Conservation Easement Tax Credit Landowner Relief

A state income tax credit is allowed for a portion of the value of a perpetual conservation easement that is granted by a taxpayer on real property located in Colorado. In the past, when the department of revenue disputed the validity or amount of one of these credits, a taxpayer could attempt to resolve the dispute using an administrative appeal process within the department. If the taxpayer was not satisfied with the final determination resulting from the administrative process, the taxpayer could appeal the final determination to a district court.

Starting in 2011, after a backlog of disputed conservation easement claims developed in the administrative process, the law was changed to allow taxpayers to elect to appeal directly to a district court and avoid the administrative appeal process. Unlike taxpayers who stayed in the administrative process, taxpayers who elected to appeal directly to district court were not required to provide a surety bond or other deposit in connection with their appeals, and additional interest and penalties ceased to accrue during their appeals. The bill provides that no surety bond or other deposit is required and no interest and penalties are to accrue for both the administrative appeal process and the district court appeal process.

The law currently allows a conservation easement to be terminated in the same manner as any other easement. The bill specifies that, in addition, a court may exercise its equitable jurisdiction to terminate a conservation easement for which a tax credit has been claimed in certain circumstances if the claim has been rejected.

(Note: This summary applies to this bill as introduced.)