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Colorado Governor Signs Tax Relief for Restaurants, Small Businesses

Posted on Dec. 9, 2020

Colorado Gov. Jared Polis (D) has signed a bill that will allow qualified retailers to retain state sales tax as assistance for economic disruptions caused by the COVID-19 pandemic.

H.B. 20B-1004, signed into law December 7, will allow restaurants, bars, and mobile food vendors to deduct up to $70,000 in monthly net taxable sales made in the period November 2020 through February 2021. According to the bill's fiscal note, that amount "equates to about $2,000 in sales tax collections per retailer per site for up to five sites." The bill will reduce the general fund revenue by $39.3 million to $52.8 million, the fiscal note continued.

Retailers must continue to remit any applicable city, county, and special district sales taxes. 

“These specific industries are in particular need of relief in order to stabilize the economy throughout the state and to better position Colorado's economy to recover from the COVID-19 pandemic,” according to the bill.

Polis recently issued an executive order to provide a 30-day extension for remitting state sales taxes collected by restaurants, bars, and food trucks for November, up to a $2,000 limit.

The governor also signed H.B. 20B-1006 December 7, which lowers a company's quarterly estimated tax payments on insurance premiums. Under the bill, companies can make minimum quarterly tax payments equal to the lesser of 25 percent of the total tax paid the previous calendar year or 80 percent of the actual quarterly tax for the current calendar year.

Companies that have overpaid their estimated taxes will also be allowed to either claim refunds or apply the excess payments to future estimated payments, according to the bill. When calculating their refund amounts, companies will have to first apply any nonrefundable tax credits. However, the refund amount "cannot exceed the total amount of any additional payments made by the company,” according to the bill’s summary.

H.B. 1006 will also allow small businesses recovery tax credits to be transferred between affiliates. A taxpayer will be able to claim up to 50 percent of the credit against premium tax liability incurred for a tax year that begins on or after January 1, 2025, and claim the remaining credit amount against premium tax liability incurred for a tax year that begins on or after January 1, 2026, according to the bill. 

The bill will also allow taxpayers to claim the credit against premium tax liability incurred for a tax year that begins on or after January 1, 2027, for credit issued in fiscal 2022.

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