A Bill for an Act
Page 1, Line 101Concerning tax incentives for businesses that transition to
Page 1, Line 102employee-owned businesses in whole or in part.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill 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.)
The bill creates 2 income tax subtractions for income tax years commencing on or after January 1, 2027, but before January 1, 2038. The first subtraction is for an amount equal to state capital gains that are realized by a taxpayer during the taxable year for the conversion by an increment of at least 20% ownership to a qualified employee-owned business of a qualified business. The taxpayers that are eligible for this subtraction are the same taxpayers that would be eligible for the tax credit for conversion costs for employee business ownership.
The second subtraction is allowed to worker-owned cooperatives in an amount equal to the worker-owned cooperative's federal taxable income for the tax year not to exceed $1 million.
The bill also makes changes to the tax credit for conversion costs for employee business ownership (credit). Under current law, the credit is available through income tax year 2026. The bill extends the credit through income tax year 2037. The bill also specifies that the aggregate amount of credits that can be claimed for each income tax year commencing on or after January 1, 2026, but before January 1, 2032, is $3 million and that the aggregate amount of credits that can be claimed for each income tax year commencing on or after January 1, 2032, but before January 1, 2038, is $4 million. The percentage of conversion or expansion costs that are eligible to be claimed for the credit is currently 50%; however, the bill increases this percentage to 75% beginning in tax year 2026 while maintaining the existing dollar caps for the different methods of conversion.
Additionally, the bill revises several definitions to expand eligibility for the credit and allows for qualified support entities, which are nonprofit organizations that provide services to businesses that qualify under the credit to convert or expand to employee-ownership, to be eligible to receive the credit for up to 75% of the costs incurred for providing such support, including for staff salaries and benefits, marketing and outreach, and consulting and technical assistance not to exceed $167,000.
The bill makes conforming amendments to several of the credit's expanded definitions that are also applicable to the tax credit for new employee-owned businesses.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. In Colorado Revised Statutes, 39-22-104, add
Page 2, Line 3(4)(dd) as follows:
Page 2, Line 439-22-104. Income tax imposed on individuals, estates, and
Page 2, Line 5trusts - single rate - report - tax preference performance statement
Page 2, Line 6- legislative declaration - definitions - repeal. (4) There shall be
Page 2, Line 7subtracted from federal taxable income:
Page 2, Line 8(dd) (I) For income tax years commencing on or after
Page 3, Line 1January 1, 2027, but before January 1, 2038, an amount equal to
Page 3, Line 2qualifying capital gains that are subject to tax under this
Page 3, Line 3article 22 and that are realized by a qualified taxpayer during
Page 3, Line 4the taxable year for the qualified sale of a qualified business.
Page 3, Line 5(II) As used in this section, unless the context otherwise
Page 3, Line 6requires:
Page 3, Line 7(A) "Owner" has the same meaning as set forth in section
Page 3, Line 839-22-542 (2)(h).
Page 3, Line 9(B) "Qualified business" has the same meaning as set forth
Page 3, Line 10in section 39-22-542 (2)(i).
Page 3, Line 11(C) "Qualified employee-owned business" has the same
Page 3, Line 12meaning as set forth in section 39-22-542 (2)(j).
Page 3, Line 13(D) "Qualified sale" means the conversion to a qualified
Page 3, Line 14employee-owned business; except that the conversion must be by
Page 3, Line 15an increment of at least twenty percent of the total ownership
Page 3, Line 16of the entire qualified employee-owned business.
Page 3, Line 17(E) "Qualified taxpayer" means, in the case of a qualified
Page 3, Line 18business that is a C corporation, the qualified business and, in
Page 3, Line 19the case of a qualified business that is a partnership or an S
Page 3, Line 20corporation, the owner.
Page 3, Line 21(F) "Qualifying capital gains" means the amount of net
Page 3, Line 22capital gains, as defined in section 1222 (11) of the internal
Page 3, Line 23revenue code.
Page 3, Line 24(III) In accordance with section 39-21-304 (1), which
Page 3, Line 25requires each bill that creates a new tax expenditure to include
Page 3, Line 26a tax preference performance statement as part of a statutory
Page 3, Line 27legislative declaration, the general assembly finds and
Page 4, Line 1declares that the purpose of the income tax subtraction
Page 4, Line 2provided in this subsection (4)(dd) is to:
Page 4, Line 3(A) Induce certain designated behavior by taxpayers,
Page 4, Line 4specifically for businesses to establish employee stock
Page 4, Line 5ownership plans or employee ownership trusts or to convert to
Page 4, Line 6a worker-owned cooperative; and
Page 4, Line 7(B) Provide tax relief for certain businesses or
Page 4, Line 8individuals, specifically to businesses that establish employee
Page 4, Line 9stock ownership plans or employee ownership trusts or that
Page 4, Line 10convert to a worker-owned cooperative.
Page 4, Line 11(IV) The general assembly and the state auditor shall
Page 4, Line 12measure the effectiveness of the subtraction in achieving the
Page 4, Line 13purpose specified in subsection (4)(dd)(III) of this section based on
Page 4, Line 14the number and aggregate amount of subtractions claimed in a
Page 4, Line 15tax year.
Page 4, Line 16(V) This subsection (4)(dd) is repealed, effective July 1,
Page 4, Line 172042.
Page 4, Line 18SECTION 2. In Colorado Revised Statutes, 39-22-304, add (3)(s)
Page 4, Line 19and (3)(t) as follows:
Page 4, Line 2039-22-304. Net income of corporation - legislative declaration
Page 4, Line 21- definitions - repeal. (3) There shall be subtracted from federal taxable
Page 4, Line 22income:
Page 4, Line 23(s) (I) For income tax years commencing on or after
Page 4, Line 24January 1, 2027, but before January 1, 2038, an amount equal to
Page 4, Line 25qualifying capital gains that are subject to tax under this
Page 4, Line 26article 22 and that are realized by a qualified taxpayer during
Page 4, Line 27the taxable year for the qualified sale of a qualified business.
Page 5, Line 1(II) As used in this section, unless the context otherwise
Page 5, Line 2requires:
Page 5, Line 3(A) "Owner" has the same meaning as set forth in section
Page 5, Line 439-22-542 (2)(h).
Page 5, Line 5(B) "Qualified business" has the same meaning as set forth
Page 5, Line 6in section 39-22-542 (2)(i).
Page 5, Line 7(C) "Qualified employee-owned business" has the same
Page 5, Line 8meaning as set forth in section 39-22-542 (2)(j).
Page 5, Line 9(D) "Qualified sale" means the conversion to a qualified
Page 5, Line 10employee-owned business; except that the conversion must be by
Page 5, Line 11an increment of at least twenty percent of the total ownership
Page 5, Line 12of the entire qualified employee-owned business.
Page 5, Line 13(E) "Qualified taxpayer" means, in the case of a qualified
Page 5, Line 14business that is a C corporation, the qualified business and, in
Page 5, Line 15the case of a qualified business that is a partnership or an S
Page 5, Line 16corporation, the owner.
Page 5, Line 17(F) "Qualifying capital gains" means the amount of net
Page 5, Line 18capital gains, as defined in section 1222 (11) of the internal
Page 5, Line 19revenue code.
Page 5, Line 20(III) In accordance with section 39-21-304 (1), which
Page 5, Line 21requires each bill that creates a new tax expenditure to include
Page 5, Line 22a tax preference performance statement as part of a statutory
Page 5, Line 23legislative declaration, the general assembly finds and
Page 5, Line 24declares that the purpose of the income tax subtraction
Page 5, Line 25provided in this subsection (3)(s) is to:
Page 5, Line 26(A) Induce certain designated behavior by taxpayers,
Page 5, Line 27specifically for businesses to establish employee stock
Page 6, Line 1ownership plans or employee ownership trusts or to convert to
Page 6, Line 2a worker-owned cooperative; and
Page 6, Line 3(B) Provide tax relief for certain businesses or
Page 6, Line 4individuals, specifically to businesses that establish employee
Page 6, Line 5stock ownership plans or employee ownership trusts or that
Page 6, Line 6convert to a worker-owned cooperative.
Page 6, Line 7(IV) The general assembly and the state auditor shall
Page 6, Line 8measure the effectiveness of the subtraction in achieving the
Page 6, Line 9purpose specified in subsection (3)(s)(III) of this section based on
Page 6, Line 10the number and aggregate amount of subtractions claimed in a
Page 6, Line 11tax year.
Page 6, Line 12(V) This subsection (3)(s) is repealed, effective July 1, 2042.
Page 6, Line 13(t) (I) For income tax years commencing on or after
Page 6, Line 14January 1, 2027, but before January 1, 2038, an amount equal to
Page 6, Line 15a qualified taxpayer's federal taxable income for the tax year
Page 6, Line 16not to exceed one million dollars.
Page 6, Line 17(II) As used in this section, unless the context otherwise
Page 6, Line 18requires:
Page 6, Line 19(A) "Qualified taxpayer" means a taxpayer that is subject
Page 6, Line 20to tax under this article 22 and that is a worker-owned
Page 6, Line 21cooperative.
Page 6, Line 22(B) "Worker-owned cooperative" has the same meaning as
Page 6, Line 23set forth in section 1042 (c)(2) of the internal revenue code.
Page 6, Line 24(III) In accordance with section 39-21-304 (1), which
Page 6, Line 25requires each bill that creates a new tax expenditure to include
Page 6, Line 26a tax preference performance statement as part of a statutory
Page 6, Line 27legislative declaration, the general assembly finds and
Page 7, Line 1declares that the purpose of the income tax subtraction
Page 7, Line 2provided in this subsection (3)(t) is to:
Page 7, Line 3(A) Induce certain designated behavior by taxpayers,
Page 7, Line 4specifically for businesses to convert to a worker-owned
Page 7, Line 5cooperative; and
Page 7, Line 6(B) Provide tax relief for certain businesses, specifically
Page 7, Line 7to provide ongoing support to businesses that convert to a
Page 7, Line 8worker-owned cooperative.
Page 7, Line 9(IV) The general assembly and the state auditor shall
Page 7, Line 10measure the effectiveness of the subtraction in achieving the
Page 7, Line 11purpose specified in subsection (3)(t)(III) of this section based on
Page 7, Line 12the number and aggregate amount of subtractions claimed in a
Page 7, Line 13tax year and the number of subtractions claimed year over
Page 7, Line 14year.
Page 7, Line 15(V) This subsection (3)(t) is repealed, effective July 1, 2042.
Page 7, Line 16SECTION 3. In Colorado Revised Statutes, 39-22-542, amend
Page 7, Line 17(1)(a)(I), (1)(a)(III), (2)(e), (2)(j)(II), (3)(a) introductory portion,
Page 7, Line 18(3)(a.5)(I), (3)(c), (3)(d), (4), (5)(a)(V), (5)(a)(VI), (6)(a)(I), (8), (10),
Page 7, Line 19(11) introductory portion, and (14); and add (2)(c.5), (2)(j.5), (2)(k.5),
Page 7, Line 20(3)(a.3), (3)(a.5)(III), (3)(a.7), (3)(b)(III), and (5)(a)(VII) as follows:
Page 7, Line 2139-22-542. Employee-ownership tax credit - definitions -
Page 7, Line 22legislative declaration - repeal. (1) Legislative declaration. (a) The
Page 7, Line 23general assembly hereby finds and declares that:
Page 7, Line 24(I) The purpose of this section is to provide an incentive for
smallPage 7, Line 25businesses to establish employee stock ownership plans or employee
Page 7, Line 26ownership trusts or to convert to a worker-owned cooperative, and to
Page 7, Line 27provide an incentive to entities that support businesses in such
Page 8, Line 1establishment or conversion;
Page 8, Line 2(III) This section encourages
smallPage 8, Line 3
through three different options,Page 8, Line 4that contributed to their success; and
Page 8, Line 5(2) Definitions. As used in this section, unless the context
Page 8, Line 6otherwise requires:
Page 8, Line 7(c.5) "Corporate headquarters" means the sole location
Page 8, Line 8within a regional or national area where the majority of the
Page 8, Line 9taxpayer's or qualified support entity's staff members or
Page 8, Line 10employees are domiciled and employed and where the majority
Page 8, Line 11of the taxpayer's or qualified support entity's financial,
Page 8, Line 12personnel, legal, planning, or other business functions are
Page 8, Line 13conducted on a regional or national basis.
Page 8, Line 14(e) "Employee ownership trust" means an indirect form of
Page 8, Line 15employee ownership in which a trust holds
a controlling stakePage 8, Line 16twenty percent of the fully diluted securities in a qualified
Page 8, Line 17business and benefits all employees on an equal basis.
Page 8, Line 18(j) "Qualified employee-owned business" means a taxpayer that
Page 8, Line 19is subject to tax under this article 22, including but not limited to a C
Page 8, Line 20corporation, S corporation, limited liability company, partnership, limited
Page 8, Line 21liability partnership, sole proprietorship, or other similar pass-through
Page 8, Line 22entity, that:
Page 8, Line 23(II) Has its corporate headquarters located in this state.
ForPage 8, Line 24
purposes of this subsection (2)(j), "corporate headquarters" means thePage 8, Line 25
sole location within a regional or national area where the taxpayer's staffPage 8, Line 26
members or employees are domiciled and employed, and where thePage 8, Line 27
majority of the taxpayer's financial, personnel, legal, planning, or otherPage 9, Line 1
business functions are conducted on a regional or national basis.Page 9, Line 2(j.5) "Qualified support entity" means an organization
Page 9, Line 3exempt from taxation under section 501 (c)(3) of the internal
Page 9, Line 4revenue code that:
Page 9, Line 5(I) Has been in existence for not less than twelve months
Page 9, Line 6prior to January 1 of the income tax year for which the qualified
Page 9, Line 7support entity claims the credit;
Page 9, Line 8(II) Either has provided services that have supported at
Page 9, Line 9least one successful conversion or expansion to a qualified
Page 9, Line 10employee-owned business in the income tax year or has provided
Page 9, Line 11services that have supported at least three qualified businesses
Page 9, Line 12that have the intent of converting or expanding to a qualified
Page 9, Line 13employee-owned business;
Page 9, Line 14(III) Has its corporate headquarters located in this state;
Page 9, Line 15and
Page 9, Line 16(IV) Is approved by the office for the tax incentives in this
Page 9, Line 17section.
Page 9, Line 18(k.5) "Support costs" means costs that are or are related
Page 9, Line 19to:
Page 9, Line 20(I) Staff salaries and benefits for staff that are directly
Page 9, Line 21involved in providing services of the qualified support entity for
Page 9, Line 22the conversion or expansion of a qualified business to a
Page 9, Line 23qualified employee-owned business;
Page 9, Line 24(II) Marketing and outreach for producing educational
Page 9, Line 25materials or hosting workshops or conferences on converting
Page 9, Line 26a business to employee-ownership; and
Page 9, Line 27(III) Consulting and technical assistance which may
Page 10, Line 1include legal, financial, and business consulting for converting
Page 10, Line 2a qualified business to a qualified employee-owned business.
Page 10, Line 3(3) (a) Except as otherwise provided in subsection (3)(a.3)
Page 10, Line 4of this section and subject to certification by the office pursuant to this
Page 10, Line 5section, for income tax years commencing on or after January 1, 2022, but
Page 10, Line 6
prior to January 1, 2027Page 10, Line 7is allowed a credit with respect to the income taxes imposed pursuant to
Page 10, Line 8this article 22 as follows:
Page 10, Line 9(a.3) For income tax years commencing on or after
Page 10, Line 10January 1, 2026, but before January 1, 2038, the allowable
Page 10, Line 11percentage of conversion costs incurred by a qualified business
Page 10, Line 12for the applicable conversion of the qualified business set forth
Page 10, Line 13in subsections (3)(a)(I), (3)(a)(II), and (3)(a)(III) of this section for
Page 10, Line 14purposes of calculating the credit is up to seventy-five percent
Page 10, Line 15of the conversion costs.
Page 10, Line 16(a.5) (I) Except as otherwise provided in subsection
Page 10, Line 17(3)(a.5)(III) of this section and subject to certification by the office
Page 10, Line 18pursuant to this section, for
thePage 10, Line 19January 1, 2024, but
prior to January 1, 2027Page 10, Line 20a qualified employee-owned business is allowed a credit with respect to
Page 10, Line 21the income taxes imposed pursuant to this article 22 of up to fifty percent
Page 10, Line 22of the expansion costs, not to exceed twenty-five thousand dollars,
Page 10, Line 23incurred to expand a qualified employee-owned business's employee
Page 10, Line 24ownership trust, employee stock ownership plan, worker-owned
Page 10, Line 25cooperative, or alternate equity structure.
Page 10, Line 26(III) For income tax years commencing on or after January
Page 10, Line 271, 2026, but before January 1, 2038, the allowable percentage of
Page 11, Line 1expansion costs incurred by a qualified employee-owned business
Page 11, Line 2to expand a qualified employee-owned business as set forth in
Page 11, Line 3subsection (3)(a.5)(I) of this section for purposes of calculating
Page 11, Line 4the credit is up to seventy-five percent of the conversion costs.
Page 11, Line 5(a.7) Subject to certification by the office pursuant to this
Page 11, Line 6section, for income tax years commencing on or after January
Page 11, Line 71, 2027, but prior to January 1, 2038, a qualified support entity is
Page 11, Line 8allowed a credit with respect to the income taxes imposed
Page 11, Line 9pursuant to this article 22 of up to seventy-five percent of the
Page 11, Line 10support costs, but not to exceed one hundred sixty-seven
Page 11, Line 11thousand dollars, incurred in providing services that support
Page 11, Line 12the conversion or the expansion of qualified businesses to
Page 11, Line 13qualified employee-owned businesses.
Page 11, Line 14(b) (III) In the case of a qualified support entity, the credit
Page 11, Line 15is allowed to the qualified support entity.
Page 11, Line 16(c) The maximum amount of all tax credit certificates that the
Page 11, Line 17office may reserve under subsection (6)(a) of this section
in any tax yearPage 11, Line 18
is ten million dollars.Page 11, Line 19(I) Ten million dollars for any income tax year
Page 11, Line 20commencing on or after January 1, 2022, but before January 1,
Page 11, Line 212026;
Page 11, Line 22(II) Three million dollars for any income tax year
Page 11, Line 23commencing on or after January 1, 2026, but before January 1,
Page 11, Line 242032; and
Page 11, Line 25(III) Four million dollars for any income tax year
Page 11, Line 26commencing on or after January 1, 2032, but before January 1,
Page 11, Line 272038.
Page 12, Line 1(d) (I) A qualified business or qualified employee-owned business
Page 12, Line 2may apply for and claim only one tax credit for the conversion or
Page 12, Line 3expansion costs incurred per tax year.
Page 12, Line 4(II) A qualified support entity may apply for and claim
Page 12, Line 5only one tax credit per tax year.
Page 12, Line 6(4) (a) A business or, where applicable, a nonprofit
Page 12, Line 7organization shall submit an application to the office for the issuance
Page 12, Line 8of a credit certificate for the credit allowed in this section by the deadlines
Page 12, Line 9established in the office's guidelines. Except as otherwise provided in
Page 12, Line 10subsection (4)(b) of this section, the application must include
Page 12, Line 11information, as set forth in the office's guidelines, regarding the type of
Page 12, Line 12conversion or expansion the business intends to undertake, a list of the
Page 12, Line 13expected conversion or expansion costs, and an estimated amount, as
Page 12, Line 14calculated by the business, of the expected conversion or expansion costs.
Page 12, Line 15(b) An application for a nonprofit organization submitting
Page 12, Line 16the application to be approved as a qualified support entity must
Page 12, Line 17include information, as set forth in the office's guidelines,
Page 12, Line 18regarding the support services the nonprofit organization
Page 12, Line 19provides to qualified businesses, whether the nonprofit
Page 12, Line 20organization supported a successful conversion of a qualified
Page 12, Line 21business to a qualified employee-owned business in the taxable
Page 12, Line 22year, if the nonprofit organization has not supported a
Page 12, Line 23successful conversion, the number of qualified businesses the
Page 12, Line 24nonprofit organization is supporting that intend to convert or
Page 12, Line 25expand to qualified employee-owned businesses and the status
Page 12, Line 26of the anticipated conversions or expansions, and information
Page 12, Line 27regarding support costs incurred in the income tax year.
Page 13, Line 1(5) (a) The office shall develop guidelines for the administration
Page 13, Line 2of this section, including, but not limited to:
Page 13, Line 3(V) Detailed guidelines regarding expansion costs;
andPage 13, Line 4(VI) Guidelines and standards for certifying a business as a
Page 13, Line 5qualified employee-owned business; and
Page 13, Line 6(VII) Guidelines and standards for certifying a nonprofit
Page 13, Line 7organization as a qualified support entity.
Page 13, Line 8(6) (a) (I) After the office provides the written report required in
Page 13, Line 9subsection (5)(b) of this section, a reservation of tax credits is permitted
Page 13, Line 10for the tax credit allowed in this section. If the office determines that the
Page 13, Line 11application filed under subsection (4) of this section is complete, the
Page 13, Line 12office shall determine whether the business is a qualified business,
orPage 13, Line 13qualified employee-owned business, or a qualified support entity,
Page 13, Line 14review the list of the expected conversion or expansion costs, and review
Page 13, Line 15the estimated conversion,
orPage 13, Line 16by the business. If the office approves the business as a qualified
Page 13, Line 17business,
orPage 13, Line 18support entity, the list of expected conversion or expansion costs, and
Page 13, Line 19the estimated conversion,
orPage 13, Line 20reserve for the benefit of the qualified business, the qualified
Page 13, Line 21employee-owned business,
orPage 13, Line 22qualified support entity an allocation of a tax credit subject to the
Page 13, Line 23limitation specified in subsection (3)(b) of this section. The office shall
Page 13, Line 24notify the qualified business,
orPage 13, Line 25or the qualified support entity in writing of the amount of the
Page 13, Line 26reservation. The reservation of a tax credit does not entitle the qualified
Page 13, Line 27business, the qualified employee-owned business,
orPage 14, Line 1business, or the qualified support entity to an issuance of a tax credit
Page 14, Line 2certificate until the qualified business,
orPage 14, Line 3business, or the qualified support entity complies with all of the
Page 14, Line 4other requirements specified in this section for the issuance of the tax
Page 14, Line 5credit certificate.
Page 14, Line 6(8) If the credit allowed under this section exceeds the income
Page 14, Line 7taxes due on the income of the qualified business, qualified
Page 14, Line 8employee-owned business,
orPage 14, Line 9support entity, the amount of the credit not used to offset income taxes
Page 14, Line 10must be refunded to the qualified business, qualified employee-owned
Page 14, Line 11business,
orPage 14, Line 12(10) (a) To claim the income tax credit allowed in this section, the
Page 14, Line 13qualified business, qualified employee-owned business,
orPage 14, Line 14business, or qualified support entity shall attach a copy of the credit
Page 14, Line 15certificate to its state income tax return. No tax credit is allowed under
Page 14, Line 16this section unless the qualified business, qualified employee-owned
Page 14, Line 17business,
orPage 14, Line 18provides the copy of the credit certificate with its filed state income tax
Page 14, Line 19return. The amount of the credit that the qualified business,
orPage 14, Line 20qualified employee-owned business, or the qualified support entity
Page 14, Line 21may claim under this section is the amount stated on the tax credit
Page 14, Line 22certificate.
Page 14, Line 23(b) A qualified support entity that claims the credit
Page 14, Line 24allowed by this section shall file a return pursuant to section
Page 14, Line 2539-22-601 (7)(b) and attach a copy of the credit certificate in
Page 14, Line 26accordance with subsection (10)(a) of this section.
Page 14, Line 27(11) The office shall, in a sufficiently timely manner to allow the
Page 15, Line 1department to process returns claiming the income tax credit allowed in
Page 15, Line 2this section, provide the department with an electronic report of each
Page 15, Line 3qualified business, qualified employee-owned business,
andPage 15, Line 4business, and qualified support entity that the office approved for the
Page 15, Line 5income tax credit allowed in this section for the preceding calendar year
Page 15, Line 6that includes the following information:
Page 15, Line 7(14) This section is repealed, effective
December 31, 2033Page 15, Line 8December 31, 2042.
Page 15, Line 9SECTION 4. In Colorado Revised Statutes, 39-22-542.5, amend
Page 15, Line 10(2)(d)(III) and (2)(f) as follows:
Page 15, Line 1139-22-542.5. Tax credit for new employee-owned businesses
Page 15, Line 12- employee ownership cash fund - tax preference performance
Page 15, Line 13statement - legislative declaration - definitions - repeal.
Page 15, Line 14(2) Definitions. As used in this section, unless the context otherwise
Page 15, Line 15requires:
Page 15, Line 16(d) "Employee-owned business" means a taxpayer that is subject
Page 15, Line 17to tax under this article 22, including but not limited to a C corporation,
Page 15, Line 18S corporation, limited liability company, partnership, limited liability
Page 15, Line 19partnership, sole proprietorship, or other similar pass-through entity, that:
Page 15, Line 20(III) Has its corporate headquarters located in this state. For
Page 15, Line 21purposes of this subsection (2)(d), "corporate headquarters" means the
Page 15, Line 22sole location within a regional or national area where the majority of
Page 15, Line 23the taxpayer's staff members or employees are domiciled and employed,
Page 15, Line 24and where the majority of the taxpayer's financial, personnel, legal,
Page 15, Line 25planning, or other business functions are conducted on a regional or
Page 15, Line 26national basis.
Page 15, Line 27(f) "Employee ownership trust" means an indirect form of
Page 16, Line 1employee ownership in which a trust holds
a controlling stakePage 16, Line 2twenty percent of the fully diluted securities in a business and
Page 16, Line 3benefits all employees on an equal basis and otherwise meets the
Page 16, Line 4definition of an alternate equity structure.
Page 16, Line 5SECTION 5. Act subject to petition - effective date. This act
Page 16, Line 6takes effect at 12:01 a.m. on the day following the expiration of the
Page 16, Line 7ninety-day period after final adjournment of the general assembly; except
Page 16, Line 8that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 16, Line 9of the state constitution against this act or an item, section, or part of this
Page 16, Line 10act within such period, then the act, item, section, or part will not take
Page 16, Line 11effect unless approved by the people at the general election to be held in
Page 16, Line 12November 2026 and, in such case, will take effect on the date of the
Page 16, Line 13official declaration of the vote thereon by the governor.