Second Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 16-0338.01 Ed DeCecco x4216 HOUSE BILL 16-1089 HOUSE SPONSORSHIP Moreno, SENATE SPONSORSHIP Holbert, House Committees Senate Committees Finance A BILL FOR AN ACT Concerning an income tax credit for charitable contributions to an eligible endowment or institutional fund. 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.) Beginning with the 2016 income tax year, the bill allows an individual taxpayer to claim an income tax credit for a contribution of money, securities, or property to an eligible endowment or institutional fund that is equal to 25% of the contribution. An "eligible endowment or institutional fund" means an endowment fund or an institutional fund that belongs to a Colorado charitable organization and that is managed in accordance with the "Uniform Prudent Management of Institutional Funds Act". A Colorado charitable organization that receives the credit is required to provide a credit certificate to the taxpayer, who must submit the certificate to the department of revenue, along with his or her tax return. The maximum credit an individual may claim for an income tax year is $25,000. Unused credits are not refunded but may be carried forward for up to 5 income tax years. A taxpayer may not claim the credit if he or she claims any other state income tax credit for the same charitable contribution. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add 39-22-538 as follows: 39-22-538. Credit for charitable contributions - legislative declaration - definitions. (1) The general assembly hereby finds and declares that the intended purpose of the tax credit created in this section is to encourage the donation of money, property, and securities to eligible endowment or institutional funds for charitable purposes, which will result in increased economic activity and community development within the state. (2) As used in this section: (a) "Colorado charitable organization" means an organization that is exempt from federal taxation under section 501 (c) (3) of the internal revenue code and that is organized and operated within Colorado. (b) "Eligible endowment or institutional fund" means an endowment fund or an institutional fund, as respectively defined in section 15-1-1102 (2) and (5), C.R.S., that belongs to a Colorado charitable organization and that is managed in accordance with the "Uniform Prudent Management of Institutional Funds Act", part 11 of article 1 of title 15, C.R.S. "Eligible endowment or institutional fund" does not include a donor advised fund, as defined in section 4966 (d) (2) (A) of the internal revenue code, or a private foundation, as defined in section 509 (a) of the internal revenue code. (3) (a) For income tax years commencing on or after January 1, 2016, an individual who makes a contribution of money, securities, or property to an eligible endowment or institutional fund during the income tax year is allowed a credit against the income taxes imposed by this article in an amount equal to twenty-five percent of the total value of the contribution. The maximum total credit an individual may claim under this section for all of the individual's contributions in a taxable year is twenty-five thousand dollars. (b) (I) A Colorado charitable organization shall issue a credit certificate to the taxpayer that: (A) Identifies the taxpayer; (B) Identifies the Colorado charitable organization; (C) Identifies the amount of a monetary contribution or the cash value of a nonmonetary contribution; and (D) Certifies that the contribution was made to an eligible endowment or institutional fund. (II) To claim the credit under this section, the taxpayer must include the credit certificate with the income tax return filed with the department of revenue. (4) If the credit exceeds the amount of income tax due on the income of the taxpayer for the tax year during which the contribution was made, the amount of the unused credit is not refunded. The unused credit 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. (5) A taxpayer may not claim the credit otherwise allowed under this section if the taxpayer claims any other state income tax credit for the same charitable contribution. SECTION 2. 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 10, 2016, if adjournment sine die is on May 11, 2016); 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.