On May 14, 2021, the House Finance Committee passed HB21-1311 and HB21-1312, but not without noteworthy amendments changing certain aspects of both bills.

HB21-1311, as introduced, would have repealed Colorado’s unique “3 of 6” test for determining C corporations that can be included in a combined report, and required “members of a unitary business” to file a combined report. The proposed repeal of the “3 of 6” test was short lived, however, as amendments to the bill keep the “3 of 6” regime in place. Thus, C corporations that satisfy the “3 of 6” test could continue to be included in a Colorado combined report under the amended version of the bill.  HB21-1311, as passed, continues to contain the tax haven “black list” provision and the provision that would move Colorado from “Joyce” to “Finnigan.”

The Committee also approved HB21-1312, which if enacted would codify the Department of Revenue’s current treatment of digital goods. Specifically, HB21-1312 would include “digital goods” in the definition of “tangible personal property,” and define “digital good” to mean “any item of tangible personal property that is delivered or stored by digital means, including but not limited to video, music, electronic books, or computer files.” The amendments to the bill, however, removed “computer files” from the proposed definition of “digital good.”

Although HB21-1311 and HB21-1312, with various amendments, were adopted by the House Finance Committee, they will not be formally incorporated into the bills unless they are adopted by the full House of Representatives. The amended bills now head to the House Appropriations Committee for review.