Notice of Proposed Rulemaking - Income Tax Special Apportionment Rules

The Colorado Department of Revenue, Division of Taxation, will hold a public rulemaking hearing on the following income tax rules listed below at 10:00 AM on November 3, 2021. This hearing will be conducted entirely by telephone and video conference, and will be recorded. The Department has created a Virtual Rulemaking Hearing Guide that provides additional guidance for participants.

Parties wishing to attend or participate by video conference may obtain a link for connecting by sending an email to dor_taxrules@state.co.us. Because of additional participation features provided by the video conference, we encourage participants to participate through the video conference. Participants are welcome to use a webcam to appear by video, but may also leave their video camera off.

Parties wishing to attend or participate by teleconference should connect as follows:

Phone Number: 1 (669) 900-6833

Meeting ID: 867 3601 5567

Proposed Rules:

• Special Rule 9A. Apportionment of Income for Electricity Producers. - The Department is proposing this new rule to prescribe the inclusion of certain receipts of electricity producers from hedging transactions in the receipts factor.
• Rule 39-22-303.6–1. Apportionment and Allocation Definitions. The Department is proposing this amended rule to add language to the rule that explains that hedging transactions are excluded from receipts except as provided in Special Rule 9A.
• Rule 39-22-303.6–7. Sales Other Than Sales of Tangible Personal Property in Colorado. The Department is proposing this amended rule to add language to the rule that explains that hedging transactions are excluded from receipts except as provided in Special Rule 9A.
• The Department is proposing to repeal the following apportionment rules within 1 CCR 201-3 because the rules applied to tax years prior to January 1, 2009.
  • Regulation IV. Colorado Multi-state Compact Tax Regulation – Applicability.
  • Regulation IV.1.(a). Business and Nonbusiness Income Defined.
  • Regulation IV.1.(b).
  • Regulation IV.1.(c). Business and Nonbusiness Income: Application of Definitions.
  • Regulation IV.1.(d). Proration of Deductions.
  • Regulation IV.2.(a). Definitions.
  • Regulation IV.2.(b)(1). Application of Article IV: Apportionment.
  • Regulation IV.2.(b)(2). Application of Article IV: Combined Report.
  • Regulation IV.2.(b)(3). Application of Article IV: Allocation.
  • Regulation IV.2.(c). Consistency and Uniformity in Reporting.
  • Regulation IV.3.(a). Taxable in Another State.
  • Regulation IV.3.(b). Taxable in Another State: When a Corporation is “Subject to” a Tax under Article IV.3.(1).
  • Regulation IV.3.(c). Taxable in Another State: When a State Has Jurisdiction to Subject a Taxpayer to a Net Income Tax.
  • Regulation IV.9. Apportionment Formula.
  • Regulation IV.15.(a). Sales Factor.
  • Regulation IV.15.(b). Sales Factor: Denominator.
  • Regulation IV.15.(c). Sales Factor: Numerator.
  • Regulation IV.16.(a). Sales Factor: Sales of Tangible Personal Property in this State.
  • Regulation IV.16.(b). Sales Factor: Sales of Tangible Personal Property to United States Government in this State.
  • Regulation IV.17. Sales Factor: Sales Other than Sales of Tangible Personal Property in this State.
  • Regulation IV.18.(c). Special Rules: Sales Factor

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 November 3, 2021.

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 October 10, 2021.

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.