For the first two full income tax years while located in an enterprise zone, taxpayers are allowed a credit of $200 for each new business facility employee insured under a health insurance plan or program at least 50% of the cost must be paid by the employer. Such plan or program may be any health insurance, health maintenance organization or pre-paid health plan that is approved by the State Insurance Commissioner for sale in Colorado or it may be a selfinsurance program. The program must be reduced to writing and it must be legally enforceable against the taxpayer. [§39-30-105 (1)(b), C.R.S.]
For tax years beginning on or after January 1, 1996, the excess credit is not refundable but may be carried forward for a period of up to five years. If the same taxpayer opens a separate new business facility in the zone, the separate facility would have its own two year health insurance qualifying period. In the case of an existing facility that qualifies as a new business facility due to expansion, the health insurance credit can be claimed for the first two full income tax years they operate in the enterprise zone as a new business facility. However, the credit is only available for the new business facility employees as computed for an expansion facility. The employees employed at the facility prior to expansion will not qualify for the insurance credit.
Example: The Lincoln Corporation, a calendar year taxpayer, established a new business facility in a Colorado enterprise zone on September 1, 2003. The Lincoln Corporation paid the entire cost of a health maintenance plan for its employees. The average number of covered employees during 2004 was 41 and during 2005 it was 62.5. The allowable credits, limited to the corporation's tax liability for such years, are $8,200 for 2004 and $12,500 for 2005.
No credit would be allowed for 2003 or 2006.
Is this credit in addition to the basic new business facility employee tax credit?
Yes. A qualifying business in an enterprise zone may claim a total credit of $700 ($1,200 for agricultural processing businesses) per new business facility employee covered under employer-sponsored health insurance.