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Notice of Proposed Rulemaking - Income Tax Rules

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The Colorado Department of Revenue, Division of Taxation, will host a public rulemaking hearing on the income tax rules listed below. The meeting is set for 10 a.m. July 18 at 1881 Pierce Street, Entrance B, Room 110, Lakewood, CO 80214. (Entrance B is on the building’s west side at its northern end.)

Those interested in attending the hearing remotely should please register to participate virtually. The Department has created a Virtual Rulemaking Hearing Guide that provides more information for participants. 

Proposed Rules: 

  • Rule 39-22-104(4)(i). Qualified State Tuition Program & ABLE Program Contributions Subtraction.  The purpose of this new rule is to explain requirements and limitations relating to the subtraction allowed to individuals, estates, and trusts for payments and contributions made to a qualified state tuition program or a qualified ABLE program.
  • Rule 39-22-539. Credit for Employer Contributions to Employee 529 Qualified State Tuition Programs. The purpose of this new rule is to detail requirements relating to the credit allowed to employers for contributions made to an employee’s 529 qualified state tuition program account.
  • Rule 39-22-104(3)(r). Qualified Business Income Deduction Addback. The purpose of this new rule is to clarify the requirement to add back, in the calculation of Colorado taxable income, the amount that an electing pass-through entity owner is allowed to deduct under section 199A of the internal revenue code.
  • Rule 39-22-108. Credit for Taxes Paid to Another State. The purpose of the amendments to this rule is to reorganize and revise the existing rule to improve clarity and to provide additional guidance regarding:
    • Credits allowed to a partner or shareholder for taxes paid to another state by a partnership or S corporation;
    • The various elements involved in the calculation of the credit limitations, including gross Colorado tax, modified adjusted federal gross income, and income derived from sources in another state; and 
    • Redeterminations to correct the amount of the credit claimed.
  • Rule 39-22-103(5.3). Internal Revenue Code Definition – Prospective. The purpose of this amendment is to repeal the rule because in Anschutz v. Department of Revenue, 2022 COA 132, 524 P.3d 1203 (Colo. App. 2022), the court determined that the rule was incorrect and that retroactive changes in federal law can affect a taxpayer’s Colorado taxable income. In light of this ruling, the Department is repealing the rule.

How to Participate

The Department encourages remote participants to participate through the video conference because of additional participation features it provides. Participants are welcome to use a webcam to appear by video but can also leave their video camera off. If you would like to virtually attend the rulemaking hearing, please register to participate virtually.

Parties wishing to attend or participate by teleconference should connect as follows:
Phone Number: 1 (669) 900-6833
Meeting ID: 815 1290 2164 

The Department will accept oral and written comments on these proposed rules. Oral comments will be accepted by video and telephone conference at the hearing. Written comments may be submitted to dor_taxrules@state.co.us in advance or in lieu of oral commentary at the hearing and will be accepted until 5:00 p.m. on July 18, 2023.

You can find the proposed rules and statements of basis and purpose at the links above. You may also find this information on the Division’s website.
 
The proposed rules will be published in the Colorado Register on June 25, 2023.

We would appreciate your feedback to help us measure and improve the success of the rulemaking program.  If you participate in the rulemaking process, we invite you to complete a short survey.  Follow the link and choose the "I participated in the Rulemaking Process (Announcement, Stakeholder Meeting, or Hearing)" option.