The Colorado Department of Revenue, Division of Taxation

Public Rulemaking Hearing

July 18, 2023 Agenda of Proposed Rules:

The proposed rules will be published in the Colorado Register on June 25.

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.