(1) Tax preference performance statement. (a) In accordance with section 39-21-304 (1), which requires each bill that creates a new tax expenditure to include a tax preference performance statement as part of a statutory legislative declaration, the general assembly finds and declares that the purposes of the tax credit provided in this section are to provide tax relief to certain businesses, specifically railroad operators, and to induce certain designated behavior by taxpayers, specifically maintaining rail line access to coal transition communities. (b) The general assembly and the state auditor shall measure the effectiveness of the tax credit in achieving the purposes specified in subsection (1)(a) of this section based on the number and value of tax credits claimed pursuant to this section. (2) Definitions. As used in this section, unless the context otherwise requires: (a) "Coal transition community" means a tier one transition community as defined in section 8-83-502 (10). (b) "Department" means the department of revenue. (c) "Qualified expenditure" means direct operating and capital improvement expenditures necessary to maintain or improve a qualified rail line. (d) "Qualified rail line" means a rail line in this state that the department of transportation has determined is both: (I) At risk of inactivity or abandonment due to a lack of demand; and (II) Covered by an access agreement for passenger rail access on the line between the qualified taxpayer and the state through at least January 1, 2038. (e) "Qualified taxpayer" means a common carrier engaged in the transportation of freight on a qualified rail line. (3) Tax credit allowed. For income tax years commencing on or after January 1, 2027, but before January 1, 2038, a qualified taxpayer is allowed a credit against the income taxes imposed by this article 22 in an amount equal to the amount stated on the tax credit certificate issued by the department of transportation pursuant to subsection (4)(c) of this section. (4) Application - tax credit certificate issuance. (a) (I) In order to claim a tax credit pursuant to this section, a taxpayer must submit an application to the department of transportation on or before December 31 of the year for which the taxpayer wishes to claim the tax credit, and the taxpayer must submit the application in a form and manner determined by the department. (II) A taxpayer's application submitted pursuant to subsection (4)(a)(I) of this section must include a certification of the taxpayer's qualified expenditures and a review of the certification that aligns with department of transportation policies for certification of qualified expenditures by a licensed certified public accountant that is not affiliated with the taxpayer. (b) The department of transportation shall review a taxpayer's application submitted pursuant to subsection (4)(a) of this section to determine: (I) Whether the taxpayer is a qualified taxpayer; (II) Whether the taxpayer incurred qualified expenditures; (III) The amount of the qualified expenditures incurred by the taxpayer; and (IV) The amount of the tax credit that the taxpayer may claim for the relevant tax year, which amount must not exceed seventy-five percent of the amount of qualified expenditures incurred by the taxpayer. (c) Upon approving a qualified taxpayer's application and making the determinations described in subsection (4)(b) of this section, and subject to the limitations set forth in subsection (5) of this section, the department of transportation shall issue a tax credit certificate to the qualified taxpayer in an amount equal to the amount determined by the department of transportation pursuant to subsection (4)(b)(IV) of this section. (d) The department of transportation shall, in a sufficiently timely manner to allow the department to process returns claiming the tax credit allowed in this section, provide the department with an electronic report for the preceding tax year that lists each qualified taxpayer to which the department of transportation issued a tax credit certificate and includes the following information: (I) The qualified taxpayer's name; (II) The amount of the income tax credit that the certificate indicates the qualified taxpayer is eligible to claim; and (III) The qualified taxpayer's social security number or the qualified taxpayer's Colorado account number and federal employer identification number. (5) Limit on aggregate amount of all tax credits that the department of transportation may reserve. (a) The aggregate amount of all tax credit certificates that the department of transportation may issue pursuant to this section must not exceed five million dollars in any calendar year, in addition to the amount of any previously issued tax credit certificates that were rescinded or not utilized during the calendar year and the amount described in subsection (5)(c) of this section. In the case of a tax credit certificate issued for the benefit of a qualified taxpayer that files an income tax return for a tax year other than a calendar year, the amount in the tax credit certificate must count against the limit for the calendar year in which the qualified applicant's income tax year begins. (b) The amount of each tax credit that the department of transportation may issue in a tax credit certificate is determined pursuant to subsection (4) of this section; except that, if the department of transportation determines that the issuing of each tax credit certificate in an amount determined pursuant to subsection (4) of this section will cause the total amount of tax credit certificates issued by the department of transportation for a calendar year to exceed the limit set forth in subsection (5)(a) of this section, the department of transportation shall proportionally reduce the amount of each tax credit certificate issued by the department of transportation so that the total amount of tax credit certificates issued by the department of transportation for that calendar year equals the limit set forth in subsection (5)(a) of this section. (c) If the aggregate amount of all tax credit certificates issued by the department of transportation for any calendar year is less than the amount available as calculated pursuant to subsection (5)(a) of this section, then the aggregate amount of all tax credit certificates that the department of transportation may issue in the next calendar year is increased by the unissued amount. (d) If, pursuant to section 39-22-563 (11), the Colorado office of economic development determines that there is insufficient interest in the tax credit offered pursuant to section 39-22- 563, the aggregate amount of all tax credit certificates that the department of transportation may issue is increased by five million dollars for each of the following calendar years through calendar year 2037. (6) Refundability. If the amount of the tax credit allowed pursuant to this section exceeds the amount of income taxes otherwise due on the income of the qualified taxpayer in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in the income tax year is refunded to the qualified taxpayer. (7) Filing tax credit certificate with income tax return. In order to claim the tax credit authorized by this section, a qualified taxpayer shall file the tax credit certificate issued by the department of transportation pursuant to subsection (4)(c) of this section with the qualified taxpayer's state income tax return. The amount of the tax credit that a qualified taxpayer may claim pursuant to this section is the amount stated on the tax credit certificate. (8) Compliance monitoring and recapture. (a) If, as of the last day of any taxable year during the compliance period, the qualified rail line is not in good operating condition or the qualified taxpayer is not meeting one or more of the service criteria specified in access agreements to the qualified rail line for passenger operations, the department of transportation shall notify the qualified taxpayer and the department that all or a portion of the total amount of the tax credits allowed to the qualified taxpayer pursuant to this section for the tax year that preceded the compliance period and any tax year thereafter is disallowed. The qualified taxpayer shall add the amount of the tax credit that is disallowed to its return as a recaptured tax credit for the taxable year in which the tax credit is disallowed pursuant to this subsection (8). (b) (I) The department of transportation shall establish reporting requirements to monitor compliance with this subsection (8), including requirements regarding the reporting of the status of a qualified rail line by the qualified taxpayer and whether the qualified taxpayer is or is not meeting any service criteria specified in access agreements. (II) If a dispute arises about whether a qualified rail line is not in good operating condition or the qualified taxpayer is not meeting any service criteria specified in access agreements, the department of transportation shall resolve the dispute and notify the department of the resolution. (c) As used in this subsection (8), unless the context otherwise requires, "compliance period" means the period of three years following any year in which the qualified taxpayer claimed a tax credit pursuant to this section. (9) Application of tax credit. A qualified taxpayer who claims a tax credit pursuant to this section shall provide the state or other passenger rail operator full credit for the value of that tax credit against any costs, fees, or other charges that the qualified taxpayer may charge for passenger rail operations access, operations, or maintenance on the qualifying rail line pursuant to an access agreement between the qualified taxpayer and the state for passenger rail access. (10) Rules. The department of transportation and the department may promulgate rules in accordance with article 4 of title 24 as may be necessary to effectuate the purposes of this section. (11) Repeal. This section is repealed, effective December 31, 2045.
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