Rates for tax credits vary depending on the property’s location. If the business receiving the investment operates in an enterprise zone or rural county, the tax credit to the investor is 35% of the qualified investment, up to the $100,000 maximum allowable tax credit amount.

The business needs to get their Enterprise Zone Pre-Certification number to qualify for enterprise zone status. Businesses can become pre-certified for free by applying through the OEDIT application portal.

The following are considered rural counties for the Advanced Industry Investment Tax Credit program: Alamosa, Archuleta, Baca, Bent, Chaffee, Cheyenne, Clear Creek, Conejos, Costilla, Crowley, Custer, Delta, Dolores, Eagle, Elbert, Fremont, Garfield, Gilpin, Grand, Gunnison, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, La Plata, Lake, Las Animas, Lincoln, Logan, Mesa, Mineral, Moffat, Montezuma, Montrose, Morgan, Otero, Ouray, Park, Phillips, Pitkin, Prowers, Pueblo, Rio Blanco, Rio Grande, Routt, Saguache, San Juan, San Miguel, Sedgwick, Summit, Teller, Washington, and Yuma.

For a business to be a qualified investee in this tax credit program, it needs to:

• Be a corporation, partnership, LLC, or other business entity (individuals do not qualify)
• Manufacture an advanced technology and influence one or more of Colorado’s advanced industries, which include advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources, infrastructure engineering, and information technology
• Have headquarters in Colorado or have at least 50% of employees based in Colorado
• Be registered with the Colorado Secretary of State and in Good Standing
• Have received less than $10 million from third-party investors since the business was formed
• Have annual revenues of less than $5 million OR have been actively generating revenue for less than five years

If your business has less than 50% of its employees in Colorado, you will need to provide documentation to certify your business is eligible based on location.

Such documentation must:

• Be on business letterhead, signed by the CEO or other officer with similar authority
• Provide the titles and functions of all employees identifying where such positions are employed (Colorado or other state or country)
• Include the statement, “I attest that (Business Name) is headquartered in Colorado, and that (identify individuals) work in Colorado on behalf of the business and are responsible for executive orders and key policy decisions.”

When determining if a business is in an advanced industry, OEDIT will look at the following factors:

• Is the company advancing the industry or advancing the state of the art?
• What is the company’s intellectual property strategy?
• Do they hold or are they applying for patents, or do they have trade secrets?
• Does the company perform Research & Development?
• What percent of employees are in STEM-related fields? 

Please note - it is required of AITC-certified businesses to monitor their own eligibility. If/when a business surpasses the eligibility criteria, it will immediately become ineligible for AITC. For example, once a business has raised $10 million from third-party investors, it becomes ineligible. Or, once a business, when reviewing their year-end financials, has surpassed $5 million in revenues and has generated revenues for 5 full years, it becomes ineligible.

Any investments made in a business after the business becomes ineligible will not qualify for a tax credit. Businesses shall notify the office within thirty days from the date that it no longer meets the qualifications. If the certification is revoked, the office may assess a penalty against the business that is equal to the amount of the tax credits authorized after the date the business no longer meets the qualifications. Therefore, the business must keep the eligibility criteria in mind when conducting business and working with potential investors.

To be eligible for this tax credit as an investor, you need to:

• Be a third-party or unaffiliated investor.
  • Founders are ineligible; a founder expresses company control. Co-founders are affiliates of each other, and are excluded from receiving a tax credit. 
• Hold less than 30% voting power when combined with affiliates, immediately before investment and less than 50% voting power when combined with affiliates, immediately after investment
  • An affiliate is defined as any person or entity that controls, is controlled by, or is under common control with another person or entity. Affiliates include investment partners, business managers, and family members including spouses, siblings, children, and parents.
• Invest at least $10,000
• Invest in common stock, preferred stock, interest in partnership, interest in LLC, equity security, SAFE, or convertible debt instrument
• Be an eligible entity type including individual, LLC, partnership, S-corp. C-corps are not eligible. Trusts are typically not eligible, please contact OEDIT if you would like to invest through a Trust
• Have a different federal employer identification number or taxpayer ID from the company accepting your investment
• Couples investing together and filing a joint tax return will be treated as a single taxpayer. Please submit the application using the name and SSN of the individual normally listed as the primary taxpayer.
• State that the tax credit was a significant factor in your decision to make the investment and that without the tax credit, you would not have made the investment or would have made the investment at a substantially lower level
• Not have previously earned a tax credit for an investment in the same qualified small business. However, investors can receive credits for investing in multiple different companies.
• An investment made in tranches may count as a single investment if those payments were made within 90 days and within the same calendar year of the first investment date
• Submit a completed application for a tax credit for an investment in a certified advanced industries small business within 90 days of the investment date (the date the business received your investment). Note that a complete application includes the portal activation, pre-application, and complete investor application.

Starting in 2023, investors belonging to pass-through entities may allocate their earned tax credit among the entities' partners, shareholders, members, or other constituent qualified investors in any manner agreed to by such qualified investors. OEDIT will issue tax credit certificates to each constituent qualified investor for the appropriate amounts.

Both the business and the investor need to apply separately for this program. Businesses can apply at any time and we encourage businesses to apply even if an investor is not lined up yet.

Follow these steps to apply as an investee for this program.

1. Complete the Investee Pre-certification on the OEDIT application portal.

• Log in to your account or create a new account. To protect your personal information, we manually add new users to the portal, so it may take several days to activate your account.
• Select "Advanced Industries Programs."
• Complete the AI Tax Credit Investee Pre-Certification to prove eligibility.

2. Complete the Investee Certification on the OEDIT application portal.

• If you receive preliminary approval on your pre-certification, you will receive access to complete the AI Tax Credit Investee Certification.
• You will be asked to upload these documents with your application:
  • certificate of Good Standing from the Colorado Secretary of State
  • proof of business organization including articles of incorporation, certificate of partnership
  • most recent year-end balance sheet
  • ALL year-end income statements or income tax filings from formation
  • investee worksheet (XLSX)
  • investment term sheet
• You will receive an email once your certification has been approved.
• Please note that it will likely take a few days to activate your account, and can take up to 90 days to process your certification application. Please plan accordingly with your investors based on this processing timeline. 

Both the business and the investor need to apply separately for this program.

Investors may only apply after the business they'd like to invest in has submitted their AITC application and been certified as an eligible business.

Follow these steps to apply as an investor for this program.

1. Complete the Investor Pre-Qualification on the OEDIT application portal.
   1. Apply within 90 days of a qualified investment.
   2. Log in to your account or create a new account. To protect your personal information, we manually add new users to the portal, so it may take 1-2 days to activate your account.
   3. Select "Advanced Industries Programs."
   4. Complete the AI Tax Credit Investor Pre-Qualification to determine preliminary eligibility.
2. Complete the Investor Application on the OEDIT application portal.
   1. Please be aware that there are three parts to a complete application
      1. The portal activation, which registers you within our system, allowing you to apply (this process can take 1-3 business days to approve)
      2. The pre-application, which only determines preliminary eligibility
      3. The full application, which calls for more detailed information and confirmation of the investment. We will make a determination based on the completion of the full application. 
   2. If you receive preliminary approval on your Pre-Qualification, you will receive access to complete the AI Tax Credit Investor Application.
   3. Investors that are part of pass-through entities will apply differently based on how they choose to allocate their tax credit to awardees:
      1. If a qualified investor is a pass-through entity and will be allocating their earned tax credit pro rata, they may use the AI Tax Credit Investor Application to assign the full tax credit to the pass-through entity.
      2. If a qualified investor is a pass-through entity and will be allocating their earned tax credit non-pro rata, in addition to the AI Tax Credit Investor Application, they must use the AI Tax Credit Pass-Through Application to allocate the tax credit amongst awardees.
      3. If a qualified investor is a pass-through entity, will be allocating their earned tax credit non-pro rata, and has 20 or more tax credit awardees, in addition to the AI Tax Credit Investor Application that assigns the full tax credit to the pass-through entity, they must also complete an Awardee Allocation Spreadsheet to notify the office of how they plan to allocate their earned tax credit to awardees.
   4. You will be asked to upload these documents with your application:
      1. Proof of funding in PDF format, such as a cancelled check, bank statement, and/or a screenshot of bank account activity. 
      2. Each of these documents should show the investor’s contact name, the business you invested in, the date you sent funds to the business, and the funding amount.
   5. You will receive an email with the determination of your application.
   6. Please note that it will likely take a few days to activate your account, and can take up to 90 days to process your investor application. Please plan accordingly. 
3. File Colorado income taxes and include certification documents.