First Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 15-0716.01 Nicole Myers x4326 SENATE BILL 15-127 SENATE SPONSORSHIP Garcia, Donovan HOUSE SPONSORSHIP Dore, Esgar Senate Committees House Committees Agriculture, Natural Resources, & Energy Finance A BILL FOR AN ACT Concerning tax incentives for agritourism-related activities. 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.) For income tax years commencing on or after January 1, 2016, but before January 1, 2021, the bill allows a private advertising or marketing agency (agency) to deduct from its federal taxable income for state income tax purposes an amount equal to 50% of the costs the agency incurs in donating advertising or marketing services to a local government with fewer than 120,000 residents, for the purpose of advertising or marketing an agritourism activity hosted by or occurring within the boundaries of the local government. An agency that donates a portion of the advertising or marketing services provided for advertising or marketing an agritourism activity and receives compensation from the local government for a portion of such services provided may deduct 50% of only the costs that were donated. An agency is prohibited from deducting more than $10,000 in any income tax year for which the deduction is claimed. In addition, for income tax years commencing on or after January 1, 2015, but before January 1, 2020, the bill allows a taxpayer who purchases equipment to be used for agritourism purposes to claim an income tax credit in an amount equal to the purchase price of the equipment. A taxpayer is not allowed to claim more than $500 in any income tax year. If the amount of the credit allowed exceeds the amount of the taxpayer's income tax liability for the income tax year during which the purchase was made, the amount of the tax credit may not be refunded, but may be carried forward for up to 5 years. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. The general assembly hereby finds and declares that the state and the people of the state derive numerous economic and personal benefits from agritourism activities. Therefore, it is the intent of the general assembly to provide a tax incentive to advertising agencies that donate services to small local governments to promote agritourism-related activities. In addition, it is the intent of the general assembly to provide a tax incentive for the purchase of agritourism-related equipment to encourage people who own or lease agricultural land to provide opportunities for citizens and visitors to the state to participate in agritourism activities. SECTION 2. In Colorado Revised Statutes, 39-22-104, add (4) (u) as follows: 39-22-104. Income tax imposed on individuals, estates, and trusts - single rate - definitions - repeal. (4) There shall be subtracted from federal taxable income: (u) (I) For income tax years commencing on or after January 1, 2016, but before January 1, 2021, to the extent not otherwise subtracted from federal taxable income, an amount equal to fifty percent of the value of advertising or marketing services donated by a private advertising or marketing agency to a local government with fewer than one hundred twenty thousand residents for the purpose of advertising or marketing an agritourism activity hosted by or occurring within the boundaries of the local government. A private advertising or marketing agency that donates a portion of the advertising or marketing services provided for advertising or marketing an agritourism activity and receives compensation from the local government for a portion of such services provided may subtract fifty percent of only the value of the services that were donated. The total amount of the subtraction pursuant to this paragraph (u) shall not exceed ten thousand dollars for any taxpayer in any income tax year. (II) For purposes of this paragraph (u), unless the context otherwise requires: (A) "Agritourism activity" has the same meaning as "agricultural recreation or agritourism activity", as defined in section 13-21-121 (2) (b), C.R.S. (B) "Local government" means any county, city and county, city, or town, whether home rule or statutory, or any school district, special district, authority, or other political subdivision of the state. (III) This paragraph (u) is repealed, effective January 1, 2022. SECTION 3. In Colorado Revised Statutes, 39-22-304, add (3) (o) as follows: 39-22-304. Net income of corporation - repeal. (3) There shall be subtracted from federal taxable income: (o) (I) For income tax years commencing on or after January 1, 2016, but before January 1, 2021, to the extent not otherwise subtracted from federal taxable income, an amount equal to fifty percent of the value of advertising or marketing services donated by a private advertising or marketing agency to a local government with fewer than one hundred twenty thousand residents for the purpose of advertising or marketing an agritourism activity hosted by or occurring within the boundaries of the local government. A private advertising or marketing agency that donates a portion of the advertising or marketing services provided for advertising or marketing an agritourism activity and receives compensation from the local government for a portion of such services provided may subtract fifty percent of only the value of the services that were donated. The total amount of the subtraction pursuant to this paragraph (o) shall not exceed ten thousand dollars for any taxpayer in any income tax year. (II) For purposes of this paragraph (o), unless the context otherwise requires: (A) "Agritourism activity" has the same meaning as "agricultural recreation or agritourism activity", as defined in section 13-21-121 (2) (b), C.R.S. (B) "Local government" means any county, city and county, city, or town, whether home rule or statutory, or any school district, special district, authority, or other political subdivision of the state. (III) This paragraph (o) is repealed, effective January 1, 2022. SECTION 4. In Colorado Revised Statutes, add 39-22-538 as follows: 39-22-538. Tax credit for agritourism equipment purchases - legislative declaration - definitions - repeal. (1) For purposes of this section, unless the context otherwise requires: (a) "Agritourism activity" has the same meaning as "agricultural recreation or agritourism activity", as defined in section 13-21-121 (2) (b), C.R.S. (b) "Equipment" means a device used to engage in an agritourism activity. (c) "Facility" means a privately owned and operated farm, ranch, or other property on which the opportunity to engage in one or more agritourism activities is offered to a participant, regardless of whether it is situated in an incorporated area or unincorporated area. (d) "Participant" means a person who engages in an agritourism activity, whether or not a fee is paid to participate in the activity. (e) "Taxpayer" means a person who owns or leases a facility in the state. (2) For income tax years commencing on or after January 1, 2015, but before January 1, 2020, a taxpayer who purchases agritourism equipment to be used at a facility during the income tax year is allowed a credit against the income taxes imposed by this article in an amount equal to the purchase price of the equipment; except that the total amount of the credit claimed in any income tax year for equipment to be used at any one facility shall not exceed five hundred dollars. (3) If the amount of the credit allowed pursuant to this section exceeds the amount of income tax due on the income of the taxpayer for the income tax year during which the purchase was made, the amount of the tax credit not used as an offset against income taxes in such income tax year may not be allowed as a refund, but may be carried forward and applied against the income tax due in each of the five succeeding income tax years, but must first be applied against the income tax due for the earliest of the income tax years possible. (4) This section is repealed, effective January 1, 2021. SECTION 5. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 5, 2015, if adjournment sine die is on May 6, 2015); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.