Colo. Code Regs. 39-22-516

Current through Register Vol. 47, No. 23, December 10, 2024

Rule 39-22-516 - Innovative Motor Vehicle and Innovative Truck Credits

Basis and Purpose. The bases for this rule are sections 39-21-112(1), 39-22-516.7, and 39-22-516.8, C.R.S. The purpose of this rule is to provide guidance regarding the innovative motor vehicle and innovative truck credits, the requirements for the credits, and the assignment of credits.

(1)General Rule. An income tax credit is allowed pursuant to section 39-22-516.7 or 39-22-516.8, C.R.S., to any person for the purchase or lease of a qualifying motor vehicle or a qualifying truck. For income tax years commencing on or after January 1, 2024, the credit is also allowed to a person or political subdivision of the state that is exempt from taxation under section 39-22-112(1), C.R.S.

(2)New Motor Vehicles and Trucks. A motor vehicle or truck must be new at the time of purchase or lease to qualify for a credit. For the purpose of this paragraph and sections 39-22-516.7(1)(r)(II)(A) and 39-22-516.8(1)(ee)(II), C.R.S., a motor vehicle or truck is new if it is being transferred for the first time from a manufacturer or importer, or dealer or agent of a manufacturer or importer, to the end user or customer. A motor vehicle or truck that has been used by a dealer for the purpose of demonstration to prospective customers is considered new unless such demonstration use has been for more than one thousand five hundred miles. Any motor vehicle or truck that has been titled or registered or both in Colorado or any other state or jurisdiction prior to purchase or lease is not considered new.

(3)Titling and Registration.

(a)Colorado Titling and Registration.

(i) A credit is allowed only with respect to:

(A) motor vehicles and trucks that are titled in Colorado under article 6 of title 42, C.R.S., and registered in Colorado by the purchaser or lessee in accordance with article 3 of title 42, C.R.S., and

(B) trucks registered by the purchaser or lessee under the International Registration Plan and base plated in Colorado.

(ii) For the purpose of sections 39-22-516.7 and 39-22-516.8, C.R.S., and this rule, a motor vehicle or truck with an active temporary registration described in section 42-3-203(3)(b), C.R.S., is not considered registered in Colorado.

(b)Titling and Registration in Another State. A motor vehicle or truck that has been titled or registered or both in any other state prior to being titled and registered in Colorado does not qualify for a credit. If a purchaser or lessee takes possession of a motor vehicle or truck in another state, the issuance of a temporary license plate for the purpose of moving the motor vehicle or truck to Colorado does not constitute registration in that state.

(4)Tax Year of the Purchase or Lease and Amount.

(a) The credit is allowed for the tax year in which the purchase or lease of the qualifying motor vehicle or truck is completed. A purchase or lease is not considered complete prior to the date on which the purchaser or lessee takes possession of the motor vehicle or truck. If the purchaser or lessee enters into an agreement to purchase or lease a qualifying motor vehicle or truck in a tax year prior to the tax year in which the purchaser or lessee takes possession of the motor vehicle or truck, the credit is allowed for the tax year in which the purchaser or lessee takes possession of the motor vehicle or truck.

(b) The amount of the credit is determined with respect to the tax year that the credit is allowed to the purchaser or lessee pursuant to paragraph (4)(a) of this rule, regardless of whether the purchaser or lessee assigns the credit to a financing entity or motor vehicle dealer pursuant to section 39-22-516.7(2)(e), 39-22-516.7(2)(f), 39-22-516.8 (13.5), or 39-22-516.8(13.7), C.R.S.

(c) With respect to tax years commencing on or after January 1, 2021, but prior to January 1, 2023, the amount of the credit allowed pursuant to section 39-22-516.7, C.R.S., is determined under section 39-22-516.7(4)(a)(IV), C.R.S., regardless of whether the category 1 motor vehicle was sold or leased on or after January 1, 2023.

(d) With respect to tax years commencing on or after January 1, 2023, but prior to January 1, 2025, the amount of the credit allowed pursuant to section 39-22-516.7, C.R.S., is determined under section 39-22-516.7(4)(a)(V) or (VI), C.R.S., as applicable based on the date the category 1 vehicle was purchased or leased.

(5)Manufacturer's Suggested Retail Price.

(a) "Manufacturer's suggested retail price" is defined in section 39-22-516.7(1) (p.5), C.R.S., by reference to section 42-1-102(50), C.R.S., which states: "'Manufacturer's suggested retail price' means the retail price of such motor vehicle suggested by the manufacturer plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to such vehicle prior to the sale to the retail purchaser." As used in this definition, for the purpose of the credit allowed pursuant to section 39-22-516.7, C.R.S.:

(i) "the retail price of such motor vehicle suggested by the manufacturer" is the retail price of the motor vehicle suggested by the manufacturer and disclosed on the label the manufacturer affixed to the windshield or side window of the motor vehicle pursuant to 15 U.S.C. sec. 1232(f)(1); and

(ii) "the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to such vehicle prior to the sale to the retail purchaser" is the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the motor vehicle and disclosed on the label the manufacturer affixed to the windshield or side window of the motor vehicle pursuant to 15 U.S.C. sec. 1232(f)(2).

(b) "Manufacturer's suggested retail price" does not include the amount charged, if any, to the dealer for the transportation of the motor vehicle to the location at which it is delivered to such dealer, commonly known as the destination fee or destination charge, that is disclosed on the label the manufacturer affixed to the windshield or side window of the motor vehicle pursuant to 15 U.S.C. sec. 1232(f)(3).

(6)Leases.

(a) A leased motor vehicle or truck qualifies for a credit only if the lease term is not less than two years.

(b) For the lease of a qualifying motor vehicle or truck, the lessee, not the lessor, is allowed to claim the credit.

(c) For the purpose of this paragraph (6), a "short-term rental" described in section 39-22-516.7 (9.5), C.R.S., is not considered a lease.

(d) In the case of a leased motor vehicle or truck, the credit is allowed for the tax year determined pursuant to paragraph (4)(a) of this rule. No additional credit is allowed for any subsequent tax year during which the lease continues.

(e)Early Termination of Leases. The lease of a qualifying motor vehicle or truck must be for a term of not less than two years to qualify for a credit. If a lessee enters into a bona fide lease agreement of not less than two years, but terminates the lease early, such early termination will not abrogate the lessee's right to any allowable credit or require any recapture of the allowable credit claimed for the lease.

(7)Credit Assignment.

(a)Election to Assign a Credit. For qualifying motor vehicles or trucks sold or leased on or after January 1, 2017, but prior to January 1, 2024, a purchaser or lessee may, by mutual agreement with a financing entity, assign an allowable credit to the financing entity pursuant to section 39-22-516.7(2)(e) or 39-22-516.8 (13.5), C.R.S. For qualifying motor vehicles or trucks sold or leased on or after January 1, 2024, a purchaser or lessee may, by mutual agreement with a financing entity or motor vehicle dealer, assign an allowable credit to the financing entity or motor vehicle dealer pursuant to section 39-22-516.7(2)(f) or 39-22-516.8 (13.7), C.R.S. For the purpose of this paragraph (7), the term "assignee" means a financing entity or motor vehicle dealer that has accepted assignment of a credit.

(b)Compensation. An assignee must compensate the purchaser or lessee as prescribed in section 39-22-516.7(2)(e)(I)(D), 39-22-516.7(2)(f)(I)(D), 39-22-516.8 (13.5)(a)(IV), or 39-22-516.8(13.7)(a)(IV), C.R.S., as applicable. Compensation must be made in the form of a cash payment, a reduction in the cash price, a capitalized cost reduction, or some similar consideration and must be reflected as a separate line item in the sales, loan, or lease agreement for the motor vehicle or truck. Such compensation must be made effective on the date the election statement to assign the credit is executed and not applied at any subsequent date.

(c)Election Statement. The purchaser or lessee and the assignee must complete the assignment of the credit at the time of purchase or lease by executing Department form DR 0618, Innovative Motor Vehicle Tax Credit - Election Statement. Pursuant to section 39-21-113(1)(b), C.R.S., an assignee must keep and preserve the executed election statement in its records for a period of four years following the due date of the return for the tax year during which the assignment occurred.

(i) For qualifying motor vehicles or trucks sold or leased on or after January 1, 2017, but prior to January 1, 2024, the assignee must file a copy of the election statement for each assigned credit along with its original tax return for the tax year in which the credit was assigned. If the assignee fails to file a copy of the election statement for each assigned credit with its return, the credit(s) claimed by the assignee may be disallowed.

(ii) For qualifying motor vehicles or trucks sold or leased on or after January 1, 2024, the assignee must provide a copy of election statement for any assigned credit to the Department upon request. If the assignee fails to provide a copy of any election statement requested by the Department, the credit(s) claimed by the assignee may be disallowed.

(d)Electronic Report. An assignee must submit an electronic report to the Department containing the information in the election statement as required by section 39-22-516.7 or 39-22-516.8, C.R.S., and this paragraph (7)(d).

(i)Deadline for Submitting the Electronic Report.

(A) For qualifying motor vehicles and trucks sold or leased on or after January 1, 2017, but prior to January 1, 2024, the assignee must submit the electronic report to the Department within thirty days of the date of assignment.

(B) For qualifying motor vehicles and trucks sold or leased on or after January 1, 2024, the assignee must submit the electronic report to the Department on a quarterly basis. The due dates for the quarterly reports are the same as the due dates for estimated payments pursuant to section 39-22-606, C.R.S., determined with respect to the assignee's tax year. Each assigned credit must be included in the first quarterly report due after the month in which the credit was assigned.

(ii)Failure to Submit the Electronic Report Timely. If the assignee fails to submit an electronic report for an assigned credit in a timely manner pursuant to paragraph (7)(d)(i)(A) of this rule, the assignee may thereafter submit an electronic report for the assigned credit. If the assignee fails to include any assigned credit pursuant to paragraph (7)(d)(i)(B) of this rule in a timely filed quarterly electronic report, the assignee may include that assigned credit in an electronic report timely filed for a subsequent quarter. However, if the assignee fails to report assignment of a credit in the time provided pursuant to paragraph (7)(d)(i) of this rule and the purchaser or lessee files an income tax return claiming any allowable credit prior to the assignee reporting the assignment of the credit late under this paragraph (7)(d)(ii), the credit is allowed to the purchaser or lessee and not to the assignee. If the assignee fails to electronically report an assigned credit by the deadline prescribed in paragraph (7)(d)(i) of this rule, the credit is allowed to the assignee only if:

(A) the assignee submits the electronic report before the assignee claims the credit; and

(B) the credit has not already been allowed to the purchaser or lessee.

(e)Assignment by Exempt Entities. A person or a political subdivision of the state that is exempt from taxation under section 39-22-112(1), C.R.S., that is a "purchaser" under section 36-22-516.7(1) (r.3)(II) or 39-22-516.8(1)(bb.3), C.R.S., and that assigns a credit to a financing entity or motor vehicle dealer pursuant to section 36-22-516.7(2)(f) or 39-22-516.8 (13.7), C.R.S., is not required by section 39-22-516.7(10), 39-22-516.8 (17.5), or 39-22-601(7)(b), C.R.S., to file a Colorado income tax return with respect to the assigned credit.

39-22-516

Colorado Register, Vol 37, No. 14. July 25, 2014, effective 8/14/2014

37 CR 18, September 25, 2014, effective 10/15/2014

37 CR 19, October 10,2014, effective 10/30/2014

37 CR 22, November 25, 2014, effective 12/16/2014

38 CR 04, February 25, 2015, effective 3/17/2015

38 CR 07, April 10, 2015, effective 4/30/2015

38 CR 11, June 10, 2015, effective 6/30/2015

38 CR 22, November 25, 2015, effective 12/15/2015

38 CR 24, December 25, 2015, effective 1/14/2016

38 CR 24, December 25, 2015, effective 1/19/2016

39 CR 01, January 10, 2016, effective 1/30/2016

39 CR 16, August 25, 2016, effective 9/14/2016

40 CR 08, April 25, 2017, effective 5/15/2017

40 CR 12, June 25, 2017, effective 7/15/2017

40 CR 16, August 25, 2017, effective 9/14/2017

40 CR 23, December 10, 2017, effective 1/1/2018

41 CR 14, July 25, 2018, effective 8/14/2018

41 CR 20, October 25, 2018, effective 11/14/2018

42 CR 02, January 25, 2019, effective 12/18/2018

42 CR 02, January 25, 2019, effective 12/18/2018, expires 4/17/2019

42 CR 06, March 25, 2019, effective 4/14/2019

43 CR 04, February 25, 2020, effective 3/16/2020

43 CR 13, July 10, 2020, effective 6/2/2020

43 CR 17, September 10, 2020, effective 9/30/2020

44 CR 03, February 10, 2021, effective 3/2/2021

44 CR 07, April 10, 2021, effective 4/30/2021

44 CR 08, April 25, 2021, effective 5/15/2021

45 CR 01, January 10, 2022, effective 1/30/2022

45 CR 04, February 25, 2022, effective 3/17/2022

45 CR 05, March 10, 2022, effective 3/30/2022

46 CR 11, June 10, 2023, effective 5/2/2023

46 CR 09, May 10, 2023, effective 5/30/2023

47 CR 06, March 25, 2024, effective 4/14/2024

1. Form DR 0618- Innovative Motor Vehicle Credit- Election Statement. 2. Form DR 0617- Innovative Motor Vehicle Credit and Innovative Truck Credit form. 3. See §§ 39-22-516.7 and 516.8, C.R.S. for the innovative motor vehicle credit and the innovative truck credit, respectively, for tax years commencing prior to January 1, 2017.