First Regular Session
Sixty-second General Assembly
LLS NO. 99-0391.01 Bob Lackner HOUSE BILL 99-1139
STATE OF COLORADO
BY REPRESENTATIVE Grossman
FINANCE
A BILL FOR AN ACT
101 CONCERNING AN EXCLUSION OF CERTAIN EARNED INCOME FROM
102 COLORADO TAXABLE INCOME, AND, IN CONNECTION THEREWITH,
103 EXCLUDING CERTAIN WAGE AND BUSINESS INCOME FROM THE
104 COLORADO INCOME TAX IMPOSED ON INDIVIDUALS, ESTATES, AND
105 TRUSTS WHEN STATE REVENUES FOR THE PREVIOUS FISCAL YEAR
106 EXCEEDED THE CONSTITUTIONAL LIMITATION ON FISCAL YEAR
107 SPENDING AND ARE REQUIRED TO BE REFUNDED.
Bill Summary
(Note: This summary applies to this bill as introduced and does
not necessarily reflect any amendments that may be subsequently
adopted.)
Subject to certain limitations, provides that, for income tax years
commencing on or after January 1, 2000, up to a specified percentage of
the aggregate amount of the gross income from wages and business per
taxable year is excluded from the federal taxable income of individuals,
estates, and trusts for state income tax purposes.
Provides that a taxpayer may make such modification only in an
income tax year when there are state revenues for the previous fiscal year
in excess of the constitutional limitation on state fiscal year spending that
are required to be refunded.
Specifies that the percentage of the aggregate amount of wages and
business income to be used in calculating the modification is to be
calculated such that the aggregate amount of the modification will be the
equivalent of $300 million or the amount of excess revenues to be
refunded, whichever is less. Requires the executive director of the
[ ] denotes HOUSE amendment. { } denotes SENATE amendment.
Capital letters indicate new material to be added to existing statute.
Dashes through the words indicate material to be deleted from existing statute.
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department of revenue to calculate the specified percentage.
Provides for publication of the percentage on which the
modification is based in rules promulgated by the executive director.
1 Be it enacted by the General Assembly of the State of Colorado:
2 SECTION 1. 39-22-104, Colorado Revised Statutes, is amended
3 BY THE ADDITION OF A NEW SUBSECTION to read:
4 39-22-104. Income tax imposed on individuals, estates, and
5 trusts - single rate. (6) (a) AS USED IN THIS SUBSECTION (6), UNLESS THE
6 CONTEXT OTHERWISE REQUIRES:
7 (I) "WAGES" SHALL HAVE THE SAME MEANING AS SET FORTH IN
8 SECTION 3401 (a) OF THE INTERNAL REVENUE CODE.
9 (II) "GROSS INCOME DERIVED FROM BUSINESS" MEANS GROSS
10 INCOME GENERATED BY AN INDIVIDUAL, SOLE PROPRIETOR, OR A SINGLE
11 FULL-TIME EMPLOYEE OF A SUBCHAPTER S CORPORATION, C
12 CORPORATION, NONPROFIT CORPORATION, LIMITED LIABILITY COMPANY,
13 OR PARTNERSHIP AS INDICATED ON THE FEDERAL INTERNAL REVENUE
14 SERVICE FORM 1040, SCHEDULE C.
15 (b) (I) FOR ANY INCOME TAX YEAR BEGINNING ON OR AFTER
16 JANUARY 1, 2000, IF THE AMOUNT OF STATE REVENUES FOR THE STATE
17 FISCAL YEAR ENDING IN THE IMMEDIATELY PRECEDING INCOME TAX YEAR
18 EXCEED THE LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY
19 SECTION 20 (7) (a) OF ARTICLE X OF THE STATE CONSTITUTION AND THE
20 VOTERS STATEWIDE EITHER HAVE NOT AUTHORIZED THE STATE TO RETAIN
21 AND SPEND ALL OF THE EXCESS STATE REVENUES OR HAVE AUTHORIZED
22 THE STATE TO RETAIN AND SPEND ONLY A PORTION OF THE EXCESS STATE
23 REVENUES FOR THAT FISCAL YEAR, THERE SHALL BE SUBTRACTED FROM
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1 FEDERAL TAXABLE INCOME AN AMOUNT EQUAL TO A SPECIFIED
2 PERCENTAGE OF THE AGGREGATE OF THE GROSS INCOME FROM WAGES AND
3 THE GROSS INCOME FROM BUSINESS TO THE EXTENT SAID INCOME FROM
4 WAGES OR BUSINESS IS INCLUDED IN, BUT NOT OTHERWISE SUBTRACTED
5 FROM, FEDERAL TAXABLE INCOME PURSUANT TO SUBSECTION (4) OF THIS
6 SECTION.
7 (II) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (I) OF
8 THIS PARAGRAPH (b), THE AGGREGATE AMOUNT SUBTRACTED FROM
9 FEDERAL TAXABLE INCOME PURSUANT TO SUBPARAGRAPH (I) OF THIS
10 PARAGRAPH (b) SHALL NOT EXCEED SIXTY THOUSAND DOLLARS IN ANY
11 TAXABLE YEAR, EXCEPT IN THE CASE OF TWO INDIVIDUALS FILING A JOINT
12 RETURN OR A QUALIFIED INDIVIDUAL FILING AS A SURVIVING SPOUSE, THE
13 AGGREGATE AMOUNT SUBTRACTED FROM FEDERAL TAXABLE INCOME
14 PURSUANT TO SAID SUBPARAGRAPH (I) SHALL NOT EXCEED ONE HUNDRED
15 TWENTY THOUSAND DOLLARS IN ANY TAXABLE YEAR.
16 (c) NO LATER THAN OCTOBER 1 OF ANY CALENDAR YEAR
17 COMMENCING ON OR AFTER JANUARY 1, 2000, DURING WHICH THE
18 CONTROLLER CERTIFIES, IN ACCORDANCE WITH THE PROVISIONS OF
19 SECTION 24-77-106.5, C.R.S., THAT STATE REVENUES EXCEED THE
20 LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY SECTION 20 (7)
21 (a) OF ARTICLE X OF THE STATE CONSTITUTION FOR THE FISCAL YEAR
22 ENDING IN THAT CALENDAR YEAR, THE EXECUTIVE DIRECTOR SHALL, FOR
23 THE TAXABLE YEAR COMMENCING ON OR AFTER JANUARY 1 OF THE
24 CALENDAR YEAR IN WHICH THE FISCAL YEAR ENDED, BUT PRIOR TO
25 JANUARY 1 OF THE SUBSEQUENT CALENDAR YEAR, CALCULATE THE
26 PERCENTAGE SET FORTH IN PARAGRAPH (b) OF THIS SUBSECTION (6) SO
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1 THAT THE AGGREGATE AMOUNT OF EXCESS REVENUES SUBTRACTED FROM
2 TAXABLE INCOME PURSUANT TO THIS SUBSECTION (6) FOR ANY GIVEN
3 TAXABLE YEAR SHALL NOT EXCEED THE LESSER OF THREE HUNDRED
4 MILLION DOLLARS OR THE AMOUNT OF EXCESS STATE REVENUES FOR THE
5 STATE FISCAL YEAR ENDING IN THE IMMEDIATELY PRECEDING INCOME TAX
6 YEAR THAT ARE REQUIRED TO BE REFUNDED.
7 (d) THE PERCENTAGE USED TO CALCULATE THE MODIFICATION
8 CREATED PURSUANT TO THIS SUBSECTION SHALL BE PUBLISHED IN RULES
9 PROMULGATED BY THE EXECUTIVE DIRECTOR IN ACCORDANCE WITH
10 ARTICLE 4 OF TITLE 24, C.R.S., AND SHALL BE INCLUDED IN INCOME TAX
11 FORMS FOR THAT TAXABLE YEAR.
12 SECTION 2. 24-77-106.5, Colorado Revised Statutes, is
13 amended to read:
14 24-77-106.5. Annual financial report - certification of state
15 excess revenues. (1) (a) For each fiscal year, the controller shall prepare
16 a financial report for the state for purposes of ascertaining compliance
17 with the provisions of this article. Any financial report prepared pursuant
18 to this section shall include, but shall not be limited to, state fiscal year
19 spending, reserves, revenues, and debt. Such financial report shall be
20 audited by the state auditor.
21 (b) BASED UPON THE FINANCIAL STATEMENT PREPARED IN
22 ACCORDANCE WITH PARAGRAPH (a) OF THIS SUBSECTION (1) FOR ANY
23 GIVEN FISCAL YEAR, THE CONTROLLER SHALL CERTIFY TO THE GOVERNOR,
24 THE GENERAL ASSEMBLY, AND THE EXECUTIVE DIRECTOR OF THE
25 DEPARTMENT OF REVENUE NO LATER THAN SEPTEMBER 1 FOLLOWING THE
26 END OF A FISCAL YEAR THE AMOUNT OF STATE REVENUES IN EXCESS OF THE
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1 LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY SECTION 20 (7)
2 (a) OF ARTICLE X OF THE STATE CONSTITUTION, IF ANY, FOR SUCH FISCAL
3 YEAR.
4 (2) ANY FINANCIAL REPORT PREPARED AND CERTIFICATION OF
5 STATE EXCESS REVENUES MADE PURSUANT TO SUBSECTION (1) OF THIS
6 SECTION SHALL BE AUDITED BY THE STATE AUDITOR. NO LATER THAN
7 SEPTEMBER 15 FOLLOWING THE CERTIFICATION MADE BY THE STATE
8 CONTROLLER FOR ANY GIVEN FISCAL YEAR, THE STATE AUDITOR SHALL
9 REPORT AND TRANSMIT TO THE GOVERNOR, THE GENERAL ASSEMBLY, AND
10 THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF REVENUE THE RESULTS
11 OF ANY AUDIT CONDUCTED IN ACCORDANCE WITH THIS SUBSECTION (2).
12 (2) (3) Notwithstanding any generally accepted accounting
13 principles to the contrary, financial reports prepared pursuant to
14 subsection (1) of this section shall not include any unrealized gains or
15 losses on investments held by the state.
16 SECTION 3. Safety clause. The general assembly hereby finds,
17 determines, and declares that this act is necessary for the immediate
18 preservation of the public peace, health, and safety.