The Alternative Transportation Options Tax Credit (House Bill 22-1026) created a new income tax credit for tax years commencing on and after January 1, 2023, but before January 1, 2025. The tax credit is not available for the 2022 tax year or prior years. The Department of Revenue has developed form DR 1323 for employers to file their notification plan required by section 39-22-509(3)(c), C.R.S. Form DR 1323 must be submitted to the Department via email for tax year 2023.
To submit the transportation option plan to the Colorado Department of Revenue ahead of filing (during the tax year), send a completed copy of Form DR 1323 to DOR_TaxpayerService@state.co.us and in the subject line put “Alternative Transportation Options Credit”.
By the year's end, the Department expects to have a portal through Revenue Online to allow employers to submit the plan. Until then, please submit the transportation option plan via email (instructions are listed above).
House Bill 22-1026 describes the types of alternative transportation options eligible for the credit. The Department is drafting rules to provide more guidance on the credit (see Question 3 below for additional information).
The Department welcomes feedback from stakeholders, businesses, Transportation Management Association (TMAs) or Organizations (TMOs) on provisions of the credit statute (section 39-22-509, C.R.S.) that need more clarification and guidance. In the meantime, the legislation lists numerous qualifying options.
For general guidance regarding the alternative transportation options credit, view the publication: Income Tax Topics, Alternative Transportation Options Credit.
Please reference the FAQs below for more information.
A. This tax incentive was originally enacted in 1979 as an income tax deduction. In 2022, the general assembly amended it to become an income tax credit in HB22-1026. That bill was signed into law on June 7, 2022. Because no referendum petition was filed against the act to be heard at the November 2022 election, the act took effect January 1, 2023.
A. When: The tax credit may be claimed for amounts paid by employers to provide alternative transportation options to employees in the income tax years commencing on or after January 1, 2023, but before January 1, 2025. Amounts paid by employers to provide alternative transportation options to employees in income tax years commencing before January 1, 2023, are not eligible for the credit.
- STEP 1: file the Annual Employer Plan Report form (DR 1323). As a prerequisite for claiming a credit, an employer is required to provide to the Department its plan for notifying its employees of the availability of the alternative transportation options that it offers and the steps beyond such notification that it plans to take to encourage employees to use those options. Send a completed copy of Form DR 1323 to DOR_TaxpayerService@state.co.us and in the subject line put “Alternative Transportation Options Credit” to complete this requirement.
- STEP 2: To claim the credit for the 2023 income tax year, a qualifying employer must file and submit a Colorado income tax return. A nonprofit organization, home rule city, town, or city and county, or statutory city or town, must claim the credit by filing a Colorado C Corporation Income Tax Return (DR 0112).
A. The Department of Revenue is responsible for the rulemaking process. The Department employs a highly collaborative approach to rulemaking, and welcomes the input from employers, transportation experts, regional planning authorities, and other interested parties. The Department will hold a workgroup meeting on March 30, 2023 at 10:00am to gather input prior to drafting rules. Visit our website (https://tax.colorado.gov/news-article/workgroup-meeting-alternative-transportation-options-income-tax-credit) for more information about rulemaking workgroups. Written comments may be submitted to DOR_TaxRules@state.co.us even after the workgroup meeting. Interested persons can sign up to receive rulemaking notices here (click on the gray “Sign Up For Rulemaking Notifications” link on the bottom right side of the page).
A. The maximum amount of qualifying expenditures in any income tax year for which an employer may claim a credit is $250,000. As a result, the maximum credit an employer may claim for a tax year is $125,000. Additionally, the maximum amount of qualifying expenditures for any one employee is $2,000 per tax year.
A. In general, an employer must make qualifying alternative transportation options available to all of its Colorado employees. However, if it is not feasible to offer a particular alternative transportation option to certain employees, an employer may offer a substantially equivalent alternative transportation option to such employees.
A. The Department has published a general guidance publication regarding the alternative transportation options income tax credit and the Annual Employer Plan Report (DR 1323). Taxpayers are encouraged to consult their tax advisors for guidance regarding specific situations.
B. Taxpayers may request a private letter ruling to obtain binding guidance on proposed alternative transportation option credit claims by following the process described here. Private letter rulings are advance rulings issued to specific taxpayers regarding the Department’s application of tax statutes and rules to a proposed or completed transaction. Private letter rulings are generally binding upon the Department, but may only be relied upon by the taxpayer to whom they are issued.
A. The Department anticipates defining “value of strategies” during the rulemaking process. See Question 3 for staying up-to-date on rulemaking efforts.
A. The Department anticipates defining “employee” during the rulemaking process. See Question 3 for staying up-to-date on rulemaking efforts.
A. The Department of Revenue currently plans to collect the following data:
- The employer must detail its plan for notifying its employees of the the availability of the alternative transportation options that it offers. The employer must also explain the additional steps beyond such notification that it plans to take to encourage employees to use those alternative transportation options.
- Employers must indicate the number of employees offered an alternative transportation option, and, to the extent feasible, the number of employees actually using an alternative transportation option and the number of trips taken by employees using an alternative transportation option.
- Income tax credits are reported on return forms and are summarized with other credits. When data is available the Department can provide the total amount claimed and possibly the number of returns that claimed the credit. That information will generally be shared publicly in the DOR Tax Profile and Expenditure Report, a report that the Department is required to prepare every other year.
- In order to obtain the non-summarized data necessary to provide the General Assembly with the information requested in HB22-1026, the Department will need to require the employer to complete a separate form requesting these details. Even so, there may be confidentiality issues with providing non-summarized data, particularly if the number of credit claims are small enough that it would be impossible to prevent the identification of particular reports or returns. See the Department’s duty of confidentiality with respect to statistics in section 39-21-113 (5), C.R.S.