First Regular Session Sixty-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 05-0184.01 Nicole Hoffman HOUSE BILL 05-1022 HOUSE SPONSORSHIP Borodkin, SENATE SPONSORSHIP (None), House Committees Senate Committees Business Affairs and Labor A BILL FOR AN ACT Concerning requirements for recipients of economic development incentives allowed on the basis of new job creation. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Requires any person or entity that receives a grant or loan from the Colorado economic development commission (commission) on the basis of a proposal to create new jobs that meet wage and benefit requirements to file an annual progress report with the commission. Specifies the information that the person or entity shall include in the report. Requires the commission to provide the information collected each year in the reports to the general assembly. Specifies that the reports submitted to the commission and the department of revenue (department) shall be open records, but prohibits the disclosure to the public of information that reveals any income tax return or the salary of any employee. Requires a person or entity that receives a grant or loan from the commission to fulfill the person's or entity's job creation, wage, and benefit requirements within 2 years of receiving the grant or loan and to maintain such requirements for 5 years. Requires the commission to recapture the funds expended on a grant or loan from the recipient if the recipient fails to fulfill or maintain the job, wage, and benefit requirements. Specifies the manner in which a grant or loan shall be recaptured. Requires every taxpayer that claims an income tax credit for creating new business facility employees within an enterprise zone to file an annual progress report with the commission and the department for each year that the credit is claimed. Specifies the information that the taxpayer shall include in the report to the commission and the department. Requires the commission to provide the information collected each year in its annual reports to the general assembly. Allows the department to review the reports and conduct an audit of any taxpayer on the basis of information submitted in the reports. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. 24-46-104 (2), Colorado Revised Statutes, is amended to read: 24-46-104. Powers and duties of commission. (2) The commission shall report to the general assembly no later than February 1 of each year regarding the work of the commission. The report shall include, but shall not be limited to, the information required to be collected by the commission pursuant to sections 24-46-107 and 39-30-110, C.R.S. SECTION 2. Part 1 of article 46 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read: 24-46-107. Reporting requirement - new jobs created. (1) Every person or entity that receives a grant or loan from the commission pursuant to this article, awarded in part or in whole on the basis of the person's or entity's proposal to create new jobs with wage and benefit requirements, shall file an annual progress report with the commission. The annual progress report shall include, but shall not be limited to, the following: (a) The name of the person or entity that received the grant or loan, and if the recipient is an entity, the name of the chief officer of the entity; (b) The business address and business phone number of the person or entity that received the grant or loan; (c) The amount of the grant or loan awarded to the person or entity by the commission; (d) A statement of the number of new jobs that the person or entity proposed to create before receiving the grant or loan, categorized by full-time permanent, part-time permanent, temporary, and contract jobs; (e) A statement of the number of new jobs that the person or entity that received the grant or loan has created to date, categorized by full-time permanent, part-time permanent, temporary, and contract jobs; (f) Payroll or other data to verify the number of jobs created by the person or entity; (g) The average annual compensation level of employees, including benefits, of the new jobs created and retained, if applicable, categorized by full-time permanent, part-time permanent, temporary, and contract jobs; (h) A statement as to whether the person or entity that received the grant or loan reduced employment at any other site controlled by the person or entity in the state as a result of automation, merger, acquisition, corporate restructuring, or other business activity; and (i) Any other information reasonably required by the commission to evaluate the progress of the person or entity that received the grant or loan and the effectiveness of awarding the grant or loan. (2) An annual progress report submitted to the commission shall include a signed certification by the person who received the grant or loan or, if the recipient is an entity, the chief officer of the entity that received the grant or loan as to the accuracy of the annual progress report. (3) Any person or entity that receives a grant or loan pursuant to this article shall file the first annual progress report required pursuant to subsection (1) of this section no later than one year and thirty days after the receipt of the grant or loan, and then every year thereafter for five years in the case of a grant or, in the case of a loan, every year thereafter until the loan is repaid in full. (4) The commission shall include the information collected each year pursuant to subsection (1) of this section in the commission's report to the general assembly pursuant to section 24-46-104 (2). The commission's report shall also include a statement as to whether the person or entity that received the grant or loan has achieved the person's or entity's job creation, wage, and benefit requirements. (5) The commission shall inform a person or entity that receives a grant or loan that the person or entity is required to comply with the requirements of this section at the time the commission awards the grant or loan. (6) The information submitted in the annual progress report to the commission shall be considered public records as defined in section 24-72-202 (6) and shall be preserved for at least five years by the commission. The commission shall be the custodian of the reports and shall make the reports available for inspection by any person at reasonable times. Nothing in this subsection (6) shall be construed to permit the disclosure to the public of any Colorado income tax return or of any information that reveals the amount of compensation paid to any individual employee. 24-46-108. Recapture. (1) Any person or entity that receives a grant or loan pursuant to this article based in whole or in part on fulfilling job creation, wage, and benefit requirements shall fulfill the requirements within two years of receiving the grant or loan. The recipient shall maintain the job, wage, and benefit requirements for five years. (2) If the requirements specified in subsection (1) of this section are not fulfilled, the commission shall recapture the funds expended on the grant or loan from the person or entity that received the grant or loan. Upon a failure by the person or entity to create the required number of jobs or to pay the required wages or benefits, the amount recaptured shall be based on the pro rata amount that the unfulfilled jobs, wages, or benefits bear to the total amount of the grant or loan. (3) The commission shall provide notice and explanation to the person or entity that received the grant or loan of its intent to recapture the grant or loan and state the amount to be recaptured. The recipient person or entity shall remit the amount to the commission within sixty calendar days of the date of the notice. Any moneys that are remitted to the commission pursuant to this section shall be deposited in the fund created in section 24-46-105 (1) and shall be used for the purposes of the fund. SECTION 3. 39-30-105, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SUBSECTION to read: 39-30-105. Credit for new business facility employees. (6) Any taxpayer that claims a credit against income tax pursuant to this section shall be subject to the reporting requirements specified in section 39-30-110. SECTION 4. Article 30 of title 39, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 39-30-110. Reporting requirements - taxpayers claiming credit against tax for new business facility employees. (1) Any taxpayer that claims a credit against the income tax imposed by article 22 of this title for hiring a new business facility employee pursuant to section 39-30-105 shall file an annual progress report with the Colorado economic development commission created in section 24-46-102, C.R.S., and the department of revenue within ninety days of claiming the credit. The annual progress report shall be submitted in addition to any information that the taxpayer is required to submit to the enterprise zone administrator of the enterprise zone in which the taxpayer's business is located, pursuant to section 39-30-103. (2) The annual progress report shall include, but shall not be limited to, the following: (a) (I) If the taxpayer is a corporation, the corporate name of the taxpayer and the name of the chief officer of the taxpayer; or (II) If the taxpayer is one or more individuals doing business as a partnership or other pass-through entity under a distinct business name, the business name used by the partnership or other pass-through entity. (b) The business address and business phone number of the taxpayer; (c) A statement of the number of new business facility employees for which the taxpayer claimed a credit and the total amount of the credit claimed for the income tax year for which the credit was claimed; (d) Payroll or other data to verify the number of jobs created by the taxpayer during the income tax year for which the credit was claimed; (e) A statement of the total number of new jobs retained during the income tax year for which the credit was claimed if the taxpayer claimed a credit pursuant to section 39-30-105 for the prior income tax year; (f) The average annual compensation level, including benefits, of the new jobs created and retained, if applicable, categorized by full-time permanent, part-time permanent, temporary, and contract jobs; (g) A statement as to whether the taxpayer reduced employment at any other site in the state that is controlled by the taxpayer as a result of automation, merger, acquisition, corporate restructuring, or other business activity; and (h) Any other information reasonably required by the Colorado economic development commission or the department of revenue to evaluate the progress and effectiveness of the credit for new business facility employees allowed pursuant to section 39-30-105. (3) An annual progress report submitted to the Colorado economic development commission and the department of revenue shall include a signed certification as to the accuracy of the progress report by the chief officer of a corporate taxpayer or by an individual taxpayer, or an authorized agent thereof, claiming a credit due to an ownership interest in a partnership or other pass-through entity. (4) The Colorado economic development commission shall include the annual progress reports submitted to the commission pursuant to this section in the commission's report to the general assembly pursuant to section 24-46-104 (2), C.R.S. (5) The department of revenue may review the annual progress reports submitted pursuant to this section and, on the basis of any information contained in such reports, conduct an audit of the taxpayer pursuant to section 24-35-108 (1) (c), C.R.S. (6) The information submitted in the annual progress report to the Colorado economic development commission and the department of revenue shall be considered public records as defined in section 24-72-202 (6), C.R.S., and shall be preserved for at least five years by the commission. The commission shall be the custodian of the reports and shall make the reports available for inspection by any person at reasonable times. Nothing in this subsection (6) shall be construed to permit the disclosure to the public of any Colorado income tax return or of any information that reveals the amount of compensation paid to any individual employee. SECTION 5. Effective date - applicability. (1) This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution (August 10, 2005, if adjournment sine die is on May 11, 2005); except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor. (2) The provisions of this act shall apply to income tax credits claimed in income tax years commencing on or after the applicable effective date of this act and to grants or loans that are received on or after the effective date of this act.