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COLORADO UPDATES

TABOR

Although not finalized, the indication is that TABOR refunds this year will be higher than last year.
As a reminder, last year the TABOR refund was $750 for single taxpayers and $1,500 for married taxpayers. If the same flat rate mechanism is used for this year, the TABOR amounts could be $800 and $1,750, respectively.
However, the November election will include a proposition HH that, if passed, would replace the flat rate TABOR approach with a sliding scale where taxpayers with higher income levels get higher TABOR refunds.
The link below has a useful article with more detials on this topic.
Remember, you do not get a TABOR refund if you have not filed a 2022 tax return by the October 15th extention deadline.

Public Health Emergency (PHE) ended

The required COVID related paid leave (up to 80 hours) that was required under PHE officially ended on June 8th.
As a reminder, employers are still obligated to comply with the "Healthy Families and Workplace Act (HFWA)" which essentially requires up to 6 days (48 hours) of paid sick leave unless your existing PTO policy satisfies the same requirements/obligations as HFWA.
The link below has additional information on HFWA.

Electric Vehicle (EV) Credit

Starting July 2023, CO increased the state tax credit available for purchased/leased EV's from $2,500 to $5,000. There are MSRP limits so the attached link has additional information on this topic.
You should also be aware that Xcel has an income qualified EV credit available to customers in Colorado. The income limits vary by county but for most clients the income limit is $65,680 for individuals and $93,760 for a family of four. Contact Xcel for additional information as there are also dependencies on the CO EV credit that prevent getting the full amount of both the CO and Xcel credits.

Minimum Wage Increases - coming soon

Since 2020, the annual increase in CO minimum wage is tied to inflation (using the Colorado CPI index).
As a reminder, the minimum wage for 2023 increased almost 9% over 2022 levels.
Although inflation is improving, most projections still have CO CPI coming in at 3-5% for 2023 so plan accordingly for 2024 minimum wage increase.

TABOR Update

HFWA Link

CO EV Credit

Employee retention tax credit papers and folder.

ERC Update

If you are a business owner, I am sure you are still getting blasted with phone calls, emails and radio ads, on how you can easily get up to $26,000 per employee due to the Employee Retention Credit (ERC). The link below has more information on ERC that we shared previously but here are a few updates and words of caution on this topic:

Congress and the IRS are becoming increasingly concerned about this program being abused. The on-going budget talks and potential government shutdown has added to the concern and focus on ERC abuse. They are also discussing possibly ending this program early to limit further exposure to abuse.
Quote from IRS Commisioner Danny Werfel at the IRS National Tax Forum

“The amount of misleading marketing around this credit is staggering, and it is creating an array of problems for tax professionals and the IRS while adding risk for businesses improperly claiming the credit,” Werfel said. “A terrible scenario is unfolding that hurts everyone involved -- except the promoters.”

As a reminder, if you received an ERC rebate, it is essentially taxable. The mechanics to do this involve amending the 2020/2021 returns to decrease the labor expense taken by the amount of the ERC rebate received (net of fees paid to file for ERC).
For planning purposes, review your 2020/2021 returns for your marginal federal tax rate and add 4.5% to that (for CO tax impact) to estimate the potential tax impact of the ERC rebate received.
We have started the process of amending returns for those clients that have received all ERC rebates expected.
The IRS has essentially worked through the backlog of amended 941's for the ERC. As a result, they plan to divert more resources to now auditing ERC's previously processed for possible fraud/abuse and will focus on 3 main areas of concern
Taxpayers that were not entitled to the ERC rebate under the "Government Order Suspension" test;
Taxpayers that claimed the ERC rebate but did not properly offset for PPP or RRF funds they had already received;
Taxpayers that received ERC rebates but have not filed amended 2020 or 2021 returns for the tax impact of ERC (this will likely be a 2024 focus depending on when you recieved the ERC rebate).
The link below contains an IRS Memo with additional insights on this topic.

Prior ERC Newsletter

IRS ERC Memo

IT'S TIME TO BOOK YOUR APPOINTMENT.

Just a reminder....

We'd love to connect with anyone that wants to review their year to date financial results and determine if any adjustments are needed for estimated payments or other tax strategies to take before year end.