A) of this subparagraph (I) shall be sent separately to all Colorado purchasers by first-class mail and shall not be included with any other shipments. The notification shall include the words "Important Tax Document Enclosed" on the exterior of the mailing. The notification shall include the name of the retailer. (II) (A) Each retailer that does not collect Colorado sales tax shall file an annual statement for each purchaser to the department of revenue on such forms as are provided or approved by the department showing the total amount paid for Colorado purchases of such purchasers during the preceding calendar year or any portion thereof, and such annual statement shall be filed on or before March 1 of each year. (B) The executive director of the department of revenue may require any retailer that does not collect Colorado sales tax that makes total Colorado sales of more than one hundred thousand dollars in a year to file the annual statement described in sub-subparagraph (A) of this subparagraph (II) by magnetic media or another machine-readable form for that year. (III) (A) Failure to send the notification required in subparagraph (I) of this paragraph (d) shall subject the retailer to a penalty of ten dollars for each such failure, unless the retailer shows reasonable cause for such failure. (B) Failure to file the annual statement required in sub-subparagraph (A) of subparagraph (II) of this paragraph (d) shall subject the retailer to a penalty of ten dollars for each purchaser that should have been included in such annual statement, unless the retailer shows reasonable cause for such failure. SECTION 4. 39-22-504 (6) (a) and (6) (b), Colorado Revised Statutes, are amended to read: 39-22-504. Net operating losses. (6) (a) Notwithstanding any other provision of this section, the maximum amount of net operating loss that a corporation may subtract from federal taxable income pursuant to section 39-22-304 (3) (g) for a tax year commencing on or after January 1, 2011, but prior to January 1, 2014 July 1, 2011, is two hundred fifty thousand dollars. (b) All net operating losses may be carried forward one additional year for each tax year that by a corporation that is prohibited pursuant to paragraph (a) of this subsection (6) from subtracting a portion of such the net operating losses from the corporation's federal taxable income. SECTION 5. 39-22-516 (2.6) (b) (III), (2.6) (d) (I), and (2.6) (d) (III), Colorado Revised Statutes, are amended to read: 39-22-516. Tax credit for purchase of vehicles using alternative fuels - repeal. (2.6) (b) (III) There shall be allowed to any person a credit against the tax imposed by this article, not to exceed six thousand dollars, for each category 7 vehicle purchased by such person on or after January 1, 2010, but before January 1, 2011. (d) (I) Except as provided in subparagraph (II) of this paragraph (d), for the purposes of paragraph (c) of this subsection (2.6), the percentage of the difference in actual cost incurred or the percentage of the actual cost incurred that may be claimed as a credit pursuant to paragraph (b) of this subsection (2.6) shall be as follows: Category: Income tax years commencing on or after January 1, 2010, but prior to January 1, 2012: Category 1 85% Category 2 65% Category 3 75% Category 4 75% Category 5 25% Category 6 75% Category 7 50% (III) For the purposes of paragraph (c) of this subsection (2.6), the percentage of the difference in actual cost incurred or the percentage of the actual cost incurred that may be claimed as a credit for the purchase of a category 7 motor vehicle pursuant to subparagraph (III) of paragraph (b) of this subsection (2.6) shall be fifty percent. SECTION 6. 39-22-522 (2.5), Colorado Revised Statutes, is amended to read: 39-22-522. Credit against tax - conservation easements. (2.5) Notwithstanding any other provision of this section, for income tax years commencing during the 2011 2012, and 2013 calendar years year, a taxpayer conveying a conservation easement in 2011 2012, or 2013 and claiming a credit pursuant to this section shall, in addition to any other requirements of this section, submit a claim for the credit to the division of real estate in the department of regulatory agencies. The division shall issue a certificate for the claims received in the order submitted. After certificates have been issued for credits that exceed an aggregate of twenty-six million dollars for all taxpayers for income tax years commencing in each of during the 2011 2012, and 2013 calendar years year, any claims that exceed the amount allowed for a specified calendar year shall be placed on a wait list in the order submitted and a certificate shall be issued for use of the credit in 2012. or 2013. The division shall not issue credit certificates that exceed twenty-six million dollars for each income tax year years commencing in during the 2011 2012, and 2013 calendar years year. No claim for a credit shall be allowed for any income tax year commencing during the 2011 2012, or 2013 calendar years year unless a certificate has been issued by the division. The right to claim the credit shall be vested in the taxpayer at the time a credit certificate is issued. The division may promulgate rules in accordance with article 4 of title 24, C.R.S., for the issuance of certificates in accordance with this subsection (2.5). SECTION 7. 39-26-102 (3) (b) (II), (8), (13.5), (15), and (21) (b), Colorado Revised Statutes, are amended to read: 39-26-102. Definitions - repeal. As used in this article, unless the context otherwise requires: (3) "Doing business in this state" means the selling, leasing, or delivering in this state, or any activity in this state in connection with the selling, leasing, or delivering in this state, of tangible personal property by a retail sale as defined in this section, for use, storage, distribution, or consumption within this state. This term includes, but shall not be limited to, the following acts or methods of transacting business: (b) (II) Commencing March 1, 2010, if a retailer that does not collect Colorado sales tax is part of a controlled group of corporations, and that controlled group has a component member that is a retailer with physical presence in this state, the retailer that does not collect Colorado sales tax is presumed to be doing business in this state. For purposes of this subparagraph (II), "controlled group of corporations" has the same meaning as set forth in section 1563 (a) of the federal "Internal Revenue Code of 1986", as amended, and "component member" has the same meaning as set forth in section 1563 (b) of the federal "Internal Revenue Code of 1986", as amended. This presumption may be rebutted by proof that during the calendar year in question, the component member that is a retailer with physical presence in this state did not engage in any constitutionally sufficient solicitation in this state on behalf of the retailer that does not collect Colorado sales tax. (8) "Retailer" or "vendor" means a person doing business, in this state, known to the trade and public as such, and selling to the user or consumer, and not for resale. (13.5) (a) (I) "Standardized software" means: (A) Computer software, including prewritten upgrades, that is not designed or developed to the specifications of a specific purchaser; or (B) Computer software designed and developed to the specifications of a specific purchaser but then sold to another purchaser. (II) (A) "Standardized software" includes standardized software that is modified or enhanced even if such modification or enhancement is designed and developed to the specifications of a specific purchaser, unless such standardized software is a de minimis component of such software. (B) "Standardized software" shall not include software or information technology services that modify or enhance standardized software if there is a reasonable, separately stated charge, invoice, or other statement of price given to the purchaser for such software or information technology services that modify or enhance the standardized software. (C) Prior to January 1, 2011, it shall be sufficient if the reasonable, separately stated charge, invoice, or other statement of price referred to in sub-subparagraph (B) of this subparagraph (II) is separately identifiable based on the books and records of the vendor and need not be separately stated. (III) "Standardized software" includes the combination of two or more standardized software programs or portions thereof. (IV) "Standardized software" excludes maintenance agreements for the maintenance of standardized software. (V) "Standardized software" shall not include software developed for a person's or affiliate's own use. However, if such software is subsequently sold, such software sold shall be considered standardized software. (b) For purposes of this subsection (13.5), "computer software" or "software" means a set of coded instructions designed to cause a computer or automatic data processing hardware to perform a task. (15) (a) (I) "Tangible personal property" means corporeal personal property. The term shall not be construed to include newspapers, as legally defined by section 24-70-102, C.R.S., preprinted newspaper supplements that become attached to or inserted in and distributed with such newspapers, or direct mail advertising materials that are distributed in Colorado by any person engaged solely and exclusively in the business of providing cooperative direct mail advertising. except that, commencing March 1, 2010, for purposes of the state sales or use tax, "tangible personal property" shall include direct mail advertising materials that are distributed in Colorado by any person engaged solely and exclusively in the business of providing cooperative direct mail advertising. (II) No funding received from revenues received as a result of the passage of House Bill 10-1189, enacted in 2010, shall be used to fund additional full-time equivalent state employees. (b) (I) "Tangible personal property" includes standardized software without regard to how such standardized software is acquired by the purchaser or downloaded to the purchaser's computer. (II) The department of revenue may promulgate rules for apportioning tax in those instances in which standardized software is transferred for use in more than one state. Such rules shall be based only on those employees or users based permanently in the state. (c) (I) "Tangible personal property" shall include computer software if the computer software meets all of the following criteria: (A) The computer software is prepackaged for repeated sale or license; (B) The use of the computer software is governed by a tear-open nonnegotiable license agreement; and (C) The computer software is delivered to the customer in a tangible medium. Computer software is not delivered to the customer in a tangible medium if it is provided through an application service provider, delivered by electronic computer software delivery, or transferred by load and leave computer software delivery. (II) As used in this paragraph (c), unless the context otherwise requires: (A) "Application service provider" or "ASP" means an entity that retains custody over or hosts computer software for use by third parties. Users of the computer software hosted by an ASP typically will access the computer software via the internet. The ASP may or may not own or license the computer software, but generally will own and maintain hardware and networking equipment required for the user to access the computer software. Where the ASP owns the computer software, the ASP may charge the user a license fee for the computer software or a fee for maintaining the computer software or hardware used by its customer. (B) "Computer software" means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. (C) "Electronic computer software delivery" means computer software transferred by remote telecommunications to the purchaser's computer, where the purchaser does not obtain possession of any tangible medium in the transaction. (D) "Load and leave computer software delivery" means delivery of computer software to the purchaser by use of a tangible medium where the title to or possession of the tangible medium is not transferred to the purchaser, and where the computer software is manually loaded by the vendor, or the vendor's representative, at the purchaser's location. (E) "Prepackaged for repeated sale or license" means computer software that is prepackaged for repeated sale or license in the same form to multiple users without modification, and is typically sold in a shrink-wrapped box. (F) "Tangible medium" means a tape, disk, compact disc, card, or comparable physical medium. (G) "Tear-open nonnegotiable license agreement" means a license agreement contained on or in the package, which by its terms becomes effective upon opening of the package and accepting the licensing agreement. "Tear-open nonnegotiable license agreement" does not include a written license agreement or contract signed by the licensor and the licensee. (III) The internalized instruction code that controls the basic operations, such as arithmetic and logic, of the computer causing it to execute instructions contained in system programs is an integral part of the computer and is not normally accessible or modifiable by the user. Such internalized instruction code is considered part of the hardware and considered tangible personal property that is taxable pursuant to section 39-26-104 (1) (a). The fact that the vendor does or does not charge separately for such code is immaterial. (IV) If a retailer sells computer software to a Colorado purchaser that is considered tangible personal property taxable pursuant to section 39-26-104 (1) (a) and the Colorado purchaser pays the retailer for a quantity of computer software licenses with the intent to distribute the computer software to any of the purchaser's locations outside of Colorado, the measure of Colorado sales tax due is the total of the license fees associated only with the licenses that are actually used in Colorado. The Colorado purchaser shall provide a written statement to the retailer, attesting to the amount of the license fees associated with Colorado and with points outside of Colorado. The written statement shall relieve the retailer of any liability associated with the proration. (21) (b) (I) Notwithstanding the provisions of paragraph (a) of this subsection (21), sales and purchases of electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel for use in processing, manufacturing, mining, refining, irrigation, construction, telegraph, telephone, and radio communication, street transportation services, and all industrial uses shall not be deemed to be wholesale sales and shall not be exempt from state sales taxation for the period commencing March 1, 2010, and ending June 30, 2012; except that this paragraph (b) shall not apply to sales and purchases of: (A) Diesel fuel purchased for off-road use; (B) Electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel purchased for agricultural purposes; or (C) Coal, gas, fuel oil, steam, coke, or nuclear fuel for use in generating electricity. (II) This paragraph (b) is repealed, effective July 1, 2012. SECTION 8. 39-26-707 (1) (c), (1) (d), (1.5), (2) (b), (2) (c), (2) (d), (3), and (4), Colorado Revised Statutes, are amended to read: 39-26-707. Food, meals, and beverages - definitions. (1) The following shall be exempt from taxation under the provisions of part 1 of this article: (c) Any sale of any article to a retailer or vendor of food, meals, or beverages, which article is to be furnished to a consumer or user for use with articles of tangible personal property purchased at retail, if a separate charge is not made for the article to the consumer or user, if such article becomes the property of the consumer or user, together with the food, meals, or beverages purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on or after March 1, 2010, any such article that is nonessential to the consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be subject to state sales taxation; (d) Any sale of any container or bag to a retailer or vendor of food, meals, or beverages, which container or bag is to be furnished to a consumer or user for the purpose of packaging or bagging articles of tangible personal property purchased at retail, if a separate charge is not made for the container or bag to the consumer or user, if such container or bag becomes the property of the consumer or user, together with the food, meals, or beverages purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on and after March 1, 2010, any such container or bag that is nonessential to the consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be subject to state sales taxation; and (1.5) (a) Notwithstanding the provisions of paragraph (e) of subsection (1) of this section, on and after May 1, 2010, sales of candy and soft drinks shall be subject to state sales taxation. (b) For the purposes of this subsection (1.5): (I) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" shall not include any preparation containing flour and shall require no refrigeration. (II) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners. "Soft drinks" do not include beverages that contain milk or milk products, soy, rice, or similar milk substitutes, or greater than fifty percent of vegetable or fruit juice by volume. (2) The following shall be exempt from taxation under the provisions of part 2 of this article: (b) The storage, use, or consumption of any article by a retailer or vendor of food, meals, or beverages, which article is to be furnished to a consumer or user for use with articles of tangible personal property purchased at retail, if a separate charge is not made for the article to the consumer or user, if the article becomes the property of the consumer or user, together with the food, meals, or beverages purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on and after March 1, 2010, any such article stored, used, or consumed that is nonessential to the end consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be subject to state use taxation; (c) The storage, use, or consumption of any container or bag by a retailer or vendor of food, meals, or beverages, which container or bag is to be furnished to a consumer or user for the purpose of packaging or bagging articles of tangible personal property purchased at retail, if a separate charge is not made for the container or bag to the consumer or user, if the container or bag becomes the property of the consumer or user, together with the food, meals, or beverages purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on and after March 1, 2010, any such container or bag stored, used, or consumed that is nonessential to the end consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be subject to state use taxation; and (d) (I) Effective January 1, 1980, the storage, use, or consumption of food as defined in section 39-26-102 (4.5). except that, on and after May 1, 2010, the storage, use, or consumption of candy and soft drinks shall be subject to state use taxation. (II) For the purposes of this paragraph (d): (A) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" shall not include any preparation containing flour and shall require no refrigeration. (B) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners. "Soft drinks" do not include beverages that contain milk or milk products, soy, rice, or similar milk substitutes, or greater than fifty percent of vegetable or fruit juice by volume. (3) The department of revenue may promulgate rules, in accordance with article 4 of title 24, C.R.S., to provide a means by which a person who sells candy or soft drinks at retail may, if necessary, reasonably estimate the amount of sales taxes due on such candy and soft drinks. For any return made prior to August 1, 2010, a person who sells candy or soft drinks at retail shall not be liable for any interest or other penalty imposed as a result of an error made in connection with the elimination of the exemption from state sales tax for sales of candy and soft drinks, as defined in paragraph (b) of subsection (1.5) of this section, by House Bill 10-1191, enacted in 2010. (4) For any return made prior to June 1, 2010, a person who sells or stores, uses, or consumes items described in paragraphs (c) and (d) of subsection (1) and paragraphs (b) and (c) of subsection (2) of this section that are nonessential to the end consumer or user shall not be liable for any interest or other penalty imposed as a result of an error made in connection with the elimination of the exemption for such nonessential items from state sales and use tax by House Bill 10-1194, enacted in 2010. SECTION 9. 39-26-709 (1) (c) (III), Colorado Revised Statutes, is amended to read: 39-26-709. Machinery and machine tools. (1) (c) As used in this subsection (1): (III) "Manufacturing" means the operation of producing a new product, article, substance, or commodity or producing standardized software as defined in section 39-26-102 (13.5) (a), different from and having a distinctive name, character, or use from raw or prepared materials. SECTION 10. 39-26-714 (2), (3), (4), and (5), Colorado Revised Statutes, are amended to read: 39-26-714. Vending machines - definitions. (2) On and after January 1, 2000, all sales and purchases of food, as defined in section 39-26-102 (4.5), by or through vending machines shall be exempt from taxation under the provisions of part 1 of this article. except that, on and after May 1, 2010, sales and purchases of candy and soft drinks by or through vending machines shall be subject to state sales taxation. Absent an express provision in the contract to the contrary, any vending machine contract that references the price at which products shall be sold from a vending machine shall be interpreted to include any applicable sales tax as an addition to the referenced price. (3) On and after January 1, 2000, the storage, use, or consumption of food, as defined in section 39-26-102 (4.5), purchased by or through vending machines shall be exempt from taxation under the provisions of part 2 of this article. except that, on and after May 1, 2010, the storage, use, or consumption of candy and soft drinks purchased by or through vending machines shall be subject to state use taxation. (4) For the purposes of this section: (a) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" shall not include any preparation containing flour and shall require no refrigeration. (b) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners. "Soft drinks" do not include beverages that contain milk or milk products, soy, rice, or similar milk substitutes, or greater than fifty percent of vegetable or fruit juice by volume. (5) The department of revenue shall promulgate rules, in accordance with article 4 of title 24, C.R.S., to provide a means by which a person who sells candy or soft drinks purchased by and through vending machines may, if necessary, reasonably estimate the amount of sales taxes due on such candy and soft drinks. For any return made prior to August 1, 2010, a person who sells candy or soft drinks at retail shall not be liable for any interest or other penalty imposed as a result of an error made in connection with the elimination of the exemption from state sales tax for sales of candy and soft drinks, as defined in subsection (4) of this section, by House Bill 10-1191, enacted in 2010. SECTION 11. Repeal. 39-26-715 (2) (b) (II) and (2) (b) (III), Colorado Revised Statutes, are repealed as follows: 39-26-715. Fuel and oil. (2) The following shall be exempt from taxation under the provisions of part 2 of this article: (b) (II) Notwithstanding the provisions of subparagraph (I) of this paragraph (b), the storage, use, or consumption described in said subparagraph (I), shall not be exempt from state use taxation for the period commencing March 1, 2010, and ending June 30, 2012; except that this subparagraph (II) shall not apply to the storage, use, and consumption: (A) For railroad transportation services; (B) Of diesel fuel purchased for off-road use; (C) Of electricity, coal, gas, fuel oil, steam, coke, or nuclear fuel purchased for agricultural purposes; or (D) Of coal, gas, fuel oil, steam, coke, or nuclear fuel for use in generating electricity. (III) Subparagraph (II) of this paragraph (b) and this subparagraph (III) are repealed, effective July 1, 2012. SECTION 12. 39-26-716 (2) (d), (2) (e), (3) (d), (3) (e), and (5), Colorado Revised Statutes, are amended to read: 39-26-716. Agriculture and livestock - special fuels - definitions. (2) The following shall be exempt from taxation under the provisions of part 1 of this article: (d) Except as otherwise provided in subsection (5) of this section, All sales and purchases of agricultural compounds to be consumed by, administered to, or otherwise used in caring for livestock and all sales and purchases of semen for agricultural or ranching purposes; and (e) Except as otherwise provided in subsection (5) of this section, All sales and purchases of pesticides that are registered by the commissioner of agriculture for use in the production of agricultural and livestock products pursuant to the provisions of the "Pesticide Act", article 9 of title 35, C.R.S., and offered for sale by dealers licensed to sell such pesticides pursuant to section 35-9-115, C.R.S. (3) The following shall be exempt from taxation under the provisions of part 2 of this article: (d) Except as otherwise provided in subsection (5) of this section, The storage, use, or consumption of agricultural compounds to be consumed by, administered to, or otherwise used in caring for livestock and semen used for agricultural or ranching purposes; and (e) Except as otherwise provided in subsection (5) of this section, The storage, use, or consumption of pesticides that are registered by the commissioner of agriculture for use in the production of agricultural and livestock products pursuant to the provisions of the "Pesticide Act", article 9 of title 35, C.R.S., and offered for sale by dealers licensed to sell such pesticides pursuant to section 35-9-115, C.R.S. (5) Notwithstanding any other provision of law, all sales and purchases of the items described in paragraph (d) or (e) of subsection (2) or paragraph (d) or (e) of subsection (3) of this section shall not be exempt from state sales and use taxation under the provisions of this article for the period commencing March 1, 2010, and ending June 30, 2013. SECTION 13. 39-30-104 (2) (b) and (2.5), Colorado Revised Statutes, are amended to read: 39-30-104. Credit against tax - investment in certain property - repeal. (2) (b) In addition to the limitations set forth in paragraph (a) of this subsection (2), for income tax years commencing on or after January 1, 2011, but prior to January 1, 2014, any taxpayer that is eligible to claim a credit pursuant to subsection (1) of this section in excess of five hundred thousand dollars shall defer claiming any amount of the credit allowed pursuant to this section that exceeds five hundred thousand dollars until an income tax year commencing on or after January 1, 2014. The five hundred thousand dollar limitation specified in this paragraph (b) shall apply to any credit allowed in the current year including any amount carried forward from a prior year. (2.5) (a) Notwithstanding the provisions of section 39-22-507.5 (7) (b), and except as otherwise provided in paragraph (b) of this subsection (2.5), any excess credit claimed pursuant to this section shall be an investment tax credit carryover to each of the twelve income tax years following the unused credit year. (b) A taxpayer that deferred claiming any credit in excess of five hundred thousand dollars during an income tax year commencing on or after January 1, 2011, but prior to January 1, 2014, pursuant to paragraph (b) of subsection (2) of this section shall be allowed to claim the deferred credit as an investment tax credit carryover for twelve income tax years following the year the credit was originally allowed plus one additional income tax year for each income tax year that the credit was deferred pursuant to paragraph (b) of subsection (2) of this section. SECTION 14. 42-4-614 (1) and (2), Colorado Revised Statutes, are amended to read: 42-4-614. Designation of highway maintenance, repair, or construction zones - signs - increase in penalties for speeding violations. (1) (a) If maintenance, repair, or construction activities are occurring or will occur within four hours on a portion of a state highway, the department of transportation may designate such portion of the highway as a highway maintenance, repair, or construction zone. Any person who commits certain violations listed in section 42-4-1701 (4) in a maintenance, repair, or construction zone that is designated pursuant to this section when one or more department of transportation employees or other workers are present within the zone is subject to the increased penalties and surcharges imposed by section 42-4-1701 (4) (c). (b) If maintenance, repair, or construction activities are occurring or will occur within four hours on a portion of a roadway that is not a state highway, the public entity conducting the activities may designate such portion of the roadway as a maintenance, repair, or construction zone. A person who commits certain violations listed in section 42-4-1701 (4) in a maintenance, repair, or construction zone that is designated pursuant to this section when one or more employees of the public entity or other workers are present within the zone is subject to the increased penalties and surcharges imposed by section 42-4-1701 (4) (c). (2) The department of transportation or other public entity shall designate a maintenance, repair, or construction zone by erecting or placing an appropriate sign in a conspicuous place before the area where the maintenance, repair, or construction activity is taking place or will be taking place within four hours. Such sign shall notify the public that increased penalties for certain traffic violations are in effect in such zone when one or more workers are present within the zone. The department of transportation or other public entity shall erect or place a second sign after such zone indicating that the increased penalties for certain traffic violations are no longer in effect. A maintenance, repair, or construction zone begins at the location of the sign indicating that increased penalties are in effect and ends at the location of the sign indicating that the increased penalties are no longer in effect. SECTION 15. 42-4-1701 (4) (c) (I), (4) (c) (II) (A), (4) (c) (III), and (4) (c) (IV), Colorado Revised Statutes, are amended to read: 42-4-1701. Traffic offenses and infractions classified - penalties - penalty and surcharge schedule - repeal. (4) (c) (I) The penalties and surcharges imposed for speeding violations under subsection (4) (a) (I) (L) of this section sub-subparagraph (L) of subparagraph (I) of paragraph (a) of this subsection (4) shall be doubled if a speeding violation occurs within a maintenance, repair, or construction zone that is designated by the department of transportation pursuant to section 42-4-614 (1) (a) when one or more department of transportation employees or other workers are present within the zone; except that the penalty for violating section 42-4-1101 (1) or (8) (b) by twenty to twenty-four miles per hour over the reasonable and prudent speed or over the maximum lawful speed limit of seventy-five miles per hour shall be five hundred forty dollars. (II) (A) The penalties and surcharges imposed for violations under sub-subparagraphs (C), (G), (H), (I), (J), (K), (N), and (O) of subparagraph (I) of paragraph (a) of this subsection (4) shall be doubled if a violation occurs within a maintenance, repair, or construction zone that is designated by the department of transportation pursuant to section 42-4-614 (1) (a) when one or more department of transportation employees or other workers are present within the zone; except that the fines for violating sections 42-4-314, 42-4-610, 42-4-613, 42-4-706, 42-4-707, 42-4-708, 42-4-709, 42-4-710, 42-4-1011, 42-4-1012, 42-4-1404, 42-4-1408, and 42-4-1414 shall not be doubled under this subparagraph (II). (III) The penalties and surcharges imposed for speeding violations under sub-subparagraph (L) of subparagraph (I) of paragraph (a) of this subsection (4) shall be doubled if a speeding violation occurs within a maintenance, repair, or construction zone that is designated by a public entity pursuant to section 42-4-614 (1) (b) when one or more employees of the public entity or other workers are present within the zone. (IV) The penalties and surcharges imposed for violations under sub-subparagraphs (C), (G), (H), (I), (J), (K), (N), and (O) of subparagraph (I) of paragraph (a) of this subsection (4) shall be doubled if a violation occurs within a maintenance, repair, or construction zone that is designated by a public entity pursuant to section 42-4-614 (1) (b) when one or more employees of the public entity or other workers are present within the zone; except that the fines for violating sections 42-4-314, 42-4-610, 42-4-613, 42-4-706, 42-4-707, 42-4-708, 42-4-709, 42-4-710, 42-4-1011, 42-4-1012, 42-4-1404, 42-4-1408, and 42-4-1414 shall not be doubled under this subparagraph (IV). SECTION 16. Effective date - applicability. This act shall take effect July 1, 2011, and section 5 of this act shall apply to motor vehicles purchased or modified on or after January 1, 2011. SECTION 17. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.