HB 18-1185 Summary

• Establishes market-based sourcing for Colorado income tax apportionment beginning January 1, 2019, replacing the previous cost-of-performance method by conforming to the Multistate Tax Commission's Uniform Division of Income for Tax Purposes Act.

• Service revenue is sourced to Colorado where the service is delivered and used, rather than where performed; tangible property sales are sourced based on delivery location; and intangible property is sourced based on use location.

• Allows taxpayers to elect to treat all income as apportionable income and provides the Department of Revenue authority to grant alternative apportionment methods when standard provisions do not fairly represent business activities in Colorado.

• Allocates nonapportionable income (rents, royalties, capital gains, interest, dividends, patent/copyright royalties) based on property location or taxpayer's commercial domicile, with specific rules for each category.

• Requires the Office of Economic Development to report on economic impacts by January 1, 2024, and authorizes up to $2.9 million transfer from the Colorado Economic Development Fund to the General Fund for fiscal year 2018-19 if revenue reductions occur.