Can a donor claim Colorado's child care contribution tax credit for a monetary gift to a licensed nonprofit child placement (adoption) agency?

Plain-English summary

Colorado gives donors an income tax credit equal to 50% of a qualifying monetary contribution that promotes child care in the state, up to a maximum of $100,000 per taxpayer per year. A licensed nonprofit child placement agency — one that works with birth mothers seeking adoption, evaluates and supervises placements, and makes recommendations to the court — asked whether gifts to it qualify. The Department said yes.

The analysis has two pieces. First, is the recipient a "child care facility"? The statute defines that term broadly to include any facility required to be licensed under the relevant human-services / early-childhood licensing parts, and it expressly lists "child placement agencies." Because this agency holds the required child placement agency license under § 26-6-905(1), it operates a "child care facility." Second, does it promote child care as the statute requires? "Child care" means care for a child age 12 or younger, and the agency's placement and supervision services are provided exclusively to children under 12. Both boxes checked, so a donor's monetary contribution qualifies for the credit — subject to the 50% rate, the $100,000 annual cap, and the other limits in § 39-22-121.

What this means for you

Donors to child placement / adoption agencies

A cash gift to a Colorado-licensed nonprofit child placement agency can earn you a credit worth half the gift (not just a deduction), up to $100,000 a year. That's a substantial Colorado tax benefit. Keep the agency's contribution certification and confirm the agency is properly licensed and serving children 12 and under.

Child placement agencies and other child care nonprofits

If you hold the required state license and serve children age 12 or younger, you likely fall within the statute's broad "child care facility" definition, which expressly names child placement agencies. Being able to offer donors a 50% credit is a meaningful fundraising point — but the contribution must be monetary and used to promote child care in Colorado.

Accountants and tax professionals

The credit is § 39-22-121. The two gating definitions are "child care facility" (§ 39-22-121(6.5)(a), which enumerates child placement agencies) and "child care" (§ 39-22-121(1.7), age 12 or younger). Watch the mechanics: 50% rate, $100,000 annual per-taxpayer cap (§ 39-22-121(5)), monetary contributions only, used to promote child care.

Common questions

Q: Do donations to an adoption / child placement agency qualify for the child care contribution credit?
A: Yes, where the agency is a licensed child placement agency serving children 12 and under — it's a "child care facility" under the statute, so qualifying monetary contributions earn the credit.

Q: How much is the credit?
A: 50% of the qualifying monetary contribution, up to a maximum of $100,000 per taxpayer per year.

Q: Does an in-kind (non-cash) gift count?
A: The credit is for monetary contributions used to promote child care in Colorado. Non-cash gifts are outside what this credit covers.

Q: Can other donors or agencies rely on this ruling?
A: No. A private letter ruling binds the Department only for the taxpayer and facts it was issued to and cannot be relied on by anyone else.

Citations and references

Statutes:
- § 39-22-121(1.5), C.R.S. (child care contribution credit — 50% of contribution); (2.5) (operation of a child care facility)
- § 39-22-121(5), C.R.S. ($100,000 annual maximum); (6.5)(a) (definition of "child care facility," includes child placement agencies); (1.7) (definition of "child care," age 12 or younger)
- § 26-6-905(1), C.R.S. (child placement agency license requirement)

Source

• Landing page: Colorado Letter Rulings
• Original PDF: PLR-24-002.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

PLR 24-002
April 10, 2024
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Via Electronic Mail: XXXXXXXXXX
Re: Donor Qualification for the Child Care Contribution Credit
Dear XXXXXXXXXX:
You submitted a request for a private letter ruling on behalf of XXXXXXXXXX (the “Agency”), to the
Colorado Department of Revenue (“Department”) pursuant to 1 CCR 201-1, Rule 24-35-103.5. This letter
is the Department’s private letter ruling. This ruling is binding on the Department to the extent set forth in
1 CCR 201-1, Rule 24-35-103.5. It cannot be relied upon by any taxpayer other than the taxpayer to
whom the ruling is made.
Issue
Whether a taxpayer who makes a monetary contribution to Agency is allowed to claim the child care
contribution tax credit pursuant to section 39-22-121(1.5), C.R.S., with respect to the contribution.
Conclusion
A taxpayer who makes a monetary contribution to Agency is allowed to claim the child care contribution
tax credit pursuant to section 39-22-121(1.5), C.R.S.
Background1
Agency currently holds a license from the Colorado Department of Human Services as a child placement
agency as required by section 26-6-905(1), C.R.S. Agency operates a nonprofit child care facility located
at XXXXXXXXXX where Agency provides child care to children exclusively under the age of twelve.
Specifically, Agency works with women who are seeking to place their child or children for adoption.
Agency’s primary focus is addressing the needs of the child and promoting what is in their best interest.
Agency evaluates the placement resource, which is typically the adoptive family, and determines if the
family has the resources and ability required to care for that specific child’s unique needs. Additionally,
Agency provides recommendations to the district court regarding the placement. Agency also provide

1

Paragraph (4)(b)(ii) of 1 CCR 201-1, Rule 24-35-103.5 requires the request for a private letter ruling to include a statement of facts.
This section generally recites the statement of facts provided in the initial request or in any supplement or amendment thereto,
which is not an indication that the Department found such facts relevant to its analysis. Some relevant facts may be redacted or
omitted to ensure confidentiality as required by section 24-35-103.5(5), C.R.S. The terms used in this section to describe the factual
background are generally those of the requester.

PLR 24-002
April 10, 2024
Page 2
ongoing placement supervision to ensure that the child’s best interests are being served, that the child’s
needs as well as all state licensing requirements are met.
Discussion
A taxpayer who makes a monetary contribution to Agency is allowed the child care contribution tax credit
pursuant to section 39-22-121(1.5), C.R.S. Taxpayers that make a qualifying monetary contribution to
promote child care in Colorado may claim an income tax credit equal to 50% of the total qualifying
contribution.2 The maximum credit allowed to a taxpayer for all contributions made during a tax year is
$100,000.3
Agency operates a “child care facility.” Among other things, credit is allowed for contributions made for
the establishment or operation of a child care facility that uses the donation to provide child care. 4
Section 39-22-121(6.5), C.R.S., broadly defines “child care facility” to include any facility required to be
licensed by the Colorado Department of Human Services pursuant to part 9 of article 6 of title 26 or the
Colorado Department of Early Childhood pursuant to part 3 of article 5 of title 26.5. 5 That subsection
further enumerates several types of facilities that are included within the definition, including “child
placement agencies.” A person operating a child placement agency is required to hold a license pursuant
to section 26-6-905(1), C.R.S. Because Agency is a child placement agency licensed by the Colorado
Department of Human Services, Agency is operating a “child care facility.”
The credit is limited to contributions that will be used to promote child care in Colorado as defined by the
statute.6 “Child care” means care provided to a child twelve years of age or younger. 7 Agency’s
placement and ongoing supervision services, for which it is licensed by the Colorado Department of
Human Services, are provided exclusively to children under the age of twelve. Therefore, all monetary
contributions to Agency for the purpose of operating its child placement agency qualify for the child care
contribution credit subject to the credit percentage, maximum contribution, and other limitations imposed
by section 39-22-121, C.R.S.
Miscellaneous
This ruling is premised on the assumption that Agency has completely and accurately disclosed all
material facts, that all representations are true and complete, and that Agency has otherwise complied
with the requirements of section 24-35-103.5, C.R.S., and the rules promulgated pursuant thereto. The
Department reserves the right, among others, to independently evaluate Agency’s facts, representations,
and assumptions. The ruling is null and void if any such fact, representation, or assumption is incorrect
and has a material bearing on the conclusions reached in this ruling. This ruling is binding on the
Department, and is subject to modification or revocation, in accordance with 1 CCR 201-1, Rule 24-35103.5.
Sincerely,
Office of Tax Policy
Colorado Department of Revenue
This ruling cannot be relied upon by any other taxpayer other than the taxpayer to whom the
ruling is made.

2

Section 39-22-121(1.5), C.R.S.
Id. at (5).
4
Id. at (2.5).
5
Id. at (6.5)(a). An approved facility school, as such term is defined in section 22-2-402(1), C.R.S., is also a “child care facility” for
purposes of the credit. Id. at (6.5)(b).
6
Section 39-22-121(1.5), C.R.S.
7
Id. at (1.7).
3