Struck = removed from the bill ยท
added = the amendment's new text.
SecondSB265_S_APP.001 RegularNOT SessionAMENDED Seventy-firstSENATE GeneralCOMMITTEE AssemblyOF STATEREFERENCE OFREPORT COLORADO_______________________________ PREAMENDEDMay This2, Unofficial2018 VersionChairman Includesof Committee AmendmentsDate NotCommittee Yet Adopted on SecondAppropriations Reading. LLS NO.
18-1261.01After Edconsideration DeCeccoon x4216the SENATEmerits, BILLthe 18-265Committee SENATErecommends SPONSORSHIPthe Hill,following: HOUSE SPONSORSHIP (None), Senate Committees House Committees State, Veterans, & Military Affairs Finance A BILL FOR AN ACT C ONCERNING STATE INCOME TAX BENEFITS FOR AMOUNTS CONTRIBUTED TO A CHILD CARE SAVINGS ACCOUNT .
BillSB18-265 Summarybe (Note:postponed indefinitely.
This** summary*** applies** to*** this** bill*SB265_S_APP.001* as introduced and does notreflectanyamendmentsthatmaybesubsequentlyadopted.Ifthisbill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.) Section 1 of the bill establishes a child care savings account, which is an account with a financial institution fromwhich anindividual uses moneyto paya child care facilityfor the care of a dependent who is less than 6 years old (account).
To be eligible to create an account, an individual must have federal taxable income of less than $90,000, or, in the case of individuals filing a joint return, $180,000.
Shading denotes HOUSE amendment.
Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing statute.
Dashes through the words indicate deletions from existing statute.
A taxpayer may claim a credit that is equal to 10% of the amount thatthetaxpayercontributestoanaccount.Themaximumcreditallowed for an income tax year for a contribution to a single account is $250.
A taxpayermaycontributetomultipleaccountsbutcannotclaimmorethan $25,000 of credits in an income tax year.
A credit for a contribution to one's own account is refundable.
All other credits are not refundable, but unused credits may be carried forward up to 5 years.
Moneyin the account mayonly be used for payments to the child carefacilityorbankfees.Ifanindividualusesmoneyforanunauthorized purpose, then any credit given for such amount is subject to recapture in the year it is withdrawn and there is a penalty equal to 10% of the credit recaptured.
The department of revenue is required to establish forms that an individual must annually file related to an account.
Section2allowsanaccountholderto subtract an amount equalto the interest or income earned during the income tax year from the money in an account from his or her federal taxable income.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1.
In Colorado Revised Statutes, add 39-22-539 as follows:
39-22-539.
Child care savings account - credit - legislative declaration - definitions.
(1) THE GENERAL ASSEMBLY HEREBY DECLARES THAT MANY WORKING PARENTS OFTEN EXPERIENCE A SUBSTANTIALFINANCIALBURDENPAYINGFORCHILDCAREEXPENSESTHAT ALLOW THEM TO WORK OR PARTICIPATE IN WORKFORCE TRAINING .
H IGH-QUALITYCHILDCAREISCRUCIALNOTONLYFORWORKINGPARENTS , BUT ALSO FOR THEIR CHILDREN WHO EXPERIENCE CRITICAL BRAIN DEVELOPMENT FROM BIRTH TO AGE FIVE .THE COSTS OF CHILD CARE AND EARLY CHILDHOOD EDUCATION OFTEN EXCEED THE AMOUNT OF A MONTHLY MORTGAGE PAYMENT OR RENT .
TO SUPPORT FAMILIES WITH YOUNG CHILDREN ,IT IS IMPORTANT TO CREATE A MEANS TO ASSIST WORKING FAMILIES AND ENCOURAGE THEM TO SAVE FOR THEIR CHILD CAREEXPENSES .THEPURPOSEOFTHETAXBENEFITSINTHISSECTIONISTO -2- 265 HELP WORKING PARENTS AFFORD CHILD CARE .
(2) A S USED IN THIS SECTI:N (a) "BENEFICIARY "MEANS A DEPENDENT WHO IS LESS THAN SIX YEARS OLD OF AN INDIVIDUAL WHO HAS CREATED A CHILD SAVINGS ACCOUNT .
(b) "CHILDCAREFACILITY "HASTHESAMEMEANINGASSETFORTH IN SECTION39-22-121 (6.5).
(c) "CHILD CARE SAVINGS ACCOUNT " OR ACCOUNT "MEANS AN ACCOUNT WITH A FINANCIAL INSTITUTION DESIGNATED AS SUCH IN ACCORDANCE WITH SUBSECTION (3)OF THIS SECTIO.
(d) "CREDIT"MEANS THE CREDIT AGAINST INCOME TAX CREATED IN THIS SECTIO.
(e) "DEPARTMENT "MEANS THE DEPARTMENT OF REVENUE .
(f) "FINANCIAL INSTITUTION" MEANS ANY STATE BANK ,STATE TRUST COMPANY , SAVINGS AND LOAN ASSOCIATION , FEDERALLY CHARTERED CREDIT UNION DOING BUSINESS IN THE STAT,CREDIT UNION CHARTERED BY THE STATE ,NATIONAL BANK ,BROKER -DEALER ,MUTUAL FUND , INSURANCE COMPANY , OR OTHER SIMILAR FINANCIAL ENTITY QUALIFIED TO DO BUSINESS IN THE STAT.
(3) BEGINNING JANUARY 1, 2020,AN INDIVIDUAL MAY OPEN AN ACCOUNT WITH A FINANCIAL INSTITUTION AND DESIGNATE THE ACCOUNT ,IN ITS ENTIRET,AS A CHILD CARE SAVINGS ACCOUNT FOR USEBYTHEINDIVIDUAL .A NINDIVIDUALMAYNOTHAVEMORETHANONE ACCOUNT BUT MAYJOINTLYOWNANACCOUNT WITHANOTHERPERSONIF THEY FILE A JOINT INCOME TAX RETUR.
(4) (a) SBJECT TO THE LIMITATIONS IN SUBSECTION(4)(bAND -3- 265 (4)(cOF THIS SECTIO,FOR ANY INCOME TAX YEAR COMMENCING ON OR AFTER JANUARY 1,2020,ATAXPAYERISALLOWEDACREDITAGAINSTTHE TAXIMPOSEDBYTHISARTICLE 22THATISEQUALTOTENPERCENT OFTHE AMOUNT THE TAXPAYER CONTRIBUTES TO A CHILD CARE SAVINGS ACCOUNT DURING THE INCOME TAX YEAR .
(b) (I) FOR AN INDIVIDUAL TO CLAIM A CREDIT FOR A CONTRIBUTION TO HIS OR HER CHILD CARE SAVINGS ACCOUNT , THE INDIVIDUAL MUST HAVE:
(A) C OMPENSATION DURING THE INCOME TAX YEAR THAT IS SUBJECT TO WITHHOLDING UNDER SECTION39-22-604;AND (B) FEDERAL TAXABLE INCOME FOR THE INCOME TAX YEAR THAT IS LESS THAN OR EQUAL TO NINETY THOUSAND DOLLARS ,IN THE CASE OF INDIVIDUALS WHO FILE A JOINT FEDERAL RETURN, ONE HUNDRED EIGHTY THOUSAND DOLLARS .
(II) AN EMPLOYER SHALL NOT CLAIM A CREDIT FOR A CONTRIBUTION TO AN EMPLOYEE'S CHILD CARE SAVINGS ACCOUNT IF THE EMPLOYEE S WAGES FROM THE EMPLOYER ARE GREATER THAN NINETY THOUSAND DOLLARS FOR THE INCOME TAX YEAR .
(c) THE MAXIMUM CREDIT ALLOWED FOR AN INCOME TAX YEAR FOR A CONTRIBUTION TOASINGLE CHILDCARE SAVINGSACCOUNT IS TWO HUNDREDFIFTYDOLLARS .ANEMPLOYERMAYCONTRIBUTETOTHECHILD CARESAVINGSACCOUNTSOFMULTIPLEEMPLOYEESBUTSHALLNOTCLAIM MORE THAN TWENTY FIVE THOUSAND DOLLARS OF CREDITS UNDER THIS SECTION FOR AN INCOME TAX YEAR.
(5) I A TAXPAYER CLAIMS THE CREDIT FOR A CONTRIBUTION TO HIS OR HER OWN CHILD CARE SAVINGS ACCOUNT,THEN THE AMOUNT OF THE CREDIT THAT EXCEEDS THE TAXPAYER 'S INCOME TAXES DUE IS -4- 265 REFUNDED TO THE TAXPAYER .
FOR ALL OTHER TAXPAYERS ,IF THE AMOUNTOFACREDITEXCEEDSATAXPAYER 'SACTUALTAXLIABILITYFOR AN INCOME TAX YEAR,THE AMOUNT OF THE CREDIT NOT USED TO OFFSET INCOME TAX LIABILITY FOR THE INCOME TAX YEAR IS NOT REFUNDED TO THE TAXPAYER .
HE TAXPAYER MAY CARRY FORWARD AND APPLY THE UNUSED CREDIT AGAINST THE INCOME TAX DUE IN EACH OF THE FIVE SUCCEEDING INCOME TAX YEARS ,BUT THE TAXPAYER SHALL APPLY THE CREDIT AGAINST THE INCOME TAXDUE FORTHE EARLIEST OFTHE INCOME TAXYEARSPOSSIBLE .A NYAMOUNTOFTHETAXCREDITTHATISNOTUSED AFTER THIS PERIOD IS NOT REFUNDAB.E (6) (a) FR PURPOSES OF THE CREDI,MONEY MAY REMAIN IN A CHILD CARE SAVINGS ACCOUNT FOR AN UNLIMITED DURATION WITHOUT BEING SUBJECT TO RECAPTURE OR PENALTYANDMAYBE WITHDRAWN BY THE INDIVIDUALAND PAID TO A CHILD CARE FACILITY FOR THE CARE OFA BENEFICIARY OR USED TO PAY A SERVICE FEE THAT IS DEDUCTED BY THE FINANCIAL INSTITUTION.
THE INDIVIDUAL MUST PROVIDE THE DEPARTMENT WITH A BENEFICIARY'S TAX IDENTIFICATION NUMBE.
(b) (I) IAN INDIVIDUAL WITHDRAWS MONEY FROM HIS OR HER CHILD CARE SAVINGS ACCOUNT AND USES IT FOR ANY PURPOSE OTHER THANTHOSE SPECIFIEDINSUBSECTION (6)(aOFTHISSECTION ,THENANY CREDIT GIVEN FOR THE AMOUNT WITHDRAWN IS SUBJECT TO RECAPTURE AS PART OFTHE INDIVIDUA'S INCOME IN THE TAXABLE YEAR IN WHICH IT IS WITHDRAWN AND THERE IS A PENALTY EQUAL TO TEN PERCENT OF THE CREDIT RECAPTURED OR , IF THE CREDIT WAS CLAIMED BY ANOTHER PERSON THEINDIVIDUALISSUBJECTTOAPENALTYTHATISEQUALTOTHE AMOUNT OF THE CREDIT GRANTED PLUS AN AMOUNT EQUAL TO TEN PERCENT OF THE CREDI.
-5- 265 (II) F THE INDIVIDUAL WHO CREATED THE CHILD CARE SAVINGS ACCOUNT DIES ,THEN ANY CREDITS GIVEN FOR A CONTRIBUTION TO THE ACCOUNT ARE SUBJECT TO RECAPTURE IN THE TAXABLE YEAR OF THE DEATH ,BUT NO PENALTY IS DUE TO THE DEPARTMEN.
(III) ATAXPAYER WHO RECEIVES A CREDIT FOR A CONTRIBUTION TOANOTHERPERSON SCHILDCARE SAVINGSACCOUNT ISNOT LIABLE FOR ANY RECAPTURE OFTHE CREDIT OR ANY PENALTIES IF THE OWNER OFTHE ACCOUNT USES MONEY IN THE ACCOUNT FOR ANY PURPOSE OTHER THAN THOSE SPECIFIED IN SUBSECTIO(6)(aOF THIS SECTIO.
(7) THE DEPARTMENT SHALL ESTABLISH FORMS FOR AN INDIVIDUAL TO ANNUALLY REPORT INFORMATION ABOUT A CHILD CARE SAVINGS ACCOUNT ,INCLUDING BUT NOT LIMITED TO HOW THE MONEY FROM THE ACCOUNT IS USED , AND IDENTIFY ANY SUPPORTING DOCUMENTATION THAT IS REQUIRED TO BE MAINTAINED.TO BE ELIGIBLE FOR THE CREDIT UNDER THIS SECTIO,AN INDIVIDUAL MUST ANNUALLY FILE WITH HIS OR HER STATE INCOME TAX RETURN THE COMPLETED FORM AND ANY OTHER SUPPORTING DOCUMENTATION THE DEPARTMENT REQUIRES .
THE INDIVIDUAL IS RESPONSIBLE FOR MAINTAINING DOCUMENTATION FOR THE ACCOUNT AND FOR ANY USE OF MONEY FROM THE ACCOUNT .
(8) (a) AINANCIAL INSTITUTION IS NOT REQUIRED :O (I) DESIGNATE AN ACCOUNT AS A CHILD CARE SAVINGS ACCOUNT INTHEFINANCIALINSTITUTION SACCOUNTCONTRACTSORSYSTEMSORIN ANY OTHER WAY ;
(II) TACK THE USE OF MONEY WITHDRAWN FROM A CHILD CARE SAVINGS ACCOUNT ;OR -6- 265 (III) EPORT ANY INFORMATION TO THE DEPARTMENT OR ANY OTHER GOVERNMENTAL AGENCY THAT IS NOT OTHERWISE REQUIRED BY LAW .
(b) AFINANCIALINSTITUTIONISNOTRESPONSIBLEORLIABLEFOR :
(I) DETERMINING OR ENSURING THE FAILURE OF AN ACCOUNT OWNER TO COMPLY WITH THE REQUIREMENTS OF THIS SECTION ,THE ELIGIBILITYOFANACCOUNTOWNERTOCLAIMACREDIT ,ORTHATMONEY INACHILDCARESAVINGSACCOUNTISUSEDFORANELIGIBLEEXPENSE ;OR (II) RPORTING OR REMITTING TAXES OR PENALTIES RELATED TO USE OF MONEY IN A CHILD CARE SAVINGS ACCOUN.
(c) IIMPLEMENTINGTHISSECTION ,THEDEPARTMENTSHALLNOT ESTABLISHANYADMINISTRATIVE ,REPORTING,OROTHERREQUIREMENTS ON FINANCIAL INSTITUTIONS THAT ARE OUTSIDE THE SCOPE OF NORMAL ACCOUNT PROCEDURES .
SECTION 2.
In Colorado Revised Statutes, 39-22-104, add (4)(y) as follows:
39-22-104.
Income tax imposed on individuals, estates, and trusts - single rate - legislative declaration - definitions - repeal.
(4) There shall be subtracted from federal taxable income:
(y) FR INCOME TAX YEARS BEGINNING ON OR AFTEJANUARY 1, 2020,AN AMOUNT EQUAL TO THE INTEREST OR INCOME EARNED DURING THEINCOMETAXYEARFROMTHEMONEYINTHETAXPAYER SCHILDCARE SAVINGS ACCOUNT CREATED IN ACCORDANCE WITH SECTION 39-22-539.
SECTION 3.
Act subject to petition - effective date.
This act takes effect at 12:01 a.m.
on the day following the expiration of the ninety-dayperiodafterfinaladjournmentofthegeneralassembly(August 8, 2018, if adjournment sine die is on May 9, 2018);
except that, if a -7- 265 referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2018 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.
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