Colorado § 39-22-123.7 - Earned income tax credit - pilot program - pre-populated tax return - rules - report - repeal.

§ 39-22-123.7. Earned income tax credit - pilot program - pre-populated tax return - rules - report - repeal.

(1) There is created in the department of revenue a pilot program to assist up to one hundred thousand households in filing or amending a federal income tax return, a state income tax return, or both, and claiming the federal and state earned income tax or child tax credits for up to two prior tax years. Depending upon the available resources of the third-party entity described in subsection (2) of this section, the pilot program shall:

(a) Assist resident individuals in filing a federal or state income tax return and claiming the federal or state earned income tax credit, the federal or state child tax credit, or both, for up to two prior tax years; or

(b) Assist resident individuals in amending their federal income tax returns, their state income tax returns, or both, for up to two prior tax years in order to claim the federal and state earned income tax and child tax credits.

(2) As third-party resources allow, a third-party entity shall create a pre-populated federal or state income tax return, or both, for one of the two options described in subsection (1) of this section for up to one hundred thousand resident households that appear to qualify for the earned income tax credit or child tax credit in up to two prior tax years. For participating residents, the third-party entity may also pre-populate other parts of the tax returns using information provided by the resident for completing necessary tax credit applications, and, where possible, submit the pre-populated forms to the department of revenue or internal revenue service, as applicable.

(3) (a) To develop, implement, and administer the pilot program described in this section, the department of revenue shall:

(I) Collaborate with a third-party entity to identify the population of up to one hundred thousand resident households who may be eligible to claim the prior year tax credits identified in subsection (1) of this section;

(II) Notify the households identified pursuant to subsection (3)(a)(I) of this section about the availability of the pilot program and instruct them on how to access the program and provide the consent required by subsection (3)(a)(III) of this section;

(III) Develop a mechanism to share wage data with the third-party entity; and

(IV) Develop a system for resident individuals to digitally consent to having wage data shared with the third-party entity.

(b) The department of revenue may seek, accept, and expend gifts, grants, or donations from private or public sources for the purposes of this section.

(c) As resources permit, the department of revenue may collaborate with the internal revenue service.

(d) The department of revenue shall develop, implement, and begin to administer the pilot program no later than August 15, 2025.

(4) (a) Information that the department of revenue may provide pursuant to this section is subject to any limitations imposed pursuant to section 6103 of the internal revenue code. The third-party entity shall secure the information shared pursuant to this section.

(b) Information provided to the third-party entity pursuant to this section remains confidential, and all agents, clerks, and employees of the third-party entity are subject to the limitations set forth in section 39-21-113 (4) and the penalties contained in section 39-21-113 (6) to the same extent as agents, clerks, and employees of the department of revenue.

(5) The third-party entity selected pursuant to subsection (3)(a)(I) of this section shall provide a written report to members of the senate and house finance committees no later than December 15, 2025. The report shall provide information that includes:

(a) The number of pre-populated federal income tax returns completed;

(b) The total number of each tax credit claimed as a result of the pilot program set forth in this section;

(c) An estimate of the amount of money claimed through the pilot program set forth in this section;

(d) The number of returns that were supported through information shared pursuant to this section; and

(e) Recommendations for improving and continuing the pilot program.

(6) This section is repealed, effective January 1, 2027.

Source: L. 2024: Entire section added, (HB 24-1288), ch. 173, p. 942, § 2, effective August 7. L. 2025: IP(5) amended, (SB 25-300), ch. 428, p. 2456, § 56, effective August 6.