Welcome to another edition of the e-leg report. We’re nearing the halfway point at the capitol, and that means the state budget debate is at hand. A number of bills that the CBA is working are subject to appropriations – and only after the budget debate is settled will we know whether they are likely to be funded or not.
Feel free to drop me a line on how we are doing or raise an issue on a piece of legislation. Contact me email@example.com.
CBA Legislative Policy Committee
For followers who are new to CBA legislative activity, the Legislative Policy Committee (“LPC”) is the CBA’s legislative policy making arm during the legislative session. The LPC meets weekly during the legislative session to determine CBA positions from requests from the various sections and committees of the Bar Association. Members are welcome to attend the meetings—please RSVP if you are interested.
LPC Meeting Update
Here is a quick rundown of the bills on which we have recently taken a position.
HB 16-1211 – Marijuana Transporter License
The bill creates a retail marijuana transporter license and a medical marijuana transporter license. The license is valid for five years. A licensed marijuana transporter (transporter) provides logistics, distribution, and storage of marijuana and marijuana products. A transporter may contract with multiple businesses and may also hold another marijuana license. A transporter must be licensed by December 31, 2017, in order to continue to operate. The bill describes the circumstances under which a business can terminate a contract with a transporter.
The Bar’s Cannabis Law Committee is currently monitoring and preparing comments on this bill. The bill is working through its first chamber and has been greatly amended from its original form. The Legislative Policy Committee has not taken action on this bill.
HB 16-1235 – Commissions Evaluating State Judicial Performance
The bill makes revisions to various functions of the state commission on judicial performance (state commission) and the district commissions on judicial performance (district commission), referred to collectively as the “commissions.”
This bill was postponed indefinitely (killed) in the House State, Veterans and Military Affairs Committee. The Colorado Bar Association had many concerns with the cost and operation of the bill.
HB 16-1270 – Security Interest Owner’s Interest In Business Entity
Under current law, the Uniform Commercial Code (Code) invalidates contractual limits on the transferability of some assets that can be subject to a security interest. In 2006, the Colorado Corporations and Associations Act (Act) was amended to clearly and broadly exempt an owner’s interest in a business entity from these Code provisions to effectuate the “pick your partner” principle that allows small businesses to control their ownership. Section 3 of the bill narrows the exemption in the Act to that necessary for “pick your partner,” and sections 1 and 2 codify this narrowed exemption in the Code.
This bill, part of a four bill package of business entities clean up acts, was supported by the Bar and has passed the House and Senate and is on its way to be signed by the Governor.
HB 16-1275 – Taxation Of Corporate Income Sheltered In Tax Haven
The bill pertains to an affiliated group of corporations filing a combined report. In a combined report filing, the tax is based on a percentage of the entire taxable income of all of the includable corporations, but the tax is assessed only against the corporation or corporations doing business in Colorado. Including more affiliated corporations in the combined report may result in an increase in income subject to tax.
There are jurisdictions located outside of the United States with no tax or very low rates of taxation, strict bank secrecy provisions, a lack of transparency in their tax system operations, and a lack of effective exchange of information with other countries. There are several common legal strategies for sheltering corporate income in such jurisdictions, often called “tax havens.”
Notwithstanding a current requirement in state law that those corporations with 80% or more of their property and payroll assigned to locations outside of the United States be excluded from a combined report, the bill makes a corporation that is incorporated in a foreign jurisdiction for the purpose of tax avoidance an includable C corporation for purposes of the combined report.
The bill defines a corporation incorporated in a foreign jurisdiction for the purpose of tax avoidance to mean any C corporation that is incorporated in a jurisdiction that has no or nominal effective tax on the relevant income and that meets one or more of five factors listed in the bill, unless it is proven to the satisfaction of the executive director of the Department of Revenue that such corporation is incorporated in that jurisdiction for a legitimate business purpose.
The bill requires the state controller to credit a specified amount per fiscal year to the state education fund to be used to help fund public school education.
The bill requires the secretary of state to submit a ballot question, to be treated as a proposition, at the statewide election to be held in November 2016 asking voters:
- To increase taxes annually by the taxation of a corporation’s state income that is sheltered in a foreign jurisdiction for the purpose of tax avoidance;
- To use the resulting tax revenue to help fund elementary and secondary public school education; and
- To allow an estimate of the resulting tax revenue to be collected and spent notwithstanding any limitations in section 20 of article X of the state constitution (TABOR).
The Tax Law section of the CBA voted to oppose this bill, which was postponed indefinitely (killed) by the Senate State Affairs Committee. The Bar had concerns over the cost of vague language in the bill as well as the impact on the courts and judicial system.
HB 16-1310 – Operators Liable For Oil And Gas Operations
Under current law governing relations between surface owners and oil and gas operators, to prevail on a claim the surface owner must present evidence that the operator’s use of the surface materially interfered with the surface owner’s use of the surface of the land. The bill amends this requirement to allow proof that the operator’s oil and gas operations harmed the surface owner’s use of the surface of the land, caused bodily injury to the surface owner or any person residing on the property of the surface owner, or damaged the surface owner’s property.
The Legislative Policy Committee voted to oppose this bill because it upends the burden of proof responsibility. The bill has passed the House and is moving on to the Senate, where it will be heard by the Agriculture Committee.
HB 16-1331 – Policies On Juvenile Shackling In Court
The bill requires restraints on a juvenile to be removed prior to any court proceeding, except when the court determines the restraints are necessary:
- To prevent physical harm to the juvenile or another person;
- To prevent disruptive courtroom behavior by the juvenile, evidenced by a history of behavior that created potentially harmful situations or presented substantial risk of physical harm; or
- To prevent the juvenile from fleeing the courtroom, when there is evidence of an escape history or other relevant factors.
The prosecution, sheriff, or any other detention or pretrial personnel may request that an individual juvenile be restrained in the courtroom. The court shall provide the juvenile’s attorney an opportunity to be heard before the court allows the use of restraints on a juvenile. The court may conduct a hearing on the use of restraints without the juvenile being present.
The CBA supports this bill as good policy and an extension of the efforts the courts have made this past year. While the courts need discretion, we believe this bill strikes the right balance for outlining the policies on how and when juveniles should be subject to shackling.
HB 16-1346 – Open Records Subject To Inspection Denial
The bill allows a custodian to deny access to confidential personal information records and employee personal e-mail addresses. The provisions of the Colorado Open Records Act (CORA) that relate to civil or administrative investigations and trade secrets and other privileged and confidential information apply to the judicial branch.
The Bar Association opposed this bill because of constitutional and separation of powers concerns regarding the relationship between the judicial and legislative branches of government. In addition, we believe that the PAIRR rules issued by the Chief Justice, which closely mirror the text of CORA, are better suited to meet the information needs of requesters while maintaining the integrity of judicial records.
HB 16-1394 -Aligning Issues Around At-risk Persons
The bill implements the following recommendations of the at-risk adults with intellectual and developmental disabilities mandatory reporting implementation task force:
- Standardizing statutory definitions among the Colorado Criminal Code, adult protective services in the department of human services, and the office of community living in the department of health care policy and financing;
- Specifying that enhanced penalties for crimes against an at-risk person apply to all persons 70 years of age or older and to all persons with a disability; and
- Clarifying and expanding the definitions of persons who are required to report instances of mistreatment of at-risk elders or at-risk adults with an intellectual and developmental disability (adults with IDD).
The bill also:
- Reduces the time in which a law enforcement agency or county department is required to prepare a written report from 48 hours to 24 hours;
- Specifies that a county department of human or social services is to conduct an investigation of allegations of mistreatment of an at-risk adult; and
- Clarifies that the human rights committee is responsible for ensuring that an investigation of mistreatment of an adult with IDD occurred.
The Colorado Bar Association opposed the bill as written, but is working with stakeholders to review amendments from other stakeholder groups. We are working with and talking with the sponsors frequently.
SB 16-130 – Methods To Collect Consumer Use Tax
Consumer use tax is the complement to sales tax and is due on the purchases of goods where the retailer did not charge sales tax. For example, any time consumers make an Internet purchase and the out-of-state retailer does not charge sales tax, the purchaser should pay the equivalent amount of sales tax as consumer use tax directly to the Colorado Department of Revenue (department). The department has added a use tax line to the 2015 individual income tax return form in an effort to make self-reporting of use tax more convenient for consumers.
The bill specifies that after the 2015 income tax year the department is not allowed to add use tax reporting lines to the individual income tax return form for any reason. The bill also prohibits the department from auditing any taxpayer for any amount he or she reported on the use tax lines included in the 2015 individual income tax return form.
The CBA is monitoring this bill and has sought permission to make changes to the bill to ensure that collecting use taxes is efficient.
SB 16-131 Overseeing Fiduciaries’ Management Of Assets
The bill clarifies statutory language concerning the removal of a fiduciary to ensure that a fiduciary’s authority is suspended as soon as a petition to remove the fiduciary is filed. The bill adds a provision to the conservatorship statutes stating that an adult ward or protected person has a right to be represented by a lawyer of their choosing unless the trial court finds the person lacks sufficient capacity to provide informed consent for representation by a lawyer. The bill states that after a fiduciary receives notice of proceedings for his, her, or its removal, the fiduciary shall not pay compensation or attorney fees and costs from the estate without an order of the court.
This bill rearranges the existing responsibilities for fiduciaries managing assets. It is a cleanup and reorganization of these statutes and adds the right to legal counsel for wards and protected persons. The bill is scheduled for committee later this week.
SB 16-133 – Transfer Of Property Rights At Death
Under current law, a certificate of death, a verification of death document, or a certified copy thereof, of a person who is a joint tenant may be placed of record with the county clerk and recorder of the county in which the real property affected by the joint tenancy is located, together with a supplementary affidavit. The bill removes the requirement that the person who swears to and affirms the supplementary affidavit has no record interest in the real property. The bill includes inherited individual retirement accounts and inherited Roth individual retirement accounts as property exempt from levy and sale under writ of attachment or writ of execution.
The bill amends provisions concerning determination-of-heirship proceedings, as follows:
- Clarifies the definition of “interested person” so that anyone affected by the ownership of property may commence a proceeding;
- Describes when an unprobated will may be used as part of a proceeding;
- Clarifies notice requirements; and
- Ensures that a judgment and decree will convey legal title as opposed to equitable title.
The bill enacts portions of section 5 of the Uniform Power of Appointment Act, with amendments.
This bill, the second part of the Colorado Bar Association’s probate reorganization bills, has passed the legislature and will be sent to the Governor shortly.
Bills that the LPC is monitoring, watching or working on can be found at this link: