*See Sec. 10-228b re tax credits for donations of computers to boards of education and public schools.
See Secs. 10-416, 10-416a re tax credits for rehabilitation of historic homes and certified historic structures.
Cited. 122 C. 148. Tax imposed by chapter is in nature of excise against domestic and foreign corporations alike for the privilege of doing business within state. Id., 547. Cited. 124 C. 405; 127 C. 508.
Annotations to former statutes relating to the taxation of banks, insurance companies and other corporations: Nature of tax; upheld as to nonresident stockholders. 70 C. 590; 73 C. 255; 185 U.S. 364. Deductions of value of real estate; assessed value is intended; includes 999 year lease. 72 C. 369; Id., 374. History of provision permitting deduction for real estate. 73 C. 289. “Capital” defined. 75 C. 280; 77 C. 45. Whether real estate represents capital investment question of fact; corporation book entries not conclusive. 74 C. 35. Real estate of national banking association not subject to direct tax; Id., 449; nor is bridge structure of bridge company. 77 C. 314. Nature of tax; value of nontaxable bonds owned by corporation not to be deducted. 89 C. 181. Stock in hands of testamentary trustee is still owned by estate, and state treasurer should remit tax collected thereon to town where deceased stockholder resided, not to town where trustee resides. 98 C. 471. “Other investment income” in statute levying tax on income of insurance companies does not include profit from the sale or maturity of ledger assets. 113 C. 14. Claim of state against trust company in receivership for tax on corporate stock is payable only from assets remaining after payment of creditors. Id., 661, 671.
Annotations to former tax on savings deposits: As to deduction of securities of the United States exempt from taxation, see 32 C. 173; 6 Wall. 594. Trust company liable for tax on franchise assessed before inception of receivership; previous temporary order of bank commissioner did not completely deprive it of benefits of franchise. 113 C. 661, 673. Tax is on franchise; after bank in hands of receiver, neither bank nor receiver liable for tax assessed after receiver's appointment. 115 C. 313, 326, 332. Appointment, before day tax laid, of temporary receiver is sufficient to remove liability for tax. Id., 364, 371. Exemption of funds invested in certain corporations continues when corporation consolidates. 116 C. 172–185. Deduction limited to taxes assessed upon real estate in name of bank during required period. 117 C. 188, 199. Bank failing through inadvertence to claim deduction for taxes not entitled to refund. Id., 196.
Annotations to former tax on miscellaneous corporations: Is tax on privilege of doing business in state, levied alike on foreign and domestic corporations; not income tax; constitutional. 94 C. 54; 97 C. 526, 528; 254 U.S. 113. Application to consolidated group of foreign corporations. 98 C. 192. Tax commissioner may obtain necessary information from corporations. Id., 197. Payment of tax to avoid penalties and lien held not to preclude recovery of illegal tax. 92 C. 204. Usual method of statutory appeal. Id., 206. Court may correct mathematical errors in computation. 70 C. 592. Is an excise upon franchise of corporations, both domestic and foreign, for privilege of doing business in the state. 135 C. 37. Cited. 142 C. 485.
Annotations to present corporation business tax:
Privilege of doing business in corporate capacity may properly be taxed by including in net income otherwise tax-exempt interest income. 178 C. 243. Cited. 195 C. 284; 202 C. 412; 203 C. 198; Id., 455; 220 C. 665; 224 C. 426; 228 C. 137; 232 C. 325; 235 C. 865.
Cited. 40 CS 77.
Sec. 12-214. Imposition of tax. Surcharge.
Sec. 12-216. Payment of tax by out-of-state corporations.
Sec. 12-217j. Tax credit for research and experimental expenditures.
Sec. 12-217k. Tax credit for employee training.
Sec. 12-217m. Tax credit for taxpayers occupying new facilities and creating new jobs.
Sec. 12-217n. Rolling tax credit for research and development expenses. Carryforward limit.
Sec. 12-217o. Tax credit for machinery and equipment expenditures.
Sec. 12-217p. Tax credits for taxpayer providing housing for low and moderate income employees.
Sec. 12-217s. Tax credit for expenditures related to traffic reduction programs.
Sec. 12-217t. Tax credit for personal property taxes paid on electronic data processing equipment.
Sec. 12-217v. Tax credit for qualifying corporations in enterprise zones.
Sec. 12-217w. Tax credit for investment in fixed capital.
Sec. 12-217x. Tax credit for human capital investment.
Sec. 12-217z. Business Tax Credit and Tax Policy Review Committee.
Sec. 12-217aa. Order of credits.
Sec. 12-217bb. Tax credit for electric suppliers hiring displaced workers.
Sec. 12-217dd. Tax credit for donation of land for open space or educational use.
Sec. 12-217ee. Refund of unused credits under sections 12-217j and 12-217n.
Sec. 12-217gg. Tax credit for employment expansion project.
Sec. 12-217hh. Tax credit for hiring displaced worker.
Sec. 12-217jj. Film production tax credit. Regulations.
Sec. 12-217kk. Tax credit for infrastructure projects in the entertainment industry. Regulations.
Sec. 12-217ll. Tax credit for digital animation production companies. Regulations.
Sec. 12-217qq. Tax credit for employers making certain student loan payments.
Secs. 12-217rr to 12-217yy. Reserved
Sec. 12-217zz. Limit on credits under this chapter.
Sec. 12-217aaa. Accumulated research and development tax credits.
Sec. 12-218. Apportionment of net income.
Sec. 12-218a. Apportionment of tax on insurance company.
Sec. 12-218b. Apportionment of net income of financial service companies.
Sec. 12-218g. Net deferred tax liability and assets. Deductions.
Sec. 12-219. Capital base tax. Phase-out. Surcharge.
Sec. 12-219a. Apportionment of tax base in and out of state. Insurance companies excepted.
Sec. 12-219b. Election with respect to apportionment of net income.
Sec. 12-221a. Petition for alternative method of apportionment. Regulations.
Sec. 12-222. Annual return. Designated taxable member of combined group. Duties.
Sec. 12-223. Returns of affiliated corporations.
Sec. 12-223a. Combined corporation business tax return.
Sec. 12-223b. Intercompany rents and business receipts.
Sec. 12-223c. Minimum tax in combined return.
Sec. 12-223d. Assessments against one or more taxpayers in combined return.
Sec. 12-223e. Readjustment of taxes on revision of combined return.
Sec. 12-223f. Preference tax due from corporations filing a combined return.
Sec. 12-224. Return of fiduciary.
Sec. 12-225. Supplemental and amended returns. Refund claim.
Sec. 12-226. Correction of returns; additional tax; refunds.
Sec. 12-226a. Adjustments by the commissioner. Regulations.
Sec. 12-227. Interest on refunds.
Sec. 12-228. Refunds to be made from General Fund.
Sec. 12-229. Failure to pay tax or make return. Penalty. Waiver of penalty authorized.
Sec. 12-230. Forfeiture of corporate rights for failure to make returns.
Sec. 12-231a. Formation of insurance company affiliate of holding company to evade tax.
Sec. 12-232. Authority to take testimony under oath; subpoenas.
Sec. 12-234. Settlement with Treasurer.
Sec. 12-235. Delinquent taxes; interest; collection.
Sec. 12-235a. Disallowance of credits if taxes due and unpaid.
Sec. 12-236. Hearing by commissioner.
Sec. 12-238. Abatement of taxes.
Sec. 12-239. Abatement of taxes on motor bus company in receivership.
Sec. 12-240. Publication and disclosure of information.
Sec. 12-241. Tax to be in lieu of other taxes.
Sec. 12-242d. Installment payment of estimated tax. Interest on under payments.
Sec. 12-242e. Disposition of installments.
Sec. 12-242f. Obligations of fiduciary.
Sec. 12-242i. Declaration as return.
Secs. 12-242j to 12-242z. Reserved
Sec. 12-213. Definitions. (a) When used in this chapter, unless the context otherwise requires:
(1) “Taxpayer” and “company” mean any corporation, foreign municipal electric utility, as defined in section 12-59, electric distribution company, as defined in section 16-1, electric supplier, as defined in section 16-1, generation entity or affiliate, as defined in section 16-1, joint stock company or association or any fiduciary thereof and any dissolved corporation which continues to conduct business, but does not include a passive investment company or municipal utility, as defined in section 12-265;
(2) “Dissolved corporation” means any company which has terminated its corporate existence by resolution, expiration, decree or forfeiture;
(3) “Commissioner” means the Commissioner of Revenue Services;
(4) “Tax year” means the calendar year in which the tax is payable;
(5) “Income year” means the calendar year upon the basis of which net income is computed under this part, unless a fiscal year other than the calendar year has been established for federal income tax purposes, in which case it means the fiscal year so established or a period of less than twelve months ending as of the date on which liability under this chapter ceases to accrue by reason of dissolution, forfeiture, withdrawal, merger or consolidation;
(6) “Fiscal year” means the income year ending on the last day of any month other than December or an annual period which varies from fifty-two to fifty-three weeks elected by the taxpayer in accordance with the provisions of the Internal Revenue Code;
(7) “Paid” means “paid or accrued” or “paid or incurred”, construed according to the method of accounting upon the basis of which net income is computed under this part;
(8) “Received” means “received” or “accrued”, construed according to the method of accounting upon the basis of which net income is computed under this part;
(9) (A) “Gross income” means gross income, as defined in the Internal Revenue Code, and, in addition, means any interest or exempt interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, received by the taxpayer or losses of other calendar or fiscal years, retroactive to include all calendar or fiscal years beginning after January 1, 1935, incurred by the taxpayer which are excluded from gross income for purposes of assessing the federal corporation net income tax, and in addition, notwithstanding any other provision of law, means interest or exempt interest dividends, as defined in said Section 852(b)(5) of the Internal Revenue Code, accrued on or after the application date, as defined in section 12-242ff, with respect to any obligation issued by or on behalf of the state, its agencies, authorities, commissions and other instrumentalities, or by or on behalf of its political subdivisions and their agencies, authorities, commissions and other instrumentalities;
(B) “Gross income” shall include, to the extent not properly includable in gross income for federal income tax purposes, an amount equal to (i) any distribution from a manufacturing reinvestment account not used in accordance with subdivision (3) of subsection (c) of section 32-9zz to the extent that a contribution to such account was subtracted from gross income pursuant to subparagraph (F) of subdivision (1) of subsection (a) of section 12-217 in computing net income for the current or a preceding income year, and (ii) any return of money from a manufacturing reinvestment account pursuant to subsection (d) of section 32-9zz to the extent that a contribution to such account was subtracted from gross income pursuant to subparagraph (F) of subdivision (1) of subsection (a) of section 12-217 in computing net income for the current or a preceding income year;
(C) “Gross income” shall not include the amount which for federal income tax purposes is treated as a dividend received by a domestic United States corporation from a foreign corporation on account of foreign taxes deemed paid by such domestic corporation, when such domestic corporation elects the foreign tax credit for federal income tax purposes;
(D) “Gross income” shall not include any amount which for federal income tax purposes is treated as a dividend received directly or indirectly by a taxpayer from a passive investment company;
(10) “Net income” means net earnings received during the income year and available for contributors of capital, whether they are creditors or stockholders, computed by subtracting from gross income the deductions allowed by the terms of section 12-217, except that in the case of a domestic insurance company which is a life insurance company, “net income” means life insurance company taxable income (A) increased by any amount or amounts which have been deducted in the computation of gain or loss from operations in respect of (i) the life insurance company's share of tax-exempt interest, (ii) operations loss carry-backs and capital loss carry-backs, and (iii) operations loss carry-overs and capital loss carry-overs arising in any taxable year commencing prior to January 1, 1973, and (B) reduced by any amount or amounts which have been deducted as operations loss carry-backs or capital loss carry-backs in the computation of gain or loss from operations for any taxable year commencing on or after January 1, 1973, but only to the extent that such amount or amounts would, for federal tax purposes, have been deductible in the taxable year as operations loss carry-overs or capital loss carry-overs if they had not been deducted in a previous taxable year as carry-backs, and provided no expense related to income, the taxation of which by the state of Connecticut is prohibited by the law or Constitution of the United States, as applied, or by the law or Constitution of this state, as applied, shall be deducted under this chapter and provided further no item may, directly or indirectly be excluded or deducted more than once;
(11) “Life insurance company” has the same meaning as it has under the Internal Revenue Code;
(12) “Life insurance company taxable income” has the same meaning as it has under the Internal Revenue Code;
(13) “Life insurance company's share” has the same meaning as it has under the Internal Revenue Code;
(14) “Operations loss carry-over”, with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;
(15) “Operations loss carry-back”, with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;
(16) “Capital loss carry-over”, with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;
(17) “Capital loss carry-back”, with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;
(18) “Gain or loss from operations”, with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;
(19) “Fiduciary” means any receiver, liquidator, referee, trustee, assignee or other fiduciary or officer or agent appointed by any court or by any other authority, except the Banking Commissioner acting as receiver or liquidator under the authority of the provisions of sections 36a-210 and 36a-218 to 36a-239, inclusive;
(20) (A) “Carrying on or doing business” means and includes each and every act, power or privilege exercised or enjoyed in this state, as an incident to, or by virtue of, the powers and privileges acquired by the nature of any organization whether the form of existence is corporate, associate, joint stock company or fiduciary, and includes the direct or indirect engaging in, transacting or conducting of activity in this state by an electric supplier, as defined in section 16-1, or generation entity or affiliate, as defined in section 16-1, for the purpose of establishing or maintaining a market for the sale of electricity or of electric generation services, as defined in section 16-1, to end use customers located in this state through the use of the transmission or distribution facilities of an electric distribution company, as defined in section 16-1;
(B) A company that has contracted with a commercial printer for printing and distribution of printed material shall not be deemed to be carrying on or doing business in this state because of (i) the ownership or leasing by that company of tangible or intangible personal property located at the premises of the commercial printer in this state, (ii) the sale by that company of property of any kind produced or processed at and shipped or distributed from the premises of the commercial printer in this state, (iii) the activities of that company's employees or agents at the premises of the commercial printer in this state, which activities relate to quality control, distribution or printing services performed by the printer, or (iv) the activities of any kind performed by the commercial printer in this state for or on behalf of that company;
(C) A company that participates in a trade show or shows at the convention center, as defined in subdivision (3) of section 32-600, shall not be deemed to be carrying on or doing business in this state, regardless of whether the company has employees or other staff present at such trade shows, provided such company's activity at such trade shows is limited to displaying goods or promoting services, no sales are made, any orders received are sent outside this state for acceptance or rejection and are filled from outside this state, and provided further that such participation is not more than fourteen days, or part thereof, in the aggregate during the company's income year for federal income tax purposes;
(21) “Alternative energy system” means design systems, equipment or materials which utilize as their energy source solar, wind, water or biomass energy in providing space heating or cooling, water heating or generation of electricity, but shall not include wood-burning stoves;
(22) “S corporation” means any corporation which is an S corporation for federal income tax purposes and includes any subsidiary of such S corporation that is a qualified subchapter S subsidiary, as defined in Section 1361(b)(3)(B) of the Internal Revenue Code, all of whose assets, liabilities and items of income, deduction and credit are treated under the Internal Revenue Code, and shall be treated under this chapter, as assets, liabilities and such items, as the case may be, of such S corporation;
(23) “Internal Revenue Code” means the Internal Revenue Code of 1986, or any subsequent internal revenue code of the United States, as from time to time amended, effective and in force on the last day of the income year;
(24) “Partnership” means a partnership, as defined in the Internal Revenue Code, and includes a limited liability company that is treated as a partnership for federal income tax purposes;
(25) “Partner” means a partner, as defined in the Internal Revenue Code, and includes a member of a limited liability company that is treated as a partnership for federal income tax purposes;
(26) “Investment partnership” means a limited partnership that meets the gross income requirement of Section 851(b)(2) of the Internal Revenue Code, except that income and gains from commodities that are not described in Section 1221(1) of the Internal Revenue Code or from futures, forwards and options with respect to such commodities shall be included in income which qualifies to meet such gross income requirement, provided such commodities are of a kind customarily dealt with in an organized commodity exchange and the transaction is of a kind customarily consummated at such place, as required by Section 864(b)(2)(B)(iii) of the Internal Revenue Code. To the extent that such a partnership has income and gains from commodities that are not described in Section 1221(1) of the Internal Revenue Code or from futures, forwards and options with respect to such commodities, such income and gains must be derived by a partnership which is not a dealer in commodities and is trading for its own account as described in Section 864(b)(2)(B)(ii) of the Internal Revenue Code. The term “investment partnership” does not include a dealer, within the meaning of Section 1236 of the Internal Revenue Code, in stocks or securities;
(27) “Passive investment company” means any corporation which is a related person to a financial service company, as defined in section 12-218b, or to an insurance company, as defined in section 12-218b, and (A) employs not less than five full-time equivalent employees in the state; (B) maintains an office in the state; and (C) confines its activities to the purchase, receipt, maintenance, management and sale of its intangible investments, and the collection and distribution of the income from such investments, including, but not limited to, interest and gains from the sale, transfer or assignment of such investments or from the foreclosure upon or sale, transfer or assignment of the collateral securing such investments. For purposes of this subdivision, “intangible investments” shall be limited to loans secured by real property, as defined in section 12-218b, including a line of credit which is a loan secured by real property and which permits future advances by the passive investment company; the collateral or an interest in the collateral that secured such loans if the sale of such collateral or interest is actively marketed by or on behalf of the passive investment company; and any short-term investment of cash held by the passive investment company which cash is reasonably necessary for the operations of such passive investment company;
(28) (A) “Captive real estate investment trust” means, except as provided in subparagraph (B) of this subdivision, a corporation, a trust or an association (i) that is considered a real estate investment trust for the taxable year under Section 856 of the Internal Revenue Code; (ii) that is not regularly traded on an established securities market; (iii) in which more than fifty per cent of the voting power, beneficial interests or shares are owned or controlled, directly or constructively, by a single entity that is subject to Subchapter C of Chapter 1 of the Internal Revenue Code; and (iv) that is not a qualified real estate investment trust, as defined in subdivision (3) of subsection (a) of section 12-217. Any voting power, beneficial interests or shares in a real estate investment trust that are directly owned or controlled by a segregated asset account of a life insurance company, as described in Section 817 of the Internal Revenue Code, shall not be taken into account for purposes of determining whether a real estate investment trust is a captive real estate investment trust.
(B) “Captive real estate investment trust” does not include a corporation, a trust or an association, in which more than fifty per cent of the entity's voting power, beneficial interests or shares are owned by a single entity described in subparagraph (A)(iii) of this subdivision that is owned or controlled, directly or constructively, by (i) a corporation, a trust or an association that is considered a real estate investment trust under Section 856 of the Internal Revenue Code; (ii) a person exempt from taxation under Section 501 of the Internal Revenue Code; (iii) a listed property trust or other foreign real estate investment trust that is organized in a country that has a tax treaty with the United States Treasury Department governing the tax treatment of these trusts; or (iv) a real estate investment trust that is intended to become regularly traded on an established securities market and that satisfies the requirements of Sections 856(a)(5) and 856(a)(6) of the Internal Revenue Code, as determined under Section 856(h) of the Internal Revenue Code.
(C) For purposes of this subdivision, the constructive ownership rules of Section 318 of the Internal Revenue Code, as modified by Section 856(d)(5) of the Internal Revenue Code, apply to the determination of the ownership of stock, assets or net profits of any person;
(29) “Combined group” means the group of all companies that have common ownership and are engaged in a unitary business, where at least one company is subject to tax under this chapter;
(30) “Combined group's net income” means the amount calculated under subsection (a) of section 12-218e;
(31) “Common ownership” means that more than fifty per cent of the voting control of each member of a combined group is directly or indirectly owned by a common owner or owners, either corporate or noncorporate, whether or not the owner or owners are members of the combined group. Whether voting control is indirectly owned shall be determined in accordance with Section 318 of the Internal Revenue Code;
(32) “Unitary business” means a single economic enterprise that is made up either of separate parts of a single business entity or of a group of business entities under common ownership, which enterprise is sufficiently interdependent, integrated or interrelated through its activities so as to provide mutual benefit and produce a significant sharing or exchange of value among such entities, or a significant flow of value among the separate parts. For purposes of this chapter, (A) any business conducted by a pass-through entity shall be treated as conducted by its members, whether directly held or indirectly held through a series of pass-through entities, to the extent of the member's distributive share of the pass-through entity's income, regardless of the percentage of the member's ownership interest or its distributive or any other share of pass-through entity income, and (B) any business conducted directly or indirectly by one corporation is unitary with that portion of a business conducted by another corporation through its direct or indirect interest in a pass-through entity if there is a mutual benefit and a significant sharing of exchange or flow of value between the two parts of the business and the two corporations are members of the same group of business entities under common ownership;
(33) “Designated taxable member” means, if the combined group has a common parent corporation and that common parent corporation is a taxable member, the common parent corporation and, in all other cases, the taxable member of the combined group that such group selects, in the manner prescribed by section 12-222, as its designated taxable member or, in the discretion of the commissioner or upon the failure of such group to select its designated taxable member in the manner prescribed by section 12-222, the taxable member of the combined group selected by the commissioner as the designated taxable member;
(34) “Group income year” means, if two or more members in the combined group file in the same federal consolidated tax return, the same income year as that used on the federal consolidated tax return and, in all other cases, the income year of the designated taxable member;
(35) “Nontaxable member” means a combined group member that is not a taxable member, but does not include a company that is exempt from the tax imposed by this chapter under subdivision (2) of subsection (a) of section 12-214;
(36) “Taxable member” means a combined group member that is subject to tax pursuant to this chapter;
(37) “Pass-through entity” means a partnership or an S corporation.
(b) As used in sections 12-214, 12-218 and 12-219a:
(1) “Limited partner” means a limited partner of a limited partnership that is treated as a partnership for federal income tax purposes and includes a member of a limited liability company that is treated as a partnership for federal income tax purposes and that is managed by managers, if such member is not a member-manager of such company;
(2) “General partner” means a partner of a general partnership, a general partner of a limited partnership that is treated as a partnership for federal income tax purposes and a partner of a limited liability partnership and includes a member of a limited liability company that is treated as a partnership for federal income tax purposes if such company is managed by managers and such member is a member-manager of such company, or if such company is not managed by managers;
(3) “Member-manager” means a member of a limited liability company that is treated as a partnership for federal income tax purposes, which member is, alone or together with others, vested with the management of the business, property and affairs of the limited liability company;
(4) “Proportionate part” means, with respect to a partner of a partnership, the percentage that the partnership used to determine such partner's distributive share of the ordinary income or loss of the partnership in an income year;
(5) “Derived from or connected with sources within this state” has the same meaning as it has under chapter 229 and the regulations adopted thereunder;
(6) “Distributive share” means, with respect to a partner of a partnership, such partner's distributive share of ordinary income or loss as determined for federal income tax purposes in an income year.
(1949 Rev., S. 1896; 1949, 1951, 1953, S. 1088d, 1105d; 1957, P.A. 560, S. 1; 1961, P.A. 376, S. 1; 428, S. 1; 1967, P.A. 741, S. 1; June, 1969, P.A. 1, S. 12; P.A. 73-350, S. 5, 27; 73-442, S. 3; P.A. 77-614, S. 139, 161, 610; P.A. 80-406, S. 3, 5; 80-482, S. 18, 348; 80-483, S. 53, 186; P.A. 82-400, S. 1, 3; P.A. 87-9, S. 2, 3; June Sp. Sess. P.A. 91-3, S. 98, 168; P.A. 95-2, S. 3, 37; P.A. 96-104, S. 1, 4; 96-139, S. 2, 13; 96-180, S. 25, 166; 96-197, S. 2, 11; P.A. 97-295, S. 3, 25; P.A. 98-28, S. 114, 115, 117; 98-110, S. 12, 27; 98-244, S. 5, 35; 98-262, S. 14, 22; P.A. 00-174, S. 21, 83; P.A. 03-84, S. 12; P.A. 05-260, S. 2; P.A. 06-186, S. 70; P.A. 10-188, S. 1; June Sp. Sess. P.A. 10-1, S. 60; June 12 Sp. Sess. P.A. 12-1, S. 195; P.A. 14-60, S. 1–4; 14-69, S. 2; 14-134, S. 46; P.A. 15-244, S. 138; June Sp. Sess. P.A. 15-5, S. 139; P.A. 17-147, S. 23.)
History: 1961 acts added definition of “dissolved corporation,” last alternative to definition of income year, and reference to state bank and trust companies and national banks in definition of interest paid; 1967 act excluded from consideration as gross income amount which for federal income tax purposes is treated as a dividend received by domestic corporation from foreign corporation on account of foreign taxes paid by domestic corporation when foreign tax credit elected; 1969 act excluded municipal utilities under chapters 212 and 212a from consideration as taxpayer or company; P.A. 73-350 added exception in definition of “net income” and defined terms for purposes of the exception, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 73-442 included foreign municipal electric utilities in definition of “taxpayer” and “company”; P.A. 77-614 substituted commissioner of revenue services for tax commissioner and banking commissioner within the department of business regulation for bank commissioner and made banking department a division within the department of business regulation, effective January 1, 1979; P.A. 80-406 defined “alternative energy system”; P.A. 80-482 deleted reference to abolished department of business regulation; P.A. 80-483 deleted reference to building and loan associations in definition of “interest paid”; P.A. 82-400 amended the definition of gross income to provide that with respect to a corporation engaged primarily in farming, gross income for purposes of the state corporation business tax does not include net gain from the sale of cattle raised on a farm owned by the corporation in this state, effective June 7, 1982 and applicable to income years of corporations commencing on or after January 1, 1981; (Revisor's note: Pursuant to P.A. 87-9, “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); June Sp. Sess. P.A. 91-3 added the definition of “S corporation”, effective August 22, 1991, and applicable to income years of corporations commencing on or after January 1, 1991; P.A. 95-2 redefined “gross income” to include exempt interest dividends under Sec. 852(b)(5) of the Internal Revenue Code, effective March 8, 1995; P.A. 96-104 redefined “carrying on or doing business” to add exception re companies contracting with commercial printers and made technical changes, effective July 1, 1996, and applicable to taxable years commencing on or after January 1, 1996; P.A. 96-139 redefined “net income” to specify that no expense related to income which is not taxable shall be deducted and that no item may be excluded or deducted more than once, made technical changes and deleted definition of “interest paid”, effective May 29, 1996; P.A. 96-180 conformed Subdiv. and Subpara. indicators to customary statutory usage, effective June 3, 1996; P.A. 96-197 designated existing section as Subsec. (a), revising Subdiv. and Subpara. indicators to conform with customary statutory usage and adding definitions of “internal revenue code”, “partnership”, “partner” and “investment partnership” and added new Subsec. (b), effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 97-295 amended Subsec. (a)(9)(B) to delete exclusion for sale of homegrown cattle, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-28 amended Subsec. (a)(1) by adding electric distribution companies, electric suppliers and generation entities or affiliates and amended Subsec. (a)(20) by splitting language into Subparas. (A) and (B) and redesignating clauses accordingly, and by adding provision in Subpara. (A) re the direct or indirect engaging in, transacting or conducting of activity for the purpose of the sale of electricity or electric generation services, effective April 29, 1998; P.A. 98-110 added Subsec. (a)(27) defining “passive investment company” and made technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999 (Revisor's note: In Subsec. (a)(1) the Revisors changed the verb following “Taxpayer” and “company” from “means” to “mean”); P.A. 98-244 amended definition of “S corporation” to include any qualified subchapter S subsidiary in the definition, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-174 made a technical change in Subsec. (a)(20)(A), effective May 26, 2000; P.A. 03-84 changed “Commissioner of Banking” to “Banking Commissioner” in Subsec. (a)(19), effective June 3, 2003; P.A. 05-260 added Subdiv. (20)(C) re participation in trade shows at the convention center, effective July 13, 2005, and applicable to taxable years commencing on or after January 1, 2005; P.A. 06-186 amended Subsec. (a)(1) by changing citation re definition of municipal utility from “chapter 212 and chapter 212a” to “section 12-265”, effective July 1, 2006; P.A. 10-188 amended Subsec. (a) to add Subdiv. (28) defining “captive real estate investment trust” and to make a technical change in Subdiv. (3), effective July 1, 2010, and applicable to income years commencing on or after January 1, 2010; June Sp. Sess. P.A. 10-1 amended Subsec. (a)(28)(A) to make a technical change, effective July 1, 2010, and applicable to income years commencing on or after January 1, 2010; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a)(9) to redefine “gross income” by adding new Subpara. (B) re manufacturing reinvestment account distribution and redesignating existing Subparas. (B) and (C) as Subparas. (C) and (D), effective June 15, 2012, and applicable to income years commencing on or after January 1, 2011; P.A. 14-60 made technical changes in Subsec. (a)(1), (10), (20)(A) and (28); P.A. 14-69 amended Subsec. (a)(9) to redefine “gross income” by deleting former Subpara. (B)(i) re manufacturing reinvestment account distribution and redesignating existing Subpara. (B)(ii)(I) and (II) as Subpara. (B)(i) and (ii), effective July 1, 2014, and applicable to income years commencing on or after January 1, 2014; P.A. 14-134 amended Subsec. (a)(20)(A) by deleting provision re electric company, effective June 6, 2014; P.A. 15-244 amended Subsec. (a) to make definitions applicable to chapter, rather than part, and add Subdivs. (29) to (37) to define “combined group”, “combined group's net income”, “common ownership”, “unitary business”, “designated taxable member”, “group income year”, “nontaxable member”, “taxable member” and “pass-through entity”, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 138, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015; P.A. 17-147 amended Subdiv. (28)(A) to redefine “captive real estate investment trust”, effective July 7, 2017.
Cited. 127 C. 509; 130 C. 461; 135 C. 48. Retroactive effect not unconstitutional; applies to federal savings and loan associations. 142 C. 483. Cited. Id., 492; 178 C. 243; 179 C. 363; 199 C. 346; 202 C. 583; 220 C. 665; 224 C. 426; 235 C. 865.
Cited. 15 CS 205. Provision for fiscal year varying from 52 to 53 weeks incorporates provisions of internal revenue code pertinent to the effective use of this accounting method, including provision that such fiscal year be treated as beginning on first day of month in determining applicability of new tax provisions. 32 CS 127. Cited. 40 CS 77; 44 CS 90.
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Sec. 12-214. Imposition of tax. Surcharge. (a)(1) Every mutual savings bank, savings and loan association and every company engaged in the business of carrying passengers for hire over the highways of this state in common carrier motor vehicles doing business in this state, and every other company carrying on, or having the right to carry on, business in this state, including a dissolved corporation which continues to conduct business, except those companies described in subdivision (2) of this subsection, shall pay, annually, a tax or excise upon its franchise for the privilege of carrying on or doing business, owning or leasing property within the state in a corporate capacity or as an unincorporated association taxable as a corporation for federal income tax purposes or maintaining an office within the state, such tax to be measured by the entire net income as herein defined received by such corporation or association from business transacted within the state during the income year and to be assessed for each income year commencing prior to January 1, 1995, at the rate of eleven and one-half per cent, for income years commencing on or after January 1, 1995, and prior to January 1, 1996, at the rate of eleven and one-quarter per cent, for income years commencing on or after January 1, 1996, and prior to January 1, 1997, at the rate of ten and three-fourths per cent, for income years commencing on or after January 1, 1997, and prior to January 1, 1998, at the rate of ten and one-half per cent, for income years commencing on or after January 1, 1998, and prior to January 1, 1999, at the rate of nine and one-half per cent, for income years commencing on or after January 1, 1999, and prior to January 1, 2000, at the rate of eight and one-half per cent, and for income years commencing on or after January 1, 2000, at the rate of seven and one-half per cent. The exemption of companies described in subparagraphs (G) and (H) of subdivision (2) of this subsection shall not be allowed with respect to any income year of any such company commencing on or after January 1, 1998, and any such company claiming such exemption for any income years commencing on or after January 1, 1985, but prior to January 1, 1998, shall be required to file a corporation business tax return in accordance with section 12-222 for each such income year.
(2) The following companies shall be exempt from the tax imposed under this chapter: (A) Insurance companies incorporated or organized under the laws of any other state or foreign government and for income years commencing on or after January 1, 1999, domestic insurance companies; (B) companies exempt by the federal corporation net income tax law, and any company which qualifies as a domestic international sales corporation (DISC), as defined in Section 992 of the Internal Revenue Code and as to which a valid election under subsection (b) of said Section 992 to be treated as a DISC is effective, but excluding companies, other than any company which so qualifies as, and so elects to be treated as, a DISC, which elect not to be subject to such tax under any provision of said Internal Revenue Code other than said subsection (b) of Section 992; (C) companies subject to gross earnings taxes under chapter 210; (D) companies all of whose properties in this state are operated by companies subject to gross earnings taxes under chapter 210; (E) cooperative housing corporations, as defined for federal income tax purposes; (F) any organization or association of two or more persons established and operated for the exclusive purpose of promoting the success or defeat of any candidate for public office or of any political party or question or constitutional amendment to be voted upon at any state or national election or for any other political purpose; (G) any company which is not owned or controlled, directly or indirectly, by any other company, the gross annual revenues of which in the most recently completed year did not exceed one hundred million dollars and which engaged in the research, design, manufacture, sale or installation of alternative energy systems or motor vehicles powered in whole or in part by electricity, natural gas or solar energy including their parts and components, provided at least seventy-five per cent of the gross annual revenues of such company are derived from such research, design, manufacture, sale or installation; (H) any company which engages in the research, design, manufacture or sale in Connecticut of aero-derived gas turbine systems in advanced industrial applications, which applications are developed after October 1, 1992, which are limited to simple-cycle systems, humid air, steam or water injection, recuperation or intercooling technologies, including their parts and components, to the extent that such company's net income is directly attributable to such purposes; (I) any non-United States corporation, which shall be any foreign corporation, as defined in Section 7701(a)(5) of the Internal Revenue Code, whose sole activity in this state during the income year consists of the trading in stocks, securities or commodities for such corporation's own account, as defined in Section 864(b)(2)(A)(ii) of said Internal Revenue Code; and (J) for income years commencing on or after January 1, 2001, S corporations.
(3) (A) A company is carrying on or doing business in this state if it is a general partner of a partnership that does business, owns or leases property or maintains an office in this state. (B) A company is carrying on or doing business in this state if it is a limited partner of a limited partnership, other than an investment partnership, that does business, owns or leases property or maintains an office in this state. (C) A company that is not otherwise carrying on or doing business in this state, either directly or by virtue of being a partner in a partnership described in subparagraph (A) or (B) of this subdivision is not carrying on or doing business in this state solely by virtue of being a limited partner of one or more investment partnerships.
(b) (1) With respect to income years commencing on or after January 1, 2006, and prior to January 1, 2007, any company subject to the tax imposed in accordance with subsection (a) of this section shall pay, except when the tax so calculated is equal to two hundred fifty dollars, for each such income year, an additional tax in an amount equal to twenty per cent of the tax calculated under said subsection (a) for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The additional amount of tax determined under this subsection for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced as provided in this chapter.
(2) (A) With respect to income years commencing on or after January 1, 2009, and prior to January 1, 2012, any company subject to the tax imposed in accordance with subsection (a) of this section shall pay, for each such income year, except when the tax so calculated is equal to two hundred fifty dollars, an additional tax in an amount equal to ten per cent of the tax calculated under said subsection (a) for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The additional amount of tax determined under this subsection for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced as provided in this chapter.
(B) Any company whose gross income for the income year was less than one hundred million dollars shall not be subject to the additional tax imposed under subparagraph (A) of this subdivision. This exception shall not apply to companies filing a combined return for the income year under section 12-223a or a unitary return under subsection (d) of section 12-218d.
(3) (A) With respect to income years commencing on or after January 1, 2012, and prior to January 1, 2018, any company subject to the tax imposed in accordance with subsection (a) of this section shall pay, for each such income year, except when the tax so calculated is equal to two hundred fifty dollars, an additional tax in an amount equal to twenty per cent of the tax calculated under said subsection (a) for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The additional amount of tax determined under this subsection for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced as provided in this chapter.
(B) Any company whose gross income for the income year was less than one hundred million dollars shall not be subject to the additional tax imposed under subparagraph (A) of this subdivision. With respect to income years commencing on or after January 1, 2012, and prior to January 1, 2016, this exception shall not apply to companies filing a combined return for the income year under section 12-223a or a unitary return under subsection (d) of section 12-218d. With respect to income years commencing on or after January 1, 2016, and prior to January 1, 2018, this exception shall not apply to taxable members of a combined group that files a combined unitary tax return.
(4) (A) With respect to income years commencing on or after January 1, 2018, and prior to January 1, 2023, any company subject to the tax imposed in accordance with subsection (a) of this section shall pay, for such income year, except when the tax so calculated is equal to two hundred fifty dollars, an additional tax in an amount equal to ten per cent of the tax calculated under said subsection (a) for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The additional amount of tax determined under this subsection for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced as provided in this chapter.
(B) Any company whose gross income for the income year was less than one hundred million dollars shall not be subject to the additional tax imposed under subparagraph (A) of this subdivision. This exception shall not apply to taxable members of a combined group that files a combined unitary tax return.
(c) Each taxable member of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall calculate such member's tax under subsection (a) of this section, by multiplying such member's net income apportioned to this state, as provided in subsection (c) of section 12-218e, by the tax rate set forth in this section.
(1949 Rev., S. 1897; 1951, 1953, June, 1955, S. 1089d; 1957, P.A. 515, S. 1; 649, S. 1; 1959, P.A. 394, S. 1; 510; 1961, P.A. 604, S. 2; February, 1965, P.A. 147; 461, S. 7; 1969, P.A. 674; June, 1969, P.A. 1, S. 13; 1971, P.A. 683, S. 1; June, 1971, P.A. 5, S. 111; 1972, P.A. 271, S. 1; 285, S. 6; P.A. 73-350, S. 6, 27; 73-442, S. 4; P.A. 75-101, S. 1, 2; 75-213, S. 1, 53; P.A. 77-476, S. 1, 3; 77-499, S. 1, 2; P.A. 80-406, S. 4, 5; 80-483, S. 54, 186; P.A. 81-472, S. 15, 159; June Sp. Sess. P.A. 83-1, S. 1, 15; P.A. 85-431, S. 1, 2; 85-474, S. 1, 2; P.A. 88-222, S. 1, 2; P.A. 89-16, S. 1, 31; 89-211, S. 22; 89-251, S. 20, 203; P.A. 90-28, S. 1; June Sp. Sess. P.A. 91-3, S. 99, 168; P.A. 92-152, S. 1; P.A. 93-74, S. 5, 67; 93-199, S. 4, 6; P.A. 94-4, S. 1, 2; May 25 Sp. Sess. P.A. 94-1, S. 45, 130; P.A. 95-160, S. 32, 69; P.A. 96-139, S. 12, 13; 96-197, S. 3, 11; P.A. 98-110, S. 13, 27; 98-244, S. 6, 35; June Sp. Sess. P.A. 98-1, S. 106, 121; P.A. 03-2, S. 32; June 30 Sp. Sess. P.A. 03-1, S. 87; P.A. 05-251, S. 62; P.A. 06-186, S. 66; June Sp. Sess. P.A. 09-3, S. 94; P.A. 11-6, S. 76; P.A. 13-184, S. 73; P.A. 15-244, S. 83, 142; June Sp. Sess. P.A. 15-5, S. 139, 140; P.A. 19-117, S. 341; June Sp. Sess. P.A. 21-2, S. 422; P.A. 22-110, S. 12.)
History: 1959 acts changed technical language of statute, added exclusion in Subsec. (2) for companies which elect not to be subject to such tax, applied 3.75% rate to net income received in each year as opposed to only those years between 1953 and 1958; 1961 act added reference to chapter 212a, changed tax rate to 5% and changed technical language of statute; 1965 acts added Subdiv. (5) excepting nonprofit cooperative ownership housing corporations when residence is restricted to corporation members and corporation ownership is restricted to residents from payment of tax and restricted 5% tax rates to years beginning before January 1, 1966, and increased rates for years thereafter to 5.25%; 1969 acts specified stock and nonstock corporations in Subdiv. (5) and added Subdiv. (6) excepting cooperative housing corporations where there is no taxable income to corporation from payment of tax, added new Subdivs. (4) and (5) detailing companies formerly mentioned by chapter reference only in Subdiv. (3) and renumbering remaining Subdivs. accordingly, specified companies “not subject to the tax imposed by this part” in Subdiv. (6), formerly (4), changed tax rates in Subdiv. (7), formerly (5), to 5.25% for years beginning after January 1, 1971, and, in the case of companies other than telephone companies, made 5.25% rate applicable to years before January 1, 1969, and set rate for period between that date and January 1, 1971, at 8%; 1971 acts deleted proviso that minimum tax shall not be less than minimum tax under Sec. 12-219, substituted “additional” for “minimum” re tax under Sec. 12-219, deleted Subdiv. (5), renumbering following Subdivs. accordingly, and changed references to 1971 to 1973; 1972 acts included DISC companies in Subdiv. (2), changed tax rates in Subdiv. (7) to 8% without exception and deleted provisions concerning tax on telephone companies; P.A. 73-350 rewrote Subdiv. (1) to apply to insurance companies for years before January 1, 1973, and to insurance companies incorporated or organized under laws of other state or foreign company on or after that date, deleted Subdiv. (4) renumbering subsequent Subdivs. accordingly and added proviso that tax rate as of January 1, 1974, applicable to companies subject to tax under provisions of section will be 2%, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 73-442 included foreign municipal electric utilities under provisions of section and specifically excluded such utilities in Subdiv. (2) of exception; P.A. 75-101 added new Subdiv. (7) exempting organizations promoting success or defeat of political candidates, parties, questions, constitutional amendments etc. from payment of tax, effective May 12, 1975, and applicable to income years commencing on or after January 1, 1973; P.A. 75-213 changed 8% rate to 10% for income years beginning on or after January 1, 1975; P.A. 77-476 deleted references to foreign municipal electric utilities; P.A. 77-499 required payment for owning or leasing property in state in corporate capacity or as unincorporated association taxable for federal income tax purposes or for maintaining an office in state; P.A. 80-406 added Subdiv. (8) exempting certain companies engaged in research, design, manufacture, sale or installation of alternative energy systems from payment of tax until July 1, 1985; P.A. 80-483 deleted reference to building and loan associations; P.A. 81-472 made technical changes; June Sp. Sess. P.A. 83-1 increased the rate of tax from 10% to 11.5%, effective July 1, 1983, and applicable to income years of corporations commencing on or after January 1, 1983; P.A. 85-431 added provision allowing for retroactive exemption to date of incorporation for certain nonprofit corporations; P.A. 85-474 provided that exemption under Subdiv. (8) for alternative energy system companies shall not be allowed with respect to any income year commencing on or after January 1, 1988, instead of after July 1, 1985; P.A. 88-222 expanded the corporate tax exemption of Subdiv. (8) to include any company which is not owned or controlled, directly or indirectly, by any other company and extended the exemption until January 1, 1993, effective May 28, 1988, and applicable to income years of corporations commencing on or after January 1, 1988; P.A. 89-16 added Subsec. (b) imposing an additional tax as a percentage of the tax under Subsec. (a), effective March 23, 1989, and applicable to income years of corporations commencing on or after January 1, 1989; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 89-251 amended Subsec. (b) by increasing the additional tax imposed under Sec. 1 of P.A. 89-16 from 15% to 20% of the tax calculated under Subsec. (a), effective July 1, 1989, and applicable to income years commencing on or after January 1, 1989; P.A. 90-28 made technical changes in the list of corporations in Subsec. (a) not subject to tax; June Sp. Sess. P.A. 91-3 amended Subsec. (b) to provide that the 20% additional tax would be applicable with respect to income years commencing prior to January 1, 1992, and to impose a 10% additional tax applicable with respect to income years commencing on or after January 1, 1992, and prior to January 1, 1993, effective August 22, 1991, and applicable to income years of corporations commencing on or after January 1, 1991; P.A. 92-152 added new Subsec. (a)(8) exempting corporation engaged in the research, design, manufacture or sale of aero-derived gas turbine systems and extended the exemptions for Subdivs. (7) and (8) until January 1, 1998; P.A. 93-74 added provisions reducing tax rates commencing on and after January 1, 1995, effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1995; P.A. 93-199 expanded exemption in Subdiv. (7) to include companies engaged in research, design, manufacture, sale or installation of motor vehicles powered by electricity, natural gas or solar energy, effective July 1, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A. 94-4 in Subdiv. (5) of Subsec. (a) eliminated provision requiring cooperative housing corporations to have no taxable income, effective April 7, 1994, and applicable for income years commencing on or after January 1, 1990; May Sp. Sess. P.A. 94-1 amended Subsec. (a) to conform section with revisions made in Sec. 5 of P.A. 93-74, effective April 7, 1994; P.A. 95-160 amended Subsec. (a) to decrease tax rate from 11% to 10.75% for the income years commencing on or after January 1, 1996, and prior to January 1, 1997, 9.5% for the income years commencing on or after January 1, 1998, and prior to January 1, 1999, 8.5% for the income years commencing on or after January 1, 1999, and prior to January 1, 2000, and 7.5% for income years commencing on or after January 1, 2000, effective June 1, 1995; P.A. 96-139 amended effective date of P.A. 95-160 to clarify applicability to income years commencing on or after January 1, 1996; P.A. 96-197 amended Subsec. (a) to reorganize provisions and added Subdiv. (3) re general partners of a partnership and made other technical changes, effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 98-110 amended Subsec. (a)(2) to exempt domestic insurance companies and make technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999; P.A. 98-244 amended Subsec. (a)(2) to exempt S corporations from the minimum tax under Sec. 12-219 for income years commencing on or after January 1, 2001, and to exempt foreign-sourced income of non-United-States corporations from the corporation business tax, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; June Sp. Sess. P.A. 98-1 amended Subsec. (a)(2) to add commodities, effective June 24, 1998; P.A. 03-2 added Subsec. (b)(3) re surcharge for the 2003 income year, effective February 28, 2003, and applicable to income years commencing on or after January 1, 2003; June 30 Sp. Sess. P.A. 03-1 amended Subsec. (b) to include in surcharge provided under Subdiv. (3) amounts calculated under Sec. 91 of P.A. 03-1 of the June 30 special session and to add Subdiv. (4) re surcharge for the 2004 income year, effective August 16, 2003, and applicable to income years commencing on or after January 1, 2003; P.A. 05-251 amended Subsec. (b) by deleting references to Sec. 91 of June 30 Sp. Sess. P.A. 03-1 in Subdivs. (3) and (4) and by adding Subdivs. (5) and (6) re surcharge for 2006 and 2007 income years, respectively, effective June 30, 2005, and applicable to income years commencing on or after January 1, 2006; P.A. 06-186 deleted former Subsec. (b)(6) re surcharge in income years commencing on or after January 1, 2007, and prior to January 1, 2008, effective July 1, 2006, and applicable to income years commencing on or after January 1, 2006; June Sp. Sess. P.A. 09-3 amended Subsec. (b) to add Subdiv. (6) re surcharge for 2009, 2010 and 2011 income years and exemption for companies with gross income less than $100,000,000, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2009; P.A. 11-6 amended Subsec. (b) to add Subdiv. (7) re 20% surcharge for 2012 and 2013 income years and exemption for companies with gross income less than $100,000,000, effective May 4, 2011, and applicable to income years commencing on or after January 1, 2011; P.A. 13-184 amended Subsec. (b)(7)(A) to extend surcharge to income years prior to January 1, 2016, effective June 18, 2013; P.A. 15-244 amended Subsec. (b)(7)(A) to extend surcharge to January 1, 2018, amended Subsec. (b)(7)(B) to provide that for income years commencing on or after January 1, 2015, and prior to January 1, 2018, exception shall not apply to taxable members of combined group filing a combined unitary tax return, added Subsec. (b)(8)(A) re surcharge for income year commencing on or after January 1, 2018, and added Subsec. (b)(8)(B) re exemption for companies with gross income less than $100,000,000, and added Subsec. (c) re calculation of tax under Subsec. (a) for taxable member of combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 83 and 142, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (b)(7)(B) to provide that exception not apply to companies filing combined return or unitary return with respect to income years commencing prior to January 1, 2016, rather than January 1, 2015, and exception not apply to taxable members of a combined group that files a combined unitary tax return with respect to income years commencing on or after January 1, 2016, rather than January 1, 2015, and amended Subsec. (b)(8)(A) to provide that additional tax apply to income years commencing prior to January 1, 2019, effective January 1, 2016, and applicable to income years commencing on or after that date; P.A. 19-117 amended Subsec. (b)(8) to replace “January 1, 2019” with “January 1, 2021”, effective June 26, 2019, and applicable to income years commencing on or after January 1, 2019; June Sp. Sess. P.A. 21-2 amended Subsec. (b)(8) to replace “January 1, 2021” with “January 1, 2023”, effective June 23, 2021; P.A. 22-110 amended Subsec. (b) by deleting former Subdivs. (1) to (4) re income years commencing prior to January 1, 2005, and redesignating existing Subdivs. (5) to (8) as Subdivs. (1) to (4).
See chapter 138c re tax credits for donations to Rental Housing Assistance Trust Fund.
See Sec. 12-264 re tax on gross earnings of utility companies.
See chapter 228z re affected business entity tax.
Cited. 127 C. 508; 129 C. 664; 130 C. 461. Constitutionality not passed upon until Connecticut court determines extent of applicability of tax to corporation solely in interstate business. 323 U.S. 104. Is an excise upon franchise of corporation for privilege of doing business in the state. 135 C. 37. Cited. 142 C. 483; 151 C. 688; 178 C. 243; 196 C. 1; 202 C. 412; Id., 583; 203 C. 198; 220 C. 665; 224 C. 426. Section is tax imposition statute; any ambiguity must be resolved in favor of taxpayer. 228 C. 137. Cited. Id., 139; 232 C. 325.
Cited. 26 CS 277; Id., 373; 40 CS 77; 43 CS 314; 44 CS 90.
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Secs. 12-214a and 12-215. Effective date of subsection (7) of section 12-214. Certain gross rentals to be tax-exempt. Sections 12-214a and 12-215 are repealed.
(1955, S. 1090d; 1957, P.A. 515, S. 2; P.A. 75-101, S. 2; P.A. 82-472, S. 182, 183.)
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Sec. 12-216. Payment of tax by out-of-state corporations. The tax imposed by this part upon corporations or associations carrying on or doing business or having the right to carry on or do business in this state, which corporations or associations are organized and exist under and by virtue of the laws of some other state, territory or country or are organized and exist without any specific statutory authority, shall be paid by such corporations or associations for the benefit and protection of the government and laws of this state, it being the purpose of this section to require the payment of a tax by all corporations or associations carrying on or doing business in this state, but not organized under the laws of this state, as an additional recompense for protection of the activities in this state of such corporations or associations.
(1951, S. 1091d; P.A. 73-442, S. 5; P.A. 77-476, S. 2, 3.)
History: P.A. 73-442 defined “foreign municipal electric utility” and included such utilities in corporations organized under the law of any other state or country; P.A. 77-476 deleted amendments enacted in 1973 act.
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Sec. 12-216a. Payment of tax by companies having economic nexus with state. Applicability to companies treated as foreign corporations by the Internal Revenue Code. (a) Any company that derives income from sources within this state and that has a substantial economic presence within this state, evidenced by a purposeful direction of business toward this state, examined in light of the frequency, quantity and systematic nature of a company's economic contacts with this state, without regard to physical presence, and to the extent permitted by the Constitution of the United States, shall be liable for the tax imposed under this chapter. Such company shall apportion its net income under the provisions of this chapter.
(b) (1) The provisions of subsection (a) of this section shall not apply to any company that is treated as a foreign corporation under the Internal Revenue Code and has no income effectively connected with a United States trade or business.
(2) To the extent that a company that is treated as a foreign corporation under the Internal Revenue Code has income effectively connected with a United States trade or business, such company's gross income, notwithstanding any provision of this chapter, shall be its income effectively connected with its United States trade or business. For net income tax apportionment purposes, only property used in, payroll attributable to and receipts effectively connected with such company's United States trade or business shall be considered for purposes of calculating such company's apportionment fraction. “Income effectively connected with a United States trade or business” shall be determined in accordance with the provisions of the Internal Revenue Code. The provisions of this subdivision shall not apply to a foreign corporation that is included in a combined group that files a combined unitary tax return.
(June Sp. Sess. P.A. 09-3, S. 90; P.A. 11-61, S. 55; Dec. Sp. Sess. P.A. 15-1, S. 39.)
History: June Sp. Sess. P.A. 09-3 effective September 9, 2009, and applicable to income years commencing on or after January 1, 2010; P.A. 11-61 designated existing provisions as Subsec. (a), replaced “, or” with “and” therein and added Subsec. (b) re applicability to companies treated as foreign corporations by the Internal Revenue Code, effective June 21, 2011, and applicable to income years commencing on or after January 1, 2011; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (b) by adding Subdiv. designators (1) and (2), and by adding reference to Secs. 12-218e to 12-218g and adding provision re exemption for foreign corporation included in combined group that files combined unitary tax return in Subdiv. (2), effective December 29, 2015.
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Sec. 12-217. Deductions from gross income. Net income and operating loss carry-over of S corporations and combined groups. (a)(1) In arriving at net income as defined in section 12-213, whether or not the taxpayer is taxable under the federal corporation net income tax, there shall be deducted from gross income, (A) all items deductible under the Internal Revenue Code effective and in force on the last day of the income year except (i) any taxes imposed under the provisions of this chapter which are paid or accrued in the income year and in the income year commencing January 1, 1989, and thereafter, any taxes in any state of the United States or any political subdivision of such state, or the District of Columbia, imposed on or measured by the income or profits of a corporation which are paid or accrued in the income year, (ii) deductions for depreciation, which shall be allowed as provided in subsection (b) of this section, (iii) deductions for qualified domestic production activities income, as provided in Section 199 of the Internal Revenue Code, and (iv) in the case of any captive real estate investment trust, the deduction for dividends paid provided under Section 857(b)(2) of the Internal Revenue Code, and (B) additionally, in the case of a regulated investment company, the sum of (i) the exempt-interest dividends, as defined in the Internal Revenue Code, and (ii) expenses, bond premium, and interest related to tax-exempt income that are disallowed as deductions under the Internal Revenue Code, and (C) in the case of a taxpayer maintaining an international banking facility as defined in the laws of the United States or the regulations of the Board of Governors of the Federal Reserve System, as either may be amended from time to time, the gross income attributable to the international banking facility, provided, no expense or loss attributable to the international banking facility shall be a deduction under any provision of this section, and (D) additionally, in the case of all taxpayers, all dividends as defined in the Internal Revenue Code effective and in force on the last day of the income year not otherwise deducted from gross income, including dividends received from a DISC or former DISC as defined in Section 992 of the Internal Revenue Code and dividends deemed to have been distributed by a DISC or former DISC as provided in Section 995 of said Internal Revenue Code, other than thirty per cent of dividends received from a domestic corporation in which the taxpayer owns less than twenty per cent of the total voting power and value of the stock of such corporation, and (E) additionally, in the case of all taxpayers, the value of any capital gain realized from the sale of any land, or interest in land, to the state, any political subdivision of the state, or to any nonprofit land conservation organization where such land is to be permanently preserved as protected open space or to a water company, as defined in section 25-32a, where such land is to be permanently preserved as protected open space or as Class I or Class II water company land, and (F) in the case of manufacturers, the amount of any contribution to a manufacturing reinvestment account established pursuant to section 32-9zz in the income year that such contribution is made to the extent not deductible for federal income tax purposes, and (G) the amount of any contribution made on or after December 23, 2017, by the state of Connecticut or a political subdivision thereof to the extent included in a company's gross income under Section 118(b)(2) of the Internal Revenue Code.
(2) (A) No deduction shall be allowed for (i) expenses related to dividends that are allowable as a deduction or credit under the Internal Revenue Code, and (ii) federal taxes on income or profits, losses of other calendar or fiscal years, retroactive to include all calendar or fiscal years beginning after January 1, 1935, interest received from federal, state and local government securities, if any such deductions are allowed by the federal government.
(B) For purposes of this subdivision, expenses related to dividends shall equal five per cent of all dividends received by a company during an income year. The net income associated with the disallowance of expenses related to dividends shall be apportioned, if the company conducts business within and without the state or is required to apportion its income under section 12-218b, in accordance with this chapter.
(3) Notwithstanding any provision of this section to the contrary, no dividend received from a real estate investment trust shall be deductible under this section by the recipient unless the dividend is: (A) Deductible under Section 243 of the Internal Revenue Code; (B) received by a qualified dividend recipient from a qualified real estate investment trust and, as of the last day of the period for which such dividend is paid, persons, not including the qualified dividend recipient or any person that is either a related person to, or an employee or director of, the qualified dividend recipient, have outstanding cash capital contributions to the qualified real estate investment trust that, in the aggregate, exceed five per cent of the fair market value of the aggregate real estate assets, valued as of the last day of the period for which such dividend is paid, then held by the qualified real estate investment trust; or (C) received from a captive real estate investment trust that is subject to the tax imposed under this chapter. For purposes of this section, “related person” has the same meaning as provided in section 12-217ii, “real estate assets” has the same meaning as provided in Section 856 of the Internal Revenue Code, “qualified dividend recipient” means a dividend recipient who has invested in a qualified real estate investment trust prior to April 1, 1997, and “qualified real estate investment trust” means an entity that both was incorporated and had contributed to it a minimum of five hundred million dollars' worth of real estate assets prior to April 1, 1997, and that elects to be a real estate investment trust under Section 856 of the Internal Revenue Code prior to April 1, 1998.
(4) Notwithstanding any provision of this section to the contrary, (A) any excess of the deductions provided in this section for any income year commencing on or after January 1, 1973, over the gross income for such year or the amount of such excess apportioned to this state under the provisions of this chapter, shall be an operating loss of such income year and shall be deductible as an operating loss carry-over for operating losses incurred prior to income years commencing January 1, 2000, in each of the five income years following such loss year, and for operating losses incurred in income years commencing on or after January 1, 2000, in each of the twenty income years following such loss year, except that (i) for income years commencing prior to January 1, 2015, the portion of such operating loss which may be deducted as an operating loss carry-over in any income year following such loss year shall be limited to the lesser of (I) any net income greater than zero of such income year following such loss year, or in the case of a company entitled to apportion its net income under the provisions of this chapter, the amount of such net income which is apportioned to this state pursuant thereto, or (II) the excess, if any, of such operating loss over the total of such net income for each of any prior income years following such loss year, such net income of each of such prior income years following such loss year for such purposes being computed without regard to any operating loss carry-over from such loss year allowed under this subparagraph and being regarded as not less than zero, and provided further the operating loss of any income year shall be deducted in any subsequent year, to the extent available for such deduction, before the operating loss of any subsequent income year is deducted, (ii) for income years commencing on or after January 1, 2015, the portion of such operating loss which may be deducted as an operating loss carry-over in any income year following such loss year shall be limited to the lesser of (I) fifty per cent of net income of such income year following such loss year, or in the case of a company entitled to apportion its net income under the provisions of this chapter, fifty per cent of such net income which is apportioned to this state pursuant thereto, or (II) the excess, if any, of such operating loss over the operating loss deductions allowable with respect to such operating loss under this subparagraph for each of any prior income years following such loss year, such net income of each of such prior income years following such loss year for such purposes being computed without regard to any operating loss carry-over from such loss year allowed under this subparagraph and being regarded as not less than zero, and provided further the operating loss of any income year shall be deducted in any subsequent year, to the extent available for such deduction, before the operating loss of any subsequent income year is deducted, and (iii) if a combined group so elects, the combined group shall relinquish fifty per cent of its unused operating losses incurred prior to the income year commencing on or after January 1, 2015, and before January 1, 2016, and may utilize the remaining operating loss carry-over without regard to the limitations prescribed in subparagraph (A)(ii) of this subdivision. The portion of such operating loss carry-over that may be deducted shall be limited to the amount required to reduce a combined group's tax under this chapter, prior to surtax and prior to the application of credits, to two million five hundred thousand dollars in any income year commencing on or after January 1, 2015. Only after the combined group's remaining operating loss carry-over for operating losses incurred prior to income years commencing January 1, 2015, has been fully utilized, will the limitations prescribed in subparagraph (A)(ii) of this subdivision apply. The combined group, or any member thereof, shall make such election on its return for the income year beginning on or after January 1, 2015, and before January 1, 2016, by the due date for such return, including any extensions. Only combined groups with unused operating losses in excess of six billion dollars from income years beginning prior to January 1, 2013, may make the election prescribed in this clause, and (B) any net capital loss, as defined in the Internal Revenue Code effective and in force on the last day of the income year, for any income year commencing on or after January 1, 1973, shall be allowed as a capital loss carry-over to reduce, but not below zero, any net capital gain, as so defined, in each of the five following income years, in order of sequence, to the extent not exhausted by the net capital gain of any of the preceding of such five following income years, and (C) any net capital losses allowed and carried forward from prior years to income years beginning on or after January 1, 1973, for federal income tax purposes by companies entitled to a deduction for dividends paid under the Internal Revenue Code other than companies subject to the gross earnings taxes imposed under chapters 211 and 212, shall be allowed as a capital loss carry-over.
(5) This section shall not apply to a life insurance company as defined in the Internal Revenue Code effective and in force on the last day of the income year. For purposes of this section, the unpaid loss reserve adjustment required for nonlife insurance companies under the provisions of Section 832(b)(5) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, shall be applied without making the adjustment in Subparagraph (B) of said Section 832(b)(5).
(6) For purposes of determining net income under this section for income years commencing on or after January 1, 2018, the deduction allowed for business interest paid or accrued shall be determined as provided under the Internal Revenue Code, except that in making such determination, the provisions of Section 163(j) shall not apply.
(b) (1) For purposes of determining net income under this section, the deduction allowed for depreciation shall be determined as provided under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, provided in making such determination, the provisions of Section 168(k) of said code shall not apply.
(2) (A) For purposes of determining net income under this section for taxable years ending after December 31, 2008, and to the extent any income from the discharge of indebtedness, under Section 108 of the Internal Revenue Code, as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009, in connection with any reacquisition, after December 31, 2008, and before January 1, 2011, of an applicable debt instrument or instruments, as those terms are defined in said Section 108, as amended by said Section 1231, is not properly includable in gross income for federal income tax purposes for the taxable year, any deferral of the recognition of any such income shall not be allowed.
(B) To the extent that any income from the discharge of indebtedness in connection with any reacquisition, after December 31, 2008, and before January 1, 2011, of an applicable debt instrument or instruments, as those terms are defined in Section 108 of the Internal Revenue Code, as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009, is properly includable in gross income for federal income tax purposes for the taxable year, any such income shall be deductible in computing net income under this section for a taxable year ending after December 31, 2008, to the extent that the deferral of recognition of such income from such discharge was not allowed pursuant to subparagraph (A) of this subdivision in computing net income for a preceding taxable year.
(C) For income years commencing on or after January 1, 2018, eighty per cent of any deduction claimed under Section 179 of the Internal Revenue Code for federal income tax purposes shall be disallowed. To the extent such a deduction is disallowed for purposes of computing the tax under this chapter, twenty-five per cent of the disallowed portion of the deduction shall be allowed as a deduction in each of the four succeeding income years.
(c) (1) Notwithstanding the provisions of subsections (a) and (b) of this section, “net income”, in the case of an S corporation, means the percentage of the nonseparately computed income or loss, as defined in Section 1366(a)(2) of the Internal Revenue Code, of such S corporation, without separate state adjustment pursuant to section 12-233 or 12-226a for the compensation of any officer or employee, to which shall be added (A) any taxes imposed under the provisions of this chapter which are paid or accrued in the income year and (B) any taxes in any state of the United States or any political subdivision of such state, or the District of Columbia, imposed on or measured by the income or profits of a corporation which are paid or accrued in the income year as provided in subdivision (2) of this subsection.
(2) For income years commencing prior to January 1, 1997, “net income” means one hundred per cent of the amount computed under subdivision (1) of this subsection; for income years commencing on or after January 1, 1997, and prior to January 1, 1998, “net income” means ninety per cent of the amount computed under subdivision (1) of this subsection; for income years commencing on or after January 1, 1998, and prior to January 1, 1999, “net income” means seventy-five per cent of the amount computed under subdivision (1) of this subsection; for income years commencing on or after January 1, 1999, and prior to January 1, 2000, “net income” means fifty-five per cent of the amount computed under subdivision (1) of this subsection; for income years commencing on or after January 1, 2000, and prior to January 1, 2001, “net income” means thirty per cent of the amount computed under subdivision (1) of this subsection; for income years commencing on or after January 1, 2001, net income of S corporations as computed under subdivision (1) of this subsection shall not be subject to the tax under this chapter. Any S corporation subject to the tax on net income as provided in this section shall be eligible for any credit against the tax otherwise available to taxpayers under this chapter only to the extent and in the same percentage as net income of such S corporation is subject to taxation under this chapter, except that any S corporation with an income year commencing on or after January 1, 1999, but before December 31, 2000, shall be eligible for the entire credit available under sections 8-395, 12-633, 12-634, 12-635 and 12-635a.
(d) The commissioner may adopt regulations in accordance with chapter 54, relating to mergers or consolidations of corporations providing for the deduction, by the surviving or new corporation provided for in the plan of consolidation, of operating losses that were incurred by a merging or consolidating corporation, respectively, before the merger or consolidation, respectively. Such regulations may follow the provisions of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or the regulations thereunder.
(e) Where a combined group is required to file a combined unitary tax return pursuant to section 12-222, the combined group's net income shall be computed as provided in subsection (a) of section 12-218e.
(f) Where a combined group is required to file a combined unitary tax return pursuant to section 12-222, a taxable member's net operating loss apportioned to this state shall be deducted and carried over by the taxable member as provided in subsection (d) of section 12-218e.
(1949 Rev., S. 1898; 1949, S. 1093d; 1957, P.A. 560, S. 8; 1961, P.A. 428, S. 2; 1963, P.A. 651, S. 1; 1971, P.A. 461; June, 1971, P.A. 8, S. 28; 1972, P.A. 285, S. 12; P.A. 73-350, S. 8, 27; P.A. 77-16, S. 1, 2; 77-550, S. 1, 2; P.A. 80-483, S. 55, 186; P.A. 81-66, S. 1, 5; 81-245, S. 2, 4; 81-411, S. 1, 42; Nov. Sp. Sess. P.A. 81-7, S. 1, 3; P.A. 85-159, S. 1, 19; 85-469, S. 4, 6; P.A. 89-211, S. 23; 89-251, S. 22, 203; June Sp. Sess. P.A. 91-3, S. 100, 168; P.A. 93-74, S. 6, 67; 93-332, S. 9, 12, 42; 93-435, S. 64, 95; P.A. 96-175, S. 1, 5; 96-197, S. 4, 11; P.A. 97-119, S. 1, 2; 97-283, S. 1, 2; P.A. 99-83, S. 1, 2; 99-173, S. 39, 65; 99-235, S. 5, 7; P.A. 00-170, S. 24, 42; May 9 Sp. Sess. P.A. 02-1, S. 56; June Sp. Sess. P.A. 09-3, S. 95; June 19 Sp. Sess. P.A. 09-2, S. 4; P.A. 10-188, S. 2, 3; P.A. 11-140, S. 5; June 12 Sp. Sess. P.A. 12-1, S. 194; P.A. 15-244, S. 87, 143; June Sp. Sess. P.A. 15-5, S. 139, 482; Dec. Sp. Sess. P.A. 15-1, S. 38; June Sp. Sess. P.A. 17-2, S. 169; P.A. 18-26, S. 10; 18-49, S. 12, 13; 18-169, S. 41; P.A. 19-117, S. 376; P.A. 22-110, S. 14.)
History: 1961 act added Subdiv. (2); 1963 act extended exception in Subdiv. (2) to all taxpayers for year 1963 and thereafter; 1971 acts added provisions applicable to taxpayers whose income reported in consolidated return and changed 2.5% rate to 60% for banking institutions beginning in 1971 income year, deleting obsolete reference to January 1, 1962; 1972 act deleted mutual banks and trust companies in Subdiv. (2), included building and loan associations and increased 60% interest by 10% each year beginning in 1973 until 100% level reached; P.A. 73-350 changed 5% rate for other taxpayers to 90% in 1973 and 100% thereafter, added provisions re operating losses and net capital losses, added phrase re taxpayers who file as part of consolidated return with federal government but not with the state and added provision clarifying applicability of provisions to life insurance companies; P.A. 77-16 added provisions specially applicable to regulated investment companies, effective March 29, 1977, and applicable to income years commencing on and after January 1, 1977; P.A. 77-550 added provisions calling for consideration of excess of deductions allocated and apportioned to state under Sec. 12-218 as operating loss; P.A. 80-483 made technical changes; P.A. 81-66 eliminated Connecticut corporation business tax paid in the income year as a deduction from gross income in determining taxable income under said tax, effective May 4, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-245 added a deduction for the gross income attributable to an international banking facility, provided no expense or loss attributable to such facility shall be a deduction, effective upon adoption by the Board of Governors of the Federal Reserve System of amendments to Regulations D and Q pertaining to international banking facilities (adopted June 9, 1981, with an effective date of December 3, 1981); P.A. 81-411 allowed dividends received to be deducted from gross income and provided that net income be apportioned only, eliminating references to allocation, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; Nov. Sp. Sess. P.A. 81-7 amended section to permit deductions for depreciation, adding Subpara. (2) of Subdiv. (1) in previously existing provisions designated as Subsec. (a) and Subsec. (b) detailing such deductions, effective January 27, 1982, and applicable to corporations' income years commencing on or after January 1, 1981; P.A. 85-159 provided for a depreciation deduction for income years commencing in 1985 of 88% of the amount of the deduction allowed for federal income tax purposes; P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 89-251 amended Subsec. (a) by adding to the list of items deductible from gross income in determining net income under the federal income tax which may not be so deducted for purposes of the Connecticut tax on net income of corporations, the following: Taxes in any state or political subdivision thereof imposed on or measured by the income or profits of a corporation, effective July 1, 1989, and applicable to income years commencing on or after January 1, 1989; June Sp. Sess. P.A. 91-3 amended Subsec. (b) to provide for the nondeductibility of 30% of dividends received from a domestic corporation in which the taxpayer owns less than 20% of the total voting power and value of the stock of such corporation and added Subsec. (c) concerning net income of S corporations, effective August 22, 1991, and applicable to income years of corporations commencing on or after January 1, 1991; P.A. 93-74 specified that with respect to nonlife insurance companies the unpaid loss reserve adjustment shall not be made, effective May 19, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A. 93-332 made technical change in language added in Sec. 6 of P.A. 93-74 to specify that with respect to nonlife insurance companies the unpaid loss reserve adjustment shall not be made and amended Subsec. (c) to prohibit any separate state adjustment to the net income of an S corporation with respect to the compensation of any officer or employee, effective June 25, 1993, and applicable to taxable years on or after January 1, 1993; P.A. 93-435 made a technical change in Subsec. (a), effective June 28, 1993; P.A. 96-175 amended Subsec. (c) by adding Subdiv. (2) re phase-out of net income, effective May 31, 1996, and applicable to income years commencing on or after January 1, 1997; P.A. 96-197 added Subsec. (d) to permit commissioner to adopt regulations relating to mergers and consolidations, effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 97-119 added Subsec. (a)(3) re real estate investment trusts and made technical and renumbering changes, effective June 6, 1997, and applicable to income years commencing on or after January 1, 1997; P.A. 97-283 amended Subsec. (c) to make any S corporation subject to tax on net income eligible for credits against tax in the same percentage as net income subject to tax under chapter, effective June 26, 1997, and applicable to income years commencing on or after January 1, 1997; P.A. 99-83 amended Subsec. (c) to add exception for S corporations with income year commencing on or after January 1, 1999, but prior to December 31, 2000, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 99-173 amended Subsec. (a) to extend the net operating loss carry forward provision from five to twenty years applicable to losses incurred on or after January 1, 2000, and provide a deduction for gains realized from sale of open space land, effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 99-235 amended Subsec. (a)(1)(E) to replace “watershed” with “water company”, effective June 29, 1999; P.A. 00-170 amended Subsec. (c) to allow S corporations to be eligible for credits under Sec. 8-395 for income years commencing on and after January 1, 1999, but before December 31, 2000, effective May 26, 2000, and applicable to income years commencing on or after January 1, 2000; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (b) to delete former Subdivs. (1) and (2) and provide for a depreciation deduction to be determined as provided under the Internal Revenue Code, except that Section 168(k) of said code shall not apply, effective July 1, 2002, and applicable to property placed in service after September 10, 2001, in income years ending after said date; June Sp. Sess. P.A. 09-3 amended Subsec. (a)(1) by adding Subpara. (A)(iii) re qualified domestic production activities income, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2009; June 19 Sp. Sess. P.A. 09-2 amended Subsec. (b) by designating existing provision as Subdiv. (1) and adding Subdiv. (2) re treatment of income from discharge of indebtedness, effective June 22, 2009, and applicable to taxable years ending after December 31, 2008; P.A. 10-188 amended Subsec. (a)(1) to add Subpara. (A)(iv) re deduction for dividends paid in the case of any captive real estate investment trust, and added Subsec. (a)(3)(C) re dividend received from a captive real estate investment trust, effective July 1, 2010, and applicable to income years commencing on or after January 1, 2010; P.A. 11-140 amended Subsec. (a)(1) to add Subpara. (F) re contribution to manufacturing reinvestment account, effective July 1, 2011, and applicable to income years commencing on or after January 1, 2012 (Revisor's note: An internal reference in P.A. 11-140, S. 5, to “section 5 of this act” was determined by the Revisors to properly refer to section 4 of said act and was therefore codified in Subsec. (a)(1)(F) as “section 32-9zz”); June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a)(1)(F) by replacing “taxable” with “income” re year and adding “to the extent not deductible for federal income tax purposes”, effective June 15, 2012, and applicable to income years commencing on or after January 1, 2011; P.A. 15-244 amended Subsec. (a)(4)(A) to designate existing provisions re deduction limits as clause (i) for income years commencing prior to January 1, 2015, make technical changes, and add new clause (ii) re operating loss carry-over for income years commencing on or after January 1, 2015, effective June 30, 2015, and added Subsec. (e) re computing combined group's net income, and Subsec. (f) re deduction and carry-over of taxable member's net operating loss, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 143, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (a)(4)(A) to add clause (iii) re optional operating loss carry-over limited to 50 per cent of unused operating losses incurred prior to income year commencing on or after January 1, 2015, and before January 1, 2016, for combined groups with unused operating losses in excess of $6 billion from income years beginning prior to January 1, 2013, effective June 30, 2015; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (a)(4)(A) by replacing references to Sec. 12-218 with references to this chapter and Secs. 12-218e to 12-218g, replacing provision limiting deductible portion of operating loss carry-over to net income greater than zero in income year commencing on or after January 1, 2017, with provision limiting deductible portion of operating loss carry-over to amount required to reduce combined group's tax under this chapter and Secs. 12-218e to 12-218g, prior to surtax and application of credits, to $2.5 million in income year commencing on or after January 1, 2015, replacing “combined group's operating loss carry-over” with “combined group's remaining operating loss carry-over” re operating losses incurred prior to income years commencing January 1, 2015, adding “, or any member thereof,” re combined group election on return for income year beginning on or after January 1, 2015, and before January 1, 2016, replacing “the operating loss carry-over of said combined group, shall be limited to” with “the combined group shall relinquish” and adding provision re utilization of remaining operating loss carry-over in clause (iii), and making technical changes, effective December 29, 2015; June Sp. Sess. P.A. 17-2 amended Subsec. (a)(1) to add Subpara. (G) re deduction for amount paid by 7/7 participant for remediation of a brownfield, effective October 31, 2017, and applicable to income years commencing on or after January 1, 2017; P.A. 18-26 made a technical change in Subsec. (a)(3); P.A. 18-49 amended Subsec. (a) to add Subpara. (H) re deduction from gross income of amount of any contribution made on or after December 23, 2017, by the state or a political subdivision thereof in Subdiv. (1), amend Subdiv. (2) to designate existing provision re prohibited deduction for certain expenses related to dividends and for certain federal taxes on income or profits, losses and interest as Subpara. (A), add Subpara. (B) re rate of expenses related to dividends, and make conforming changes, add Subdiv. (6) re determination of business interest paid or accrued for purposes of determining net income for income years commencing on or after January 1, 2018, effective May 31, 2018, and applicable to income years commencing on or after January 1, 2017, and amended Subsec. (b)(2) to add Subpara. (C) re disallowance of 80 per cent of deduction claimed under Sec. 179 of Internal Revenue Code for income years commencing on or after January 1, 2018, and deduction in 4 succeeding income years, effective May 31, 2018; P.A. 18-169 made identical changes in Subsec. (a) as P.A. 18-49, effective June 14, 2018, and applicable to income years commencing on or after January 1, 2017; P.A. 19-117 amended Subsec. (a)(1) to delete former Subpara. (G) re deduction for amount paid by 7/7 participant for remediation of brownfield and redesignate existing Subpara. (H) as new Subpara. (G), effective June 26, 2019; P.A. 22-110 amended Subsec. (a)(3) to redefine “related person” and make technical changes.
Statute should be construed so as to avoid double taxation. 122 C. 553. Under former exception, rent received from subtenants may not be deducted from gross rent to determine rent paid. 127 C. 507. Taxes paid by lessee under terms of lease on property leased held within former exception and not deductible; payment made for “other services” under agreement by which corporation rented machines could not be treated as rent. 129 C. 663. “Items deductible under federal corporation net income tax law” do not include “credits” of sums taxable under federal law; federal excise profits net income not deductible in determining income subject to state business tax. 130 C. 460. Cited. 135 C. 57. Incorporation of federal law by reference into state law is not a delegation of legislative power. 142 C. 483. Cited. 178 C. 243; 179 C. 363; 196 C. 1. Implications of a taxpayer's federal election on his privilege to claim deductions under state statutes discussed. 199 C. 346. Cited. 203 C. 198. “... does not authorize surviving corporation to deduct operating loss carry-overs of the merged or consolidated corporations ...”. Id., 455. Cited. 213 C. 220; Id., 442; 220 C. 665; 235 C. 865.
Cited. 2 CA 660.
Cited. 40 CS 77; 43 CS 260; 44 CS 90; Id., 377. Surviving corporation may deduct an operating loss carry over of a merged or consolidated corporation if “continuity of business test” is met. 45 CS 202.
Subsec. (a):
Where election made to take federal tax credit, wages at issue in case are no longer “items deductible under federal corporation net income tax” for purposes of section. 213 C. 442. Cited. 236 C. 156.
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Secs. 12-217a and 12-217b. Deduction for investment in depreciable property. Tax credit for expenditures for water pollution abatement facilities. Sections 12-217a and 12-217b are repealed.
(1963, P.A. 4; February, 1965, P.A. 8, S. 1; 1967, P.A. 57, S. 29; 1969, P.A. 291, S. 2; P.A. 82-472, S. 182, 183.)
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Secs. 12-217c and 12-217d. Tax credit for expenditures for: Air pollution abatement facilities; industrial waste treatment facilities. Sections 12-217c and 12-217d are repealed, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998.
(1967, P.A. 754, S. 21; 1969, P.A. 291, S. 1; 758, S. 15; 1971, P.A. 872, S. 32, 145; P.A. 97-295, S. 24, 25; P.A. 98-262, S. 14, 22.)
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Sec. 12-217e. Tax credits for certain manufacturing, service and eligible facilities. No credit to be first claimed for income years commencing on or after January 1, 2018. (a) There shall be allowed as a credit against the tax imposed by this chapter an amount equal to twenty-five per cent of that portion of such tax which is allocable to any manufacturing facility, provided, for any such facility which is located in an enterprise zone designated pursuant to section 32-70 or in a municipality with an entertainment district designated under section 32-76 or established under section 2 of public act 93-311* and which became eligible as a manufacturing facility after the designation of such zone and for which not less than one hundred fifty full-time employees or thirty per cent of the full-time employment positions directly attributable to the manufacturing facility were, during the last quarter of the income year of the taxpayer, held by employees of the taxpayer who at the time of employment were (1) residents of such zone, or (2) residents of such municipality and eligible for training under the Federal Comprehensive Employment Training Act or any other training program that may replace the Comprehensive Employment Training Act, a credit of fifty per cent shall be allowed. A position is directly attributable to the manufacturing facility if: (A) The work is performed or the base of operations is at the facility; (B) the position did not exist prior to the construction, renovation, expansion or acquisition of the facility; and (C) but for the construction, renovation, expansion or acquisition of the facility, the position would not have existed, provided nothing in this section shall preclude a position from being considered directly attributable to a manufacturing facility if such position formerly existed in an eligible manufacturing facility in the same municipality under section 32-9p. For income years commencing on and after January 1, 2012, the credit under this section for that portion of the tax imposed by this chapter, which is allocable to any manufacturing facility shall be available under the same terms and conditions to that portion of such tax which is allocable to an eligible facility. For purposes of this section, “eligible facility” means any facility described in subparagraph (D) of subdivision (2) of subsection (d) of section 32-9p.
(b) There shall be allowed as a credit against the tax imposed by this chapter an amount equal to the following percentage of that portion of such tax which is allocable to any service facility: (1) Fifteen per cent, if there are three hundred or more but not more than five hundred ninety-nine new employees working at such facility; (2) twenty per cent if there are six hundred or more but not more than eight hundred ninety-nine new employees working at such facility; (3) twenty-five per cent, if there are nine hundred or more but not more than one thousand one hundred ninety-nine new employees working at such facility; (4) thirty per cent if there are one thousand two hundred or more but not more than one thousand four hundred ninety-nine new employees working at such facility; (5) forty per cent, if there are one thousand five hundred or more but not more than one thousand nine hundred ninety-nine new employees working at such facility; or (6) fifty per cent if there are two thousand or more new employees working at such facility. As used in this subsection: (A) “New employee” means a person hired by a taxpayer to fill a position for a new job or a person shifted from an existing location of the taxpayer outside this state to a service facility in this state, provided (i) in no case shall the total number of new employees allowed for purposes of this credit exceed the total increase in the taxpayer's employment in this state, which increase shall be the difference between (I) the number of employees employed by the taxpayer in this state at the time of application to the Commissioner of Revenue Services for such credit plus the number of new employees who would be eligible for inclusion under the credit allowed under this subsection without regard to this calculation, and (II) the highest number of employees employed by the taxpayer in this state in the year preceding the taxpayer's application to the Commissioner of Revenue Services for such credit, and (ii) a person shall be deemed to be a “new employee” only if such person's duties in connection with the operation of the facility are on a regular, full-time or equivalent or full-time and permanent basis; and (B) “new job” means a job that did not exist in the business of a taxpayer in this state prior to the taxpayer's application to the Commissioner of Revenue Services for such credit and that is filled by a new employee, but does not include a job created when an employee is shifted from an existing location of the taxpayer in this state to a service facility.
(c) The portion of such tax which is allocable to such a manufacturing facility, service facility or eligible facility shall be determined by multiplying such tax by a fraction computed as the simple arithmetical mean of the following fractions: First, a fraction the numerator of which is the average monthly net book value in the income year of the manufacturing facility, service facility or eligible facility, and machinery and equipment acquired for and installed in the manufacturing facility, service facility or eligible facility, without deduction on account of any encumbrance thereon, or if rented to the taxpayer, the value of the manufacturing facility, service facility or eligible facility, and machinery and equipment acquired for and installed in the manufacturing facility, service facility or eligible facility, computed by multiplying the gross rents payable by the taxpayer for the manufacturing facility, service facility or eligible facility, and such machinery and equipment during the income year or period by eight, and the denominator of which is the sum of the average monthly net book value of all real property and machinery and equipment held and owned by the taxpayer in the state, without deduction on account of any encumbrance thereon and the value of all real property and machinery and equipment rented to the taxpayer in the state, computed by multiplying the gross rents payable during the income year by eight; and second, a fraction the numerator of which is all wages, salaries and other compensation paid during the income year to employees of the taxpayer whose positions are directly attributable to the manufacturing facility, service facility or eligible facility and the denominator of which is the wages, salaries and other compensation paid during the income year to all employees of the taxpayer in the state. An employee's position is directly so attributable if (1) the employee's service is performed or his base of operations is at the manufacturing facility, service facility or eligible facility, (2) the position did not exist prior to the construction, renovation, expansion or acquisition of the manufacturing facility, service facility or eligible facility, and (3) but for the construction, renovation, expansion or acquisition of the manufacturing facility, service facility or eligible facility the position would not have existed. For the purposes of this subsection, “gross rents” means gross rents as defined in section 12-218.
(d) The credit allowed by this section may be claimed only by the initial occupant or occupants of the manufacturing facility, service facility or eligible facility. The owner of the manufacturing facility, service facility or eligible facility may not claim the credit unless the owner is also an occupant. The credit may first be claimed on the tax return for the taxpayer's income year which begins during the calendar year next succeeding the calendar year in which the taxpayer was issued an eligibility certificate, and may be claimed in each of the following nine income years. If within such period, however, any facility for which an eligibility certificate has been issued ceases to qualify as a manufacturing facility, service facility or eligible facility, or any occupant of a manufacturing facility, service facility or eligible facility ceases to be an occupant, the entitlement to the credit allowed by this section shall terminate in the income year in which the qualification or occupancy ceases, and there shall not be a pro rata application of the credit to such income year. No credit allowed by this section may be first claimed for any income year commencing on or after January 1, 2018.
(e) Any subsequent occupant or occupants of a manufacturing facility, service facility or eligible facility for which an eligibility certificate has been issued may claim the credit allowed by this section in accordance with subsection (c) of this section but only after obtaining a new eligibility certificate with respect to the manufacturing facility, service facility or eligible facility being occupied in the manner provided in section 32-9r.
(f) The Commissioner of Economic and Community Development shall, upon request, provide a copy of the applicable eligibility certificate to the Commissioner of Revenue Services.
(P.A. 78-303, S. 85, 136; 78-357, S. 7, 16; P.A. 81-445, S. 4, 11; P.A. 82-435, S. 3, 8; P.A. 83-381, S. 2; 83-587, S. 26, 96; P.A. 90-270, S. 23, 38; P.A. 93-311, S. 6, 8; P.A. 94-247, S. 5, 8; P.A. 96-239, S. 12, 17; P.A. 97-295, S. 14, 25; P.A. 98-262, S. 14, 22; P.A. 00-174, S. 22, 83; P.A. 06-159, S. 7; P.A. 10-98, S. 4; P.A. 11-78, S. 2; P.A. 18-145, S. 1.)
*Note: Section 2 of public act 93-311 is special in nature and therefore has not been codified but remains in full force and effect according to its terms.
History: P.A. 78-303 allowed substitution of commissioner of revenue services for tax commissioner in accordance with provisions of P.A. 77-614; P.A. 81-445 included provisions allowing double credit for certain facilities in enterprise zones in Subsec. (a), effective July 1, 1982; P.A. 82-435 amended Subsec. (a) to provide that the 30% determination for employees of facilities in enterprise zones will be made for the last quarter rather than the last day of the year and to provide that CETA eligible residents of the municipality, along with residents of the zone, will count toward the 30%; P.A. 83-381 amended Subsec. (a) concerning the determination of eligibility for credit for facilities in enterprise zones; P.A. 83-587 made technical changes in Subsec. (b); P.A. 90-270 amended Subsec. (a) by making businesses employing more than 150 full-time employees eligible for the tax credit; P.A. 93-311 amended Subsec. (a) to extend eligibility for the tax credit to manufacturing facilities located in entertainment districts, effective July 1, 1993; P.A. 94-247 made facilities located in an entertainment district established pursuant to Sec. 2 of public act 93-311 eligible for the credit, effective June 9, 1994; P.A. 96-239 inserted new Subsec. (b) authorizing tax credit against certain percentages of the tax imposed by Ch. 208 which is allocable to a service facility, relettered former Subsecs. (b) to (e), inclusive, as Subsecs. (c) to (f), inclusive, respectively, and amended relettered Subsecs. (c), (d) and (e) by adding references to “service facility”, effective July 1, 1996; P.A. 97-295 amended Subsec. (d) to reword provision re when credit may first be claimed, effective July 8, 1997, and applicable to tax returns filed for income years of corporations commencing on or after January 1, 1997; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-174 amended Subsec. (a) to add a provision allowing a position to be attributable to a manufacturing facility if it formerly existed in an eligible facility in the same municipality, effective May 26, 2000; P.A. 06-159 amended Subsec. (f) to require Commissioner of Economic and Community Development, rather than taxpayer, to provide copy of certificate, effective June 6, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 10-98 amended Subsec. (a) to add provisions re credit for portion of tax allocable to a manufacturing facility shall be available under same terms and conditions to portion of tax allocable to an eligible facility in income years commencing on and after January 1, 2012, and added references to eligible facility in Subsecs. (c), (d) and (e), effective October 1, 2011, and applicable to income years commencing on or after January 1, 2013; P.A. 11-78 changed effective date of P.A. 10-98, S. 4, from October 1, 2011, and applicable to income years commencing on or after January 1, 2013, to October 1, 2011, and applicable to income years commencing on or after January 1, 2012, effective July 1, 2011; P.A. 18-145 amended Subsec. (d) to add provision re no credit may be first claimed for any income year commencing on or after January 1, 2018, effective July 1, 2018, and applicable to income years commencing on or after January 1, 2018.
See Sec. 32-9p for definitions of “manufacturing facility” and “service facility”.
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Sec. 12-217f. Tax credit for employers participating in certain state-approved programs combining high school study and part-time employment. Section 12-217f is repealed, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998.
(P.A. 79-474, S. 1, 2; P.A. 97-295, S. 15, 24, 25; P.A. 98-262, S. 14, 22.)
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Sec. 12-217g. Tax credits for apprenticeship training in manufacturing, construction and plastics-related trades. (a)(1) There shall be allowed a credit for any taxpayer against the tax imposed under this chapter or chapter 228z, for any income or taxable year with respect to each apprenticeship in the manufacturing trades commenced by such taxpayer in such year under a qualified apprenticeship training program as described in subsection (d) of this section, certified in accordance with regulations adopted in accordance with the provisions of chapter 54 by the Labor Commissioner and registered with the Labor Department under section 31-22r, in an amount equal to six dollars per hour multiplied by the total number of hours worked during the income or taxable year by apprentices in the first half of a two-year term of apprenticeship and the first three-quarters of a four-year term of apprenticeship, provided the amount of credit allowed for any income or taxable year with respect to each such apprenticeship may not exceed seven thousand five hundred dollars or fifty per cent of actual wages paid in such year to an apprentice in the first half of a two-year term of apprenticeship or in the first three-quarters of a four-year term of apprenticeship, whichever is less. For income or taxable years commencing on or after January 1, 2015, for purposes of this subsection, “taxpayer” includes an affected business entity, as defined in section 12-284b.
(2) (A) For taxable years commencing on or after January 1, 2015, but prior to January 1, 2022, any affected business entity allowed a credit under this subsection may sell, assign or otherwise transfer such credit, in whole or in part, to one or more taxpayers to offset any state tax due or otherwise payable by such taxpayers under this chapter, or, with respect to taxable years commencing on or after January 1, 2016, but prior to January 1, 2022, chapter 212 or 227, provided such credit may be sold, assigned or otherwise transferred, in whole or in part, not more than three times.
(B) For taxable years commencing on or after January 1, 2022, with respect to an affected business entity claiming a credit under this subsection against the tax due under chapter 228z, the credit available to the members of such entity pursuant to subdivision (1) of subsection (g) of section 12-699 shall be based upon the amount of tax due under chapter 228z from such entity prior to the application of the credit granted under this subsection and any other payments made against such tax due.
(b) There shall be allowed a credit for any taxpayer against the tax imposed under this chapter for any income year with respect to each apprenticeship in plastics and plastics-related trades commenced by such taxpayer in such year under a qualified apprenticeship training program as described in subsection (d) of this section, certified in accordance with regulations adopted in accordance with the provisions of chapter 54 by the Labor Commissioner and registered with the Labor Department under section 31-22r, which apprenticeship exceeds the average number of such apprenticeships begun by such taxpayer during the five income years immediately preceding the income year with respect to which such credit is allowed, in an amount equal to four dollars per hour multiplied by the total number of hours worked during the income year by apprentices in the first half of a two-year term of apprenticeship and the first three-quarters of a four-year term of apprenticeship, provided the amount of credit allowed for any income year with respect to each such apprenticeship may not exceed four thousand eight hundred dollars or fifty per cent of actual wages paid in such income year to an apprentice in the first half of a two-year term of apprenticeship or in the first three-quarters of a four-year term of apprenticeship, whichever is less.
(c) There shall be allowed a credit for any taxpayer against the tax imposed under this chapter for any income year with respect to wages paid to apprentices in the construction trades by such taxpayer in such year that the apprentice and taxpayer participate in a qualified apprenticeship training program, as described in subsection (d) of this section, which (1) is at least four years in duration, (2) is certified in accordance with regulations adopted in accordance with the provisions of chapter 54 by the Labor Commissioner, and (3) is registered with the Labor Department under section 31-22r. The tax credit shall be (A) in an amount equal to two dollars per hour multiplied by the total number of hours completed by each apprentice toward completion of such program, and (B) awarded upon completion and notification of completion of such program in the income year in which such completion and notification occur, provided the amount of credit allowed for such income year with respect to each such apprentice may not exceed four thousand dollars or fifty per cent of actual wages paid over the first four income years for such apprenticeship, whichever is less.
(d) For purposes of this section, a qualified apprenticeship training program shall require at least four thousand but not more than eight thousand hours of apprenticeship training for certification of such apprenticeship by the Labor Department. The amount of credit allowed any taxpayer under this section for any income or taxable year may not exceed the amount of tax due from such taxpayer under this chapter or chapter 228z with respect to such income or taxable year.
(P.A. 79-475, S. 1, 2; May Sp. Sess. P.A. 94-4, S. 16, 85; P.A. 95-160, S. 64, 69; 95-284, S. 1, 2; P.A. 97-295, S. 16, 25; P.A. 98-262, S. 14, 22; P.A. 06-174, S. 1; P.A. 13-265, S. 1; P.A. 14-217, S. 251; Dec. Sp. Sess. P.A. 15-1, S. 28; P.A. 21-141, S. 2; P.A. 22-118, S. 425.)
History: P.A. 79-475 effective June 12, 1979, and applicable to income years ending on or after January 1, 1979; May Sp. Sess. P.A. 94-4 increased the credit amount from $2.50 per hour to $4.00, increased the time period established for the program and increased the maximum total amount of the credit from $3,000 to $4,800, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1994; P.A. 95-160, revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 95-284 designated existing provisions as Subsecs. (a) and (c) and added Subsec. (b) re tax credits for apprenticeships in plastics and plastics-related trades, effective July 1, 1995, and applicable to income years of corporations commencing on or after January 1, 1995; P.A. 97-295 amended Subsec. (a) to change machine tool and metal trades to manufacturing trades and deleted provision re average number of apprenticeships in five preceding income years, revised method of calculating amount of credit in Subsecs. (a) and (b), added new Subsec. (c) re construction trades and redesignated existing Subsec. (c) as Subsec. (d), effective July 8, 1997, and applicable to tax returns filed for income years of corporations commencing on or after January 1, 1997; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 06-174 amended Subsec. (c) to delete reference to federal act, require qualified apprenticeship program to be at least four years in duration, limit credit to hours worked toward completion of program, provide for award of credit upon completion and notification of completion of program in income year in which completion and notification occur, provide for limitation of credit to $4,000 or 50% of wages paid over first four years of program and make technical changes, effective July 1, 2006; P.A. 13-265 amended Subsec. (a) to increase credit amount from $4 per hour to $6 per hour and increase the maximum total amount of the credit from $4,800 to $7,500, effective July 1, 2015, and applicable to income years commencing on or after January 1, 2015; P.A. 14-217 amended Subsec. (a) by designating existing provisions re tax credits for apprenticeship in manufacturing trades as Subdiv. (1) and adding Subdiv. (2) re use of credits by affected business entities, effective July 1, 2015; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (a)(2) by adding provision re use of credit allowed under subsection that is sold, assigned or otherwise transferred to one or more taxpayers, effective January 1, 2016, and applicable to taxable and income years commencing on or after January 1, 2016; P.A. 21-141 amended Subsecs. (a) to (c) to replace references to Connecticut State Apprenticeship Council and section 31-22n with references to Labor Department and section 31-22r, and amended Subsec. (d) to replace reference to Connecticut State Apprenticeship Council with reference to Labor Department, effective July 7, 2021; P.A. 22-118 amended Subsec. (a) by adding references to Ch. 228z, taxable years and Subsec. (d), adding Subdiv. (2)(A) making existing provisions applicable to taxable years commencing on or after January 1, 2015, but prior to January 1, 2022, adding Subdiv. (2)(B) re affected business entities claiming a credit for taxable years commencing on or after January 1, 2022, and making technical and conforming changes, amended Subsecs. (b) and (c) by adding references to Subsec. (d) and Ch. 54 and amended Subsec. (d) by adding references to taxable years and Ch. 228z, effective July 1, 2022, and applicable to income or taxable years commencing on or after January 1, 2022.
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Sec. 12-217h. Tax credit for expenditures to establish day care facilities for children of employees. Section 12-217h is repealed effective January 1, 1990, and applicable to income years of corporations commencing on or after that date.
(P.A. 81-100, S. 1, 2; P.A. 82-469, S. 9, 11; P.A. 83-453, S. 1, 4; P.A. 88-289, S. 1, 4; P.A. 89-364, S. 6, 7.)
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Sec. 12-217i. Tax credits for investments in vehicles powered by clean alternative fuels or electricity, for construction of or improvements to alternative fuel filling stations and for converting motor vehicles to utilize alternative fuels. For income years commencing prior to January 1, 2008. (a) There shall be allowed a credit for any taxpayer against the tax imposed by this chapter, chapter 209, 210, 211 or 212 in any income year or calendar quarter, as the case may be, commencing prior to January 1, 2008, in an amount equal to ten per cent of the amount of expenditures paid or incurred during such income year or such quarter, as the case may be, for the incremental cost of purchasing a vehicle which is exclusively powered by a clean alternative fuel.
(b) There shall be allowed a credit for any taxpayer against the tax imposed by this chapter in any income year commencing on or after January 1, 1994, and prior to January 1, 2008, in an amount equal to fifty per cent of the amount of expenditures, other than those described in subsection (a) of this section, paid or incurred during such income year directly for (1) the construction of any filling station or improvements to any existing filling station in order to provide compressed natural gas, liquefied petroleum gas or liquefied natural gas; (2) the purchase and installation of conversion equipment incorporated into or used in converting vehicles powered by any other fuel to either exclusive use of clean alternative fuel or dual use of such other fuel and a clean alternative fuel, including, but not limited to, storage cylinders, cylinder brackets, regulated mixers, fill valves, pressure regulators, solenoid valves, fuel gauges, electronic ignitions and alternative fuel delivery lines, if such converted vehicles, after conversion, meet generally accepted standards, including, but not limited to, the standards set by the American Gas Association, the National Fire Protection Association, the American National Standards Institute, the American Society of Testing Materials or the American Society of Mechanical Engineers; or (3) the purchase and installation of equipment incorporated into or used in a compressed natural gas, liquefied petroleum gas or liquefied natural gas filling or electric recharging station for vehicles powered by a clean alternative fuel, including, but not limited to, compressors, storage cylinders, associated framing, tubing and fittings, valves and fuel poles and fuel delivery lines.
(c) If the amount of any credit provided in this section exceeds the amount of tax otherwise payable in the income year or calendar quarter, as the case may be, in which such expenditure was paid or incurred, the balance of any such credit remaining may be taken in any of the three succeeding income years or twelve succeeding calendar quarters, respectively. Any taxpayer allowed such a tax credit against the tax imposed under this chapter or chapter 209, 210, 211 or 212 shall not be allowed such credit under more than one of said chapters. As used in this section, “clean alternative fuel” means compressed natural gas, liquefied petroleum gas, liquefied natural gas or electricity when used as a motor vehicle fuel and “incremental cost” means the difference between the purchase price of a vehicle which is exclusively powered by a clean alternative fuel and the manufacturer's suggested retail price of a comparably equipped vehicle which is not so powered.
(P.A. 91-179, S. 1, 5; P.A. 92-188, S. 1, 4; P.A. 93-199, S. 2, 6; P.A. 95-15, S 1, 3; P.A. 96-183, S. 1, 4; P.A. 97-295, S. 23, 25; P.A. 98-262, S. 14, 22; P.A. 99-173, S. 41, 65; May 9 Sp. Sess. P.A. 02-4, S. 11; P.A. 04-231, S. 5; P.A. 14-122, S. 90.)
History: P.A. 91-179 effective October 1, 1991, and applicable to income years commencing on or after January 1, 1991; P.A. 92-188 amended section to authorize tax credits for investments in vehicles powered by electricity, effective July 1, 1992, and applicable to income years of corporations commencing on or after January 1, 1992; P.A. 93-199 extended credit to any income year commencing prior to January 1, 1998, and added reference to electric recharging stations in Subdiv. (1), effective July 1, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A. 95-15 incorporated tax credits for expenditures for construction of or improvements to alternative fuel filling stations, formerly authorized under Sec. 12-217g and for expenditures for converting motor vehicles to utilize alternative fuels formerly authorized under Sec. 12-217r and made technical changes, effective April 13, 1995, and applicable to income years or calendar quarters commencing on or after January 1, 1994; P.A. 96-183 amended Subsec. (b) by adding liquefied petroleum gas and liquefied natural gas to Subdiv. (3) effective May 31, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 97-295 amended Subsec. (a) to extend date from January 1, 1998, to January 1, 2000, and amended Subsec. (b) to extend date from January 1, 1999, to January 1, 2000, effective July 8, 1997; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 99-173 amended Subsecs. (a) and (b) to extend the sunset from January 1, 2000, to January 1, 2002, effective June 23, 1999; May 9 Sp. Sess. P.A. 02-4 amended Subsecs. (a) and (b) to extend the credit until January 1, 2004, effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002; P.A. 04-231 amended Subsecs. (a) and (b) to extend the sunset dates for the credits from January 1, 2004 to January 1, 2008, effective July 1, 2004, and applicable to income years commencing on or after January 1, 2004; P.A. 14-122 made technical changes in Subsec. (c).
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Sec. 12-217j. Tax credit for research and experimental expenditures. (a) There shall be allowed as a credit against the tax imposed on any corporation under this chapter, with respect to income years of such corporation commencing on or after January 1, 1994, an amount equal to twenty per cent of the amount spent by such corporation directly on research and experimental expenditures, as defined in Section 174 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, which are conducted in this state and which exceeds the amount spent by such corporation during the preceding income year of such corporation for such expenditures.
(b) (1) With respect to any income year commencing on or after January 1, 2000, a credit or any portion of a credit that is allowed under this section but that is not used by a taxpayer because the amount of the credit exceeds the tax due and owing by the taxpayer shall be carried forward to each of the successive income years until such credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any portion of a credit, that is not used by a taxpayer be carried forward for a period of more than fifteen years.
(2) (A) With respect to any income year commencing on or after January 1, 1997, and prior to January 1, 2000, a credit or any portion of a credit that is allowed under this section but that is not used by a biotechnology company because the amount of the credit exceeds the tax due and owing by the taxpayer shall be carried forward to each of the successive income years until such credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any portion of a credit, that is not used by a biotechnology company be carried forward for a period of more than fifteen years.
(B) For purposes of this subsection, “biotechnology company” means a company engaged in the business of applying technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, or to transform biological systems into useful processes and products.
(P.A. 92-193, S. 3, 8; P.A. 93-403, S. 1, 3; P.A. 96-252, S. 7, 8; P.A. 98-110, S. 22, 27; P.A. 03-225, S. 2.)
History: P.A. 92-193 effective July 1, 1992, and applicable to taxable years of corporations commencing on or after January 1, 1993 (Revisor's note: In codifying public act 92-193 the words “an amount” were inserted editorially by the Revisors in Subdiv. (1) after the words “January 1, 1994,” for consistency with Subdiv. (2)); P.A. 93-403 added requirement that research and experimental expenditures be conducted in the state, effective June 29, 1993, and applicable to taxable years commencing on and after January 1, 1993; P.A. 96-252 authorized tax credits which are not used by biotechnology companies to be carried forward and defined “biotechnology company”, effective July 1, 1996, and applicable to income years of corporations commencing on or after January 1, 1997; P.A. 98-110 expanded credit to all taxpayers, effective May 19, 1998, and applicable to income years commencing on or after January 1, 2000; P.A. 03-225 divided existing provisions into Subsecs. (a) and (b), amended Subsec. (a) to delete obsolete references and make technical changes, and amended Subsec. (b) to add provisions re credit for biotechnology companies after January 1, 1997, and make technical changes, effective July 9, 2003.
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Sec. 12-217k. Tax credit for employee training. Section 12-217k is repealed, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998.
(P.A. 92-193, S. 4, 8; P.A. 93-74, S. 7, 67; P.A. 97-295, S. 24, 25; P.A. 98-262, S. 14, 22.)
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Sec. 12-217l. Tax credit for expenditures for grants to institutions of higher education for research and development related to technological advancements. Section 12-217l is repealed, effective July 1, 2013.
(P.A. 92-193, S. 5, 8; P.A. 13-232, S. 18.)
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Sec. 12-217m. Tax credit for taxpayers occupying new facilities and creating new jobs. Section 12-217m is repealed, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998.
(P.A. 92-250, S. 1, 2; P.A. 95-79, S. 27, 189; 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A. 97-295, S. 17, 24, 25; P.A. 98-262, S. 14, 22.)
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Sec. 12-217n. Rolling tax credit for research and development expenses. Carryforward limit. (a) There shall be allowed as a credit against the tax imposed by this chapter the amount determined under subsection (c) of this section in respect of the research and development expenses paid or incurred during any income year, subject to the limitations of this section.
(b) For purposes of this section:
(1) “Research and development expenses” means research or experimental expenditures deductible under Section 174 of the Internal Revenue Code of 1986, as in effect on May 28, 1993, determined without regard to Section 280C(c) thereof or any elections made by a taxpayer to amortize such expenses on its federal income tax return that were otherwise deductible, and basic research payments as defined under Section 41 of said Internal Revenue Code to the extent not deducted under said Section 174, provided: (A) Such expenditures and payments are paid or incurred for such research and experimentation and basic research conducted in this state; and (B) such expenditures and payments are not funded, within the meaning of Section 41(d)(4)(H) of said Internal Revenue Code, by any grant, contract, or otherwise by a person or governmental entity other than the taxpayer unless such other person is included in a combined return with the person paying or incurring such expenses;
(2) “Combined return” means a combined unitary tax return under section 12-222;
(3) “Commissioner” means the Commissioner of Economic and Community Development;
(4) “Qualified small business” means a company that (A) has gross income for the previous income year that does not exceed one hundred million dollars, and (B) has not, in the determination of the commissioner, met the gross income test through transactions with a related person, as defined in section 12-217w.
(c) (1) The amount allowed as a credit in any income year shall be the tentative credit calculated under subdivision (2) of this subsection, modified as provided in subsection (e) or (f) of this section, if applicable, except that in the case of a qualified small business the tentative credit allowed for research and development expenses shall be equal to six per cent of such expenses or in the case of any business employing over two thousand five hundred people in the state of Connecticut with annual revenues in excess of three billion dollars and headquartered in an enterprise zone the tentative credit allowed for research and development expenses shall be equal to the greater of (A) the tentative credit calculated under subdivision (2), modified as provided in subsection (e) or (f) of this section, if applicable, or (B) three and one-half per cent of such expense.
(2) Where the research and development expenses paid or incurred in the income year equal: (A) Fifty million dollars or less, the tentative credit allowed shall be an amount equal to one per cent of such expenses; (B) more than fifty million dollars but not more than one hundred million dollars, the tentative credit allowed shall be equal to five hundred thousand dollars plus two per cent of the excess of such expenses over fifty million dollars; (C) more than one hundred million dollars but not more than two hundred million dollars, the tentative credit allowed shall be equal to one million five hundred thousand dollars plus four per cent of the excess of such expenses over one hundred million dollars; and (D) more than two hundred million dollars, the tentative credit allowed shall be equal to five million five hundred thousand dollars plus six per cent of the excess of such expenses over two hundred million dollars.
(d) (1) The credit provided for by this section shall be allowed for any income year commencing on or after January 1, 1993, provided any credits allowed for income years commencing on or after January 1, 1993, and prior to January 1, 1995, may not be taken until income years commencing on or after January 1, 1995, and, for the purposes of subdivision (2) of this subsection, shall be treated as if the credit for each such income year first became allowable in the first income year commencing on or after January 1, 1995.
(2) No more than one-third of the amount of the credit allowable for any income year may be included in the calculation of the amount of the credit that may be taken in that income year.
(3) The total amount of the credit under subdivision (1) of this subsection that may be taken for any income year may not exceed the greater of (A) fifty per cent of the taxpayer's tax liability or in the case of a combined return, fifty per cent of the combined tax liability, for such income year, determined without regard to any credits allowed under this section, and (B) the lesser of (i) two hundred per cent of the credit otherwise allowed under subsection (c) of this section for such income year, and (ii) ninety per cent of the taxpayer's tax liability or in the case of a combined return, ninety per cent of the combined liability for such income year, determined without regard to any credits allowed under this section.
(4) (A) Credits that are allowed under this section for income years commencing prior to January 1, 2021, that exceed the amount permitted to be taken in an income year pursuant to the provisions of subdivision (1), (2) or (3) of this subsection shall be carried forward to each of the successive income years until such credits, or applicable portion thereof, are fully taken.
(B) Credits that are allowed under this section for income years commencing on or after January 1, 2021, that exceed the amount permitted to be taken in an income year pursuant to the provisions of subdivision (1), (2) or (3) of this subsection shall be carried forward to each of the successive income years until such credits, or applicable portion thereof, are fully taken. No credit or portion thereof allowed under this section for income years commencing on or after January 1, 2021, shall be carried forward for a period of more than fifteen years.
(C) No credit allowed under this section shall be taken in any income year until the full amount of all allowable credits carried forward to such year from any prior income year, commencing with the earliest such prior year, that otherwise may be taken under subdivision (2) of this subsection in that income year, have been fully taken.
(e) In addition to the wage base test set forth in subsection (f) of this section, any aerospace company or in the case of a combined return, any combined group including an aerospace company, shall be subject to this subsection for any income year commencing on or after January 1, 1993, and prior to January 1, 1996. For purposes of this subsection, an aerospace company is any taxpayer, whether or not included in a combined return, engaged principally in the aerospace industry whose research and development expenses during each of the income years beginning on or after January 1, 1990, 1991 and 1992, respectively, exceeded two hundred million dollars. No aerospace company, or in the case of a combined return, a combined group including an aerospace company, shall be allowed any credit under this section for any income year to which this subsection applies in which the aggregate transfers by an aerospace company, if any, of historical economic base functions outside of this state, other than to a location outside the United States, since January 1, 1993, through the end of such income year, have materially reduced the historical economic base functions in this state. For purposes of this subsection, the historical economic base functions shall be those economic base functions conducted by an aerospace company, which need not be all economic base functions of the aerospace company, in this state on January 1, 1993, whose continuance in this state, as determined by the commissioner in his discretion, will further the policies set forth in section 32-221. Such historical economic base functions shall be set forth in a binding memorandum of understanding between the commissioner and an aerospace company that may be entered into at any time prior to the expiration of the first income year to which this subsection applies, with sufficient specificity to allow the commissioner and the aerospace company to determine in all income years subject to this subsection whether there has been such a reduction in said historical economic base functions. As a prerequisite to the allowance of any credit otherwise allowable under this section for any income year to which this subsection applies, each aerospace company shall obtain a certificate of eligibility issued by the commissioner to the aerospace company for such income year. The aerospace company shall not later than sixty days after the close of each income year to which this subsection applies certify to the commissioner that there has been no such aggregate material reduction in the historical economic base functions in this state for the income year just completed that otherwise has not been offset as provided below. Within sixty days thereafter, the commissioner shall review the certification and, if the commissioner determines that there has been no such net aggregate material reduction in the historical economic base functions in this state, the commissioner shall issue a certificate of eligibility for said income year. The following shall not constitute a material reduction in the historical economic base functions in this state: (1) A reduction of not more than two per cent of the historical economic base functions; (2) transfer of an historical economic base function to a person in this state; (3) transfer of a historical economic base function outside of the United States; or (4) reductions in historical economic base functions attributable to reductions in volume, productivity improvements or the discontinuance of operations due to obsolescence or the like. Any transfers that may otherwise be counted in determining if a material reduction occurred may be offset to the extent economic base functions listed in, or comparable to those listed in, the memorandum of understanding are increased in this state, transferred into this state, or established in this state. Any such increase, transfer or establishment made during an income year, or subsequent to such income year but prior to the filing of the return for such income year, shall be effective for such income year and all income years thereafter. The commissioner may issue or reissue a certificate of eligibility for the applicable income year following any such offset. The commissioner shall, upon request, provide a copy of the certificate of eligibility and memorandum of understanding to the Commissioner of Revenue Services.
(f) The tentative credit allowable to the taxpayer, or in the case of a combined return, the combined group, that pays or incurs research and development expenses in excess of two hundred million dollars for the income year shall be reduced for any income year in which the workforce reductions, if any, exceed the percentages set forth below. For purposes of this subsection, workforce reductions shall be reductions of the historical Connecticut wage base of the taxpayer, or in the case of a combined return, the combined group, as a result of the transfer outside of this state, other than to a location outside the United States, of work done by employees of the taxpayer, or in the case of a combined return, the combined group. Such reduction in the tentative credit shall be as follows: (1) If the historical Connecticut wage base for the income year is so reduced by not more than two per cent, the tentative credit allowable for the income year shall not be reduced; (2) if the historical Connecticut wage base for the income year is so reduced by more than two per cent but not more than three per cent, the tentative credit allowable for the income year shall be reduced by ten per cent; (3) if the historical Connecticut wage base for the income year is so reduced by more than three per cent but not more than four per cent, the tentative credit allowable for the income year shall be reduced by twenty per cent; (4) if the historical Connecticut wage base for the income year is so reduced by more than four per cent but not more than five per cent, the tentative credit allowable for the income year shall be reduced by forty per cent; (5) if the historical Connecticut wage base for the income year is so reduced by more than five per cent but not more than six per cent, the tentative credit allowable for the income year shall be reduced by seventy per cent; and (6) if the historical Connecticut wage base for the income year is so reduced by more than six per cent, no credit for the income year shall be allowed. The Connecticut wage base for any income year shall be the total wages assigned to Connecticut for such income year under section 12-218 excluding wages paid to the ten most highly-compensated executives of the taxpayer, or in the case of a combined return, the combined group, and any compensation that does not subject the recipient thereof to federal income tax thereon in said income year. The historical Connecticut wage base shall be the Connecticut wage base for the third full income year immediately preceding the current income year; provided the historical Connecticut wage base for the first three income years commencing on or after January 1, 1993, shall be the Connecticut wage base for May 1993, converted to an annual basis. The following shall not constitute a workforce reduction for any income year: (A) A reduction of wages attributable to the transfer of work done by a taxpayer, or in the case of a combined return, by the combined group, in this state to a party in this state; (B) a reduction of wages attributable to the transfer of work done by a taxpayer, or in the case of a combined return, by the combined group, outside the United States; or (C) a reduction in wages attributable to reductions in volume, productivity improvements or the discontinuance of operations due to obsolescence or the like. Solely for purposes of determining whether the allowable credit is to be reduced under this subsection for any income year, the Connecticut wages attributable to any new jobs or jobs moved into this state by the taxpayer, or in the case of a combined return, the combined group, during such income year or subsequent to such income year but prior to the filing of the return for such income year shall be an offset to any workforce reduction of a taxpayer, or in the case of a combined return, the combined group, for said income year. A new job shall be a job that did not exist in the business of a taxpayer, or in the case of a combined return, a member of the combined group, in this state at the end of the income year just completed. Notwithstanding subsection (g) of this section, a taxpayer may elect for any income year to separately compute its allowable tentative credit under this subsection for any one or more business units that had gross revenues for such income year in excess of one hundred million dollars. Any taxpayer subject to this subsection shall not later than sixty days after the close of each income year certify to the commissioner whether or not there has been any workforce reduction for the income year just completed, the amount thereof, and any offsets thereto as provided above. Not later than sixty days thereafter, the commissioner shall review the certification and, if the commissioner determines that there has been no more than a six per cent workforce reduction, net of any such offsets, the commissioner shall issue a certificate of eligibility stating the amount of net workforce reduction so determined for said income year, if any. The commissioner shall not issue a certificate of eligibility for any income year in which the commissioner determines that there has been more than a six per cent net workforce reduction. The commissioner shall, upon request, provide a copy of the certificate of eligibility to the Commissioner of Revenue Services.
(g) Where one or more taxpayers properly included in a combined return pays or incurs research and development expenses, all allowances and limitations under this section shall be made on an aggregate basis for all taxpayers included in such combined return, provided, the credit attributable to a qualified small business may be taken only against the combined tax liability attributable to such qualified small business. The amount of the combined tax for all corporations properly included in a combined corporation business tax return that is attributable to a qualified small business shall be in the same ratio to such combined tax that the net income apportioned to this state of the qualified small business bears to the net income, in the aggregate of all corporations included in such combined return. Solely for the purposes of computing such ratio, any net loss apportioned to this state by a corporation included in such combined return shall be disregarded.
(h) Any taxpayer, or in the case of a combined return, any combined group of taxpayers, that claims a credit under section 12-217j for any income year shall reduce the amount of research and development expenses that otherwise may be taken into account in computing the allowable credit under subsection (c) of this section for such income year by the amount of excess research and experimental expenditures, as computed under said section 12-217j, for which the credit thereunder is given.
(i) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to carry out the purposes of this section.
(P.A. 93-433, S. 1, 26; P.A. 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A. 98-110, S. 23, 27; June Sp. Sess. P.A. 98-1, S. 85, 121; P.A. 99-173, S. 40, 65; June Sp. Sess. P.A. 99-1, S. 28, 51; P.A. 06-159, S. 8; P.A. 13-232, S. 13; P.A. 14-122, S. 91; P.A. 15-244, S. 144; June Sp. Sess. P.A. 15-5, S. 139; June Sp. Sess. P.A. 21-2, S. 427.)
History: P.A. 93-433 effective July 1, 1993; P.A. 95-250 and P.A. 96-211 replaced Commissioner and Department of Economic Development with Commissioner and Department of Economic and Community Development; P.A. 98-110 expanded credit to qualified small businesses and defined the term, effective May 19, 1998, and applicable to income years commencing on or after January 1, 2000; June Sp. Secs. P.A. 98-1 amended Subsec. (b)(4) to change reference to Sec. 12-217m to Sec. 12-217w, effective June 24, 1998; P.A. 99-173 amended Subsec. (c)(1) to increase the credit for companies who employ over 2,500 people in the state, have in excess of $3,000,000,000 in revenue and are located in an enterprise zone, effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999; June Sp. Sess. P.A. 99-1 amended Subsec. (c)(1) to change tentative credit for research and development expenses for businesses employing over 2,500 people with annual revenues in excess of $3,000,000,000 and headquartered in an enterprise zone from 3.5% of such expense to the greater of the tentative credit calculated under Subdiv. (2), modified as provided in Subsec. (e) or (f), if applicable, or 3.5% of such expense, effective July 1, 1999; P.A. 06-159 amended Subsecs. (e) and (f) to make technical changes, delete provision re treatment of information as provided in Sec. 32-11a(k) and require commissioner, rather than combined group or taxpayer, to provide copy of certificate of eligibility to Commissioner of Revenue Services, effective June 6, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 13-232 amended Subsec. (h) to delete provision re credit claimed under Sec. 12-217l, effective July 1, 2013; P.A. 14-122 made a technical change in Subsec. (b)(2); P.A. 15-244 redefined “combined return” in Subsec. (b)(2), effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 144, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015; June Sp. Sess. P.A. 21-2 amended Subsec. (d)(4) to redesignate existing provisions re credits carryforward and the order of taking allowable credits carried forward as Subparas. (A) and (C), add Subpara. (B) re 15 year limit for credit carryforwards for credits allowed for income years commencing on or after January 1, 2021, and make technical changes, effective June 23, 2021, and applicable to income years commencing on or after January 1, 2021.
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Sec. 12-217o. Tax credit for machinery and equipment expenditures. There shall be allowed as a credit against the tax imposed on any corporation under this chapter with respect to any taxable year of such corporation commencing on or after January 1, 1997, (1) that has more than two hundred fifty full-time, permanent employees but not more than eight hundred full-time, permanent employees whose wages, salaries or other compensation is paid in this state, as the phrase is used in subsection (b) of section 12-218, an amount equal to five per cent of the amount spent by the corporation on machinery and equipment acquired for and installed in a facility in this state, which amount exceeds the amount spent by such corporation during the preceding income year of the corporation for such expenditures or (2) that has not more than two hundred fifty full-time, permanent employees whose wages, salaries or other compensation is paid in this state, as the phrase is used in subsection (b) of section 12-218, an amount equal to ten per cent of the amount spent by the corporation on machinery and equipment acquired for and installed in a facility in this state, which amount exceeds the amount spent by such corporation during the preceding income year of the corporation for such expenditures. In addition, any amount spent (A) by a corporation whose income year, for federal income tax purposes, commences on the first day of January, February, March, April or May, (B) on machinery and equipment acquired for and installed in a facility in this state, (C) during that portion of its income year in 1995 that expired on May 31, 1995, shall be deemed to have been spent during its income year commencing in 1997 and shall be added to any amount actually spent on machinery and equipment acquired for and installed in a facility in this state during its income year commencing in 1997, provided the credit percentage to which such corporation shall be entitled for its income year commencing in 1997 shall be based on the number of full-time, permanent employees during its income year commencing in 1997.
(P.A. 93-382, S. 42, 69; P.A. 94-3, S. 1, 2; May Sp. Sess. P.A. 94-4, S. 69, 85; P.A. 95-160, S. 33, 64, 69; P.A. 96-139, S. 12, 13; 96-144, S. 4, 5; P.A. 99-121, S. 3, 28; Dec. Sp. Sess. P.A. 15-1, S. 41; P.A. 16-146, S. 12.)
History: P.A. 93-382 effective July 1, 1993, and applicable to taxable years of corporations commencing on or after July 1, 1995; P.A. 94-3 amended section to require machinery and equipment to be acquired for and installed in a facility in this state, effective April 7, 1994, and applicable to income years commencing on or after January 1, 1995; May Sp. Sess. P.A. 94-4 in Subdiv. (1) increased the maximum number of full time employees from 500 to 800, effective June 9, 1994; P.A. 95-160 added that credit is allowed with respect to any taxable year commencing on or after January 1, 1997, effective June 1, 1995, and applicable to income years commencing on or after January 1, 1995 (Revisor's note: P.A. 95-160 also revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section); P.A. 96-139 changed effective date of P.A. 95-160 but without affecting this section; P.A. 96-144 provided for a credit during the 1997 income year for companies that bought and installed machinery during the portion of their 1995 income year expiring on May 31, 1995, effective May 29, 1996; P.A. 99-121 allowed the credit to only apply for employees based in Connecticut, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999; Dec. Sp. Sess. P.A. 15-1 replaced references to Sec. 12-218(c) with references to Sec. 12-218(b), effective January 1, 2016; P.A. 16-146 replaced Subdiv. (1) to (3) designators with Subpara. (A) to (C) designators in provision re amount spent, effective June 9, 2016.
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Sec. 12-217p. Tax credits for taxpayer providing housing for low and moderate income employees. Section 12-217p is repealed, effective June 7, 2006.
(P.A. 93-74, S. 50, 67; P.A. 94-175, S. 18, 32; May Sp. Sess. P.A. 94-4, S. 80, 85; P.A. 95-160, S. 64, 69; P.A. 97-295, S. 18, 25; P.A. 98-262, S. 2, 14, 22; P.A. 06-159, S. 9; 06-189, S. 23.)
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Secs. 12-217q and 12-217r. Tax credit for expenditures for: Construction of or improvements to alternative fuel filling stations; converting motor vehicles to utilize alternative fuels. Sections 12-217q and 12-217r are repealed, effective April 13, 1995, and applicable to income years or calendar quarters commencing on or after January 1, 1994.
(P.A. 94-170, S. 1, 2, 5; P.A. 95-15, S. 2, 3.)
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Sec. 12-217s. Tax credit for expenditures related to traffic reduction programs. There shall be allowed as a credit against the tax imposed on any corporation under this chapter which participates in the traffic reduction program established under section 13b-38p and conducted in this state, except corporations employing fewer than one hundred employees, with respect to any taxable year of such corporation commencing on or after January 1, 1997, an amount equal to fifty per cent of the amount spent in this state by such corporation, on or after January 1, 1995, for the direct costs of traffic reduction programs and services related thereto conducted in this state by such corporation in response to the provisions of sections 13b-38o, 13b-38p, 13b-38t, 13b-38v and 13b-38x, not to exceed two hundred fifty dollars annually per employee employed in this state and participating in alternative means of commuting pursuant to traffic reduction programs conducted in this state. The total amount of credits available under the provisions of this section shall not exceed one million five hundred thousand dollars. The Department of Transportation shall adopt regulations in accordance with the provisions of chapter 54 which shall include, but not be limited to, establishing procedures for a corporation to obtain and qualify for the tax credit.
(May Sp. Sess. P.A. 94-4, S. 45, 85; P.A. 95-160, S. 34, 64, 69; 95-325, S. 14, 16; P.A. 96-139, S. 12, 13; 96-223, S. 6, 8; P.A. 00-174, S. 23, 83.)
History: May Sp. Sess. P.A. 94-4, S. 45, effective June 9, 1994, and applicable to income years commencing on or after January 1, 1995; P.A. 95-160 changed on or after January 1, 1995, to January 1, 1997, re taxable years when credit is allowed, effective June 1, 1995, applicable to income years commencing on or after January 1, 1995 (Revisor's note: P.A. 95-160 also revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section); P.A. 95-325 allowed as a credit such amount spent by a corporation “on or after January 1, 1995”, effective July 13, 1995; P.A. 96-139 changed effective date of P.A. 95-160 but without affecting this section; P.A. 96-223 specified that credit be applicable to any corporation which participates in the traffic reduction program under Sec. 13b-38p, substituted “traffic reduction” for “transportation management” programs and made technical changes, effective July 1, 1996; P.A. 00-174 specified that section applies to programs conducted in this state for employees employed in this state, effective May 26, 2000, and applicable to income years commencing on or after January 1, 2000.
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Sec. 12-217t. Tax credit for personal property taxes paid on electronic data processing equipment. (a) There shall be allowed as a credit against the tax imposed by chapter 207, this chapter, chapter 208a, 209, 210, 211, or 212 or against the tax imposed pursuant to section 12-202a in an amount determined under the provisions of subsection (b) of this section with respect to the personal property taxes paid during any income year, on electronic data processing equipment. For the purposes of this section “electronic data processing equipment” means computers, printers, peripheral computer equipment, bundled software and any computer-based equipment acting as a computer as defined under Section 168 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and any other such equipment reported as a Code 20 on the Personal Property Declaration as prescribed by the Secretary of the Office of Policy and Management pursuant to section 12-27.
(b) The amount allowed as a credit in any income year shall be the full amount of the tax on such electronic data processing equipment paid pursuant to section 12-71 or 12-80a, and as defined under Section 168 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, provided no credit shall be allowed for the payment of any interest or penalty on the tax.
(c) The credit provided for by this section shall be allowed for any taxes owed on the grand list of October 1, 1994, and each grand list annually thereafter or included in the list prescribed under section 12-80a for such grand list. Such credits shall first be used by the taxpayer against the corporation business tax under this chapter, if any, and then may be used against any tax paid by the taxpayer under the provisions of chapter 207, 208a, 209, 210, 211 or 212 or the tax imposed upon a health care center under section 12-202a. The amount of credits allowable under this section in any tax year against the taxes imposed by chapter 207, 208, 208a, 209, 210, 211 or 212 or against the tax imposed on health care centers, under the provisions of section 12-202a, shall be allowable only after all other credits allowable against such taxes for such tax year have been applied.
(d) In the case of leased electronic data processing equipment, the lessee, not the lessor, shall be entitled to claim the credit allowed pursuant to this section if the lease by its terms or operation imposes on the lessee the cost of the personal property taxes on such equipment, provided the lessor and lessee may elect, in writing, that the lessor may claim the credit provided by this section. The lessor shall provide a copy of such election to the Commissioner of Revenue Services, upon the request of said commissioner.
(e) In the case of taxpayers filing a combined unitary tax return pursuant to section 12-222, the credit provided by this section shall be allowed on a combined basis, such that the amount of personal property taxes paid by such taxpayers with respect to such equipment may be claimed as a tax credit against the combined unitary tax liability of such taxpayers as determined under this chapter. Credits available to taxpayers which are subject to tax under this chapter but not subject to tax under chapter 207, 208a, 209, 210, 211 or 212 or the tax imposed on health care centers under the provisions of section 12-202a shall be used prior to credits of companies included in such combined unitary tax return which are also subject to tax under said chapter 207, 208a, 209, 210, 211 or 212 or the tax imposed upon health centers pursuant to the provisions of section 12-202a.
(f) If the amount of credit allowable under this section exceeds the sum of (1) the corporation business tax, if any, and (2) any taxes imposed by chapter 207, 208a, 209, 210, 211 or 212 paid by the taxpayer, after all other credits allowable against such taxes have first been applied, then any balance of the credit allowable under this section remaining may be taken in any of the five succeeding income years.
(May Sp. Sess. P.A. 94-4, S. 47, 85; P.A. 95-160, S. 35, 64, 69; P.A. 96-139, S. 12, 13; 96-144, S. 1, 5; P.A. 06-159, S. 10; P.A. 15-244, S. 145; June Sp. Sess. P.A. 15-5, S. 139, 146.)
History: May Sp. Sess. P.A. 94-4, S. 47, effective June 9, 1994, and applicable to property on the grand list as of October 1, 1994; P.A. 95-160 amended Subsec. (a) to allow credit against the tax imposed by chapters 207, 209, 210, 211 or 212 or Sec. 12-202a in income years commencing on or after January 1, 1997, instead of January 1, 1995, and Subsec. (c) to make conforming technical changes, effective June 1, 1995, and applicable to income years commencing on or after January 1, 1995 (Revisor's note: P.A. 95-160 also revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section); P.A. 96-139 changed effective date of P.A. 95-160 but without affecting this section; P.A. 96-144 advanced the effective date of credit against chapters 207, 209, 210, 211, 212 and Sec. 12-202a from income years commencing on or after January 1, 1997, to income years commencing on or after January 1, 1995, and added new Subsec. (f) to provide a five-year carry forward of any unused credit, effective May 29, 1996; P.A. 06-159 amended Subsec. (d) to require submittal of copy of election upon request of commissioner, rather than with tax return, effective June 6, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 15-244 amended Subsec. (e) to add “unitary tax” re combined return and “unitary” re combined tax liability and make a technical change, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 145, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (e) to make a technical change, effective January 1, 2016, and applicable to income years commencing on or after that date.
Text indicates that legislature intended to grant eligibility for tax credit to taxpayer who has paid personal property taxes on electronic data processing equipment and who can use the tax against any tax liability arising from corporation business tax or other specific chapters of tax code. 273 C. 240.
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Sec. 12-217u. Tax credit for financial institutions constructing new facilities and creating new jobs. For income years commencing prior to January 1, 2014. (a) For purposes of this section:
(1) “Commissioner” means the Commissioner of Economic and Community Development;
(2) “Company” means any corporation, partnership, trust, association, unincorporated organization or similar organization;
(3) “Compensation is paid within this state” if (A) the individual's service is performed entirely within the state; or (B) the individual's service is performed both within and without the state, but the service performed without the state is incidental to the individual's service within the state;
(4) “Control” with respect to a corporation means ownership of stock possessing at least fifty per cent of the total combined voting power of all classes of stock entitled to vote. “Control” with respect to a partnership, association or similar unincorporated organization means ownership of at least fifty per cent of the capital or profits interest in such partnership or association. “Control” with respect to a trust, means ownership of at least fifty per cent of the beneficial interest in the principal or income of such trust. Ownership shall be determined as provided in Section 267(c) of the Internal Revenue Code of 1986, as in effect on October 14, 1994, other than paragraph (3) of such section;
(5) “Financial institution” means any bank, holding company or out-of-state bank, as those terms are defined in section 36a-2, or out-of-state holding company, as that term is defined in section 36a-410, which directly or indirectly establishes an office in Connecticut and is subject to the supervision of or regulation by the Banking Commissioner pursuant to title 36a or by one or more federal banking agencies pursuant to applicable federal law. “Financial institution” also means any establishment described in major group 61 or 62 in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, or in Subsector 522 or 523 in the North American Industrial Classification System, United States Manual, United States Office of Management and Budget, 1997 edition, as engaged primarily in the extending of credit in the form of loans or the underwriting, purchase, sale or brokerage of securities and other financial contracts on their own account or for the account of others, and exchanges, exchange clearinghouses and other services allied with the exchange of securities and commodities or a holding company controlling any such establishment;
(6) “Related person” means a corporation, limited liability company, partnership, trust, association, unincorporated organization or similar organization that is controlled by the financial institution;
(7) “Tax” means the corporation business tax imposed by this chapter.
(b) In any income year commencing prior to January 1, 2014, there shall be allowed a credit against the tax imposed on a financial institution not to exceed fifty per cent of the amount of such tax, provided the aggregate amount of the credit that may be taken under this subsection shall in no event exceed one hundred twenty million dollars over the period for which it is allowed and provided further the total amount of credit allowed in any qualified income year shall not exceed the aggregate amount as determined in accordance with the employment requirements for such year under subsection (c) of this section, reduced by the amount of credit previously allowed, but in no event shall the amount be below zero. The credit shall be allowed in the initial qualified year and in each of the nine consecutive income years thereafter which is a subsequent qualified year.
(c) For purposes of this section, (1) the initial qualified year is the income year with respect to which the financial institution first meets all of the following criteria: (A) It has constructed a new facility in Connecticut of at least nine hundred thousand gross square feet for the purpose of carrying on, directly or indirectly, the business of the financial institution; (B) it has obtained a temporary or permanent certificate of occupancy for such facility; (C) it has employed, during the income year for which the credit is claimed, an average of at least (i) one thousand two hundred qualified employees to claim a thirty per cent tax credit, which shall not exceed seventy-two million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, (ii) one thousand six hundred qualified employees to claim a forty per cent tax credit, which shall not exceed ninety-six million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, and (iii) two thousand qualified employees to claim a fifty per cent tax credit, which shall not exceed one hundred twenty million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed; and (D) it has been issued an initial certificate of eligibility by the commissioner under subsection (g) of this section; and (2) a subsequent qualified year is an income year, following an initial qualified year, with respect to which the financial institution employs an average of at least (A) one thousand two hundred qualified employees to claim a thirty per cent tax credit, which shall not exceed seventy-two million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, (B) one thousand six hundred qualified employees to claim a forty per cent tax credit, which shall not exceed ninety-six million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, and (C) two thousand qualified employees to claim a fifty per cent tax credit, which shall not exceed one hundred twenty million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, and has been issued an annual certificate of eligibility by the commissioner under subsection (g) of this section.
(d) For purposes of this section, (1) a qualified employee is an individual whose compensation is paid within this state and (A) is employed directly by the financial institution or a related person and who works an average of at least thirty-five hours per week for at least eight consecutive weeks for such financial institution or related person, (B) is an independent contractor of the financial institution or of a related person and who works an average of at least thirty-five hours per week for at least eight consecutive weeks for such financial institution or related person, or (C) is an employee or principal of a company other than the financial institution or a related person if (i) such individual works an average of at least thirty-five hours per week for at least eight consecutive weeks providing services to the financial institution or a related person, and (ii) such company derives not less than eighty per cent of its gross revenues from the financial institution, one or more related persons or a combination thereof. A qualified employee shall not include any individual who would have satisfied the criteria of a qualified employee prior to the date that a proposal by the financial institution to create new positions in this state was approved by the commissioner; and (2) notwithstanding the provisions of subdivision (1) of this subsection, an individual is not a qualified employee if (A) the prior employer of such individual was a company other than the financial institution or a related person, (B) compensation was paid in this state to such individual by such employer, (C) the individual was employed for an average of at least thirty-five hours per week and had been employed by such employer for at least eight consecutive weeks, and (D) either (i) the individual is employed directly by the financial institution or a related person in which the prior employer had an ownership interest equal to ten per cent or more of the voting rights of the financial institution or related person at the time such individual became employed by the financial institution or related person, unless the position previously held by such individual with the prior employer has been filled by the prior employer; (ii) the individual is employed directly by the financial institution or a related person which had an ownership interest equal to ten per cent or more of the voting rights of the prior employer at the time such individual became employed by the financial institution or related person, unless the position previously held by such individual with the prior employer has been filled by the prior employer; or (iii) the prior employer of such individual was a company which was acquired directly or indirectly by, or merged or consolidated with, the financial institution or a related person and the individual was employed by that company at the date of such acquisition, merger or consolidation.
(e) For each income year in which the credit is claimed, the average number of qualified employees shall be the sum of (1) the average of the number of qualified employees reported in the quarterly Federal Insurance Contributions Act tax returns of the financial institution or a related person; (2) the average of the number of qualified employees who are included in the quarterly reports described in subsection (g) of this section; and (3) the average of the number of qualified employees reported in the quarterly Federal Insurance Contributions Act tax returns of the company as described in subparagraph (C) of subdivision (1) of subsection (d) of this section. If the number of qualified employees in any income year fails to equal or exceed the number necessary to qualify under subsection (b) or (f) of this section, as the case may be, the financial institution may compute an average which includes the first quarter of the next succeeding income year with the four quarters of the subject income year and, if such new average equals or exceeds the criteria set forth in subsection (c) or (f) of this section, as the case may be, such financial institution shall be deemed to have met the employment criteria necessary to qualify under subsection (b) or (f) of this section, as the case may be. If two otherwise unrelated financial institutions have a related person in common, the employees of such related person may be considered in determining the average number of employees for only one of the financial institutions.
(f) (1) In any income year commencing prior to January 1, 2014, there shall be allowed a credit against the tax imposed on a financial institution for an additional five-year period if the financial institution (A) employs an average of at least three thousand qualified employees in the tenth income year after the initial qualified year and during each subsequent income year for which the credit is claimed; and (B) has been issued a certificate by the commissioner under subsection (g) of this section. The credit allowed under this subsection may be claimed each year for five consecutive income years beginning with the tenth income year after the initial qualified year.
(2) The amount of the credit allowed by this subsection shall equal twenty-five per cent of the tax imposed on a financial institution provided the aggregate amount of the credit that may be taken under this subsection and subsection (b) of this section may not exceed one hundred forty-five million dollars.
(g) Upon application from a financial institution, the commissioner shall issue an initial certificate of eligibility for the credit allowed under subsection (b) of this section after it has been established that the applicant satisfies the new facility construction, certificate of occupancy and relevant employment requirements of this section and, after consultation with the Commissioner of Revenue Services and the Banking Commissioner, that the applicant is a financial institution. If the commissioner determines that all appropriate requirements are met, the commissioner shall issue an annual certificate of eligibility for the credit allowed under subsection (b) or (f) of this section for each income year for which an application for a credit under either of said subsections is made. The commissioner shall require the financial institution to submit quarterly reports of the number of individuals to whom the financial institution or a related person made payments of six hundred dollars or more which must be reported as provided by Section 6041 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, for each income year for which the credit is claimed and to submit such other information as may be necessary to determine whether all appropriate requirements have been met and that the applicant continues to be a financial institution. Such reports shall also include the number of individuals who are principals and who qualify as qualified employees under subparagraph (C) of subdivision (1) of subsection (d) of this section.
(h) The sale, merger, acquisition, bankruptcy or other reorganization by or of a financial institution may not create new eligibility for the credit allowed under subsection (b) or (f) of this section in a succeeding company. Any successor to the financial institution which is a financial institution may qualify under subsection (b) or (f) of this section if either the original financial institution or such successor satisfies the new facility construction and certificate of occupancy requirements and such successor qualifies under subsection (b) or (f) of this section on an annual basis, provided the total credits available to the successor financial institution, when added to all credits taken by the original financial institution, shall not exceed the applicable limits under subsection (b) or (f) of this section, or both, as the case may be.
(i) The commissioner may accept and approve proposals to create new positions as described in subsection (d) of this section. The commissioner shall prescribe the form of such proposals.
(j) The commissioner shall, upon request, provide a copy of the certificate of eligibility to the Commissioner of Revenue Services.
(k) No taxpayer claiming the credit under this section is eligible for the credit allowed under section 12-217w.
(l) (1) In the case of a financial institution included in a combined unitary tax return under section 12-222, a credit allowed under subsection (b) or (f) of this section may be taken against the tax of the combined unitary group. (2) The credit allowed to a financial institution under subsection (b) or (f) of this section may be taken by any corporation which is eligible to elect to file a combined unitary tax return with a group with which the financial institution is eligible to file a combined unitary tax return, provided the aggregate credit taken by all such corporations in any income year shall not exceed the aggregate credit for which such group would have been eligible if it had filed a combined unitary tax return.
(m) The credits allowed under this section shall be claimed prior to any other credits allowed against the corporation business tax.
(n) (1) No taxpayer which has received financial assistance from the state under section 32-236 may claim the credit under subsection (b) of this section. The total amount of credit allowed under subsection (f) of this section to such a taxpayer shall not exceed, in the aggregate, twenty-five million dollars.
(2) Notwithstanding the provisions of subsection (c) of this section, for purposes of any credit allowed under subsection (f) of this section to a taxpayer which has received financial assistance under section 32-236, the initial qualified year shall be the income year in which the Commissioner of Economic and Community Development executes an agreement with such financial institution to provide financial assistance pursuant to section 32-236.
(3) For purposes of determining the number and specification of qualified employees under subsection (d) of this section, and the number and specification of new employees under section 12-217e, with respect to any taxpayer which has received financial assistance under section 32-236, the dates, numbers and specifications shall be the dates, numbers and specifications provided in an agreement executed by the Commissioner of Economic and Community Development with such financial institution to provide financial assistance pursuant to section 32-236. In no event shall the definition of qualified employee be more favorable to the employer than the definition provided in this section.
(Oct. Sp. Sess. P.A. 94-1, S. 17, 21; P.A. 95-79, S. 28, 189; 95-129, S. 4, 5; 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A. 97-295, S. 5, 25; P.A. 98-262, S. 14, 22; P.A. 00-170, S. 26, 42; 00-174, S. 24, 83; P.A. 03-84, S. 13, 14; P.A. 06-159, S. 11; P.A. 10-75, S. 26, 27; P.A. 15-244, S. 146; June Sp. Sess. P.A. 15-5, S. 139.)
History: Oct. Sp. Sess. P.A. 94-1, S. 17 effective January 1, 1995, and applicable to income years of corporations commencing on or after said date; P.A. 95-79 amended Subsec. (a) to redefine “related person” to include a limited liability company, effective May 31, 1995; P.A. 95-129 amended Subsec. (b) by adding proviso re the ceiling and floor of the total credit allowed in any qualified income year, and amended Subsec. (c) by changing the minimum average number of employees from 2,000 to the levels specified in Subdiv. (1)(C)(i), (ii) and (iii) in the initial qualified year and specified in Subsec. (c)(2)(A), (B) and (C) in a subsequent qualified year, effective May 25, 1995; P.A. 95-250 and P.A. 96-211 replaced Commissioner and Department of Economic Development with Commissioner and Department of Economic and Community Development; P.A. 97-295 amended Subsec. (k) to change reference from Sec. 12-217m to 12-217w, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-170 added Subsec. (n) re a restriction on credits under this section for recipients of assistance under Sec. 32-236, effective May 26, 2000; P.A. 00-174 amended Subsec. (a)(5) to add references to the North American Industrial Classification System in the definition of “financial institution”, effective May 26, 2000; P.A. 03-84 changed “Commissioner of Banking” to “Banking Commissioner” in Subsecs. (a)(5) and (g) and made a technical change in Subsec. (g), effective June 3, 2003; P.A. 06-159 amended Subsec. (j) to require commissioner, rather than taxpayer, to provide copy of certificate of eligibility, effective June 6, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 10-75 amended Subsecs. (b) and (f)(1) to specify that credit shall be allowed in any income year commencing prior to January 1, 2014, effective July 1, 2010; P.A. 15-244 amended Subsec. (l) to add “unitary tax” re combined return and “unitary” re combined group and make a technical change, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 146, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
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Sec. 12-217v. Tax credit for qualifying corporations in enterprise zones. Section 12-217v is repealed, effective July 1, 2018.
(P.A. 96-239, S. 3, 17; Dec. Sp. Sess. P.A. 15-1, S. 35; P.A. 18-145, S. 3.)
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Sec. 12-217w. Tax credit for investment in fixed capital. (a) For purposes of this section, “fixed capital” means tangible personal property which (1) has a class life, in years, of more than four years, as described in Section 168(e) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (2) is acquired by purchase from a person other than a related person, (3) is not acquired to be leased, and is not leased, to another person or persons during the twelve full months following its acquisition, and (4) will be held and used in this state by a corporation in the ordinary course of the corporation's trade or business in this state for not less than five full years following its acquisition. “Fixed capital” does not include inventory, land, buildings or structures, or mobile transportation property. With respect to a corporation claiming a credit under this section, a “related person” means a corporation, partnership, association or trust controlled by such corporation; an individual, corporation, partnership, association or trust that is in control of such corporation; a corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in control of such corporation; or a member of the same controlled group as such corporation. For purposes of this section, “control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote; with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of such section.
(b) There shall be allowed a credit for any corporation against the tax imposed under this chapter in an amount paid or incurred by such corporation for any new fixed capital investment during the income year in which such fixed capital is acquired as follows: For any income year commencing on or after January 1, 1998, and prior to January 1, 1999, equal to three per cent of such amount paid or incurred by the corporation during such income year; for any income year commencing on or after January 1, 1999, and prior to January 1, 2000, equal to four per cent of such amount paid or incurred by the corporation during such income year; and for any income year commencing on or after January 1, 2000, equal to five per cent of such amount paid or incurred by the corporation during such income year.
(c) The amount of such credit allowed to any corporation under this section shall not exceed the amount of tax due from such corporation under this chapter with respect to such income year.
(d) No corporation claiming the credit under this section with respect to the acquisition of fixed capital, as defined in subsection (a) of this section, may claim a credit against any tax under any other provision of the general statutes with respect to the same acquisition.
(e) Any tax credit not used in the income year during which the acquisition was made may be carried forward for the five immediately succeeding income years until the full credit has been allowed.
(f) If the fixed capital on account of which a corporation has claimed the credit allowed by this section is not held and used in this state in the ordinary course of the corporation's trade or business in this state for three full years following its acquisition as provided in subsection (a) of this section, the corporation shall recapture one hundred per cent of the amount of the credit allowed under this section on its corporation business tax return required to be filed for the income year immediately succeeding the income year during which such three-year period expires. If the fixed capital on account of which a corporation has claimed the credit allowed by this section is not held and used in this state in the ordinary course of the corporation's trade or business in this state for five full years following its acquisition as provided in subsection (a) of this section, the corporation shall recapture fifty per cent of the amount of the credit allowed under this section on its corporation business tax return required to be filed for the income year immediately succeeding the income year during which such five-year period expires. The provisions of this subsection shall not apply if the property that is the subject of the credit under this section is replaced. If any amount of credit required to be recaptured has not been paid to the commissioner on or before the first day of the fourth month next succeeding the end of the income year immediately succeeding the income year during which the three-year or five-year period, as the case may be, expires, such amount shall bear interest at the rate of one per cent per month or fraction thereof from such date to the date of payment.
(P.A. 97-295, S. 1, 25; P.A. 98-262, S. 10, 14, 22.)
History: P.A. 97-295, Sec. 1 effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 amended Subsec. (f) to delete provision re accrual of interest from extended due date and clarified the text regarding recapture, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998, and revised effective date of P.A. 97-295, but without affecting this section.
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Sec. 12-217x. Tax credit for human capital investment. (a) For purposes of this section, “human capital investment” means the amount paid or incurred by a corporation on (1) job training which occurs in this state for persons who are employed in this state; (2) work education programs in this state including, but not limited to, programs in public high schools and work education-diversified occupations programs in this state; (3) worker training and education for persons who are employed in this state provided by institutions of higher education in this state; (4) donations or capital contributions to institutions of higher education in this state for improvements or advancements of technology, including physical plant improvements; (5) planning, site preparation, construction, renovation or acquisition of facilities in this state for the purpose of establishing a child care center, as described in section 19a-77, in this state to be used primarily by the children of employees who are employed in this state; (6) subsidies to employees who are employed in this state for child care to be provided in this state; and (7) contributions made to the Individual Development Account Reserve Fund, as defined in section 31-51ww.
(b) There shall be allowed a credit for any corporation against the tax imposed under this chapter in an amount spent by such corporation, as a human capital investment as follows: For any income year commencing on or after January 1, 1998, and prior to January 1, 1999, equal to three per cent of such amount paid or incurred by the corporation during such income year; for any income year commencing on or after January 1, 1999, and prior to January 1, 2000, equal to four per cent of such amount paid or incurred by the corporation during such income year; and for any income year commencing on or after January 1, 2000, equal to five per cent of such amount paid or incurred by the corporation during such income year.
(c) The amount of credit allowed to any corporation under this section shall not exceed the amount of tax due from such corporation under this chapter with respect to such income year.
(d) No corporation claiming the credit under this section with respect to a human capital investment as defined in subsection (a) of this section shall claim a credit against any tax under any other provision of the general statutes against any tax with respect to the same investment.
(e) Any tax credit not used in the income year during which the investment was made may be carried forward for the five immediately succeeding income years until the full credit has been allowed.
(P.A. 97-295, S. 2, 25; P.A. 98-262, S. 14, 22; P.A. 00-192, S. 11, 102; P.A. 16-163, S. 29.)
History: P.A. 97-295, Sec. 2 effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-192 added Subsec. (a)(7) re contributions to the Individual Development Account Reserve Fund, effective January 1, 2001, and applicable to income years commencing on or after that date; P.A. 16-163 amended Subsec. (a)(5) by replacing “day care facility” with “child care center, as described in section 19a-77”, effective June 9, 2016.
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Sec. 12-217y. Tax credit for employing persons who are receiving benefits from the temporary family assistance program. Section 12-217y is repealed, effective June 18, 2013.
(P.A. 97-295, S. 7, 25; P.A. 98-262, S. 14, 22; P.A. 99-203, S. 1, 3; P.A. 00-174, S. 25, 83; P.A. 13-140, S. 22; 13-232, S. 18.)
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Sec. 12-217z. Business Tax Credit and Tax Policy Review Committee. (a) There is established a Business Tax Credit and Tax Policy Review Committee which shall be comprised of the following members: (1) The chairpersons and ranking members of the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding, or their designees; (2) one member appointed by each of the following: The Governor, the president pro tempore of the Senate, the speaker of the House of Representatives, the majority leader of the Senate, the majority leader of the House of Representatives, the minority leader of the House of Representatives and the minority leader of the Senate; and (3) the Commissioners of Revenue Services and Economic and Community Development and the Labor Commissioner, or their designees.
(b) All appointments to the committee shall be made no later than August 15, 2005. Any vacancy shall be filled by the appointing authority.
(c) The chairpersons of the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding shall be the chairpersons of the Business Tax Credit and Tax Policy Review Committee. The Business Tax Credit and Tax Policy Review Committee shall meet not less than twice a year, and at such other times as the chairpersons deem necessary.
(d) The committee shall study and evaluate all the existing credits against the corporation business tax, evaluate changes or modifications made to such tax, and consider further changes in policy regarding the taxation of businesses. The study shall include, but is not limited to, consideration of the following with respect to each credit or policy: (1) Has the credit or policy provided a benefit to the state in terms of (A) measurable economic development, (B) new investments in the state, (C) new jobs or retention of existing jobs, or measurable benefits for the workforce in the state; (2) is there sufficient justification to continue the credit or policy as it currently exists or is it obsolete; (3) could the credit or policy be more efficiently administered as part of a broad-based credit or policy; and (4) does the credit or policy add unnecessary complexity in the application, administration and approval process for the corporation business tax. The committee shall also engage in an analysis of the history, rationale and estimated revenue loss as a result of each tax credit or policy change, and shall recommend revisions necessary to change the tax by eliminating or changing any redundant, obsolete or unnecessary tax credit or any credit or tax policy that is not providing a measurable benefit sufficient to justify any revenue loss to the state.
(e) Upon the request of the chairs of the committee, the Commissioner of Revenue Services shall provide information to the committee concerning (1) exemptions or credits against the corporation business tax, (2) the implementation and operation of legislative changes in tax policy, and (3) other tax-related issues. Such information shall not include the names or addresses of any taxpayers, but may include, for each recipient of a tax credit, or business implementing a change in tax policy, a description of the business activities, the amount of income apportioned to this state and the taxes paid on such income, the exemption or credit taken and the amount of such exemption or credit, and such other information as may be available to the Department of Revenue Services and relevant to the committee's area of inquiry.
(f) The Business Tax Credit and Tax Policy Review Committee shall report its findings and recommendations to the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding no later than January 1, 2006, and annually thereafter, in accordance with section 11-4a.
(P.A. 97-295, S. 4, 25; P.A. 98-262, S. 14, 22; P.A. 05-251, S. 64.)
History: P.A. 97-295, Sec. 4 effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 05-251 changed name from Corporation Business Tax Credit Review Committee to Business Tax Credit and Tax Policy Review Committee, amended Subsec. (a) by adding Labor Commissioner, inserted new Subsecs. (b) and (c) re chairpersons and meeting times, redesignated existing Subsec. (b) as Subsec. (d) and amended same to add consideration of tax policy to committee duties, added Subsec. (e) re information from Commissioner of Revenue Services, redesignated existing Subsec. (c) as Subsec. (f) and amended same to require annual reports from the committee, and made conforming changes throughout, effective July 1, 2005.
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Sec. 12-217aa. Order of credits. (a) Except as otherwise provided in section 12-217t and subsection (c) of this section, whenever a company is eligible to claim more than one corporation business tax credit, the credits shall be claimed for the income year in the following order: (1) Any credit that may be carried backward to a preceding income year or years shall first be claimed (A) with any credit carry-back that will expire first being claimed before any credit carry-back that will expire later or will not expire at all, and (B) if the credit carry-backs will expire at the same time, in the order in which the company may receive the maximum benefit; (2) any credit that may not be carried backward to a preceding income year or years and that may not be carried forward to a succeeding income year or years shall next be claimed, in the order in which the company may receive the maximum benefit; and (3) any credit that may be carried forward to a succeeding income year or years shall next be claimed (A) with any credit carry-forward that will expire first being claimed before any credit carry-forward that will expire later or will not expire at all, and (B) if the credit carry-forwards will expire at the same time, in the order in which the company may receive the maximum benefit.
(b) In no event shall any credit be claimed more than once.
(c) The rebate allowed pursuant to section 32-7t shall be claimed after all other credits have been claimed.
(P.A. 98-244, S. 10, 35; 98-261, S. 4, 6; P.A. 22-118, S. 424.)
History: P.A. 98-244 effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; P.A. 98-261 amended Subsec. (a) to add exception for Sec. 12-217t, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; P.A. 22-118 added Subsec. (c) re JobsCT tax rebates allowed pursuant to Sec. 32-7t and amended Subsec. (a) by adding reference to Subsec. (c), effective July 1, 2022, and applicable to income years beginning on or after January 1, 2023.
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Sec. 12-217bb. Tax credit for electric suppliers hiring displaced workers. Section 12-217bb is repealed, effective July 1, 2013.
(P.A. 98-28, S. 47, 117; P.A. 13-232, S. 18.)
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Sec. 12-217cc. Tax credit for certain small businesses obtaining financing from federal Small Business Administration. For income years commencing prior to January 1, 2014. (a) As used in this section, “small business” means any business entity qualifying as a small business under 13 CFR Part 121 which has gross receipts of not more than five million dollars for the income year in which the credit is first allowed.
(b) In any income year commencing prior to January 1, 2014, there shall be allowed as a credit against the tax imposed by this chapter in any income year an amount equal to the amount paid during such income year by a small business to the federal Small Business Administration as a guaranty fee to obtain guaranteed financing from the federal Small Business Administration, provided the credit shall not reduce the tax in any income year below any minimum tax required under this chapter.
(c) If the amount of the credit allowable under this section exceeds the sum of any taxes paid by the small business after all other credits have first been applied, any such excess amount of the credit allowable under this section may be taken in any of the four succeeding income years.
(P.A. 99-173, S. 42, 65; P.A. 10-75, S. 28.)
History: P.A. 99-173 effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 10-75 amended Subsec. (b) to specify that credit shall be allowed in any income year commencing prior to January 1, 2014, effective July 1, 2010.
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Sec. 12-217dd. Tax credit for donation of land for open space or educational use. (a) For purposes of this section:
(1) “Donation of open space land” means the value of any land or interest in land conveyed without financial consideration, or the value of any discount of the sale price in any sale of land or interest in land, to the state, a political subdivision of the state, a water company, as defined in section 25-32a, or to any nonprofit land conservation organization where such land is to be permanently preserved as protected open space or used as a public water supply source.
(2) “Donation of land for educational use” means the value of any land or interest in land conveyed without financial consideration, or the value of any discount of the sale price in any sale of land or interest in land, to any town, city or borough, whether consolidated or unconsolidated, or any school district or regional school district for educational use, as defined in section 16-43b.
(b) There shall be allowed a credit for all taxpayers against the tax imposed under this chapter, in an amount equal to fifty per cent of any donation of open space land and fifty per cent of any donation of land for educational use. For purposes of calculating the credit under this section, the amount of donation shall be based on the use value of the donated land and the amount received for such land. For purposes of this subsection, “use value” means the fair market value of land at its highest and best use, as determined by a certified real estate appraiser.
(c) A credit for the donation of open space land that is allowed under this section with respect to any taxable year commencing on or after January 1, 2000, but is not used by a taxpayer, may be carried forward to each of the successive income years until such credit is fully taken, but in no case shall a credit that is not used be carried forward for a period of more than twenty-five years. A credit for the donation of land for educational use that is allowed under this section with respect to any taxable year commencing on or after January 1, 2013, but is not used by a taxpayer, may be carried forward to each of the successive income years until such credit is fully taken, but in no case shall a credit that is not used be carried forward for a period of more than twenty-five years.
(P.A. 99-173, S. 47, 65; P.A. 00-203, S. 6, 8, 11; P.A. 04-200, S. 2; June Sp. Sess. P.A. 09-3, S. 96; P.A. 13-232, S. 8.)
History: P.A. 99-173 effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 00-203 amended Subsec. (b) by defining use value, effective June 7, 2000, and applicable to all open space land donations made on or after income year commencing January 1, 1999, and added Subsec. (c) re tax credit carry forward, effective July 1, 2000; P.A. 04-200 amended Subsec. (a) to add interest in land to definition, to add a water company to the type of recipients permitted, and to add use as a public water supply source as a type of use permitted, amended Subsec. (b) to add “or as a public water supply source” and “and the amount received for such land”, and amended Subsec. (c) to replace “ten” with “fifteen”, effective June 3, 2004; June Sp. Sess. P.A. 09-3 amended Subsec. (c) to extend carry-forward period from 15 years to 25 years, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2009; P.A. 13-232 amended Subsec. (a) by designating existing definition of “donation of open space land” as Subdiv. (1) and adding definition of “donation of land for educational use” as Subdiv. (2), added provisions allowing a credit for donation of land for educational use in Subsecs. (b) and (c), and made technical changes, effective July 1, 2013, and applicable to income years commencing on or after January 1, 2013.
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Sec. 12-217ee. Refund of unused credits under sections 12-217j and 12-217n. (a) Any taxpayer that (1) is a qualified small business, (2) qualifies for a credit under section 12-217j or section 12-217n, and (3) cannot take such credit in the taxable year in which the credit could otherwise be taken as a result of having no tax liability under this chapter may elect to carry such credit forward under this chapter or may apply to the commissioner as provided in subsection (b) of this section to exchange such credit with the state for a credit refund equal to sixty-five per cent of the value of the credit. Any amount of credit refunded under this section shall be refunded to the taxpayer under the provisions of this chapter, except that such credit refund shall not be subject to the provisions of section 12-227. Payment of the capital base tax under section 12-219 for an income year commencing on or after January 1, 2002, in which year the taxpayer reports no net income, as defined in section 12-213, or payment of the minimum tax of two hundred fifty dollars under section 12-219 or 12-223c for any income year, shall not be considered a tax liability for purposes of this section.
(b) An application for refund of such credit amount shall be made to the Commissioner of Revenue Services, at the same time such taxpayer files its return for the income year on or before the original due date or, if applicable, the extended due date of such year's return, on such forms and containing such information as prescribed by said commissioner. No application for refund of such credit amount may be made after the due date or extended due date, as the case may be, of such return.
(c) If the commissioner determines that the taxpayer qualifies for a credit refund under this section, the commissioner shall notify, no later than one hundred twenty days from receipt of the application for such credit refund, the State Comptroller of the name of the eligible taxpayer, and the State Comptroller shall draw an order on the State Treasurer. The amount of the credit refund shall be limited as follows: (1) In the case of an application for such credit refund filed by the taxpayer for income years beginning during 2000 or 2001 where such credit refund has not been paid as of July 1, 2002, the taxpayer shall be entitled to receive no more than one million dollars during the state's fiscal year in which the initial refund is paid, with any remaining unpaid balance to be paid in two equal installments during the state's next two succeeding fiscal years; and (2) in the case of an application for such credit refund filed by the taxpayer for the income years beginning during 2002 or thereafter, the taxpayer shall be entitled to receive no more than one million five hundred thousand dollars for any one such income year.
(d) The Commissioner of Revenue Services may disallow the credit refund of any credit otherwise allowable for a taxable year under this section if the company claiming the exchange has any amount of taxes due and unpaid to the state including interest, penalties, fees and other charges related thereto for which a period in excess of thirty days has elapsed following the date on which such taxes were due and which are not the subject of a timely filed administrative appeal to the commissioner or of a timely filed appeal pending before any court of competent jurisdiction. Before any such disallowance, the commissioner shall send written notice to the company, stating that it may pay the amount of such delinquent tax or enter into an agreement with the commissioner for the payment thereof, by the date set forth in said notice, provided, such date shall not be less than thirty days after the date of such notice. Failure on the part of the company to pay the amount of the delinquent tax or enter into an agreement to pay the amount thereof by said date shall result in a disallowance of the credit refund being claimed.
(e) For purposes of this section “qualified small business” means a company that (1) has gross income for the previous income year that does not exceed seventy million dollars, and (2) has not, in the determination of the commissioner, met the gross income test through transactions with a related person, as defined in section 12-217w.
(P.A. 99-173, S. 38, 65; June Sp. Sess. P.A. 01-6, S. 11, 85; May 9 Sp. Sess. P.A. 02-1, S. 60; May 9 Sp. Sess. P.A. 02-4, S. 19; P.A. 03-120, S. 1; June 30 Sp. Sess. P.A. 03-1, S. 89; P.A. 04-235, S. 1.)
History: P.A. 99-173 effective June 23, 1999, and applicable to taxable years commencing on or after January 1, 2000; June Sp. Sess. P.A. 01-6 amended Subsec. (a) to add reference to the application for a credit refund under Subsec. (b), to change “cash payment” to “credit refund”, and to provide that amounts refunded under this section are not subject to Sec. 12-227, and amended Subsecs. (b) and (c) to change “payment” and “exchange” to “credit refund”, effective July 1, 2001; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (b) to provide for the application for refund on or before the due date of the return, or extended due date of the return, redesignated a portion of existing Subsec. (b) as new Subsec. (c) and added provisions therein re limit on the amount of credit refund and redesignated existing Subsecs. (c) and (d) as Subsecs. (d) and (e), effective July 1, 2002; May 9 Sp. Sess. P.A. 02-4 amended Subsec. (a) to provide that payment of the minimum tax shall not be considered a tax liability for purposes of section, effective August 15, 2002, and applicable to income years commencing on or after January 1, 2002; P.A. 03-120 amended Subsec. (a) to add provision re effect of tax liability for payment of tax under Sec. 12-219 for the income year commencing January 1, 2002, and make conforming changes, effective June 18, 2003, and applicable to income years commencing on or after January 1, 2002; June 30 Sp. Sess. P.A. 03-1 amended Subsec. (a) to allow participation in program for certain capital base taxpayers through the 2004 income year, effective August 16, 2003, and applicable to income years commencing on or after January 1, 2002; P.A. 04-235 amended Subsec. (a) to eliminate January 1, 2005, end date for consideration of income years under the exchange program, effective June 8, 2004, and applicable to income years commencing on or after January 1, 2002.
Exchange of tax credits carried forward from previous income years for a refund in subsequent years is not authorized under section. 291 C. 525.
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Sec. 12-217ff. Tax credit for donation of land for educational use. No credit allowed on or after January 1, 2013. (a) For purposes of this section, “donation of land for educational use” means the value of any land or interest in land conveyed without financial consideration, or the value of any discount of the sale price in any sale of land or interest in land, to any municipality or political subdivision of the state for educational use, as defined in section 16-43b.
(b) There shall be allowed a credit for all taxpayers against the tax imposed under section 12-217, in an amount equal to fifty per cent of any donation of land for educational use. For purposes of calculating the credit under this section the amount of donation shall be based on the difference between the use value of the donated land and the amount received for such land. For the purposes of this subsection, “use value” means a fair market value of land at its highest and best use, as determined by a certified real estate appraiser.
(c) A credit that is allowed under this section, with respect to any taxable year commencing on or after January 1, 2004, but is not used by a taxpayer may be carried forward to each of the successive income years until such credit is fully taken. In no case shall a credit that is not used be carried forward for a period of more than fifteen years.
(d) No tax credit shall be allowed under this section with respect to any donation of land for educational use made on or after January 1, 2013.
(P.A. 04-200, S. 4; P.A. 13-232, S. 9.)
History: P.A. 04-200 effective June 3, 2003; P.A. 13-232 added Subsec. (d) re discontinuation of credit on or after January 1, 2013, effective July 1, 2013, and applicable to income years commencing on or after January 1, 2013.
See Sec. 12-217dd re tax credit for donation of land for educational use.
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Sec. 12-217gg. Tax credit for employment expansion project. (a) As used in this section:
(1) “Approved employment expansion project” means an employment expansion project approved by the commissioner pursuant to subsection (e) of this section.
(2) “Commencement date” means the commencement date of the approved employment expansion project as provided in the certificate of eligibility issued by the commissioner pursuant to subsection (f) of this section.
(3) “Commissioner” means the Commissioner of Economic and Community Development.
(4) “Constituent corporation” means any corporation that holds or has held an interest in the sponsor of an approved employment expansion project (A) as a general partner, limited partner, member or otherwise, and (B) is subject to tax under this chapter either directly or by virtue of holding an interest in such sponsor.
(5) “Employment expansion project” means a project: (A) That will result in the creation of at least four hundred new jobs in this state over a period of not more than five full income years following the income year in which the commencement date occurs; (B) for which the allowance to the constituent corporations of credits under this section will be necessary to attract the project to this state; (C) that will be economically viable and will generate direct and indirect economic benefits to the state; and (D) that is, in the judgment of the commissioner, consistent with the strategic economic development priorities of the state and the municipality or municipalities in which the new jobs are to be created.
(6) “Income year” has the same meaning as provided in subdivision (5) of subsection (a) of section 12-213.
(7) “New employee” means a person hired by a sponsor or a constituent corporation to fill a new job full-time in this state. A new employee does not include a person who was employed in Connecticut by a related person with respect to the sponsor or constituent corporation during the prior twelve months. The aggregate number of new employees at the end of any income year shall be equal to the excess, if any, of the (A) aggregate number of employees employed in this state by the sponsor and constituent corporations at the end of any income year, less (B) the aggregate number of employees employed in this state by the sponsor and constituent corporations on the commencement date.
(8) “New job” means a full-time job that (A) did not exist in this state prior to the commencement date, and (B) is filled by a new employee. “New job” does not include a job created when an employee is shifted from an existing location in this state of the sponsor or any constituent corporation to such job.
(9) “Sponsor” means a partnership, limited partnership, limited liability company or other entity that is treated as a pass-through entity for federal income tax purposes.
(10) “Full-time job” means a job in which an employee is required to work at least thirty-five or more hours per week. A full-time job does not include a temporary or seasonal job.
(11) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer.
(12) “Control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. “Control”, with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of said Section 267(c).
(b) (1) There shall be allowed to each constituent corporation such credits that the constituent corporation otherwise would have been allowed under this chapter had such constituent corporation itself conducted its pro rata share of the business conducted by the sponsor during any relevant income year.
(2) Credits shall be allowable under this section for those income years commencing on or after the commencement date as set forth in a certificate of eligibility issued by the commissioner.
(c) (1) For the purposes of this chapter, each constituent corporation shall be deemed to have itself conducted its pro rata share of the business conducted by the sponsor.
(2) The pro rata share of the business conducted by the sponsor that shall be deemed to have been conducted by each constituent corporation shall be the same percentage as such constituent corporation's distributive share of the profit or loss of the sponsor for any relevant income year.
(3) The limitation of section 12-217zz shall be applied on the return of each constituent corporation or on the combined unitary tax return filed by two or more constituent corporations.
(d) Any sponsor of an employment expansion project may submit an application for a certificate of eligibility to the commissioner in accordance with the provisions of this section. The application shall contain sufficient information to establish that the project is an employment expansion project, and shall include information concerning (1) the location or locations of the new jobs, (2) the number of new jobs to be created in each of the five full income years following the income year in which the commencement date occurs, (3) the physical infrastructure that might be created, renovated or expanded, (4) feasibility studies or business plans for the project, and (5) such other information the commissioner determines is necessary to demonstrate the financial viability of the employment expansion project. The commissioner may impose a fee for such application as the commissioner deems appropriate.
(e) (1) The commissioner, upon consideration of the application and any additional information that the commissioner requires concerning a proposed employment expansion project, may approve the project if the commissioner finds that the project is an employment expansion project. If the commissioner rejects an application, the commissioner shall specifically identify the defects in the application and specifically explain the reasons for such rejection. The commissioner shall render a decision on an application not later than ninety days after its receipt by the commissioner.
(2) The approval of an employment expansion project by the commissioner may be combined with the exercise of any of the other powers of the commissioner, including, but not limited to, the provision of financial assistance.
(3) The commissioner shall require the applicant to reimburse the commissioner for all or any part of the cost of any activities performed in the exercise of due diligence reviewing an application pursuant to this subsection.
(f) Upon approving an employment expansion project, the commissioner shall issue a certificate of eligibility certifying that the applicant has complied with the provisions of this section. The certificate of eligibility shall set forth the commencement date, as well as any other requirements the commissioner deems appropriate.
(g) Each constituent corporation claiming a credit or credits allowed under this section shall retain a copy of the certificate of eligibility issued under subsection (f) of this section and a copy of the certificate of continuing eligibility issued under subsection (g) of this section for each income year for which a credit is claimed for at least as long as such income year would otherwise be subject to audit.
(h) The credits allowed under this section may be used by constituent corporations joining in a combined unitary tax return under section 12-222.
(i) Any constituent corporation allowed a credit under this section may assign such credit to another constituent corporation, provided such other constituent corporation may claim such credit only with respect to an income year for which the assigning constituent corporation would have been eligible to claim such credit and such other constituent corporation or constituent corporations may not further assign such credit. The assignor and assignee shall jointly submit written notification of such assignment to the commissioner. The notification shall include the credit certificate number, the date of assignment, the amount of such credit assigned, the tax identification numbers for both the assignor and assignee, and any other information required by the commissioner. Failure to comply with this subsection will result in a disallowance of the tax credit until there is full compliance on both the part of the assignor and the assignee. The commissioner shall provide a copy of the notification of assignment to the Commissioner of Revenue Services upon request.
(j) (1) The determination of whether the aggregate number of new jobs has been created shall be made as of the end of each of the five full income years following the income year in which the commencement date occurs. Not later than the first day of the fourth month of each year following each of such five income years, the commissioner shall require the sponsor to certify the aggregate number of new jobs created by the end of the preceding income year. Not later than the first day of the seventh month of each year following each of the five income years, the commissioner shall review such certification and, if the aggregate number of new jobs at the end of the preceding income year is at least ninety per cent of the aggregate number of such new jobs set forth in the certificate of eligibility for such income year, shall issue a certificate of continuing eligibility for such preceding income year.
(2) If the aggregate number of new jobs at the end of any such income year is less than ninety per cent of the aggregate number of such new jobs set forth in the certificate of eligibility for such income year, no credits attributable to the activities of the sponsor during such income year shall be allowed to the constituent corporations. The failure to achieve ninety per cent of the aggregate number of new jobs by the end of any applicable income year shall not preclude the allowance to the constituent corporations of credits from any prior or subsequent income year otherwise available under this section.
(P.A. 06-187, S. 19; 06-189, S. 20–22; P.A. 14-122, S. 92; P.A. 15-244, S. 147, 148; June Sp. Sess. P.A. 15-5, S. 139.)
History: P.A. 06-187 effective May 26, 2006, and applicable to projects with a commencement date on or after September 1, 2005; P.A. 06-189 amended Subsec. (a)(8)(A) to change timing requirement re job creation from after sponsor's application for a certificate to commencement date, amended Subsec. (b)(2) by eliminating five-year limit for credit and allowing credit for income years commencing on or after commencement date and amended Subsec. (i) by requiring submittal of written notification of assignment to the commissioner, effective June 7, 2006, and applicable to projects with a commencement date on or after September 1, 2005; P.A. 14-122 made technical changes in Subsec. (a)(6); P.A. 15-244 amended Subsec. (c)(3) to add “unitary tax” re combined return and amended Subsec. (h) to substitute “unitary” for “corporation business” re combined tax return and make a technical change, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 147 and 148, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
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Sec. 12-217hh. Tax credit for hiring displaced worker. Section 12-217hh is repealed, effective July 1, 2013.
(P.A. 06-186, S. 81; P.A. 13-232, S. 18.)
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Sec. 12-217ii. Jobs creation tax credit program. No eligibility certificates issued on or after January 1, 2012. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Economic and Community Development;
(2) “Income year” means, with respect to entities subject to the insurance premiums tax under chapter 207, the corporation business tax under this chapter or the utility companies tax under chapter 212, the income year as determined under each of said chapters, as the case may be;
(3) “Taxpayer” means a person subject to tax under chapter 207, this chapter or chapter 212;
(4) “New job” means a full-time job which (A) did not exist in this state prior to a taxpayer's application to the commissioner for an eligibility certificate under this section for a job creation credit, and (B) is filled by a new employee;
(5) “New employee” means a person hired by the taxpayer to fill a new full-time job. A new employee does not include a person who was employed in Connecticut by a related person with respect to the taxpayer during the prior twelve months;
(6) “Full-time job” means a job in which an employee is required to work at least thirty-five or more hours per week. A full-time job does not include a temporary or seasonal job;
(7) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer; and
(8) “Control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. “Control”, with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of said Section 267(c).
(b) (1) There is established a jobs creation tax credit program whereby a taxpayer who creates at least ten new jobs in Connecticut may be allowed a credit against the tax imposed under chapter 207, this chapter or chapter 212, in an amount up to sixty per cent of the income tax deducted and withheld from the wages of new employees and paid over to the state pursuant to chapter 229.
(2) For each new employee, credits may be granted for five successive years.
(3) The credit shall be claimed in the income year in which it is earned. Any credits not used in a tax year shall expire.
(c) Any taxpayer planning to claim a credit under the provisions of this section shall apply to the commissioner in accordance with the provisions of this section. The application shall be on a form provided by the commissioner, and shall contain sufficient information concerning the number of new jobs to be created, feasibility studies or business plans for the increased number of jobs, projected state and local revenue that might derive as a result of the job growth and other information necessary to demonstrate that there will be net benefits to the economy of the municipality and the state. The commissioner shall impose a fee for such application as the commissioner deems appropriate.
(d) The commissioner shall determine whether (1) the taxpayer making the application is eligible for the tax credit, and (2) the proposed job growth (A) is economically viable only with use of the tax credit, (B) would provide a net benefit to economic development and employment opportunities in the state, and (C) conforms to the state plan of conservation and development prepared pursuant to part I of chapter 297. The commissioner may require the applicant to submit such additional information as may be necessary to evaluate the application.
(e) (1) The commissioner, upon consideration of the application and any additional information the commissioner requires, may approve the credit application, in whole or in part, if the commissioner concludes that the increase in the number of jobs is economically viable only with the use of the tax credit and that the revenue generated due to economic development and employment opportunities created in the state exceeds the credit and any other credits to be taken. If the commissioner disapproves an application, the commissioner shall specifically identify the defects in the application and specifically explain the reasons for the disapproval. The commissioner shall render a decision on an application not later than ninety days after the date of its receipt by the commissioner.
(2) The total amount of credits granted to all taxpayers under this section and sections 12-217nn, 12-217oo and 12-217pp shall not exceed twenty million dollars in any one fiscal year.
(3) (A) A credit under this section may be granted to a taxpayer for not more than five successive income years. No credit under this section shall be granted to a taxpayer more than five income years after the date the commissioner issues an eligibility certificate to the taxpayer under subsection (f) of this section.
(B) The commissioner shall not issue any eligibility certificates under this section on or after January 1, 2012.
(4) The commissioner may combine approval of a credit application with the exercise of any of the commissioner's other powers, including, but not limited to, the provision of other forms of financial assistance.
(f) Upon approving a taxpayer's credit application, the commissioner shall issue a credit allocation notice certifying that the credits will be available to be claimed by the taxpayer if the taxpayer otherwise meets the requirements of this section. No later than thirty days after the close of the taxpayer's income year, the taxpayer shall provide information to the commissioner regarding the number of new jobs created for the year and the income tax deducted and withheld from the wages of such new employees and paid over to the state for such year. The commissioner shall issue an eligibility certificate that includes the taxpayer's name, the number of new jobs created, and the amount of the credit certified for the year. The certificate shall be issued by the commissioner not later than sixty days after the close of the taxpayer's income year or not later than thirty days after the information is provided, whichever comes first.
(g) The commissioner shall, upon request, provide a copy of the eligibility certificate issued under subsection (f) of this section to the Commissioner of Revenue Services.
(h) (1) If (A) the number of new employees on account of which a taxpayer claimed the credit allowed by this section decreases to less than the number for which the commissioner issued an eligibility certificate during any of the four years succeeding the first full income year following the issuance of an eligibility certificate, and (B) those employees are not replaced by other employees who have not been shifted from an existing location of the taxpayer or a related person in this state, the taxpayer shall be required to recapture a percentage of the credit allowed under this section on its tax return, as determined under the provisions of subdivision (2) of this subsection. The commissioner shall provide notice of the required recapture amount to both the taxpayer and the Commissioner of Revenue Services.
(2) If the taxpayer is required under the provisions of subdivision (1) of this subsection to recapture a portion of the credit during (A) the first of such four years, then ninety per cent of the credit allowed shall be recaptured on the tax return required to be filed for such year, (B) the second of such four years, then sixty-five per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year, (C) the third of such four years, then fifty per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year, (D) the fourth of such four years, then thirty per cent of the credit allowed for the entire period of eligibility shall be recaptured on the tax return required to be filed for such year.
(P.A. 06-186, S. 80; P.A. 07-250, S. 18; P.A. 10-75, S. 10; P.A. 11-6, S. 130; 11-86, S. 3; Oct. Sp. Sess. P.A. 11-1, S. 20; P.A. 22-23, S. 6.)
History: P.A. 06-186 effective July 1, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 07-250 removed requirement re credit available only to taxpayers relocating to state, lowered job creation requirement from 50 to 10 new jobs, increased tax credit allowed from up to 25% to up to 60% of taxes deducted, added requirement that job growth conform to state plan of conservation and development and made conforming and technical changes, effective July 1, 2007, and applicable to income years commencing on or after January 1, 2007; P.A. 10-75 amended Subsec. (e)(2) to include Secs. 12-217nn and 12-217oo in cap and to increase cap from $10,000,000 to $11,000,000, effective May 6, 2010, and applicable to income years commencing on or after January 1, 2010; P.A. 11-6 amended Subsec. (e)(2) to increase cap on credits from $11,000,000 to $20,000,000, effective July 1, 2011; P.A. 11-86 amended Subsec. (e)(2) to delete references to Secs. 12-217nn and 12-217oo and to increase cap on credits from $11,000,000 to $20,000,000, effective July 1, 2011; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (e)(2) to include Sec. 12-217pp in cap, amended Subsec. (e)(3) to add provision re 5-income-year time limit for granting credit after issuance of eligibility certificate and sunset date of January 1, 2012, and made technical changes in Subsecs. (f) and (g), effective October 27, 2011; P.A. 22-23 made a technical change in Subsec. (d).
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Sec. 12-217jj. Film production tax credit. Regulations. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Revenue Services.
(2) “Department” means the Department of Economic and Community Development.
(3) (A) “Qualified production” means entertainment content created in whole or in part within the state, including motion pictures, except as otherwise provided in this subparagraph; documentaries; long-form, specials, mini-series, series, sound recordings, videos and music videos and interstitials television programming; interactive television; relocated television production; interactive games; videogames; commercials; any format of digital media, including an interactive web site, created for distribution or exhibition to the general public; and any trailer, pilot, video teaser or demo created primarily to stimulate the sale, marketing, promotion or exploitation of future investment in either a product or a qualified production via any means and media in any digital media format, film or videotape, provided such program meets all the underlying criteria of a qualified production. For state fiscal years ending on or after June 30, 2014, “qualified production” shall not include a motion picture that has not been designated as a state-certified qualified production prior to July 1, 2013, and no tax credit voucher for such motion picture may be issued for such motion picture, except, for state fiscal years ending on or after June 30, 2015, “qualified production” shall include a motion picture for which twenty-five per cent or more of the principal photography shooting days are in this state at a facility that receives not less than twenty-five million dollars in private investment and opens for business on or after July 1, 2013, and a tax credit voucher may be issued for such motion picture.
(B) “Qualified production” shall not include any ongoing television program created primarily as news, weather or financial market reports; a production featuring current events, other than a relocated television production, sporting events, an awards show or other gala event; a production whose sole purpose is fundraising; a long-form production that primarily markets a product or service; a production used for corporate training or in-house corporate advertising or other similar productions; or any production for which records are required to be maintained under 18 USC 2257, as amended from time to time, with respect to sexually explicit content.
(4) “Eligible production company” means a corporation, partnership, limited liability company, or other business entity engaged in the business of producing qualified productions on a one-time or ongoing basis, and qualified by the Secretary of the State to engage in business in the state.
(5) “Production expenses or costs” means all expenditures clearly and demonstrably incurred in the state in the preproduction, production or postproduction costs of a qualified production, including:
(A) Expenditures incurred in the state in the form of either compensation or purchases including production work, production equipment not eligible for the infrastructure tax credit provided in section 12-217kk, production software, postproduction work, postproduction equipment, postproduction software, set design, set construction, props, lighting, wardrobe, makeup, makeup accessories, special effects, visual effects, audio effects, film processing, music, sound mixing, editing, location fees, soundstages and any and all other costs or services directly incurred in connection with a state-certified qualified production;
(B) Expenditures for distribution, including preproduction, production or postproduction costs relating to the creation of trailers, marketing videos, commercials, point-of-purchase videos and any and all content created on film or digital media, including the duplication of films, videos, CDs, DVDs and any and all digital files now in existence and those yet to be created for mass consumer consumption; the purchase, by a company in the state, of any and all equipment relating to the duplication or mass market distribution of any content created or produced in the state by any digital media format which is now in use and those formats yet to be created for mass consumer consumption; and
(C) “Production expenses or costs” does not include the following: (i) On and after January 1, 2008, compensation in excess of fifteen million dollars paid to any individual or entity representing an individual, for services provided in the production of a qualified production and on or after January 1, 2010, compensation subject to Connecticut personal income tax in excess of twenty million dollars paid in the aggregate to any individuals or entities representing individuals, for star talent provided in the production of a qualified production; (ii) media buys, promotional events or gifts or public relations associated with the promotion or marketing of any qualified production; (iii) deferred, leveraged or profit participation costs relating to any and all personnel associated with any and all aspects of the production, including, but not limited to, producer fees, director fees, talent fees and writer fees; (iv) costs relating to the transfer of the production tax credits; (v) any amounts paid to persons or businesses as a result of their participation in profits from the exploitation of the qualified production; and (vi) any expenses or costs relating to an independent certification, as required by subsection (h) of this section, or as the department may otherwise require, pertaining to the amount of production expenses or costs set forth by an eligible production company in its application for a production tax credit.
(6) “Sound recording” means a recording of music, poetry or spoken-word performance, but does not include the audio portions of dialogue or words spoken and recorded as part of a motion picture, video, theatrical production, television news coverage or athletic event.
(7) “State-certified qualified production” means a qualified production produced by an eligible production company that (A) is in compliance with regulations adopted pursuant to subsection (l) of this section, (B) is authorized to conduct business in this state, and (C) has been approved by the department as qualifying for a production tax credit under this section.
(8) “Interactive web site” means a web site, the production costs of which (A) exceed five hundred thousand dollars per income year, and (B) is primarily (i) interactive games or end user applications, or (ii) animation, simulation, sound, graphics, story lines or video created or repurposed for distribution over the Internet. An interactive web site does not include a web site primarily used for institutional, private, industrial, retail or wholesale marketing or promotional purposes, or which contains obscene content.
(9) “Post-certification remedy” means the recapture, disallowance, recovery, reduction, repayment, forfeiture, decertification or any other remedy that would have the effect of reducing or otherwise limiting the use of a tax credit provided by this section.
(10) “Compensation” means base salary or wages and does not include bonus pay, stock options, restricted stock units or similar arrangements.
(11) “Relocated television production” means:
(A) An ongoing television program all of the prior seasons of which were filmed outside this state, and may include current events shows, except those referenced in subparagraph (B)(i) of this subdivision.
(B) An eligible production company's television programming in this state that (i) is not a general news program, sporting event or game broadcast, and (ii) is created at a qualified production facility that has had a minimum investment of twenty-five million dollars made by such eligible production company on or after January 1, 2012, at which facility the eligible production company creates ongoing television programming as defined in subparagraph (A) of this subdivision, and creates at least two hundred new jobs in Connecticut on or after January 1, 2012. For purposes of this subdivision, “new job” means a full-time job, as defined in section 12-217ii, that did not exist in this state prior to January 1, 2012, and is filled by a new employee, and “new employee” includes a person who was employed outside this state by the eligible production company prior to January 1, 2012, but does not include a person who was employed in this state by the eligible production company or a related person, as defined in section 12-217ii, with respect to the eligible production company during the prior twelve months.
(C) A relocated television production may be a state-certified qualified production for not more than ten successive income years, after which period the eligible production company shall be ineligible to resubmit an application for certification.
(b) (1) The Department of Economic and Community Development shall administer a system of tax credit vouchers within the resources, requirements and purposes of this section for eligible production companies producing a state-certified qualified production in the state.
(2) Any eligible production company incurring production expenses or costs shall be eligible for a credit (A) for income years commencing on or after January 1, 2010, but prior to January 1, 2018, against the tax imposed under chapter 207 or this chapter, (B) for income years commencing on or after January 1, 2018, but prior to January 1, 2022, against the tax imposed under chapter 207 or 211 or this chapter, and (C) for income years commencing on or after January 1, 2022, against the tax imposed under chapter 207, 211, 219 or this chapter, as follows: (i) For any such company incurring such expenses or costs of not less than one hundred thousand dollars, but not more than five hundred thousand dollars, a credit equal to ten per cent of such expenses or costs, (ii) for any such company incurring such expenses or costs of more than five hundred thousand dollars, but not more than one million dollars, a credit equal to fifteen per cent of such expenses or costs, and (iii) for any such company incurring such expenses or costs of more than one million dollars, a credit equal to thirty per cent of such expenses or costs.
(c) No eligible production company incurring an amount of production expenses or costs that qualifies for such credit shall be eligible for such credit unless on or after January 1, 2010, such company conducts (1) not less than fifty per cent of principal photography days within the state, or (2) expends not less than fifty per cent of postproduction costs within the state, or (3) expends not less than one million dollars of postproduction costs within the state.
(d) For income years commencing on or after January 1, 2010, no expenses or costs incurred outside the state and used within the state shall be eligible for a credit, and one hundred per cent of such expenses or costs shall be counted toward such credit when incurred within the state and used within the state.
(e) (1) On and after July 1, 2006, and for income years commencing on or after January 1, 2006, any credit allowed pursuant to this section may be sold, assigned or otherwise transferred, in whole or in part, to one or more taxpayers, provided (A) no credit, after issuance, may be sold, assigned or otherwise transferred, in whole or in part, more than three times, (B) in the case of a credit allowed for the income year commencing on or after January 1, 2011, and prior to January 1, 2012, any entity that is not subject to tax under chapter 207 or this chapter may transfer not more than fifty per cent of such credit in any one income year, and (C) in the case of a credit allowed for an income year commencing on or after January 1, 2012, any entity that is not subject to tax under chapter 207 or this chapter may transfer not more than twenty-five per cent of such credit in any one income year.
(2) Notwithstanding the provisions of subdivision (1) of this subsection, any entity that is not subject to tax under this chapter or chapter 207 shall not be subject to the limitations on the transfer of credits provided in subparagraphs (B) and (C) of said subdivision (1), provided such entity owns not less than fifty per cent, directly or indirectly, of a business entity, as defined in section 12-284b.
(3) Notwithstanding the provisions of subdivision (1) of this subsection, any qualified production that is created in whole or in significant part, as determined by the Commissioner of Economic and Community Development, at a qualified production facility shall not be subject to the limitations of subparagraph (B) or (C) of said subdivision (1). For purposes of this subdivision, “qualified production facility” means a facility (A) located in this state, (B) intended for film, television or digital media production, and (C) that has had a minimum investment of three million dollars, or less if the Commissioner of Economic and Community Development determines such facility otherwise qualifies.
(4) (A) For the income year commencing January 1, 2018, any credit that is sold, assigned or otherwise transferred, in whole or in part, to one or more taxpayers pursuant to subdivision (1) of this subsection may be claimed against the tax imposed under chapter 211 only if there is common ownership of at least fifty per cent between such taxpayer and the eligible production company that sold, assigned or otherwise transferred such credit. Such taxpayer may only claim ninety-two per cent of the amount of such credit entered by the department on the production tax credit voucher.
(B) For income years commencing on or after January 1, 2019, any credit that is sold, assigned or otherwise transferred, in whole or in part, to one or more taxpayers pursuant to subdivision (1) of this subsection, which credit is claimed against the tax imposed under chapter 211, shall be subject to the following limits:
(i) The taxpayer may only claim ninety-five per cent of the amount of such credit entered by the department on the production tax credit voucher; and
(ii) If there is common ownership of at least fifty per cent between such taxpayer and the eligible production company that sold, assigned or otherwise transferred such credit, such taxpayer may only claim ninety-two per cent of the amount of such credit entered by the department on the production tax credit voucher.
(5) For income years commencing on or after January 1, 2022, any credit that is claimed against the tax imposed under chapter 219 shall be subject to the following limits:
(A) Any credit that is sold, assigned or otherwise transferred, in whole or in part, to one or more taxpayers pursuant to subdivision (1) of this subsection may be claimed against the tax imposed under chapter 219 only if there is common ownership of at least fifty per cent between such taxpayer and the eligible production company that sold, assigned or otherwise transferred such credit; and
(B) The eligible production company or taxpayer claiming the credit against the tax imposed under chapter 219 may only claim seventy-eight per cent of the amount of such credit entered by the department on the production tax credit voucher.
(f) (1) On and after July 1, 2006, and for income years commencing on or after January 1, 2006, but prior to January 1, 2015, all or part of any such credit allowed under this section may be claimed against the tax imposed under chapter 207 or this chapter for the income year in which the production expenses or costs were incurred, or in the three immediately succeeding income years.
(2) For production tax credit vouchers issued on or after July 1, 2015, but prior to January 1, 2018, all or part of any such credit may be claimed against the tax imposed under chapter 207 or this chapter, for the income year in which the production expenses or costs were incurred, or in the five immediately succeeding income years.
(3) For production tax credit vouchers issued on or after July 1, 2018, but prior to January 1, 2022, all or part of any such credit may be claimed against the tax imposed under chapter 207 or 211 or this chapter, for the income year in which the production expenses or costs were incurred, or in the five immediately succeeding income years.
(4) For production tax credit vouchers issued on or after January 1, 2022, all or part of any such credit may be claimed against the tax imposed under chapter 207, 211, 219 or this chapter, for the income year in which the production expenses or costs were incurred, or in the five immediately succeeding income years.
(g) Any production tax credit allowed under this section shall be nonrefundable.
(h) (1) An eligible production company shall apply to the department for a tax credit voucher on an annual basis, but not later than ninety days after the first production expenses or costs are incurred in the production of a qualified production, and shall provide with such application such information as the department may require to determine such company's eligibility to claim a credit under this section. No production expenses or costs may be listed more than once for purposes of the tax credit voucher pursuant to this section, or pursuant to section 12-217kk or 12-217ll, and if a production expense or cost has been included in a claim for a credit, such production expense or cost may not be included in any subsequent claim for a credit.
(2) Not later than ninety days after the end of the annual period, or after the last production expenses or costs are incurred in the production of a qualified production, an eligible production company shall apply to the department for a production tax credit voucher, and shall provide with such application such information and independent certification as the department may require pertaining to the amount of such company's production expenses or costs. Such independent certification shall be provided by an audit professional chosen from a list compiled by the department. If the department determines that such company is eligible to be issued a production tax credit voucher, the department shall enter on the voucher the amount of production expenses or costs that has been established to the satisfaction of the department and the amount of such company's credit under this section. The department shall provide a copy of such voucher to the commissioner, upon request.
(3) The department shall charge a reasonable administrative fee sufficient to cover the department's costs to analyze applications submitted under this section.
(i) If an eligible production company sells, assigns or otherwise transfers a credit under this section to another taxpayer, the transferor and transferee shall jointly submit written notification of such transfer to the department not later than thirty days after such transfer. If such transferee sells, assigns or otherwise transfers a credit under this section to a subsequent transferee, such transferee and such subsequent transferee shall jointly submit written notification of such transfer to the department not later than thirty days after such transfer. The notification after each transfer shall include the credit voucher number, the date of transfer, the amount of such credit transferred, the tax credit balance before and after the transfer, the tax identification numbers for both the transferor and the transferee, and any other information required by the department. Failure to comply with this subsection will result in a disallowance of the tax credit until there is full compliance on the part of the transferor and the transferee, and for a second or third transfer, on the part of all subsequent transferors and transferees. The department shall provide a copy of the notification of assignment to the commissioner upon request.
(j) Any eligible production company that submits information to the department that it knows to be fraudulent or false shall, in addition to any other penalties provided by law, be liable for a penalty equal to the amount of such company's credit entered on the production tax credit voucher issued under this section.
(k) No tax credits transferred pursuant to this section shall be subject to a post-certification remedy, and the department and the commissioner shall have no right, except in the case of possible material misrepresentation or fraud, to conduct any further or additional review, examination or audit of the expenditures or costs for which such tax credits were issued. The sole and exclusive remedy of the department and the commissioner shall be to seek collection of the amount of such tax credits from the entity that committed the fraud or misrepresentation.
(l) The department, in consultation with the commissioner, shall adopt regulations, in accordance with the provisions of chapter 54, as may be necessary for the administration of this section.
(P.A. 06-83, S. 20; 06-186, S. 83; 06-187, S. 79; P.A. 07-236, S. 1; June Sp. Sess. P.A. 07-4, S. 69, 70; June Sp. Sess. P.A. 07-5, S. 13; P.A. 08-142, S. 1; June Sp. Sess. P.A. 09-3, S. 97; Sept. Sp. Sess. P.A. 09-8, S. 1–3; P.A. 10-107, S. 1; June Sp. Sess. P.A. 10-1, S. 61; P.A. 11-6, S. 77; 11-61, S. 37; Oct. Sp. Sess. P.A. 11-1, S. 53; P.A. 13-184, S. 75; 13-247, S. 129; P.A. 15-244, S. 86; June Sp. Sess. P.A. 15-5, S. 431; June Sp. Sess. P.A. 17-2, S. 626; P.A. 19-117, S. 339; June Sp. Sess. P.A. 21-2, S. 429.)
History: P.A. 06-83 effective July 1, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 06-186 amended Subsec. (a) to redefine “qualified production” by deleting exception and changing reference to obscene material and to redefine “production expenses or costs” by eliminating requirement that they be in cash, requiring intellectual property to be produced primarily in state, requiring expenditures to be incurred within state rather than paid to persons authorized to do business in state, eliminating provision allowing commissioner to determine other production expenses or costs, exempting talent fees and making technical changes, amended Subsec. (b) by replacing former provisions with provisions allowing any eligible production company to receive 30% credit and allowing a three-year carryforward, eliminated former Subsec. (c) re wage tax credit, redesignated existing Subsec. (d) as new Subsec. (c) and made conforming changes therein, eliminated former Subsec. (e) re carryforward period, inserted new Subsec. (d) re procedure upon transfer of credit, and redesignated existing Subsec. (f) as new Subsec. (e) and amended same to require the commission, in consultation with the commissioner, to adopt regulations, effective July 1, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 06-187 amended Subsec. (f) to require the commission, in consultation with the commissioner, to adopt regulations, effective July 1, 2006 (Revisor's note: In Subsec. (a)(6)(A), a reference to “subsection (f) of this section” was changed editorially by the Revisors to “subsection (e) of this section”, for accuracy); P.A. 07-236 amended Subsec. (a) to redefine “qualified production” and “production expenses or costs” and add definitions of “sound recording”, “interactive web site” and “post-certification remedy”, amended Subsec. (b) to divide existing provisions into Subdivs. (1) to (3) and, in Subdiv. (1), to apply credit to taxes due under chapter 207 and add Subpara. (A) re expenses or costs on and after January 1, 2009, and Subpara. (B) re expenses or costs on and after January 1, 2012, and, in Subdiv. (2), to limit credit transfers to three times, amended Subsec. (c) to add provisions in Subdiv. (1) to prohibit limit on listing expenses or costs on a tax credit voucher more than one once, to add new Subdiv. (2) re requirements for applying for tax credit vouchers, and to redesignate existing Subdiv. (2) as Subdiv. (3), amended Subsec. (d) to add provisions re second or third transfers, added new Subsec (e) re submission of false or fraudulent information and Subsec. (f) re post-certification remedy, redesignated existing Subsec. (e) as Subsec. (g) and made conforming changes throughout, effective July 1, 2007, and applicable to income years commencing on or after January 1, 2007; June Sp. Sess. P.A. 07-4 amended Subsec. (a) by making a technical change in Subdiv. (3)(A) and inserting “in the state” re expenditures incurred in Subdiv. (5), effective July 1, 2007, and applicable to income years commencing on or after January 1, 2007, and amended Subsec. (c) by inserting “and independent certification” in Subdivs. (2) and (3), effective July 1, 2007; June Sp. Sess. P.A. 07-5 amended Subsec. (f) to substitute “commission” for “commissioner” re issuance of tax credit voucher and make technical changes, effective October 6, 2007; P.A. 08-142 amended Subsec. (b) by changing eligibility date in Subdiv. (1) from income years commencing on or after January 1, 2007, to income years commencing on or after January 1, 2006, and amending Subdivs. (2) and (3) to specify that provisions are applicable on and after July 1, 2006, for income years commencing on or after January 1, 2006, effective June 5, 2008; June Sp. Sess. P.A. 09-3 made changes throughout to transfer responsibility for program from Commission on Culture and Tourism to Department of Economic and Community Development, amended Subsec. (a) by deleting infomercials from definition of “qualified production” in Subdiv. (3)(A) and removing compensation in excess of $20,000,000 and costs of independent certification from definition of “production expenses or costs” in Subdiv. (5)(C), amended Subsec. (b)(1) by designating existing provisions re income years on or after January 1, 2006, as new Subpara. (A), amending same to make applicable prior to January 1, 2010, and replacing former Subparas. (A) and (B) with new Subparas. (B) to (D) re spending and in-state work required to qualify for credit, amended Subsec. (c) by deleting former Subdiv. (2) re interim voucher, redesignating existing Subdiv. (3) as Subdiv. (2), amending same to add provision re independent certification provided by audit professional chosen from list, and adding new Subdiv. (3) re administrative fee, amended Subsec. (e) by deleting “wilfully” re submission of information, and amended Subsec. (f) by replacing former provisions with provisions re post-certification remedy, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2010; Sept. Sp. Sess. P.A. 09-8 amended Subsec. (b) by replacing “not less than five hundred thousand one dollars” with “more than five hundred thousand dollars” in Subdiv. (1)(B)(ii), adding provision re postproduction costs in Subdiv. (1)(C) and inserting “all or part of” re credit in Subdiv. (3), effective October 5, 2009; P.A. 10-107 amended Subsec. (a) by deleting “development” from definition of “production expenses or costs” in Subdiv. (5) and adding Subdiv. (10) defining “compensation”, redesignated existing Subsec. (b)(1) as Subsec. (b) and made technical changes therein, redesignated existing Subsec. (b)(1)(C) as new Subsec. (c) and amended same by changing principal photography days requirement from 50% to 25% and adding “or (C) expends not less than one million dollars of postproduction costs within the state” and redesignated existing Subsecs. (b)(1)(D) to (g) as Subsecs. (d) to (k), effective July 1, 2010, and applicable to income years commencing on or after January 1, 2010; June Sp. Sess. P.A. 10-1 made technical changes in Subsec. (c), effective July 1, 2010, and applicable to income years commencing on or after January 1, 2010 (Revisor's note: In 2011, internal references to “subsection (c) of this section” in Subsec. (a)(5)(C)(vi) and “subsection (g) of this section” in Subsec. (a)(7)(A) were changed editorially by the Revisors to “subsection (g) of this section” and “subsection (k) of this section”, respectively, to reflect changes made by P.A. 10-107); P.A. 11-6 amended Subsec. (c) by increasing from 25% to 50% the required principal photography days within the state, and amended Subsec. (e) by designating existing provisions as Subdiv. (1) and amending same to add Subparas. (B) and (C) re limits on transfer of credits and by adding Subdiv. (2) re exception to transfer limits, effective May 4, 2011, and applicable to income years commencing on or after January 1, 2011; P.A. 11-61 amended Subsec. (e) by adding new Subdiv. (2) re exception to limitations on transfer for certain entities, redesignating existing Subdiv. (2) as Subdiv. (3), and specifying in Subdiv. (3)(C) that determination is by the Commissioner of Economic and Community Development, effective July 1, 2011; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (a) by adding references to relocated television production in definition of “qualified production”, and adding Subdiv. (11) defining “relocated television production”, effective October 27, 2011; P.A. 13-184 amended Subsec. (a)(3) by excluding “motion picture” from the definition of “qualified production” for fiscal years ending June 30, 2014, and June 30, 2015, effective July 1, 2013, and applicable to tax credits issued on or after that date; P.A. 13-247 amended Subsec. (a)(3) by excluding “motion picture” from the definition of “qualified production” for fiscal years ending June 30, 2014, and June 30, 2015, and specified that the exclusion applies to motion picture not designated as a state-certified qualified production prior to July 1, 2013, effective July 1, 2013, and applicable to tax credits issued on or after that date; P.A. 15-244 amended Subsec. (a)(3)(A) to extend provisions re motion pictures under definition of “qualified production” to fiscal years ending June 30, 2016, and June 30, 2017, effective June 30, 2015; June Sp. Sess. P.A. 15-5 amended Subsec. (f) by adding provision re tax credit vouchers issued on or after July 1, 2015, to be claimed in the income year the production expenses or costs were incurred, or in the five immediately succeeding income years, effective June 30, 2015; June Sp. Sess. P.A. 17-2 amended Subsec. (a)(3)(A) by replacing “For the state fiscal years ending June 30, 2014, June 30, 2015, June 30, 2016, and June 30, 2017,” with “For state fiscal years ending on or after June 30, 2014”, replacing “during said years” with “for such motion picture”, and replacing “for the state fiscal years ending June 30, 2015, June 30, 2016, and June 30, 2017” with “for state fiscal years ending on or after June 30, 2015”, amended Subsec. (b) by deleting former Subdiv. (1) re income years commencing prior to January 1, 2010, and designating existing provision re tax credit voucher system administration as new Subdiv. (1), substantially amending Subdiv. (2) including by adding provision re credit use for income years commencing on or after January 1, 2018, against tax imposed under Ch. 211, amended Subsec. (d) by deleting former Subdiv. (1) re production expenses or costs for income years commencing on or after January 1, 2009, but prior to January 1, 2010, and redesignating existing Subdiv. (2) as new Subsec. (d), amended Subsec. (e) by adding Subdiv. (4) re use of credit that is sold, assigned or otherwise transferred, amended Subsec. (f) by adding Subdiv. designators (1) to (3) and replacing “shall” with “may” re claiming credit and adding Subpara. (B) re income years commencing on or after January 1, 2018 in Subdiv. (2), and made technical and conforming changes, effective October 31, 2017; P.A. 19-117 amended Subsec. (e)(2) by replacing “subject to tax under” with “, as defined in” re reference to Sec. 12-284b, effective January 1, 2020; June Sp. Sess. P.A. 21-2 amended Subsec. (b)(2) by adding Subpara. (C) re income years commencing on or after January 1, 2022, amended Subsec. (e) by adding Subdiv. (5) re credit use for income years commencing on or after January 1, 2022, against tax imposed under Ch. 219, substantially revised Subsec. (f) re production tax credit vouchers and redesignated Subdiv. (3) as new Subsec. (g), redesignated former Subsecs. (g) to (k) as Subsecs. (h) to (l), and made technical and conforming changes, effective January 1, 2022.
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Sec. 12-217kk. Tax credit for infrastructure projects in the entertainment industry. Regulations. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Revenue Services.
(2) “Department” means the Department of Economic and Community Development.
(3) “Infrastructure project” means a capital project to provide basic buildings, facilities or installations needed for the functioning of the digital media and motion picture industry in this state.
(4) “State-certified project” means an infrastructure project undertaken in this state by an entity that (A) is in compliance with regulations adopted pursuant to subsection (e) of this section, (B) is authorized to conduct business in this state, (C) is not in default on a loan made by the state or a loan guaranteed by the state, nor has ever declared bankruptcy under which an obligation of the entity to pay or repay public funds was discharged as a part of such bankruptcy, and (D) has been approved by the department as qualifying for an infrastructure tax credit under this section.
(5) “Post-certification remedy” means the recapture, disallowance, recovery, reduction, repayment, forfeiture, decertification or any other remedy that would have the effect of reducing or otherwise limiting the use of a tax credit provided by this section.
(b) (1) (A) For income years commencing prior to January 1, 2010, there shall be allowed a state-certified project credit against the tax imposed under chapter 207 or this chapter to any taxpayer that invests in a state-certified project. Such credit may be in the following amounts: (i) For state-certified projects costing greater than fifteen thousand dollars and less than one hundred fifty thousand dollars, each taxpayer may be allowed a tax credit of ten per cent of the investment made by such taxpayer; (ii) for state-certified projects costing one hundred fifty thousand dollars or more, but less than one million dollars, each taxpayer may be allowed a tax credit of fifteen per cent of the investment made by such taxpayer; and (iii) for state-certified projects costing one million dollars or more, each taxpayer may be allowed a tax credit of twenty per cent of the investment made by such taxpayer.
(B) For income years commencing on or after January 1, 2010, there shall be allowed a state-certified project credit against the tax imposed under chapter 207 or this chapter to any taxpayer that invests three million dollars or more in a state-certified project in an amount equal to twenty per cent of the investment made by such taxpayer.
(2) Eligible expenditures pursuant to this section shall include the following: All expenditures for a capital project to provide buildings, facilities or installations, whether a capital lease or purchase, together with necessary equipment for a film, video, television, digital production facility or digital animation production facility; project development, including design, professional consulting fees and transaction costs; development, preproduction, production, post-production and distribution equipment and system access; and fixtures and other equipment.
(3) Any credit allowed pursuant to this section may be sold, assigned or otherwise transferred, in whole or in part, to one or more taxpayers, and such taxpayers may sell, assign or otherwise transfer, in whole or in part, such credit.
(4) All or part of any credit allowed pursuant to this section shall be claimed against the tax imposed under chapter 207 or this chapter for the income year in which expenditures were made for the infrastructure project, or in the three immediately succeeding income years.
(5) Any tax credit earned under this section shall be nonrefundable.
(c) (1) An entity undertaking an infrastructure project shall apply to the department for an eligibility certificate not later than ninety days after the first expenses or costs are incurred, and shall provide with such application such information as the department may require to determine such infrastructure project's eligibility as a state-certified project.
(2) Each application for an eligibility certificate shall include: (A) A detailed description of the infrastructure project; (B) a preliminary budget; (C) estimated completion date; and (D) such other information as the department may require. The department may require an independent audit of all project costs and expenditures prior to certification. If the department determines that such project is eligible to be a state-certified project, the department shall indicate the amount of costs or expenditures that has been established to the satisfaction of the department, and issue to such entity a tax credit certification letter for investors indicating the amount of tax credits available under this section. The department shall provide a copy of such letter to the commissioner, upon request.
(3) Prior to the issuance of a state-certified project tax credit voucher to a taxpayer based upon the tax credit certification letter issued pursuant to subdivision (2) of this subdivision, the entity undertaking such infrastructure project shall provide the department with a description of the progress on such project and an estimated completion date. The department may require an independent audit of all project costs and expenditures prior to issuance of such tax credit voucher to a taxpayer. No such tax credit voucher may be issued prior to such time as such state-certified project is shown to be one hundred per cent complete.
(4) The department shall charge a reasonable administrative fee sufficient to cover the department's costs to analyze applications submitted under this section.
(d) If a taxpayer sells, assigns or otherwise transfers a credit under this section to another taxpayer, the transferor and transferee shall jointly submit written notification of such transfer to the department not later than thirty days after such transfer. The notification shall include the credit certificate number, the date of transfer, the amount of such credit transferred, the tax credit balance before and after the transfer, the tax identification numbers for both the transferor and the transferee and any other information required by the commissioner. After the initial issuance of a tax credit, such credit may be sold, assigned or otherwise transferred not more than three times. Failure to comply with this subsection will result in a disallowance of the tax credit until there is full compliance on both the part of the transferor and the transferee, and all subsequent transferors and transferees. The department shall provide a copy of the notification of assignment to the commissioner upon request.
(e) No tax credits transferred pursuant to this section shall be subject to a post-certification remedy, and the department and the commissioner shall have no right, except in the case of possible material misrepresentation or fraud, to conduct any further or additional review, examination or audit of the expenditures or costs for which such tax credits were issued. The sole and exclusive remedy of the department and the commissioner shall be to seek collection of the amount of such tax credits from the entity that committed the fraud or misrepresentation.
(f) The department, in consultation with the commissioner, shall adopt regulations, in accordance with the provisions of chapter 54, as may be necessary for the administration of this section.
(P.A. 07-236, S. 2; June Sp. Sess. P.A. 07-5, S. 14; June Sp. Sess. P.A. 09-3, S. 98; P.A. 10-107, S. 2; Oct. Sp. Sess. P.A. 11-1, S. 55; P.A. 13-232, S. 10.)
History: P.A. 07-236 effective July 1, 2007, and applicable to income years commencing on or after January 1, 2007; June Sp. Sess. P.A. 07-5 amended Subsec. (e) to substitute “commission” for “commissioner” re issuance of tax credit voucher and make technical changes, effective October 6, 2007; June Sp. Sess. P.A. 09-3 made changes throughout to transfer responsibility for program from Commission on Culture and Tourism to Department of Economic and Community Development, amended Subsec. (b)(1) by designating existing provisions as Subpara. (A), making conforming changes therein and adding Subpara. (B) re $3,000,000 threshold to qualify for credit on or after January 1, 2010, amended Subsec. (c) by changing completion amount required in Subdiv. (3) from 60% to 100% and adding Subdiv. (4) re administrative fee, and amended Subsec. (e) by replacing former provisions with provisions re post-certification remedy, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2010; P.A. 10-107 amended Subsec. (b)(2) by replacing “leased or purchased” with “a capital lease or purchase”, effective July 1, 2010, and applicable to income years commencing on or after January 1, 2010; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (b)(4) to specify that all or part of credit must be claimed in the income year in which expenditures were made, or in the three immediately succeeding income years and to delete provision re amount of allowable credit exceeding sum of taxes due, effective October 27, 2011; P.A. 13-232 amended Subsec. (b)(3) by eliminating requirement that credit be claimed in same year expenditures were made, effective June 25, 2013.
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Sec. 12-217ll. Tax credit for digital animation production companies. Regulations. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Revenue Services.
(2) “Department” means the Department of Economic and Community Development.
(3) “Digital animation production company” means a corporation, partnership, limited liability company or other business entity engaged exclusively in digital animation production activity on an ongoing basis, and that is qualified by the Secretary of the State to engage in business in the state.
(4) “State-certified digital animation production company” means a digital animation production company that (A) maintains studio facilities located within the state at which digital animation production activities are conducted, (B) employs at least two hundred full-time employees within the state, (C) is in compliance with regulations adopted pursuant to subsection (h) of this section, and (D) has been certified by the department.
(5) “Digital animation production activity” means the creation, development and production of computer-generated animation content for distribution or exhibition to the general public, but not for the production of any material for which records are required to be maintained under 18 USC 2257 with respect to sexually explicit content.
(6) “Full-time employee” means an employee required to work at least thirty-five hours or more per week, and who is not a temporary or seasonal employee.
(7) “Post-certification remedy” means the recapture, disallowance, recovery, reduction, repayment, forfeiture, decertification or any other remedy that would have the effect of reducing or otherwise limiting the use of a tax credit provided by this section.
(8) “Production expenses or costs” means all expenditures clearly and demonstrably incurred in the state in the development, preproduction, production or postproduction costs of a digital animation production activity, including:
(A) Expenditures for optioning or purchase of any intellectual property including, but not limited to, books, scripts, music or trademarks relating to the development or purchase of a script, screenplay or format, to the extent that such expenditures are less than thirty-five per cent of the production expenses or costs incurred by a digital animation production company in any income year. Such expenses or costs shall include all expenditures generally associated with the optioning or purchase of intellectual property, including option money, agent fees and attorney fees relating to the transaction, but shall not include any and all deferrals, deferments, profit participation or recourse or nonrecourse loans which the digital animation production company may negotiate in order to obtain the rights to the intellectual property;
(B) Expenditures incurred in the form of either compensation or purchases including production work, production equipment not eligible for the infrastructure tax credit provided in section 12-217kk, production software, postproduction work, postproduction equipment, postproduction software, set design, set construction, props, lighting, wardrobe, makeup, makeup accessories, special effects, visual effects, audio effects, actors, voice talent, film processing, music, sound mixing, editing, location fees, soundstages, rent, utilities, insurance, administrative support, systems support, all reasonably-related expenses in connection with digital animation production activity, and any and all other costs or services directly incurred in the state in connection with a state-certified digital animation production company;
(C) Expenditures for distribution, including preproduction, production or postproduction costs relating to the creation of trailers, marketing videos, short films, commercials, point-of-purchase videos and any and all content created on film or digital media, including the duplication of films, videos, CDs, DVDs and any and all digital files now in existence and those yet to be created for mass consumer consumption; the purchase, by a company in the state, of any and all equipment relating to the duplication or mass market distribution of any content created or produced in the state by any digital media format which is now in use and those formats yet to be created for mass consumer consumption; and
(D) “Production expenses or costs” does not include the following: (i) Compensation in excess of fifteen million dollars paid to any individual or entity representing an individual, for services provided in a digital animation production activity and, on or after January 1, 2010, compensation subject to Connecticut personal income tax in excess of twenty million dollars paid in the aggregate to any individuals or entities representing individuals, for star talent provided in a digital animation production activity; (ii) media buys, promotional events or gifts or public relations associated with the promotion or marketing of any digital animation production activity; (iii) deferred, leveraged or profit participation costs relating to any and all personnel associated with any and all aspects of the production, including, but not limited to, producer fees, director fees, talent fees and writer fees; (iv) costs relating to the transfer of the digital animation tax credits; (v) any amounts paid to persons or businesses as a result of their participation in profits from the exploitation of the digital animation production activity; and (vi) any expenses or costs relating to an independent certification, as required by subsection (c) of this section, or as the department may otherwise require, pertaining to the amount of production expenses or costs set forth by a state-certified digital animation company in its application for a digital animation tax credit.
(b) (1) The Department of Economic and Community Development shall administer a system of tax credit vouchers within the resources, requirements and purposes of this section for digital animation production companies undertaking digital animation production activity in the state.
(A) For income years commencing on or after January 1, 2007, but prior to January 1, 2010, any state-certified digital animation production company incurring production expenses or costs in excess of fifty thousand dollars shall be eligible for a credit against the tax imposed under chapter 207 or this chapter, equal to thirty per cent of such production expenses or costs.
(B) For income years commencing on or after January 1, 2010, (i) any state-certified digital animation production company incurring production expenses or costs of not less than one hundred thousand dollars, but not more than five hundred thousand dollars, shall be eligible for a credit against the tax imposed under chapter 207 or this chapter equal to ten per cent of such production expenses or costs, (ii) any such company incurring such expenses or costs of more than five hundred thousand dollars, but not more than one million dollars, shall be eligible for a credit against the tax imposed under chapter 207 or this chapter equal to fifteen per cent of such production expenses or costs, and (iii) any such company incurring such expenses or costs of more than one million dollars shall be eligible for a credit against the tax imposed under chapter 207 or this chapter equal to thirty per cent of such production expenses or costs.
(2) Any credit allowed pursuant to this section may be sold, assigned or otherwise transferred, in whole or in part, to one or more taxpayers, provided no credit, after issuance, may be sold, assigned or otherwise transferred, in whole or in part, more than three times.
(3) All or part of any credit allowed pursuant to this section shall be claimed against the tax imposed under chapter 207 or this chapter, for the income year in which the production expenses or costs were incurred, or in the three immediately succeeding income years. Any digital animation tax credit allowed under this section shall be nonrefundable.
(4) Any digital animation production company receiving a digital animation tax credit pursuant to this section shall not be eligible to apply for or receive a tax credit pursuant to section 12-217jj.
(c) (1) Not more frequently than twice during the income year of a state-certified digital animation production company, such company may apply to the department for a digital animation tax credit voucher, and shall provide with such application such information and independent certification as the department may require pertaining to the amount of such company's production expenses or costs incurred during the period for which such application is made. Such independent certification shall be provided by an audit professional chosen from a list compiled by the department. If the department determines that the company is eligible to be issued a tax credit voucher, the department shall enter on the voucher the amount of production expenses and costs incurred during the period for which the voucher is issued and the amount of tax credits issued pursuant to such voucher. The department shall provide a copy of such voucher to the commissioner upon request.
(2) The department shall charge a reasonable administrative fee sufficient to cover the department's costs to analyze applications submitted under this section.
(d) If a state-certified digital animation production company sells, assigns or otherwise transfers a credit under this section to another taxpayer, the transferor and transferee shall jointly submit written notification of such transfer to the department not later than thirty days after such transfer. If such transferee sells, assigns or otherwise transfers a credit under this section to a subsequent transferee, such transferee and such subsequent transferee shall jointly submit written notification of such transfer to the department not later than thirty days after such transfer. The notification after each transfer shall include the credit voucher number, the date of transfer, the amount of such credit transferred, the tax credit balance before and after the transfer, the tax identification numbers for both the transferor and the transferee, and any other information required by the department. Failure to comply with this subsection will result in a disallowance of the tax credit until there is full compliance on the part of the transferor and the transferee, and for a second or third transfer, on the part of all subsequent transferors and transferees. The department shall provide a copy of the notification of assignment to the commissioner upon request.
(e) Any state-certified digital animation production company that submits information to the department that it knows to be fraudulent or false shall, in addition to any other penalties provided by law, be liable for a penalty equal to the amount of such company's credit entered on the digital animation tax credit certificate issued under this section.
(f) No tax credits transferred pursuant to this section shall be subject to a post-certification remedy, and the department and the commissioner shall have no right, except in the case of possible material misrepresentation or fraud, to conduct any further or additional review, examination or audit of the expenditures or costs for which such tax credits were issued. The sole and exclusive remedy of the department and the commissioner shall be to seek collection of the amount of such tax credits from the entity that committed the fraud or misrepresentation.
(g) The aggregate amount of all tax credits which may be reserved by the department pursuant to this section shall not exceed fifteen million dollars in any one fiscal year.
(h) The department, in consultation with the commissioner, shall adopt regulations, in accordance with the provisions of chapter 54, as may be necessary for the administration of this section.
(P.A. 07-236, S. 3; June Sp. Sess. P.A. 07-4, S. 71; June Sp. Sess. P.A. 07-5, S. 15; June Sp. Sess. P.A. 09-3, S. 99; Sept. Sp. Sess. P.A. 09-8, S. 4, 5.)
History: P.A. 07-236 effective July 1, 2007, and applicable to income years commencing on or after January 1, 2007; June Sp. Sess. P.A. 07-4 amended Subsec. (c) by inserting “and independent certification”, effective July 1, 2007; June Sp. Sess. P.A. 07-5 amended Subsec. (f) to substitute “commission” for “commissioner” re issuance of tax credit voucher and make technical changes, effective October 6, 2007; June Sp. Sess. P.A. 09-3 made changes throughout to transfer responsibility for program from Commission on Culture and Tourism to Department of Economic and Community Development, amended Subsec. (a) by removing compensation in excess of $200,000,000 and costs of independent certification from definition of “production expenses or costs” in Subdiv. (8)(D), amended Subsec. (b)(1) by designating existing provisions re income years on or after January 1, 2007, as Subpara. (A), amending same to make applicable prior to January 1, 2010, and adding Subpara. (B) re allowable credit depending on amount spent, amended Subsec. (c) by designating existing provisions as Subdiv. (1), amending same to add provision re independent certification provided by audit professional chosen from list and adding Subdiv. (2) re administrative fee, amended Subsec. (e) by deleting “wilfully” re submission of information, and amended Subsec. (f) by replacing former provisions with provisions re post-certification remedy, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2010; Sept. Sp. Sess. P.A. 09-8 amended Subsec. (b) by replacing “not less than five hundred thousand one dollars” with “more than five hundred thousand dollars” in Subdiv. (1)(B), and by inserting “All or part of any” re credit and replacing “and may be carried forward for” with “or in” in Subdiv. (3), effective October 5, 2009.
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Sec. 12-217mm. Tax credit for green buildings. No initial credit voucher issued after November 30, 2017. (a) As used in this section:
(1) “Allowable costs” means the amounts chargeable to a capital account, including, but not limited to: (A) Construction or rehabilitation costs; (B) commissioning costs; (C) architectural and engineering fees allocable to construction or rehabilitation, including energy modeling; (D) site costs, such as temporary electric wiring, scaffolding, demolition costs and fencing and security facilities; and (E) costs of carpeting, partitions, walls and wall coverings, ceilings, lighting, plumbing, electrical wiring, mechanical, heating, cooling and ventilation but “allowable costs” does not include the purchase of land, any remediation costs or the cost of telephone systems or computers;
(2) “Brownfield” has the same meaning as in section 32-760;
(3) “Eligible project” means a real estate development project that is designed to meet or exceed the applicable LEED Green Building Rating System gold certification or other certification determined by the Commissioner of Energy and Environmental Protection to be equivalent, but if a single project has more than one building, “eligible project” means only the building or buildings within such project that is designed to meet or exceed the applicable LEED Green Building Rating System gold certification or other certification determined by the Commissioner of Energy and Environmental Protection to be equivalent;
(4) “Energy Star” means the voluntary labeling program administered by the United States Environmental Protection Agency designed to identify and promote energy-efficient products, equipment and buildings;
(5) “Enterprise zone” means an area in a municipality designated by the Commissioner of Economic and Community Development as an enterprise zone in accordance with the provisions of section 32-70;
(6) “LEED Accredited Professional Program” means the professional accreditation program for architects, engineers and other building professionals as administered by the United States Green Building Council;
(7) “LEED Green Building Rating System” means the Leadership in Energy and Environmental Design green building rating system developed by the United States Green Building Council as of the date that the project is registered with the United States Green Building Council;
(8) “Mixed-use development” means a development consisting of one or more buildings that includes residential use and in which no more than seventy-five per cent of the interior square footage has at least one of the following uses: (A) Commercial use; (B) office use; (C) retail use; or (D) any other nonresidential use that the Secretary of the Office of Policy and Management determines does not pose a public health threat or nuisance to nearby residential areas;
(9) “Secretary” means the Secretary of the Office of Policy and Management; and
(10) “Site improvements” means any construction work on, or improvement to, streets, roads, parking facilities, sidewalks, drainage structures and utilities.
(b) For income years commencing on and after January 1, 2012, there may be allowed a credit for all taxpayers against any tax due under the provisions of this chapter for the construction or renovation of an eligible project that meets the requirements of subsection (c) of this section, and, in the case of a newly constructed building, for which a certificate of occupancy has been issued not earlier than January 1, 2010.
(c) (1) To be eligible for a tax credit under this section a project shall: (A) Not have energy use that exceeds (i) seventy per cent of the energy use permitted by the state building code for new construction, or (ii) eighty per cent of the energy use permitted by the state energy code for renovation or rehabilitation of a building; and (B) use equipment and appliances that meet Energy Star standards, if applicable, including, but not limited to, refrigerators, dishwashers and washing machines.
(2) The credit shall be equivalent to a base credit as follows: (A) For new construction or major renovation of a building but not other site improvements certified by the LEED Green Building Rating System or other system determined by the Commissioner of Energy and Environmental Protection to be equivalent, (i) eight per cent of allowable costs for a gold rating or other rating determined by the Commissioner of Energy and Environmental Protection to be equivalent, and (ii) ten and one-half per cent of allowable costs for a platinum rating or other rating determined by the Commissioner of Energy and Environmental Protection to be equivalent; and (B) for core and shell or commercial interior projects, (i) five per cent of allowable costs for a gold rating or other rating determined by the Commissioner of Energy and Environmental Protection to be equivalent, and (ii) seven per cent of allowable costs for a platinum rating or other rating determined by the Commissioner of Energy and Environmental Protection to be equivalent. There shall be added to the base credit one-half of one per cent of allowable costs for a development project that is (I) a mixed-use development, (II) located in a brownfield or enterprise zone, (III) does not require a sewer extension of more than one-eighth of a mile, or (IV) located within one-quarter of a mile walking distance of publicly available bus transit service or within one-half of a mile walking distance of adequate rail, light rail, streetcar or ferry transit service, provided, if a single project has more than one building, at least one building shall be located within either such distance. Allowable costs shall not exceed two hundred fifty dollars per square foot for new construction or one hundred fifty dollars per square foot for renovation or rehabilitation of a building.
(d) (1) The Secretary of the Office of Policy and Management may issue an initial credit voucher upon determination that the applicant is likely, within a reasonable time, to place in service property qualifying for a credit under this section. Such voucher shall state: (A) The first income year for which the credit may be claimed, (B) the maximum amount of credit allowable, and (C) the expiration date by which such property shall be placed in service. The expiration date may be extended at the discretion of the secretary. Such voucher shall reserve the credit allowable for the applicant named in the application until the expiration date. If the expiration date is extended, the reservation of the tax credit may also be extended at the discretion of the secretary. No initial credit voucher may be issued by the secretary after November 30, 2017.
(2) The aggregate amount of all tax credits in initial credit vouchers issued by the secretary shall not exceed twenty-five million dollars.
(3) For each income year for which a taxpayer claims a credit under this section, the taxpayer shall obtain an eligibility certificate from an architect or professional engineer licensed to practice in this state and accredited through the LEED Accredited Professional Program or other program determined by the Commissioner of Energy and Environmental Protection to be equivalent. Such certificate shall consist of a certification, under the seal of such architect or engineer, that the building, base building or tenant space with respect to which the credit is claimed, meets or exceeds the applicable LEED Green Building Rating System gold certification, or other certification determined by the Commissioner of Energy and Environmental Protection to be equivalent in effect at the time such certification is made. Such certification shall set forth the specific findings upon which the certification is based and shall state that the architect or engineer is accredited through the LEED Accredited Professional Program or other program determined by the Commissioner of Energy and Environmental Protection to be equivalent.
(4) To obtain the credit, the taxpayer shall file the initial credit voucher described in subdivision (1) of this subsection, the eligibility certificate described in subdivision (3) of this subsection and an application to claim the credit with the Commissioner of Revenue Services. The commissioner shall approve the claim upon determination that the taxpayer has submitted the voucher and certification required under this subdivision. The applicant shall send a copy of all such documents to the secretary.
(e) (1) A taxpayer may claim not more than a total of twenty-five per cent of allowable costs in any income year, and any percentage of tax credit that the taxpayer would otherwise be entitled to in accordance with subsection (c) of this section may be carried forward for a period of not more than five years.
(2) Tax credits are fully assignable and transferable. A project owner, including, but not limited to, a nonprofit or institutional project organization, may transfer a tax credit to a pass-through partner in return for a lump sum cash payment.
(f) Notwithstanding any provision of the general statutes, any subsequent successor in interest to the property that is eligible for a credit in accordance with subsection (c) of this section may claim such credit if the deed transferring the property assigns the subsequent successor such right, unless the deed specifies that the seller shall retain the right to claim such credit. Any subsequent tenant of a building for which a credit was granted to a taxpayer pursuant to this section may claim the credit for the period after the termination of the previous tenancy that such credit would have been allowable to the previous tenant.
(g) The Secretary of the Office of Policy and Management shall establish a uniform application fee, in an amount not to exceed ten thousand dollars, which shall cover all direct costs of administering the tax credit program established pursuant to this section. Said secretary may hire a private consultant or outside firm to administer and review applications for said program.
(h) On or before July 1, 2013, the secretary, in consultation with the Commissioner of Revenue Services, shall prepare and submit to the Governor and the joint standing committees of the General Assembly having cognizance of matters relating to planning and development and finance, revenue and bonding, a written report containing (1) the number of taxpayers applying for the credits provided in this section; (2) the amount of such credits granted; (3) the geographical distribution of such credits granted; and (4) any other information the secretary deems appropriate. A preliminary draft of the report shall be submitted on or before July 1, 2012, to the Governor and the joint standing committees of the General Assembly having cognizance of matters relating to planning and development and finance, revenue and bonding. Such reports shall be submitted in accordance with the provisions of section 11-4a.
(i) Not later than January 1, 2011, the secretary, in consultation with the Commissioner of Revenue Services, shall adopt regulations, in accordance with the provisions of chapter 54, as necessary to implement the provisions of this section.
(Sept. Sp. Sess. P.A. 09-8, S. 7; P.A. 11-80, S. 1; P.A. 13-308, S. 12; June Sp. Sess. P.A. 17-2, S. 647; P.A. 18-26, S. 2.)
History: Sept. Sp. Sess. P.A. 09-8 effective October 5, 2009; pursuant to P.A. 11-80, “Commissioner of Environmental Protection” was changed editorially by the Revisors to “Commissioner of Energy and Environmental Protection”, effective July 1, 2011; P.A. 13-308 amended Subsec. (a)(2) by replacing reference to Sec. 32-9cc(g) with reference to Sec. 32-760, effective July 1, 2013; June Sp. Sess. P.A. 17-2 amended Subsec. (b) by adding “but prior to December 1, 2017,”, effective October 31, 2017; P.A. 18-26 amended Subsec. (b) by deleting “but prior to December 1, 2017,” and amended Subsec. (d)(1) by adding provision re prohibition of initial credit voucher issuance after November 30, 2017, effective May 29, 2018.
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Sec. 12-217nn. Qualified small business job creation tax credit program. No credit allowed in income years commencing on or after January 1, 2013. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Economic and Community Development;
(2) “Income year” means the income year or taxable year, as determined under this chapter or chapter 207 or 229, as the case may be;
(3) “Qualified small business” means an employer, subject to tax under this chapter or chapter 207 or 229, who employs less than fifty employees in Connecticut on the date of its application under subsection (c) of this section;
(4) “New employee” means a person hired after May 6, 2010, by the qualified small business during its income years commencing on or after January 1, 2010, and prior to January 1, 2013, to fill a new full-time job. A new employee does not include a person who was employed in Connecticut by a related person with respect to the qualified small business during the prior twelve months;
(5) “Full-time job” means a job in which an employee is required to work at least thirty-five or more hours per week for not less than forty-eight weeks in a calendar year. “Full-time job” does not include a temporary or seasonal job;
(6) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the qualified small business, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the qualified small business, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the qualified small business, or (D) a member of the same controlled group as the qualified small business; and
(7) “Control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. “Control”, with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of Section 267(c) of said Internal Revenue Code.
(b) (1) There is established a qualified small business job creation tax credit program for qualified small businesses whereby a qualified small business that hires a new employee who resides in the state may be allowed a tax credit against the tax imposed under this chapter or chapter 207 or 229, other than the liability imposed by section 12-707.
(2) The tax credit shall be an amount equal to two hundred dollars per month for each new employee hired.
(3) No tax credit shall be allowed for any new employee hired by a qualified small business in any income year commencing on or after January 1, 2013.
(4) No qualified small business may claim a tax credit for any new employee who is an owner, member or partner in the business or who is not employed at the close of the income year of the qualified small business.
(5) The qualified small business shall claim the tax credit for the income year in which the qualified small business hires a new employee and, if eligible, the two immediately succeeding income years. Any tax credit not used in an income year shall expire and shall not be refundable.
(c) To be eligible to claim the tax credit, a qualified small business shall apply to the commissioner in accordance with the provisions of this section. The application shall be on a form provided by the commissioner and shall contain sufficient information as required by the commissioner, including the activities that the qualified small business primarily engages in, the North American Industrial Classification System code of the qualified small business, the current number of employees employed by the qualified small business as of the application date, and the name and position or job title of the new employee hired.
(d) (1) Upon receipt of an application, the commissioner shall render a decision on the application, in writing, not later than thirty days after the date of its receipt by the commissioner. If the commissioner approves the application of the qualified small business, the commissioner shall issue a certification letter indicating that the tax credit will be available to be claimed by the qualified small business if the qualified small business otherwise meets the requirements of this section.
(2) The total amount of tax credits granted under this section and sections 12-217ii, 12-217oo and 12-217pp shall not exceed twenty million dollars in any one fiscal year.
(3) No qualified small business claiming the tax credit under this section with respect to a new employee may claim any credit against any tax under any other provision of the general statutes with respect to the same new employee.
(e) If the qualified small business is an S corporation or an entity treated as a partnership for federal income tax purposes, the tax credit may be claimed by the shareholders or partners of the qualified small business. If the qualified small business is a single member limited liability company that is disregarded as an entity separate from its owner, the tax credit may be claimed by the limited liability company's owner.
(f) For a qualified small business subject to the tax imposed under chapter 229, no credit allowed under this section shall exceed the amount of tax imposed by said chapter. The commissioner shall annually provide to the Commissioner of Revenue Services a list detailing all tax credits that have been approved and all qualified small businesses that have been issued a certification letter under subsection (d) of this section.
(P.A. 10-75, S. 8; P.A. 11-6, S. 131; Oct. Sp. Sess. P.A. 11-1, S. 21.)
History: P.A. 10-75 effective May 6, 2010, and applicable to income years commencing on or after January 1, 2010; P.A. 11-6 amended Subsec. (d)(2) by increasing cap on credits from $11,000,000 to $20,000,000, effective July 1, 2011; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (d)(2) to include Sec. 12-217pp in cap, effective October 27, 2011.
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Sec. 12-217oo. Vocational rehabilitation job creation tax credit program. No credit allowed for income years commencing on or after January 1, 2012. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Economic and Community Development;
(2) “Employer” means a person engaged in business who has employees and who is subject to tax under this chapter or chapter 207 or 229;
(3) “Income year” means the income year or taxable year, as determined under this chapter or chapter 207 or 229, as the case may be;
(4) “New qualifying employee” means a person who (A) is receiving vocational rehabilitation services from the Department of Aging and Disability Services, and (B) is hired by the employer to fill a new job after May 6, 2010, during the employer's income years commencing on or after January 1, 2010, and prior to January 1, 2012. A new qualifying employee does not include a person receiving vocational rehabilitation services pursuant to subparagraph (A) of this subdivision and who was employed in this state by a related person with respect to the employer during the prior twelve months;
(5) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the employer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the employer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the employer, or (D) a member of the same controlled group as the employer; and
(6) “Control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. “Control”, with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, other than paragraph (3) of said Section 267(c).
(b) (1) There is established a vocational rehabilitation job creation tax credit program for employers whereby an employer who hires a new qualifying employee who resides in this state and requires such employee to work at least twenty hours or more per week for not less than forty-eight weeks in a calendar year may be allowed a tax credit against the tax imposed under this chapter or chapter 207 or 229, other than the liability imposed by section 12-707.
(2) The tax credit shall be an amount equal to two hundred dollars per month for each new qualifying employee hired.
(3) No employer may claim a tax credit for any new qualifying employee who is an owner, member or partner in the business of the employer or who is not employed at the close of the income year of the employer.
(4) The employer shall claim the tax credit for the income year in which the employer hires a new qualifying employee and, if eligible, the two immediately succeeding income years. Any tax credit not used in an income year shall expire and shall not be refundable.
(c) To be eligible to claim the tax credit, an employer shall apply to the commissioner in accordance with the provisions of this section. The application shall be on a form provided by the commissioner and shall contain sufficient information as required by the commissioner, including the activities that the employer primarily engages in, the North American Industrial Classification System code of the employer and the name and position or job title of the new qualifying employee hired.
(d) (1) Upon receipt of an application, the commissioner shall render a decision on the application, in writing, not later than thirty days after the date of its receipt by the commissioner. If the commissioner approves the application of the employer, the commissioner shall issue a certification letter indicating that the tax credit will be available to be claimed by the employer if the employer otherwise meets the requirements of this section.
(2) The total amount of tax credits granted under this section and sections 12-217ii, 12-217nn and 12-217pp shall not exceed twenty million dollars in any one fiscal year.
(3) No employer claiming the tax credit under this section, with respect to a new qualifying employee, may claim any credit against any tax under any other provision of the general statutes with respect to the same new qualifying employee.
(e) If the employer is an S corporation or an entity treated as a partnership for federal income tax purposes, the tax credit may be claimed by the shareholders or partners of the employer. If the employer is a single member limited liability company that is disregarded as an entity separate from its owner, the tax credit may be claimed by the limited liability company's owner.
(f) For an employer subject to the tax imposed under chapter 229, no credit allowed under this section shall exceed the amount of tax imposed by chapter 229. The commissioner shall annually provide to the Commissioner of Revenue Services a list detailing all tax credits that have been approved and all employers that have been issued a certification letter under subsection (d) of this section.
(g) No tax credit shall be allowed under this section for any new qualifying employee hired by an employer in any income year commencing on or after January 1, 2012.
(P.A. 10-75, S. 9; June Sp. Sess. P.A. 10-1, S. 18; P.A. 11-6, S. 132; 11-44, S. 52; Oct. Sp. Sess. P.A. 11-1, S. 22; June 12 Sp. Sess. P.A. 12-1, S. 60; P.A. 19-157, S. 33.)
History: P.A. 10-75 effective May 6, 2010, and applicable to income years commencing on or after January 1, 2010; June Sp. Sess. P.A. 10-1 amended Subsec. (a)(4) by redefining “new qualifying employee”, effective June 22, 2010, and applicable to income years commencing on or after January 1, 2010; P.A. 11-6 amended Subsec. (d)(2) by increasing cap on credits from $11,000,000 to $20,000,000, effective July 1, 2011; P.A. 11-44 amended Subsec.(a)(4) by replacing “Bureau of Rehabilitation Services within the Department of Social Services or from the Board of Education and Services for the Blind” with “Bureau of Rehabilitative Services”, effective July 1, 2011; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (a)(4)(B) to add sunset date of January 1, 2012, amended Subsec. (d)(2) to include Sec. 12-217pp in cap, and added Subsec. (g) re sunset date of January 1, 2012, effective October 27, 2011; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a)(4) by replacing “Bureau of Rehabilitative Services” with “Department of Rehabilitation Services”, effective July 1, 2012; P.A. 19-157 amended Subsec. (a)(4) by replacing “Department of Rehabilitation Services” with “Department of Aging and Disability Services”.
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Sec. 12-217pp. Job expansion tax credit program. No credit allowed for new jobs created on or after January 1, 2014. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Economic and Community Development;
(2) “Control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. “Control”, with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of said Section 267(c);
(3) “Full-time job” means a job in which an employee is required to work at least thirty-five hours per week for not less than forty-eight weeks in a calendar year. “Full-time job” does not include a temporary or seasonal job;
(4) “Income year” means, with respect to entities subject to the insurance premiums tax under chapter 207, the corporation business tax under this chapter, the utility companies tax under chapter 212 or the income tax under chapter 229, the income year as determined under each of said chapters, as the case may be;
(5) “New employee” means a person who resides in this state and is hired by a taxpayer on or after January 1, 2012, and prior to January 1, 2014, to fill a new job. “New employee” does not include a person who was employed in this state by a related person with respect to a taxpayer during the prior twelve months;
(6) “New job” means a job that did not exist in this state prior to a taxpayer's application to the commissioner for certification under this section for a job expansion tax credit, is filled by a new, qualifying or veteran employee, and (A) is a full-time job, or (B) in the case of a qualifying employee under subparagraph (B) of subdivision (7) of this subsection, is a job in which an employee is required to work at least twenty hours per week for not less than forty-eight weeks in a calendar year;
(7) “Qualifying employee” means a new employee who, at the time of hiring by the taxpayer:
(A) (i) Is receiving unemployment compensation, or (ii) has exhausted unemployment compensation benefits and has not had an intervening full-time job; or
(B) Is (i) receiving vocational rehabilitation services from the Department of Aging and Disability Services, (ii) receiving employment services from the Department of Mental Health and Addiction Services, or (iii) participating in employment opportunities and day services, as defined in section 17a-226, operated or funded by the Department of Developmental Services;
(8) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer;
(9) “Taxpayer” means a person that (A) has been in business for at least twelve consecutive months prior to the date of the taxpayer's application to the commissioner for certification under this section for a job expansion tax credit, and (B) is subject to tax under this chapter or chapter 207, 212 or 229; and
(10) “Veteran employee” means a new employee who, at the time of hiring by the taxpayer, is (A) a member of the armed forces, as defined in section 27-103, or (B) a veteran, as defined in section 27-103.
(b) (1) There is established a job expansion tax credit program whereby a taxpayer may be allowed a credit against the tax imposed under this chapter or chapter 207, 212 or 229, other than the liability imposed by section 12-707, for each new, qualifying or veteran employee hired on or after January 1, 2012, and prior to January 1, 2014. For taxpayers that employ not more than fifty employees in full-time jobs in this state on the date of application to the commissioner for certification under this section, the creation of at least one new job in this state shall be required for said tax credit. For taxpayers that employ more than fifty, but not more than one hundred employees in full-time jobs in this state on the date of application to the commissioner for certification under this section, the creation of at least five new jobs in this state shall be required for said tax credit. For taxpayers that employ more than one hundred employees in full-time jobs in this state on the date of application to the commissioner for certification under this section, the creation of at least ten new jobs in this state shall be required for said tax credit.
(2) For the purposes of determining the number of new jobs a taxpayer is required to create in order to claim a credit under this section, the number of employees working in full-time jobs the taxpayer employs in this state on the date of its application to the commissioner for certification under this section shall apply to such taxpayer for the duration of such certification.
(c) The amount of the credit shall be:
(1) Five hundred dollars per month for each new employee; or
(2) Nine hundred dollars per month for each qualifying or veteran employee.
(d) (1) The taxpayer shall claim the credit in the income year in which it is earned and, if eligible, in the two immediately succeeding income years. Any credit not claimed by the taxpayer in an income year shall expire and shall not be refundable.
(2) If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, the shareholders or partners of such taxpayer may claim the credit. If the taxpayer is a single member limited liability company that is disregarded as an entity separate from its owner, the limited liability company's owner may claim the credit.
(3) No taxpayer shall claim a credit for any new, qualifying or veteran employee who is an owner, member or partner in the business or who is not employed by the taxpayer at the close of the taxpayer's income year.
(4) No taxpayer claiming the credit under this section with respect to a new, qualifying or veteran employee shall claim any credit against any tax under any other provision of the general statutes with respect to the same new, qualifying or veteran employee.
(e) (1) To be eligible to claim the credit, a taxpayer shall apply to the commissioner in accordance with the provisions of this section. The application shall be on a form provided by the commissioner and shall contain sufficient information as required by the commissioner, including, but not limited to, the activities that the taxpayer primarily engages in, the North American Industrial Classification System code of the taxpayer, the current number of employees employed by the taxpayer as of the application date, and if applicable, the name and position or job title of the new, qualifying or veteran employee. The commissioner shall consult with the Labor Commissioner, the Commissioner of Aging and Disability Services, the Commissioner of Veterans Affairs, the Commissioner of Mental Health and Addiction Services or the Commissioner of Developmental Services, as applicable, for any verification the commissioner deems necessary of unemployment compensation or vocational rehabilitation services received by a qualifying employee, or of service in the armed forces of the United States by a veteran employee. The commissioner may impose a fee for such application as the commissioner deems appropriate.
(2) (A) Upon receipt of an application, the commissioner shall render a decision, in writing, on each completed application not later than thirty days after the date of its receipt by the commissioner. If the commissioner approves such application, the commissioner shall issue a certification letter to the taxpayer indicating that the credit will be available to be claimed by the taxpayer if the taxpayer and the new, qualifying or veteran employee otherwise meet the requirements of this section.
(B) On and after January 1, 2014, the commissioner shall render a decision upon such completed applications and, if approved, issue such certification letters, as provided in subparagraph (A) of this subdivision, that pertain to qualifying or veteran employees who meet the requirements of this section, and with respect to whom credits pursuant to this section have previously been granted. The commissioner may, in his or her discretion, render a decision upon applications that pertain to new employees, with respect to whom credits pursuant to this section have previously been granted, when such applications are consistent with the economic development priorities of the state.
(f) (1) The total amount of credits granted under this section and sections 12-217ii, 12-217nn and 12-217oo shall not exceed twenty million dollars in any one fiscal year or forty million dollars over the duration of the job expansion tax credit program, including the two immediately succeeding income years after such credits are granted.
(2) If a taxpayer was issued an eligibility certificate by the commissioner prior to January 1, 2012, to receive a jobs creation tax credit pursuant to section 12-217ii, the provisions of the tax credit program pursuant to said section 12-217ii shall apply to such taxpayer for the duration of the eligibility certificate.
(3) If a taxpayer is issued a certification letter by the commissioner prior to January 1, 2013, to receive a qualified small business job creation tax credit pursuant to section 12-217nn, the provisions of the tax credit program pursuant to said section 12-217nn shall apply to such taxpayer for the duration of such certification.
(4) If a taxpayer was issued a certification letter by the commissioner prior to January 1, 2012, to receive a vocational rehabilitation job creation tax credit pursuant to section 12-217oo, the provisions of the tax credit program pursuant to said section 12-217oo shall apply to such taxpayer for the duration of such certification.
(g) No credit allowed under this section shall exceed the amount of tax imposed on a taxpayer under this chapter or chapter 207, 212 or 229. The commissioner shall annually provide to the Commissioner of Revenue Services a list detailing all credits that have been approved and all taxpayers that have been issued a certification letter under this section.
(h) No credit shall be allowed under this section for any new jobs created on or after January 1, 2014.
(Oct. Sp. Sess. P.A. 11-1, S. 19; June 12 Sp. Sess. P.A. 12-1, S. 61, 62, 198; P.A. 13-123, S. 4; 13-232, S. 11; P.A. 14-60, S. 5; P.A. 16-167, S. 17; P.A. 19-157, S. 34, 35; P.A. 21-79, S. 19.)
History: Oct. Sp. Sess. P.A. 11-1 effective January 1, 2012, and applicable to income or taxable years commencing on or after that date; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a)(7)(B) by replacing “Bureau of Rehabilitative Services” with “Department of Rehabilitation Services” and amended Subsec. (e)(1) by replacing “director of the Bureau of Rehabilitative Services” with Commissioner of Rehabilitation Services”, effective July 1, 2012, and further amended Subsec. (a)(7)(B) by designating existing provision as clause (i) and adding clauses (ii) and (iii) re Department of Mental Health and Addiction Services and Department of Developmental Services and further amended Subsec. (e)(1) by adding “Mental Health and Addiction Services or Developmental Services”, effective July 1, 2012, and applicable to income or taxable years commencing on or after January 1, 2012; P.A. 13-123 made technical changes in Subsec. (e)(1), effective June 18, 2013; P.A. 13-232 amended Subsec. (e)(2) by designating existing provisions as Subpara. (A) and adding Subpara. (B) re applications received on and after January 1, 2014, and amended Subsec. (f)(1) by adding provision re $40,000,000 limit over duration of tax credit program, effective July 1, 2013; P.A. 14-60 made technical changes in Subsec. (e)(2)(A); P.A. 16-167 amended Subsec. (e)(1) to replace “Commissioner of Veterans' Affairs” with “Commissioner of Veterans Affairs”, effective July 1, 2016; P.A. 19-157 amended Subsec (a)(7) by replacing “Department of Rehabilitation Services” with “Department of Aging and Disability Services”; P.A. 19-157 amended Subsec. (e)(1) by replacing “Commissioner of Rehabilitation Services” with “Commissioner of Aging and Disability Services”; P.A. 21-79 amended Subsec. (a)(10) by redefining “veteran employee”.
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Sec. 12-217qq. Tax credit for employers making certain student loan payments. (a) As used in this section:
(1) “Authority” means the Connecticut Higher Education Supplemental Loan Authority;
(2) “Commissioner” means the Commissioner of Revenue Services;
(3) “Eligible education loan” means an authority loan, as defined in section 10a-223, that is in repayment;
(4) “Full-time” means required to work at least thirty-five hours per week;
(5) “Qualified employee” means an individual who (A) is a resident of the state, (B) has earned his or her first bachelor's degree from an institution of higher education in the immediately preceding five-year period, (C) is employed full-time in the state by a qualified employer, (D) is not an owner, member or partner of such qualified employer or a family member of an owner, member or partner of such qualified employer, and (E) has received an eligible education loan;
(6) “Qualified employer” means a corporation licensed to operate a business in the state that is subject to tax under this chapter or chapter 207; and
(7) “Qualified small business” means a qualified employer that has gross receipts of not more than five million dollars for the calendar or income year, as applicable, for which a credit under this section is allowed.
(b) (1) For calendar or income years commencing on and after January 1, 2022, each qualified employer that employs a qualified employee and makes a payment directly to the authority on behalf of such qualified employee on an eligible education loan that was used to finance the qualified employee's attendance at an institution of higher education may claim a credit against the tax imposed under this chapter or chapter 207. Such credit shall be granted in an amount equal to fifty per cent of the amount of payments made to the outstanding principal balance of such loans by the qualified employer during the calendar or income year, provided (A) the credit shall not be allowed against the tax imposed under this chapter and chapter 207 for the same loan payment, and (B) the amount of credit allowed for any calendar or income year with respect to a specific qualified employee shall not exceed two thousand six hundred twenty-five dollars.
(2) A qualified employer may claim the credit under subdivision (1) of this subsection for a payment made during the part of the calendar or income year the qualified employee worked and resided in the state, provided a qualified employee who worked and resided in the state for any part of a month shall be deemed to have worked and resided in the state for the entire month for purposes of this section.
(c) A qualified employer that claims the credit under subsection (b) of this section shall provide any documentation required by the commissioner in a form and manner prescribed by the commissioner.
(d) (1) A qualified small business may apply to the commissioner in accordance with the provisions of subdivision (2) of this subsection to exchange any credit allowed under subsection (b) of this section for a credit refund equal to the value of the credit. Any amount of credit refunded under this subsection shall be refunded to the qualified small business in accordance with the provisions of this chapter or chapter 207, as applicable. No interest shall be allowed or paid on any amount of credit refunded under this subsection. Any amount of credit refunded under this subsection shall be subject to the provisions of section 12-39h.
(2) Each application for a credit refund under this subsection shall be filed, on such forms and containing such information as prescribed by the commissioner, on or before the original due date of the return prescribed under section 12-205 or 12-222, as applicable, for the calendar or income year for which such credit was earned or, if applicable, the extended due date of such year's return. No application for a credit refund under this subsection may be filed after the due date or extended due date, as the case may be, of such return.
(P.A. 19-86, S. 1; P.A. 22-118, S. 419.)
History: P.A. 19-86 effective January 1, 2022, and applicable to income years commencing on or after January 1, 2022; P.A. 22-118 amended Subsec. (a) by adding new Subdiv. (2) defining “commissioner”, redesignating existing Subdivs. (2) to (5) as Subdivs. (3) to (6), redefining “eligible education loan” in redesignated Subdiv. (3), deleting former Subdiv. (6) re definition of “student loan” and adding Subdiv. (7) defining “qualified small business”, amended Subsec. (b) by replacing “payment directly to the authority on an eligible education loan on behalf of such qualified employee” with “payment directly to the authority on behalf of such qualified employee on an eligible education loan that was used to finance the qualified employee's attendance at an institution of higher education” in Subdiv. (1) and adding references to calendar year, amended Subsec. (c) by making a technical change, and added Subsec. (d) re application by qualified small business to exchange credit for credit refund, effective May 7, 2022, and applicable to calendar and income years commencing on or after January 1, 2022.
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Secs. 12-217rr to 12-217yy. Reserved for future use.
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Sec. 12-217zz. Limit on credits under this chapter. (a) Except as otherwise provided in subsection (b) of this section and sections 12-217aaa and 12-217bbb, the amount of tax credit or credits otherwise allowable against the tax imposed under this chapter shall be as follows:
(1) For any income year commencing on or after January 1, 2002, and prior to January 1, 2015, the amount of tax credit or credits otherwise allowable shall not exceed seventy per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits;
(2) For any income year commencing on or after January 1, 2015, the amount of tax credit or credits otherwise allowable shall not exceed fifty and one one-hundredths per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits;
(3) Notwithstanding the provisions of subdivision (2) of this subsection, any taxpayer that possesses excess credits may utilize the excess credits as follows:
(A) For income years commencing on or after January 1, 2016, and prior to January 1, 2017, the aggregate amount of tax credits and excess credits allowable shall not exceed fifty-five per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits;
(B) For income years commencing on or after January 1, 2017, and prior to January 1, 2018, the aggregate amount of tax credits and excess credits allowable shall not exceed sixty per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits;
(C) For income years commencing on or after January 1, 2018, and prior to January 1, 2019, the aggregate amount of tax credits and excess credits allowable shall not exceed sixty-five per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits;
(D) For purposes of this subdivision, “excess credits” means any remaining credits available under section 12-217j, 12-217n or 32-9t after tax credits are utilized in accordance with subdivision (2) of this subsection;
(4) Notwithstanding the provisions of subdivision (2) of this subsection, the aggregate amount allowable of tax credits and any remaining credits available under section 12-217j or 12-217n after tax credits are utilized in accordance with said subdivision shall not exceed (A) for income years commencing on or after January 1, 2022, and prior to January 1, 2023, sixty per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits, and (B) for income years commencing on or after January 1, 2023, seventy per cent of the amount of tax due from such taxpayer under this chapter with respect to any such income year of the taxpayer prior to the application of such credit or credits.
(b) The amount of the rebate computed under section 32-7t shall be treated as a credit and may exceed the amount specified in subsection (a) of this section. If the amount of the rebate allowed pursuant to section 32-7t exceeds the taxpayer's liability for the tax imposed under this chapter, the commissioner shall treat such excess as an overpayment and shall refund the amount of such excess, without interest, to the taxpayer.
(May 9 Sp. Sess. P.A. 02-1, S. 59; P.A. 11-6, S. 78; P.A. 15-244, S. 88; Dec. Sp. Sess. P.A. 15-1, S. 29; June Sp. Sess. P.A. 17-2, S. 703; P.A. 19-117, S. 349; June Sp. Sess. P.A. 21-2, S. 426; P.A. 22-118, S. 423.)
History: May 9 Sp. Sess. P.A. 02-1 effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002; P.A. 11-6 designated existing provisions as Subsec. (a) and amended same to add exception re Subsec. (b) provisions, and added Subsec. (b) re allowable credit for average monthly net employee gain in income years 2011 and 2012, effective May 4, 2011, and applicable to income years commencing on or after January 1, 2011; P.A. 15-244 amended Subsec. (a) to designate 70 per cent limit as Subdiv. (1) and amend same to limit to income years commencing on or after January 1, 2002, and prior to January 1, 2015, and add Subdiv. (2) re 50.01 per cent limit for income years commencing on or after January 1, 2015, effective June 30, 2015; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (a) by adding Subdiv. (3) re use of excess credits by taxpayer possessing excess credits for income years commencing on or after January 1, 2016, January 1, 2017, January 1, 2018, and January 1, 2019, and adding Subdiv. (4) defining “excess credits”, effective December 29, 2015; June Sp. Sess. P.A. 17-2 amended Subsec. (a) by adding reference to Secs. 12-217aaa and 12-217bbb, effective October 31, 2017; P.A. 19-117 amended Subsec. (a) by deleting Subdiv. (3)(D) re aggregate amount of tax credits for income years commencing on or after January 1, 2019, and made a technical change, effective June 26, 2019, and applicable to income years commencing on or after January 1, 2019; June Sp. Sess. P.A. 21-2 amended Subsec. (a) by deleting reference to notwithstanding any other provision of law, redesignating existing Subdiv. (4) as Subdiv. (3)(D), and adding new Subdiv. (4) re aggregate amount of tax credits for income years commencing on or after January 1, 2022, and made technical and conforming changes, effective June 23, 2021; P.A. 22-118 amended Subsec. (b) by deleting existing provisions and adding provisions re JobsCT tax rebates computed under Sec. 32-7t, effective July 1, 2022, and applicable to taxable years commencing on or after January 1, 2023.
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Sec. 12-217aaa. Accumulated research and development tax credits. (a) As used in this section, (1) “accumulated credits” means the amount of credits allowed, in accordance with the provisions of section 12-217n, that have not been taken through an applicant's last income year completed prior to the date of an application submitted as provided in subsection (b) of this section, (2) “commissioner” means the Commissioner of Economic and Community Development, and (3) “human capital investment” means the amount paid or incurred by a corporation on (A) job training which occurs in this state for persons who are employed in this state; (B) work education programs in this state, including, but not limited to, programs in public high schools and work education-diversified occupations programs in this state; (C) worker training and education for persons who are employed in this state provided by institutions of higher education in this state; (D) donations or capital contributions to institutions of higher education in this state for improvements or advancements of technology, including physical plant improvements; (E) planning, site preparation, construction, renovation or acquisition of facilities in this state for the purpose of establishing a child care center, as described in section 19a-77, in this state to be used primarily by the children of employees who are employed in this state; (F) subsidies to employees who are employed in this state for child care to be provided in this state; and (G) contributions made to the Individual Development Account Reserve Fund, as defined in section 31-51ww.
(b) The commissioner shall establish and administer a program to allow businesses in the state to utilize accumulated credits against the tax imposed under this chapter and chapter 219 in exchange for (1) capital projects, planned or underway, in the state that propose to (A) expand the scale or scope of such business, (B) increase employment at such business, or (C) generate a substantial return to the state economy, or (2) human capital investment. A business seeking to utilize accumulated credits under this section shall submit to the commissioner, on forms provided by the commissioner, an application that shall include, but not be limited to: (A) A detailed plan outlining the capital project or human capital investment, (B) the term of such project or investment, (C) the estimated costs of such project or investment, and (D) the amount of accumulated credits the business proposes it be allowed to utilize under this section. The commissioner shall perform an econometric analysis of each application and shall only approve an application if he or she determines that such project or investment will generate revenues for the state that exceed the amount of the accumulated credits proposed to be utilized. The amount of such accumulated credits shall be subject to confirmation, in accordance with the provisions of this title, by the Commissioner of Revenue Services in consultation with the commissioner.
(c) The commissioner shall determine, in consultation with the Commissioner of Revenue Services and the Secretary of the Office of Policy and Management, when such accumulated credits may be utilized by the business, provided the commissioner shall not approve the utilization of the accumulated credits until the capital project or human capital investment under subsection (b) of this section generates revenues for the state that exceed the amount of the accumulated credits proposed to be utilized.
(d) The total amount of accumulated credits used under this section, at full value, and the investments made under section 12-217bbb shall not exceed fifty million dollars in the aggregate.
(e) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of this section.
(f) Not later than February 1, 2019, and annually thereafter, the commissioner shall include in the annual report required under section 32-1m: (1) Information on the number of applications received and the number of applications approved under this section; (2) the status of the capital projects or human capital investments associated with such approved applications; (3) the amount of accumulated credits that are proposed to be utilized under this section; and (4) (A) the amount and type of state revenue generated in connection with each such capital project or human capital investment to date, and (B) the projected amount and type of such revenue for the five succeeding fiscal years after completion of such capital project or human capital investment.
(June Sp. Sess. P.A. 17-2, S. 701; P.A. 21-188, S. 1.)
History: June Sp. Sess. P.A. 17-2 effective October 31, 2017; P.A. 21-188 added Subsec. (a)(3) re definition of “human capital investment”, amended Subsec. (b) by designating existing provision re capital projects as new Subdiv. (1), adding new Subdiv. (2) re human capital investment and made conforming changes, effective July 1, 2021, and applicable to income years beginning January 1, 2021.
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Sec. 12-217bbb. Accumulated research and experimental expenditures tax credits and accumulated research and development tax credits. Innovation investment fund tax credit auction. (a) As used in this section, (1) “accumulated credits” means credits allowed under sections 12-217j and 12-217n that have not been taken through the last income year completed prior to the date of an auction under this section, (2) “commissioner” means the Commissioner of Economic and Community Development, and (3) “chief executive officer” means the chief executive officer of Connecticut Innovations, Incorporated.
(b) (1) The commissioner, in consultation with the Commissioner of Revenue Services and the chief executive officer, shall hold an innovation investment fund tax credit auction, at such time and as frequently as the commissioner deems appropriate and effective, to allow taxpayers with accumulated credits to utilize such credits in exchange for making an investment as provided under subsection (c) of this section.
(2) For each tax credit auction, the commissioner shall specify, in consultation with the chief executive officer, the deadline for submitting a bid, the minimum number of cents for each dollar of accumulated credit that may be bid and the information required to be included with such bid. Each bidder shall submit a sealed bid and the commissioner shall select, in consultation with the chief executive officer, the winning bid or bids based upon the amounts of accumulated credits the bidder proposes to exchange, the amounts the bidder proposes to invest for such exchange and any other criteria the commissioner and the chief executive officer deem appropriate to evaluate the bids.
(c) The commissioner shall invest the amounts received from the winning bidder or bidders in the winning bidder's corporate venture fund, subject to the following requirements:
(1) All investments shall be made under the advisement of a representative of Connecticut Innovations, Incorporated, who is a member of the corporate venture fund's investment committee;
(2) The amount invested in a corporate venture fund pursuant to this subsection shall be not less than five million dollars and not more than ten million dollars;
(3) All such amounts invested shall be invested in (A) start-up businesses located in the state, or (B) spin-off companies located in the state from the bidder's research and development department;
(4) The portion of profits attributable to such investments shall be divided equally between the state and the bidder and the state's share shall be deposited in the General Fund; and
(5) The bidder agrees to reinvest the bidder's profits attributable to such investments in the bidder's corporate venture fund.
(d) In lieu of holding a tax credit auction under subsection (b) of this section, the commissioner, in consultation with the chief executive officer, may enter into an agreement with a taxpayer with accumulated credits to allow such taxpayer to utilize such credits in exchange for making an investment as provided under subsection (c) of this section. The requirements applicable to investments under said subsection (c) shall apply to investments made pursuant to an agreement under this subsection, except that the number of cents for each dollar of accumulated credit may be negotiated by the commissioner, in consultation with the Commissioner of Revenue Services, and the taxpayer.
(e) The commissioner shall continue to hold tax credit auctions pursuant to subsection (b) of this section or proactively seek agreements under subsection (d) of this section, or both, until a minimum of two deals with different corporate venture funds are reached, provided nothing in this subsection shall be construed to prohibit the commissioner from continuing to hold such auctions or enter into such agreements after two deals have been reached.
(f) The total amount of investments made under this section and the accumulated credits used under section 12-217aaa, at full value, shall not exceed fifty million dollars in the aggregate.
(g) (1) On and after July 1, 2020, the credits allowed to be used pursuant to subsection (b) or (d) of this section may be claimed against the tax imposed under chapter 219 or, notwithstanding the limits imposed under section 12-217zz, this chapter, with respect to the following income years of the taxpayer: (A) With respect to the income year in which the taxpayer made the investment required under this section and the next succeeding income year, zero per cent; and (B) with respect to the second full income year succeeding the year in which the taxpayer made the investment required under this section, an amount and on a schedule for such second full income year and next succeeding income years as agreed to by the commissioner, in consultation with the Commissioner of Revenue Services, and the taxpayer that made the investment.
(2) Credits allowed to be used pursuant to subsection (b) or (d) of this section may be sold, assigned or otherwise transferred, in whole or in part.
(h) Tax credit auctions and agreements under this section may be held or entered into for five years after the date the first such auction or agreement is held or entered into, whichever is earlier.
(i) Any taxpayer with accumulated credits may sell, assign or otherwise transfer such accumulated credits, in whole or in part, to one or more taxpayers for the sole purpose of exchanging such accumulated credits in accordance with the provisions of subsections (b) to (d), inclusive, of this section. Such accumulated credits may not be sold, assigned or otherwise transferred, in whole or in part, more than once.
(June Sp. Sess. P.A. 17-2, S. 702; P.A. 18-178, S. 50.)
History: June Sp. Sess. P.A. 17-2 effective October 31, 2017; P.A. 18-178 amended Subsec. (g) by replacing “under this section” with “to be used pursuant to subsection (b) or (d) of this section” in Subdivs. (1) and (2), and adding Subsec. (i) re accumulated credits, effective July 1, 2018.
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Sec. 12-218. Apportionment of net income. (a) Any taxpayer which is taxable both within and without this state shall apportion its net income as provided in this section. For purposes of apportionment of income under this section, a taxpayer is taxable in another state if in such state such taxpayer conducts business and is subject to a net income tax, a franchise tax for the privilege of doing business, or a corporate stock tax, or if such state has jurisdiction to subject such taxpayer to such a tax, regardless of whether such state does, in fact, impose such a tax.
(b) Except as otherwise provided in this chapter, on and after January 1, 2016, the net income of the taxpayer shall be apportioned within and without the state by means of an apportionment fraction. The apportionment fraction shall represent the part of the taxpayer's gross receipts from sales or other sources during the income year, computed according to the method of accounting used in the computation of its entire net income, which is assignable to the state, and excluding any gross receipts attributable to an international banking facility as defined in section 12-217. For the purposes of this subsection:
(1) Gross receipts from sales of tangible personal property are assignable to this state if the property is delivered or shipped to a purchaser within this state, other than a company which qualifies as a Domestic International Sales Corporation (DISC) as defined in Section 992 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and as to which a valid election under Subsection (b) of said Section 992 to be treated as a DISC is effective, regardless of the F.O.B. point or other conditions of the sale.
(2) Gross receipts from services are assignable to this state if the market for services is in this state. The taxpayer's market for the services is in this state if and to the extent the service is used at a location in this state.
(3) Gross receipts from the rental, lease or license of real or tangible personal property are assignable to this state to the extent such property is situated within the state.
(4) Gross receipts from the rental, lease or license of intangible property are assignable to this state if and to the extent the property is used in this state. Intangible property utilized in marketing a good or service to a consumer is used in this state if that good or service is purchased by a consumer in this state.
(5) Gross receipts from interest managed or controlled within the state are assignable to this state.
(6) Gross receipts from the sale or other disposition of real property, tangible personal property or intangible property are excluded from the calculation of the apportionment fraction if such property is not held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business.
(7) Gross receipts, other than those receipts described in subdivisions (1) to (6), inclusive, of this subsection, are assignable to this state to the extent the taxpayer's market for the sales is in this state.
(8) If a taxpayer concludes that it cannot reasonably determine the assignment of its receipts in accordance with subdivisions (1) to (7), inclusive, of this subsection, such taxpayer may petition the commissioner for approval to use a methodology that reasonably approximates the assignment of such receipts provided for in this subsection. Any such petition shall be submitted not later than sixty days prior to the due date of the return for the first income year to which the petition applies, determined with regard to any extension of time for filing such return. The commissioner shall grant or deny such petition before such due date.
(c) Any motor bus company which is taxable both within and without this state shall apportion its net income derived from carrying of passengers for hire by means of an apportionment fraction, the numerator of which shall represent the total number of miles operated within this state and the denominator of which shall represent the total number of miles operated everywhere, but income derived by motor bus companies from sources other than the carrying of passengers for hire shall be apportioned as herein otherwise provided.
(d) Any motor carrier which transports property for hire and which is taxable both within and without this state shall apportion its net income derived from carrying of property for hire by means of an apportionment fraction, the numerator of which shall represent the total number of miles operated within this state and the denominator of which shall represent the total number of miles operated everywhere, but income derived by motor carriers from sources other than the carrying of property for hire shall be apportioned as herein otherwise provided.
(e) (1) Each taxpayer that provides management, distribution or administrative services, as defined in this subsection, to or on behalf of a regulated investment company, as defined in Section 851 of the Internal Revenue Code shall apportion its net income derived, directly or indirectly, from providing management, distribution or administrative services to or on behalf of a regulated investment company, including net income received directly or indirectly from trustees, and sponsors or participants of employee benefit plans which have accounts in a regulated investment company, in the manner provided in this subsection. Income derived by such taxpayer from sources other than the providing of management, distribution or administrative services to or on behalf of a regulated investment company shall be apportioned as provided in this chapter.
(2) The numerator of the apportionment fraction shall consist of the sum of the Connecticut receipts, as described in subdivision (3) of this subsection. The denominator of the apportionment fraction shall consist of the total receipts from the sale of management, distribution or administrative services to or on behalf of all the regulated investment companies. For purposes of this subsection, “receipts” means receipts computed according to the method of accounting used by the taxpayer in the computation of net income.
(3) For purposes of this subsection, Connecticut receipts shall be determined by multiplying receipts from the rendering of management, distribution or administrative services to or on behalf of each separate regulated investment company by a fraction (A) the numerator of which shall be the average of (i) the number of shares on the first day of such regulated investment company's taxable year, for federal income tax purposes, which ends within or at the same time as the taxable year of the taxpayer, that are owned by shareholders of such regulated investment company then domiciled in this state and (ii) the number of shares on the last day of such regulated investment company's taxable year, for federal income tax purposes, which ends within or at the same time as the taxable year of the taxpayer, that are owned by shareholders of such regulated investment company then domiciled in this state; and (B) the denominator of which shall be the average of the number of shares that are owned by shareholders of such regulated investment company on such dates.
(4) (A) For purposes of this subsection, “management services” includes, but is not limited to, the rendering of investment advice directly or indirectly to a regulated investment company, making determinations as to when sales and purchases of securities are to be made on behalf of the regulated investment company, or the selling or purchasing of securities constituting assets of a regulated investment company, and related activities, but only where such activity or activities are performed (i) pursuant to a contract with the regulated investment company entered into pursuant to 15 USC 80a-15(a), as from time to time amended, (ii) for a person that has entered into such contract with the regulated investment company, or (iii) for a person that is affiliated with a person that has entered into such contract with a regulated investment company.
(B) For purposes of this subsection, “distribution services” includes, but is not limited to, the services of advertising, servicing, marketing or selling shares of a regulated investment company, but, in the case of advertising, servicing or marketing shares, only where such service is performed by a person that is, or, in the case of a closed end company, was, either engaged in the service of selling such shares or affiliated with a person that is engaged in the service of selling such shares. In the case of an open end company, such service of selling shares shall be performed pursuant to a contract entered into pursuant to 15 USC 80a-15(b), as from time to time amended.
(C) For purposes of this subsection, “administrative services” includes, but is not limited to, clerical, fund or shareholder accounting, participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal and tax services performed for a regulated investment company but only if the provider of such service or services during the income year in which such service or services are provided also provides, or is affiliated with a person that provides, management or distribution services to such regulated investment company.
(D) For purposes of this subsection, a person is “affiliated” with another person if each person is a member of the same affiliated group, as defined under Section 1504 of the Internal Revenue Code without regard to subsection (b) of said section.
(E) For purposes of this subsection, the domicile of a shareholder shall be presumed to be such shareholder's mailing address as shown in the records of the regulated investment company except that for purposes of this subsection, if the shareholder of record is an insurance company which holds the shares of the regulated investment company as depositor for the benefit of a separate account, then the taxpayer may elect to treat as the shareholders the contract owners or policyholders of the contracts or policies supported by such separate account. An election made under this subparagraph shall apply to all shareholders that are insurance companies and shall be irrevocable for, and applicable for, five successive income years. In any year that such an election is applicable, it shall be presumed that the domicile of a shareholder is the mailing address of the contract owner or policyholder as shown in the records of the insurance company.
(f) (1) Each taxpayer that provides securities brokerage services, as defined in this subsection, shall apportion its net income derived, directly or indirectly, from rendering securities brokerage services in the manner provided in this subsection. Income derived by such taxpayer from sources other than the rendering of securities brokerage services shall be apportioned as provided in this chapter.
(2) The numerator of the apportionment fraction shall consist of the brokerage commissions and total margin interest paid on behalf of brokerage accounts owned by the taxpayer's customers who are domiciled in this state during such taxpayer's income year, computed according to the method of accounting used in the computation of net income. The denominator of the apportionment fraction shall consist of brokerage commissions and total margin interest paid on behalf of brokerage accounts owned by all of the taxpayer's customers, wherever domiciled, during such taxpayer's income year, computed according to the method of accounting used in the computation of net income.
(3) For purposes of this subsection:
(A) “Security brokerage services” means services and activities including all aspects of the purchasing and selling of securities rendered by a broker, as defined in 15 USC 78c(a)(4) and registered under the provisions of 15 USC 78a to 78kk, inclusive, as from time to time amended, to effectuate transactions in securities for the account of others, and a dealer, as defined in 15 USC 78c(a)(5) and registered under the provisions of 15 USC 78a to 78kk, inclusive, as from time to time amended, to buy and sell securities, through a broker or otherwise. Security brokerage services shall not include services rendered by any person buying or selling securities for such person's own account, either individually or in some fiduciary capacity, but not as part of a regular business carried on by such person.
(B) “Securities” means security, as defined in 15 USC 78c(a)(10), as from time to time amended.
(C) “Brokerage commission” means all compensation received for effecting purchases and sales for the account or on order of others, whether in a principal or agency transaction, and whether charged explicitly or implicitly as a fee, commission, spread, markup or otherwise.
(4) For purposes of this subsection, the domicile of a customer shall be presumed to be such customer's mailing address as shown in the records of the taxpayer.
(g) (1) Any company that is (A) a limited partner in a partnership, other than an investment partnership, that does business, owns or leases property or maintains an office within this state and (B) not otherwise carrying on or doing business in this state shall pay the tax imposed under section 12-214 solely on its distributive share as a partner of the income or loss of such partnership to the extent such income or loss is derived from or connected with sources within this state, except that, if the commissioner determines that the company and the partnership are, in substance, parts of a unitary business engaged in a single business enterprise or if the company is a member of a combined group that files a combined unitary tax return, the company shall be taxed in accordance with the provisions of subdivision (3) of this subsection and not in accordance with the provisions of this subdivision, provided, in lieu of the payment of tax based solely on its distributive share, such company may elect for any particular income year, on or before the due date or, if applicable the extended due date, of its corporation business tax return for such income year, to apportion its net income within and without the state under the provisions of this chapter.
(2) Any company that is (A) a limited partner (i) in an investment partnership or (ii) in a limited partnership, other than an investment partnership, that does business, owns or leases property or maintains an office within this state and (B) otherwise carrying on or doing business in this state shall apportion its net income, including its distributive share as a partner of such partnership income or loss, within and without the state under the provisions of this chapter, except that the numerator and the denominator of its apportionment fraction shall include its proportionate part, as a partner, of the numerator and the denominator of such partnership's apportionment fraction. For purposes of this section, such partnership shall compute its apportionment fraction and the numerator and the denominator of its apportionment fraction as if it were a company taxable both within and without this state.
(3) Any company that is a general partner in a partnership that does business, owns or leases property or maintains an office within this state shall, whether or not it is otherwise carrying on or doing business in this state, apportion its net income, including its distributive share as a partner of such partnership income or loss, within and without the state under the provisions of this chapter, except that the numerator and the denominator of its apportionment fraction shall include its proportionate part, as a partner, of the numerator and the denominator of such partnership's apportionment fraction. For purposes of this section, such partnership shall compute its apportionment fraction and the numerator and the denominator of its apportionment fraction as if it were a company taxable both within and without this state.
(h) The provisions of this section shall not apply to insurance companies.
(i) (1) Any financial service company as defined in section 12-218b, that has net income derived from credit card activities, as defined in this subsection, shall apportion its net income derived from credit card activities in the manner provided in this subsection. Income derived by such taxpayer from sources other than credit card activities shall be apportioned as provided in this chapter.
(2) The numerator of the apportionment fraction shall consist of the Connecticut receipts, as described in subdivision (3) of this subsection. The denominator of the apportionment fraction shall consist of (A) the total amount of interest and fees or penalties in the nature of interest from credit card receivables, (B) receipts from fees charged to card holders, including, but not limited to, annual fees, irrespective of the billing address of the card holder, (C) net gains from the sale of credit card receivables, irrespective of the billing address of the card holder, and (D) all credit card issuer's reimbursement fees, irrespective of the billing address of the card holder.
(3) For purposes of this subsection, “Connecticut receipts” shall be determined by adding (A) interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, including, but not limited to, annual fees, where the billing address of the card holder is in this state and (B) the product of (i) the sum of net gains from the sale of credit card receivables and all credit card issuer's reimbursement fees multiplied by (ii) a fraction, the numerator of which shall be interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, including, but not limited to, annual fees, where the billing address of the card holder is in this state, and the denominator of which shall be the total amount of interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, including, but not limited to, annual fees, irrespective of the billing address of the card holder.
(4) For purposes of this subsection:
(A) “Credit card” means a credit, travel, or entertainment card;
(B) “Receipts” means receipts computed according to the method of accounting used by the taxpayer in the computation of net income;
(C) “Credit card issuer's reimbursement fee” means the fee that a taxpayer receives from a merchant's bank because one of the persons to whom the taxpayer or a related person, as defined in section 12-218b, has issued a credit card has charged merchandise or services to the credit card;
(D) “Net income derived from credit card activities” means (i) interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, including, but not limited to, annual fees, net gains from the sale of credit card receivables, credit card issuer's reimbursement fees, and credit card receivables servicing fees received in connection with credit cards issued by the taxpayer or a related person, as defined in section 12-218b, less (ii) expenses related to such income, to the extent deductible under this chapter;
(E) “Billing address” shall be presumed to be the location indicated in the books and records of the taxpayer as the address where any notice, statement or bill relating to a card holder is to be mailed, as of the date of such mailing; and
(F) “Credit card activities” means those activities involving the underwriting and approval of credit card relationships or other business activities generally associated with the conduct of business by an issuer of credit cards from which it derives income.
(5) The Commissioner of Revenue Services may adopt regulations, in accordance with chapter 54, to permit a financial service company that is an owner of a financial asset securitization investment trust, as defined in Section 860H(a) of the Internal Revenue Code, to elect to apportion its share of the net income from credit card activities carried on by such trust, and to provide rules for apportioning such share of net income that are consistent with this subsection.
(j) (1) For income years commencing on or after January 1, 2001, the net income of a taxpayer which is primarily engaged in activities that, in accordance with the North American Industrial Classification System, United States Manual, United States Office of Management and Budget, 1997 edition, would be included in Sector 31, 32 or 33, shall be apportioned within and without the state by means of the apportionment fraction described in subdivision (2) of this subsection provided, in the income year commencing on January 1, 2001, each such taxpayer shall not take such apportionment fraction into account for purposes of installment payments on estimated tax under section 12-242d for calendar quarters ending prior to July 1, 2001, but shall make such payments in accordance with the apportionment fraction applicable to the income year commencing January 1, 2000.
(2) The apportionment fraction of a taxpayer described in subdivision (1) of this subsection shall be the apportionment fraction calculated under subsection (b) of this section.
(3) (A) Any taxpayer which is described in subdivision (1) of this subsection and seventy-five per cent or more of whose total gross receipts, as described in subsection (b) of this section, during the income year are from the sale of tangible personal property directly, or in the case of a subcontractor, indirectly, to the United States government may elect, on or before the due date or, if applicable, the extended due date, of its corporation business tax return for the income year, to apportion its net income within and without the state by means of the apportionment fraction described in subparagraph (B) of this subdivision. The election, if made by the taxpayer, shall be irrevocable for, and applicable for, five successive income years.
(B) The net income of the taxpayer making an election under subdivision (3) of subparagraph (A) of this subsection shall be apportioned within and without the state by means of an apportionment fraction, to be computed as the sum of the property factor, the payroll factor and twice the receipts factor, divided by four. (i) The first of these fractions, the property factor, shall represent that part of the average monthly net book value of the total tangible property held and owned by the taxpayer during the income year which is held within the state, without deduction on account of any encumbrance thereon, and the value of tangible property rented to the taxpayer computed by multiplying the gross rents payable during the income year or period by eight. For the purpose of this section, gross rents shall be the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer or for its benefit for the use or possession of the property, excluding royalties, but including interest, taxes, insurance, repairs or any other amount required to be paid by the terms of a lease or other arrangement and a proportionate part of the cost of any improvement to the real property made by or on behalf of the taxpayer which reverts to the owner or lessor upon termination of a lease or other arrangement, based on the unexpired term of the lease commencing with the date the improvement is completed, provided, where a building is erected on leased land by or on behalf of the taxpayer, the value of the land is determined by multiplying the gross rent by eight, and the value of the building is determined in the same manner as if owned by the taxpayer. (ii) The second fraction, the payroll factor, shall represent the part of the total wages, salaries and other compensation to employees paid by the taxpayer during the income year which was paid in this state, excluding any such wages, salaries or other compensation attributable to the production of gross income of an international banking facility as defined in section 12-217. Compensation is paid in this state if (I) the individual's service is performed entirely within the state; or (II) the individual's service is performed both within and without the state, but the service performed without the state is incidental to the individual's service within the state; or (III) some of the service is performed in the state and the base of operations or, if there is no base of operations, the place from which the service is directed or controlled is in the state, or the base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in this state. (iii) The third fraction, the receipts factor, shall represent the part of the taxpayer's gross receipts from sales or other sources during the income year, computed according to the method of accounting used in the computation of its entire net income, which is assignable to the state, and excluding any gross receipts attributable to an international banking facility as defined in section 12-217 but including receipts from sales of tangible property if the property is delivered or shipped to a purchaser within this state, other than a company which qualifies as a Domestic International Sales Corporation (DISC) as defined in Section 992 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and as to which a valid election under Subsection (b) of said Section 992 to be treated as a DISC is effective, regardless of the F.O.B. point or other conditions of the sale, receipts from services performed within the state, rentals and royalties from properties situated within the state, royalties from the use of patents or copyrights within the state, interest managed or controlled within the state, net gains from the sale or other disposition of intangible assets managed or controlled within the state, net gains from the sale or other disposition of tangible assets situated within the state and all other receipts earned within the state.
(k) (1) For income years commencing on or after October 1, 2001, any broadcaster which is taxable both within and without this state shall apportion its net income derived from the broadcast of video or audio programming, whether through the public airwaves, by cable, by direct or indirect satellite transmission or by any other means of communication, through an over-the-air television or radio network, through a television or radio station or through a cable network or cable television system and, if such broadcaster is a cable network, all net income derived from activities related to or arising out of the foregoing, including, but not limited to, broadcasting, entertainment, publishing, whether electronically or in print, electronic commerce and licensing of intellectual property created in the pursuit of such activities, by means of the apportionment fraction described in subdivision (3) of this subsection, and any eligible production entity which is taxable both within and without this state shall apportion its net income derived from video or audio programming production services by means of the apportionment fraction described in subdivision (4) of this subsection.
(2) For purposes of this subsection:
(A) “Video or audio programming” means any and all performances, events or productions, including without limitation news, sporting events, plays, stories and other entertainment, literary, commercial, educational or artistic works, telecast or otherwise made available for video or audio exhibition through live transmission or through the use of video tape, disc or any other type of format or medium;
(B) A “subscriber” to a cable television system is an individual residence or other outlet which is the ultimate recipient of the transmission;
(C) “Telecast” or “broadcast” means the transmission of video or audio programming by an electronic or other signal conducted by radiowaves or microwaves, by wires, lines, coaxial cables, wave guides or fiber optics, by satellite transmissions directly or indirectly to viewers or listeners or by any other means of communication;
(D) “Eligible production entity” means a corporation which provides video or audio programming production services and which is affiliated, within the meaning of Sections 1501 to 1504 of the Internal Revenue Code and the regulations promulgated thereunder, with a broadcaster;
(E) “Release” or “in release” means the placing of video or audio programming into service. A video or audio program is placed into service when it is first broadcast to the primary audience for which the program was created. For example, video programming is placed in service when it is first publicly telecast for entertainment, educational, commercial, artistic or other purpose. Each episode of a television or radio series is placed in service when it is first broadcast; and
(F) “Broadcaster” means a corporation that is engaged in the business of broadcasting video or audio programming, whether through the public airwaves, by cable, by direct or indirect satellite transmission or by any other means of communication, through an over-the-air television or radio network, through a television or radio station or through a cable network or cable television system, and that is primarily engaged in activities that, in accordance with the North American Industry Classification System, United States Manual, 1997 edition, are included in industry group 5131 or 5132.
(3) (A) Except as provided in subparagraph (B) of this subdivision with respect to the determination of the apportionment fraction for net income derived from the activities referred to in subdivision (1) of subsection (k) of this section, the numerator of the apportionment fraction for a broadcaster shall consist of the broadcaster's gross receipts, as described in subsection (b) of this section, which are assignable to the state, as provided in subsection (b) of this section. Except as provided in subparagraph (C) of this subdivision with respect to the determination of the apportionment fraction for the net income derived from the activities referred to in subdivision (1) of subsection (k) of this section, the denominator of the apportionment fraction for a broadcaster shall consist of the broadcaster's total gross receipts, as described in subsection (b) of this section, whether or not assignable to the state.
(B) The numerator of the apportionment fraction for a broadcaster shall include the gross receipts of the taxpayer from sources within this state determined as follows:
(i) Gross receipts, including without limitation, advertising revenue, affiliate fees and subscriber fees, received by a broadcaster from video or audio programming in release to or by a broadcaster for telecast which is attributed to this state.
(ii) Gross receipts, including without limitation, advertising revenue, received by an over-the-air television or radio network or a television or radio station from video or audio programming in release to or by such network or station for telecast shall be attributed to this state in the same ratio that the audience for such over-the-air network or station located in this state bears to the total audience for such over-the-air network or station inside and outside of the United States. For purposes of this subparagraph, the audience shall be determined either by reference to the books and records of the taxpayer or by reference to the applicable year's published rating statistics, provided the method used by the taxpayer is consistently used from year to year for such purpose and fairly represents the taxpayer's activity in the state.
(iii) Gross receipts including, without limitation, advertising revenue, affiliate fees and subscriber fees, received by a cable network or a cable television system from video or audio programming in release to or by such cable network or cable television system for telecast and other receipts that are derived from the activities referred to in subdivision (1) of this subsection shall be attributed to this state in the same ratio that the number of subscribers for such cable network or cable television system located in this state bears to the total of such subscribers of such cable network or cable television system inside and outside of the United States. For purpose of this subparagraph, the number of subscribers of a cable network shall be measured by reference to the number of subscribers of cable television systems that are affiliated with such network and that receive video or audio programming of such network. For purposes of this subparagraph, the number of subscribers of a cable television system shall be determined either by reference to the books and records of the taxpayer or by reference to the applicable year's published rating statistics located in published surveys, provided the method used by the taxpayer is consistently used from year to year for such purpose and fairly represents the taxpayer's activities in the state.
(C) The denominator of the apportionment fraction of a broadcaster shall include gross receipts of the broadcaster that are derived from the activities referred to in subdivision (1) of subsection (k) of this section, whether or not assignable to the state.
(4) (A) Except as provided in subparagraph (B) of this subdivision, with respect to the determination of the apportionment fraction for net income derived from video or audio programming production services, the numerator of the apportionment fraction for an eligible production entity shall consist of the eligible production entity's gross receipts, as described in subsection (b) of this section, which are assignable to the state, as provided in subsection (b) of this section. Except as provided in subparagraph (C) of this subdivision, with respect to the determination of the apportionment fraction for net income derived from video or audio programming production services, the denominator of the apportionment fraction for an eligible production entity shall consist of the eligible production entity's total gross receipts, as described in subsection (b) of this section, whether or not assignable to the state.
(B) The numerator of the apportionment fraction for an eligible production entity shall include gross receipts of the entity that are derived from video or audio programming production services relating to events which occur within this state.
(C) The denominator of the apportionment fraction for an eligible production entity shall include gross receipts of the entity that are derived from video or audio programming production services relating to events which occur within or without this state.
(l) Each taxable member of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall, if one or more members of such group are taxable without this state, apportion its net income as provided in subsections (b) and (c) of section 12-218e.
(1949 Rev., S. 1899; 1951, 1953, S. 1094d; 1957, P.A. 515, S. 3; 1959, P.A. 147, S. 1; 1961, P.A. 381; 1967, P.A. 586, S. 1; 1969, P.A. 266, S. 1; June, 1969, P.A. 1, S. 14; 1972, P.A. 271, S. 2; P.A. 73-350, S. 9, 27; P.A. 75-501, S. 1, 3; P.A. 77-539, S. 1, 3; P.A. 81-245, S. 3, 4; 81-411, S. 2, 42; P.A. 89-211, S. 24; P.A. 93-403, S. 2, 3; P.A. 96-111, S. 1, 2; 96-197, S. 5, 11; 96-265, S. 4, 5; P.A. 97-243, S. 10, 67; June 18 Sp. Sess. P.A. 97-4, S. 1, 11; June 18 Sp. Sess. P.A. 97-11, S. 63, 65; P.A. 98-110, S. 14–18, 27; P.A. 99-121, S. 4, 28; P.A. 00-170, S. 25, 42; P.A. 02-103, S. 44, 45; P.A. 14-122, S. 93; P.A. 15-244, S. 149; June Sp. Sess. P.A. 15-5, S. 139; Dec. Sp. Sess. P.A. 15-1, S. 40; May Sp. Sess. P.A. 16-3, S. 199.)
History: 1959 act changed technical language, changed proviso in Subdiv. (1) re allocation of dividends and interest to state so that allocation dependent on whether and to what extent business is carried on in state, and changed Subdiv. (2) to apply to goods situated in state at time of, rather than prior to, sale, etc.; 1961 act deleted reference to royalties in Subdiv. (1), added list of specific inclusions in determining the third fraction, and changed technical language; 1967 act amended Subdiv. (3)(b) to substitute “tangible” for “real” property, and to include in third fraction receipts from sales of tangible property if property delivered or shipped to in-state purchaser regardless of f.o.b. point or other conditions of sale rather than if transactions chiefly negotiated and executed in-state; 1969 acts substituted apportionment for allocation in Subdiv. (3) and changed second fraction to consist of wages, etc. “paid in this state” and specified what “paid in this state” means, replacing previous provision re second fraction and in Subdiv. (2) specified applicability to telephone companies taxable under Sec. 12-214 “for income years beginning on and after January 1, 1971”; 1972 act added provisions re allocation of dividends from DISC or former DISC; P.A. 73-350 deleted provisions re telephone companies in Subdiv. (2) and specifically excluded insurance companies from provisions of section, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 75-501 replaced former provisions setting out general applicability re maintenance of office without the state with new provisions re taxpayers taxable in another state, effective July 3, 1975, and applicable to income years ending on or after that date; P.A. 77-539 included in general applicability provision taxpayers conducting business and taxable in another state; P.A. 81-245 amended Subdiv. (3)(a) to exclude from the numerator and the denominator any gross receipts attributable to an international banking facility and amended Subdiv. (3)(b) to exclude from the second apportionment fraction wages, salaries or other compensation attributable to the production of gross income of an international banking facility and to exclude from the third apportionment fraction any gross receipts attributable to an international banking facility, effective upon adoption by the Board of Governors of the Federal Reserve System of amendments to Regulations D and Q pertaining to international banking facilities (adopted June 9, 1981, with an effective date of December 3, 1981); P.A. 81-411 eliminated the procedure for allocation of net income and modified the apportionment formula by increasing the effect of receipts from sales, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 93-403 divided existing section into Subsecs. and incorporated definition of gross receipts with respect to corporations applying the multiple factor apportionment to corporations using the single factor fraction, effective June 29, 1993, and applicable to taxable years commencing on and after January 1, 1993; P.A. 96-111 inserted new provisions re regulated investment companies and securities brokerage services as Subsecs. (f) and (g), respectively, effective May 24, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 96-197 added new provisions re companies that are limited partners in a partnership as Subsec. (h) (enacted as Subsec. (e)), effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 96-265 inserted new provisions re apportionment of net income of motor carriers which transport property for hire as Subsec. (e), effective June 10, 1996, and applicable to income years commencing on or after January 1, 1996 (Revisor's note: Subsec. indicators assigned to new provisions were changed editorially by the Revisors to maintain an orderly progression of section concepts and previously existing Subsec. (e) was designated as Subsec. (i) to retain its logical position at the end of the section); P.A. 97-243 amended Subsec. (g)(1) to change reference from “subsection” to “section”, effective June 24, 1997, and applicable to income years commencing on or after January 1, 1997; June 18 Sp. Sess. P.A. 97-4 added Subsec. (j) re apportionment of income derived from credit card activities, effective June 30, 1997, and applicable to income years commencing on or after January 1, 1997; June 18 Sp. Sess. P.A. 97-11 changed effective date of June 18 Sp. Sess. P.A. 97-4 but without affecting this section; P.A. 98-110 amended Subsec. (f) to remove election option, effective May 19, 1998 and applicable to income years commencing on or after January 1, 2001, and to make technical changes, effective May 19, 1998 and applicable to income years commencing on or after January 1, 1999, and prior to January 1, 2001, amended Subsec. (g) to remove election option, effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999, and amended Subsec. (j) to make section applicable to financial service companies with net income derived from credit card activities and to remove the election option and to make technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 2002; P.A. 99-121 amended Subsec. (h) to revise apportionment provisions for investment partnerships and financial services industry, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 00-170 added Subsec. (k) re apportionment of income by certain manufacturing businesses, applicable to income years commencing on or after January 1, 2001, added Subsec. (l) re apportionment of income by certain broadcasting businesses, applicable to income years commencing on or after October 1, 2001, and made a conforming change in Subsec. (c), effective May 26, 2000; P.A. 02-103 made technical changes in Subsecs. (k)(3) and (l)(3)(B)(iii); (Revisor's note: In 2003 a reference in Subsec. (j)(4)(D) to “chapter 208” was changed editorially by the Revisors to “this chapter”); P.A. 14-122 made a technical change in Subsec. (b); P.A. 15-244 amended Subsec. (h)(1) to extend exception for taxation under Subdiv. (3) to company that the commissioner determines is member of a combined group that files a combined unitary tax return, and added Subsec. (m) re apportionment of net income by taxable member of combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 149, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015; Dec. Sp. Sess. P.A. 15-1 deleted former Subsec. (b) re apportionment of net income of taxpayer derived from business other than manufacture, sale or use of tangible personal or real property, redesignated existing Subsecs. (c) to (m) as Subsecs. (b) to (l), amended redesignated Subsec. (b) by replacing “subsection (k) or (l) of this section” with reference to this chapter and Secs. 12-218e to 12-218g, inclusive, on and after January 1, 2016, and deleting former Subdivs. (1) and (2) re computation of apportionment fraction, amended redesignated Subsec. (j) by deleting provisions re numerator and denominator of apportionment fraction and adding reference to apportionment fraction calculated under Subsec. (b) in Subdiv. (2), and by designating provision re election of apportionment by taxpayer as Subpara. (A) and adding Subpara. (B) re computation of apportionment of net income of taxpayer making election in Subdiv. (3), and made conforming changes, effective January 1, 2016, and applicable to income years commencing on or after January 1, 2016; May Sp. Sess. P.A. 16-3 amended Subsec. (b) re apportionment of net income and gross receipts assignable to state by designating existing provision re receipts from sales of tangible property as Subdiv. (1) and amending same by replacing “receipts” with “gross receipts”, replacing “tangible property” with “tangible personal property” and adding “are assignable to this state”, designating existing provisions re receipts from services as Subdiv. (2) and substantially amending same, adding Subdiv. (3) re gross receipts from rental, lease or license of real or tangible personal property, adding Subdiv. (4) re gross receipts from rental, lease or license of intangible property, designating existing provisions re interest managed or controlled within state as Subdiv. (5) and substantially amending same, adding Subdiv. (6) re exclusion of gross receipts from sale or other disposition of property from calculation of apportionment fraction, adding Subdiv. (7) re gross receipts assignable to state and adding Subdiv. (8) re taxpayer cannot reasonably determine assignment of receipts, effective June 2, 2016, and applicable to income years commencing on or after January 1, 2016.
See Sec. 12-244 re allocation of tax on air carriers.
Dividends received by Connecticut corporation on stock of wholly-owned Canadian corporations carrying on business solely in Canada should be allocated without the state. 122 C. 547. The words “held and owned” include goods of corporation in warehouses and in transit. 132 C. 158. General Assembly has power to impose a tax on a corporation doing business both within and without the state. 135 C. 37. Cited. 179 C. 363; 196 C. 1; 202 C. 412; Id., 583; 203 C. 455; 215 C. 134; 220 C. 665; 224 C. 426. Section is tax imposition statute; any ambiguity must be resolved in favor of taxpayer. 228 C. 137. Storage contracts fall within definition of rental arrangements contained in section; rental payments, “tangible property” and bailments discussed; treatment of payments for use of warehouse storage space as rental payments discussed. 232 C. 325. Cited. 240 C. 422.
Cited. 17 CA 82. Where taxpayer could not have acquired information necessary to its business without use of tangible personal property, the three-factor analysis of former Subsec. (b) applied. 73 CA 757.
Cited. 15 CS 205; 26 CS 373; 41 CS 271; 42 CS 356; 43 CS 314.
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Sec. 12-218a. Apportionment of tax on insurance company. (a) Except as provided in subsection (b) of this section, any tax imposed on domestic insurance companies by section 12-214 shall be imposed on the base specified for such tax apportioned to this state by multiplying the base by a fraction, the numerator of which shall represent the company's gross direct premiums, as defined in section 12-201, received during the income year for insurance on property or risks located or resident in this state, and the denominator of which shall represent its total gross direct premiums received during the income year from all sources.
(b) If more than fifty per cent of the total gross premiums received during the income year by an insurance company taxable under this chapter consists of reinsurance premiums, any tax imposed by section 12-214 shall be imposed on the specified base apportioned to this state by multiplying such base by a fraction, the numerator of which shall represent the sum of (1) gross direct premiums, as defined in section 12-201, received during the income year for insurance on property or risks located or resident in this state, plus (2) gross reinsurance premiums received during the income year in respect of property or risks located or resident in this state, and the denominator of which shall represent the sum of (A) total gross direct premiums received during the income year from all sources, plus (B) total gross reinsurance premiums received during the income year from all sources. For purposes of this subsection reinsurance premiums received in respect of property or risks located or resident in this state, whether or not otherwise determinable, may, at the election of the company, be determined either on the basis of the proportion which reinsurance premiums received from domestic insurance companies bear to reinsurance premiums received from all sources or, alternatively, on the basis of the proportion which the aggregate amount of gross direct premiums received for insurance on property or risks located or resident in this state by all the companies which ceded reinsurance to the taxpayer in the income year bears to the aggregate amount of gross direct premiums received by said companies from all sources.
(P.A. 73-350, S. 10, 27.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973.
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Sec. 12-218b. Apportionment of net income of financial service companies. (a) For purposes of this section:
(1) “Administrative services” includes, but is not limited to, clerical, fund or investment or account holder accounting, participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal and tax services performed for an investment entity, pension fund or retirement account but only if the provider of such service or services during the income year in which such service or services are provided also provides, or is a related person of a person that provides, management or distribution services to such an investment entity, pension fund or retirement account.
(2) “Billing address” means the location indicated in the books and records of the taxpayer or, as applicable, the investment entity, pension fund or retirement fund on the first day of the taxable year or on such later date in the taxable year when the relationship with the customer or, in the case of an investment entity, pension fund or retirement account, investor or participant began as the address where any notice, statement or bill relating to a customer's, investor's or participant's account is mailed.
(3) “Borrower located in this state” means (A) a borrower that is engaged in a trade or business which maintains its commercial domicile in this state, or (B) a borrower that is not engaged in a trade or business whose billing address is in this state.
(4) “Commercial domicile” means the headquarters of the trade or business, that is, the place from which the trade or business is principally managed and directed.
(5) “Distribution services” means the services of advertising, servicing, marketing or selling interests in an investment entity, pension fund or retirement account, but, in the case of advertising, servicing or marketing interests, only where such service is performed by a person that is, or, in the case of a closed-end company, was, either engaged in the service of selling such interests or a related person of a person that is engaged in the service of selling such interests.
(6) “Financial service company” means:
(A) Any corporation or other business entity registered under the laws of any state as a bank holding company or registered under the federal Bank Holding Company Act of 1956, as amended, or registered as a savings and loan holding company under the federal National Housing Act, as amended;
(B) A national bank organized and existing as a national bank association pursuant to the provisions of the National Bank Act, 12 USC Section 21 et seq.;
(C) A savings association or federal savings bank, as defined in the Federal Deposit Insurance Act, 12 USC 1813(b)(1);
(D) Any bank, banking association, trust company, savings and loan association or thrift institution incorporated or organized under the laws of any state, or any other corporation or other business entity, the deposits or accounts of which are insured under the Federal Deposit Insurance Act or by the Federal Deposit Insurance Corporation;
(E) Any corporation organized under the provisions of 12 USC 611 to 631;
(F) Any foreign bank that has an agency or branch, as defined in 12 USC 3101;
(G) A credit union organized under the laws of any state the loan assets of which exceed fifty million dollars as of the first day of its income year;
(H) A production credit association organized under the federal Farm Credit Act of 1933, all of whose stock held by the Federal Production Credit Corporation has been retired;
(I) Any company whose voting stock is more than fifty per cent owned, directly or indirectly, by any person described in subparagraphs (A) to (H), inclusive, of this subdivision or by an insurance company, other than an insurance company or a company that has more than fifty per cent of its gross income from one or more of the following sources other than from sales to a related person: Manufacturing, construction, mining, transportation and public utilities, retail or wholesale trade, other than the retail or wholesale delivery of the services described in subparagraph (J) of this subdivision, or agriculture, forestry and fishing;
(J) (i) Any company, other than an insurance company or a real estate broker, which derives fifty per cent or more of its gross income from one or more of the following sources or activities: Loans; letters of credit and acceptance of drafts; underwriting, purchase, placement, sale or brokerage of securities, commodities contracts or other financial instruments or contracts on its own account or for the account of others; exchanges, exchange clearinghouses and other services allied with the exchange of securities or commodities contracts; investment advisory or management services; investment banking services, corporate trust and escrow services; securities information processing; securities and financial rating agency services; transfer agent, clearing agent, securities custodial and depository services; securities exchange or quotation services; any of the services described in subsection (e) of section 12-218; any of the services described in subsection (f) of section 12-218; management, distribution or administrative services to or on behalf of an investment entity; management, distribution or administrative services to or on behalf of pension funds or retirement accounts; leasing or acting as an agent, broker or adviser in connection with leasing real and personal property that is the functional equivalent of an extension of credit and that transfers substantially all of the benefits and risks incident to the ownership of property, including any direct financing lease or leverage lease that meets the criteria of Financial Accounting Standards Board Statement No. 13, “Accounting for Leases” or any other lease that is accounted for as a financing by a lessor under generally accepted accounting principles; activities of a Morris plan company; credit card activities; third party insurance administration services, claim administration services, claim adjusting services, premium billing and collection services, or employee benefit plan administration services; insurance underwriting or policy issuance services; actuarial services; trust company services; financial planning services; insurance brokerage services; or risk management services;
(ii) Any company which derives fifty per cent or more of its gross income from an activity in which a person described in subparagraphs (B) to (H), inclusive, of this subdivision is authorized to transact;
(iii) Whether a company is classified as a financial service company for any income year by virtue of this subparagraph shall be determined based upon the sources of such taxpayer's gross income, other than gross income from nonrecurring, extraordinary transactions, for such income year, except that any taxpayer classified as a financial service company solely by virtue of this subparagraph for any income year shall continue to be classified as a financial service company until the second consecutive year the taxpayer would not otherwise qualify as a financial service company;
(K) (i) Any person described in subparagraph (J) of this subdivision may submit a petition in writing to the commissioner for permission to apportion its income without regard to the provisions of this section not later than sixty days prior to the due date of the return to which the petition applies, determined with regard to any extension of time for filing such return, and said commissioner shall grant or deny such permission before said due date. The commissioner shall grant such permission only in the event that the petitioner has proved, by clear and convincing evidence, that the income-producing activity of the petitioner is not in substantial competition with a financial service company without regard to subparagraph (I) of this subdivision;
(ii) Any person may submit a petition in writing to the commissioner for permission to apportion its income in accordance with the provisions of this section not later than sixty days prior to the due date of the return to which the petition applies, determined with regard to any extension of time for filing such return, and said commissioner shall grant or deny such permission before said due date. The commissioner shall grant such permission only in the event that the petitioner has proved, by clear and convincing evidence, that the income-producing activity is substantially similar to the income-producing activities of a financial service company without regard to subparagraph (I) of this subdivision.
(7) “Gross rents” means the actual sum of money or other consideration payable for the use or possession of property, including, but not be limited to, (A) any amount payable for the use or possession of real property or tangible property whether designated as a fixed sum of money or as a percentage of receipts, profits, or otherwise, (B) any amount payable as additional rent or in lieu of rent, such as interest, taxes, insurance, repairs or any other amount required to be paid by the terms of a lease or other arrangement, and (C) a proportionate part of the cost of any improvement to real property made by or on behalf of the taxpayer which reverts to the owner or lessor upon termination of a lease or other arrangement. The amount to be included in gross rents is the amount of amortization or depreciation allowed in computing the taxable income base for the income year, provided where a building is erected on leased land by or on behalf of the taxpayer, the value of the land is determined by multiplying the gross rent by eight and the value of the building is determined in the same manner as if owned by the taxpayer. “Gross rents” shall not include reasonable amounts payable as separate charges for water and electric service furnished by the lessor, reasonable amounts payable as service charges for janitorial services furnished by the lessor, reasonable amounts payable to storage, provided such amounts are payable for space not designated and not under the control of the taxpayer, and that portion of any rental payment which is applicable to the space subleased from the taxpayer and not used by it.
(8) “Insurance company” means any corporation, limited liability company, association, partnership or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, including a receiver, trustee or other fiduciary of any insurance company when the context reasonably permits.
(9) “Investment entity” means (A) an investment partnership, a real estate investment trust, as defined in Section 856 of the Internal Revenue Code, a real estate mortgage investment conduit, as defined in Section 860D of the Internal Revenue Code, a financial asset securitization investment trust, as defined in Section 860L of the Internal Revenue Code, or a similar investment entity which is exempt from, or is not subject to, federal income tax, or (B) a separate account of an insurance company.
(10) “Loan” means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase or receipt, in whole or in part, of such extension of credit from another. Loans include participations, syndications, and leases treated as loans for federal income tax purposes. Loans shall not include: (A) Futures or forward contracts; (B) options; (C) notional principal contracts such as swaps; (D) credit card receivables, including purchased credit card relationships; (E) non-interest-bearing balances due from depository institutions; (F) cash items in the process of collection; (G) federal funds sold; (H) securities purchased under agreements to resell; (I) assets held in a trading account; (J) securities; (K) interests in a real estate mortgage investment conduit, as defined in Section 860D of the Internal Revenue Code or other mortgage-backed or asset-backed security; and (L) other similar items.
(11) “Loan secured by real property” means that fifty per cent or more of the aggregate value of the collateral used to secure a loan or other obligation, when valued at fair market value as of the time the original loan or obligation was incurred, was real property.
(12) “Management services”, when performed on behalf of an investment entity, pension fund or retirement account, means the rendering of investment advice directly or indirectly to an investment entity, pension fund or retirement account, making determinations as to when sales and purchases of property are to be made on behalf of the investment entity, pension fund or retirement account, or the selling or purchasing of property constituting assets of an investment entity, pension fund or retirement account and related activities, but only where such activity or activities are performed (A) pursuant to a contract with the investment entity, pension fund or retirement account, (B) for a person that has entered into such contract with the investment entity, pension fund or retirement account, or (C) for a person that is a related person of a person that has entered into such contract with an investment entity, pension fund or retirement account.
(13) “Participation” means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral. In a loan participation, the credit originator initially makes the loan and then subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.
(14) “Pension fund or retirement fund” means any fund, trust, plan, account, annuity or contract referred to in subsection (a) of section 52-321a, or other fund, trust, plan, account, annuity or contract established pursuant to the Internal Revenue Code or any other federal or state statute, including, but not limited to, funds held in an insurance company general or separate account, which is designed to provide pension or retirement benefits.
(15) “Principal base of operations”, with respect to transportation property, means the place of more or less permanent nature from which said property is regularly directed or controlled.
(16) “Real property owned” and “tangible personal property owned” means real and tangible personal property, respectively, (A) on which the taxpayer may claim depreciation for federal income tax purposes, or (B) property to which the taxpayer holds legal title and on which no other person may claim depreciation for federal income tax purposes or could claim depreciation if subject to federal income tax. Real and tangible personal property does not include coin, currency or property acquired in lieu of or pursuant to a foreclosure.
(17) “Regular place of business” means an office at which the taxpayer carries on its business in a regular and systematic manner and which is continuously maintained, occupied and used by employees of the taxpayer.
(18) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer. For purposes of this subdivision, “control”, with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. “Control”, with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code other than paragraph (3) of said section.
(19) “State” means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States or any foreign country.
(20) “Syndication” means an extension of credit in which two or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.
(21) “Transportation property” means vehicles and vessels capable of moving under their own power, such as aircraft, trains, water vessels and motor vehicles, as well as any equipment or containers attached to such property, such as rolling stock, barges, trailers or the like.
(b) (1) Except as otherwise specifically provided, a financial service company whose business activity is taxable within this state, whether or not it is taxable outside this state, shall apportion its net income from business carried on within this state in accordance with this section. The net income of a financial service company shall be apportioned to this state by multiplying such income by the receipts factor. The receipts factor for a financial service company is a fraction, the numerator of which is the receipts of the taxpayer in this state during the income year and the denominator of which is the receipts of the taxpayer within and without this state during the income year. The method of calculating receipts for purposes of the denominator is the same as the method used in determining receipts for purposes of the numerator.
(2) Any receipts attributable to an international banking facility, as defined in section 12-217, shall not be included in the numerator or denominator of the receipts factor. In lieu of such exclusion of receipts attributable to an international banking facility, the taxpayer, pursuant to the provisions of subdivision (3) of this subsection, may, on or before the due date or, if applicable, the extended due date, of its corporation business tax return, make an election on its corporation business tax return, to exclude receipts attributable to an international banking facility from the numerator of its receipts factor and to include such receipts in the denominator of its receipts factor.
(3) If the taxpayer makes the election under subdivision (2) of this subsection, the taxpayer may not, in arriving at its net income, deduct the gross income attributable to the international banking facility from its gross income, but expenses or losses attributable to the international banking facility, to the extent deductible under the Internal Revenue Code, may be deducted from its gross income. The election, if made by the taxpayer, shall be irrevocable for, and applicable for, five successive income years.
(c) The numerator of the receipts factor includes receipts from the lease or rental of real property owned by the taxpayer if the property is located within this state and receipts from the sublease of real property if the property is located within this state.
(d) (1) Except as described in subdivision (2) of this subsection, the numerator of the receipts factor includes receipts from the lease or rental of tangible personal property owned by the taxpayer if the property is located within this state when it is first placed in service by the lessee.
(2) Receipts from the lease or rental of transportation property owned by the taxpayer are included in the numerator of the receipts factor to the extent that the property is used in this state. The extent an aircraft will be deemed to be used in this state and the amount of receipts that is to be included in the numerator of this state's receipts factor is determined by multiplying all the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this state and the denominator of which is the total number of landings of the aircraft. If the extent of the use of any transportation property within this state cannot be determined, the property shall be deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle shall be deemed to be used wholly in the state in which it is registered.
(e) (1) The numerator of the receipts factor includes interest and fees or penalties in the nature of interest from loans secured by real property if the property is located within this state. If the property is located both within this state and one or more other states, the receipts described in this subsection are included in the numerator of the receipts factor if more than fifty per cent of the fair market value of the real property is located within this state. If more than fifty per cent of the fair market value of the real property is not located within any one state, the receipts described in this subsection shall be included in the numerator of the receipts factor if the borrower is located in this state.
(2) The determination of whether the real property securing a loan is located within this state shall be made as of the time the original agreement was made and all subsequent substitutions of collateral shall be disregarded.
(f) The numerator of the receipts factor includes interest and fees or penalties in the nature of interest from loans not secured by real property if the borrower is located in this state.
(g) (1) The numerator of the receipts factor includes net gains from the sale of loans. Net gains from the sale of loans includes income recorded under the coupon stripping rules of Section 1286 of the Internal Revenue Code.
(2) The amount of net gains, but not less than zero, from the sale of loans secured by real property included in the numerator is determined by multiplying such net gains by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (e) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.
(3) The amount of net gains, but not less than zero, from the sale of loans not secured by real property included in the numerator is determined by multiplying such net gains by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (f) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.
(h) (1) The numerator of the receipts factor includes loan servicing fees derived from loans secured by real property multiplied by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (e) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.
(2) The numerator of the receipts factor includes loan servicing fees derived from loans not secured by real property multiplied by a fraction the numerator of which is the amount included in the numerator of the receipts factor pursuant to subsection (f) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.
(3) In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, the numerator of the receipts factor shall include such fees if the borrower is located in this state.
(i) (1) Interest, dividends, net gains, but not less than zero, and other income from investment assets and activities and from trading assets and activities shall be included in the receipts factor. Investment assets and activities and trading assets and activities include, but are not limited to, investment securities, trading account assets, federal funds, securities purchased and sold under agreements to resell or repurchase, options, futures contracts, forward contracts, notional principal contracts such as swaps, equities, and foreign currency transactions. With respect to the investment and trading assets and activities described in subparagraphs (A) and (B) of this subdivision, the receipts factor shall include the amounts described in said subparagraphs (A) and (B).
(A) The receipts factor shall include the amount by which interest from federal funds sold and securities purchased under resale agreements exceeds interest expense on federal funds purchased and securities sold under repurchase agreements.
(B) The receipts factor shall include the amount by which interest, dividends, gains and other income from trading assets and activities, including, but not limited to, assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, exceed amounts paid in lieu of interest, amounts paid in lieu of dividends and losses from such assets and activities.
(2) The numerator of the receipts factor includes interest, dividends, net gains, but not less than zero, and other income from investment assets and activities and from trading assets and activities described in subdivision (1) of this subsection that are attributable to this state.
(A) The amount of interest, dividends, net gains, but not less than zero, and other income from investment assets and activities in the investment account to be attributed to this state and included in the numerator is determined by multiplying all such income from such assets and activities by a fraction, the numerator of which is the average value of such assets which are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such assets.
(B) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements attributable to this state and included in the numerator is determined by multiplying the amount described in subparagraph (A) of subdivision (1) of this subsection from such funds and such securities by a fraction, the numerator of which is the average value of federal funds sold and securities purchased under agreements to resell which are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such funds and such securities.
(C) The amount of interest, dividends, gains and other income from trading assets and activities, including, but not limited to, assets and activities in the matched book, in the arbitrage book and foreign currency transactions, but excluding amounts described in subparagraph (A) or (B) of this subdivision, attributable to this state and included in the numerator is determined by multiplying the amount described in subparagraph (B) of subdivision (1) of this subsection by a fraction, the numerator of which is the average value of such trading assets which are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such assets.
(D) For purposes of this subdivision, the average value of property owned by the taxpayer is computed on an annual basis by adding the value of the property on the first day of the income year and the value on the last day of the income year and dividing the sum by two. If averaging on this basis does not properly reflect average value, the commissioner may require averaging on a more frequent basis. The taxpayer may elect to average on a more frequent basis. When averaging on a more frequent basis is required by the commissioner or is elected by the taxpayer, the same method of valuation must be used consistently by the taxpayer with respect to property within and without this state and on all subsequent returns unless the taxpayer receives prior permission from the commissioner or the commissioner requires a different method of determining average value.
(3) In lieu of using the method set forth in subdivision (2) of this subsection, the taxpayer may elect, or the commissioner may require in order to fairly represent the business activity of the taxpayer in this state, the use of the method set forth in this subdivision.
(A) The amount of interest, dividends, net gains, but not less than zero, and other income from investment assets and activities in the investment account to be attributed to this state and included in the numerator is determined by multiplying all such income from such assets and activities by a fraction, the numerator of which is the gross income from such assets and activities which are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such assets and activities.
(B) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements attributable to this state and included in the numerator is determined by multiplying the amount described in subparagraph (A) of subdivision (1) of this subsection from such funds and such securities by a fraction, the numerator of which is the gross income from such funds and such securities which are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such funds and securities.
(C) The amount of interest, dividends, gains and other income from trading assets and activities, including, but not limited to, assets and activities in the matched book, in the arbitrage book and foreign currency transactions, but excluding amounts described in subparagraph (A) or (B) of this subdivision, attributable to this state and included in the numerator is determined by multiplying the amount described in subparagraph (B) of subdivision (1) of this subsection by a fraction, the numerator of which is the gross income from such trading assets and activities which are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such assets and activities.
(4) If the taxpayer elects or is required by the commissioner to use the method set forth in subdivision (3) of this subsection, it shall use this method on all subsequent returns unless the taxpayer receives prior permission from the commissioner to use, or the commissioner requires a different method.
(5) The taxpayer shall have the burden of proving that an investment asset or activity or trading asset or activity was properly assigned to a regular place of business outside of this state by demonstrating that the day-to-day decisions regarding the asset or activity occurred at a regular place of business outside this state. Where the day-to-day decisions regarding an investment asset or activity or trading asset or activity occur at more than one regular place of business and one such regular place of business is in this state and one such regular place of business is outside this state, such asset or activity shall be considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established. Unless the taxpayer demonstrates to the contrary, such policies and guidelines shall be presumed to be established at the commercial domicile of the taxpayer.
(j) (1) The numerator of the receipts factor includes receipts received for management, distribution and administrative services performed on behalf of an investment entity in an amount equal to the product of such receipts for the income year multiplied by a fraction (A) the numerator of which shall be the average of (i) the fair market value of the interests in the investment entity issued and outstanding on the first day of such investment entity's taxable year for federal income tax purposes, which ends within or at the same time as the income year of the financial service company, that are owned by investors in such investment entity if the billing address of such investors is in this state, and (ii) the fair market value of the interests in the investment entity issued and outstanding on the last day of such investment entity's taxable year for federal income tax purposes, which ends within or at the same time as the income year of the financial service company, that are owned by investors in such investment entity if the billing address of such investors is in this state; and (B) the denominator of which shall be the average of the fair market value of the interests in the investment entity issued and outstanding that are owned by investors in such investment entity on such dates.
(2) The numerator of the receipts factor includes receipts received for management, distribution and administrative services performed on behalf of a pension fund or retirement account in an amount equal to the product of such receipts for the income year multiplied by a fraction (A) the numerator of which shall be the average of (i) the number of participants with an interest in the pension fund or retirement account on the first day of the pension fund or retirement account taxable year, for federal income tax purposes, which ends within or at the same time as the income year of the financial service company, whose billing address is in this state, and (ii) the number of participants with an interest in the pension fund or retirement account on the last day of the pension fund or retirement account taxable year, for federal income tax purposes, which ends within or at the same time as the income year of the financial service company, whose billing address is in this state; and (B) the denominator of which shall be the total number of participants with an interest in the pension fund or retirement account on such dates. In lieu of using the billing addresses of the participants with an interest in the pension fund or retirement account as provided in this subdivision, the taxpayer may elect to determine receipts in the manner provided for in this subsection based upon the average of the fair market value of funds under management in each income year allocated to the commercial domicile of the sponsor of the pension fund or retirement account and, where there is no sponsor for a particular pension fund or retirement account, the billing address of the participant. The election, if made by the taxpayer, shall be irrevocable for, and applicable for, five successive income years and shall be applicable to all receipts from the rendering of management, distribution or administrative services performed for any pension fund or retirement account.
(3) In the case of a separate account of an insurance company, to the extent that both subdivisions (1) and (2) of this subsection may be applicable, then subdivision (2) shall apply.
(k) This section shall not apply to net income from services or activities described in subsection (e), (f) or (i) of section 12-218, which income shall be apportioned in accordance with said subsection (e), (f) or (i), whether or not the taxpayer is taxable outside this state, or, for income years commencing prior to January 1, 2002, in the case of net income from activities described in said subsection (i) that is earned by a taxpayer that is either not eligible to make the election described in said subsection (i) or does not make the election described in said subsection (i) which income shall be apportioned in accordance with subsection (b) of said section 12-218.
(l) For all other receipts not otherwise sourced by this section, the numerator of the receipts factor includes all other receipts if the billing address of the customer is in this state; otherwise the numerator will include all other receipts pursuant to the provisions of section 12-218.
(m) Each financial service company that is a member of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall apportion its net income as provided in subsections (b) and (c) of section 12-218e.
(P.A. 98-110, S. 11, 27; P.A. 99-121, S. 5, 28; June Sp. Sess. P.A. 01-6, S. 24, 85; P.A. 15-244, S. 150; June Sp. Sess. P.A. 15-5, S. 139; Dec. Sp. Sess. P.A. 15-1, S. 42, 43; P.A. 18-26, S. 11.)
History: P.A. 98-110 effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999; P.A. 99-121 amended Subsec. (a)(12) to limit “management services” to when performed on behalf of an investment entity, pension fund or retirement account, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999; June Sp. Sess. P.A. 01-6 amended Subsec. (a)(6)(K) to add provisions re the submission and grant or denial of written petition for permission to apportion net income, effective July 1, 2001, and applicable to income years commencing on or after January 1, 2001, with respect to petitions filed on or after October 1, 2001; P.A. 15-244 added Subsec. (m) re apportionment of net income by financial service company that is a member of a combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 150, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (a)(6)(J)(i) by replacing reference to Sec. 12-218(f) and (g) with reference to Sec. 12-218(e) and (f), respectively, and amended Subsec. (k) by replacing “(f), (g) or (j)” with “(e), (f) or (i)” and replacing references to Subsec. (j) with references to Subsec. (i), effective January 1, 2016; P.A. 18-26 made a technical change in Subsec. (l).
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Sec. 12-218c. Restrictions on the deductibility of certain intangible expenses and interest expenses with a related member. (a) As used in this section:
(1) “Affiliated group” has the same meaning as in Section 1504 of the Internal Revenue Code.
(2) “Intangible expenses and costs” includes (A) expenses, losses and costs for, related to, or in connection directly or indirectly with the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property to the extent such amounts are allowed as deductions or costs in determining taxable income before operating loss deduction and special deductions for the taxable year under the Internal Revenue Code; (B) losses related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions; (C) royalty, patent, technical and copyright fees; (D) licensing fees; and (E) other similar expenses and costs.
(3) “Intangible property” means patents, patent applications, trade names, trademarks, service marks, copyrights and similar types of intangible assets.
(4) “Interest expenses and costs” means amounts directly or indirectly allowed as deductions under Section 163 of the Internal Revenue Code for purposes of determining taxable income under the Internal Revenue Code to the extent such expenses and costs are directly or indirectly for, related to, or in connection with the direct or indirect acquisition, maintenance, management, ownership, sale, exchange or disposition of intangible property.
(5) “Related member” means a person that, with respect to the taxpayer during all or any portion of the taxable year, is a related entity, as defined in this subsection, a component member as defined in Section 1563(b) of the Internal Revenue Code, or is a person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code.
(6) “Related entity” means (A) a stockholder who is an individual, or a member of the stockholder's family enumerated in Section 318 of the Internal Revenue Code, if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially or constructively, in the aggregate, at least fifty per cent of the value of the taxpayer's outstanding stock; (B) a stockholder, or a stockholder's partnership, limited liability company, estate, trust or corporation, if the stockholder and the stockholder's partnerships, limited liability companies, estates, trusts and corporations own directly, indirectly, beneficially or constructively, in the aggregate, at least fifty per cent of the value of the taxpayer's outstanding stock; or (C) a corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the taxpayer owns, directly, indirectly, beneficially or constructively, at least fifty per cent of the value of the corporation's outstanding stock. The attribution rules on Section 318 of the Internal Revenue Code shall apply for purposes of determining whether the ownership requirements of this subdivision have been met.
(b) For purposes of computing its net income under section 12-217 a corporation shall add back otherwise deductible interest expenses and costs and intangible expenses and costs directly or indirectly paid, accrued or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related members.
(c) (1) The adjustments required in subsection (b) of this section shall not apply if the corporation establishes by clear and convincing evidence that the adjustments are unreasonable, or the corporation and the Commissioner of Revenue Services agree in writing to the application or use of an alternative method of apportionment under section 12-221a. Nothing in this subdivision shall be construed to limit or negate the commissioner's authority to otherwise enter into agreements and compromises otherwise allowed by law.
(2) The adjustments required in subsection (b) of this section shall not apply to such portion of interest expenses and costs and intangible expenses and costs that the corporation can establish by the preponderance of the evidence meets both of the following: (A) The related member during the same income year directly or indirectly paid, accrued or incurred such portion to a person who is not a related member, and (B) the transaction giving rise to the interest expenses and costs or the intangible expenses and costs between the corporation and the related member did not have as a principal purpose the avoidance of any portion of the tax due under this chapter.
(3) The adjustments required in subsection (b) of this section shall apply except to the extent that increased tax, if any, attributable to such adjustments would have been avoided if both the corporation and the related member had been eligible to make and had timely made the election to file a combined return under subsection (a) of section 12-223a.
(4) The adjustments required in subsection (b) of this section shall not apply if the corporation and the related member are both members of a combined group required to file a combined unitary tax return pursuant to section 12-222.
(d) Nothing in this section shall require a corporation to add to its net income more than once any amount of interest expenses and costs or intangible expenses and costs that the corporation pays, accrues or incurs to a related member described in subsection (b) of this section.
(e) Nothing in this section shall be construed to limit or negate the commissioner's authority to make adjustments under section 12-221a or 12-226a.
(P.A. 98-110, S. 20, 27; P.A. 15-244, S. 151; June Sp. Sess. P.A. 15-5, S. 139.)
History: P.A. 98-110 effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999; (Revisor's note: In 2003 a reference in Subsec. (c)(2) to “chapter 208” was changed editorially by the Revisors to “this chapter”); P.A. 15-244 added Subsec. (c)(4) re adjustments under Subsec. (b) not to apply if corporation and related members are both members of combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 151, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
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Sec. 12-218d. Restriction on the deductibility of interest expenses or costs related to certain transactions with related members. (a) As used in this section:
(1) “Affiliated group” has the same meaning as in Section 1504 of the Internal Revenue Code.
(2) “Interest expenses and costs” means amounts directly or indirectly allowed as deductions under Section 163 of the Internal Revenue Code.
(3) “Related member” means a person that, with respect to the taxpayer during all or any portion of the taxable year, is: (A) A related entity, as defined in this subsection, (B) a component member, as defined in Section 1563(b) of the Internal Revenue Code, (C) a person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, other than a statutory business trust of which each beneficiary is not a related entity to the taxpayer, or (D) a person that, notwithstanding its form of organization, bears the same relationship to the taxpayer as a person described in subparagraphs (A) to (C), inclusive, of this subdivision.
(4) “Related entity” means (A) a stockholder who is an individual, or a member of the stockholder's family enumerated in Section 318 of the Internal Revenue Code, if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially or constructively, in the aggregate, at least fifty per cent of the value of the taxpayer's outstanding stock; (B) a stockholder, or a stockholder's partnership, limited liability company, estate, trust or corporation, if the stockholder and the stockholder's partnerships, limited liability companies, estates, trusts and corporations own directly, indirectly, beneficially or constructively, in the aggregate, at least fifty per cent of the value of the taxpayer's outstanding stock; or (C) a corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of the Internal Revenue Code, if the taxpayer owns, directly, indirectly, beneficially or constructively, at least fifty per cent of the value of the corporation's outstanding stock. The attribution rules of the Internal Revenue Code shall apply for purposes of determining whether the ownership requirements of this subdivision have been met.
(b) For purposes of computing its net income under section 12-217, a corporation shall add back otherwise deductible interest expenses and costs directly or indirectly paid, accrued or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related members.
(c) The adjustments required in subsection (b) of this section shall not apply to an otherwise deductible interest expense or cost if the corporation establishes by clear and convincing evidence, as determined by the commissioner, that: (1) A principal purpose of the transaction giving rise to the payment of interest was not to avoid payment of taxes due under this chapter; (2) the interest is paid pursuant to a contract that reflects an arm's length rate of interest and terms; and (3) either (A) (i) the related member was subject to tax on its net income in this state or another state or possession of the United States or a foreign nation; (ii) a measure of said tax included the interest received from the corporation; and (iii) the rate of tax applied to the interest received by the related member is no less than the statutory rate of tax applied to the corporation under section 12-214, without regard to subsection (b) of section 12-214, minus three percentage points, or (B) the related member is a company subject to tax under chapter 207 or comparable tax under the laws of another state.
(d) The adjustments required in subsection (b) of this section shall not apply in any of the following circumstances:
(1) The corporation establishes by clear and convincing evidence, as determined by the commissioner, that the adjustments are unreasonable.
(2) The corporation and the commissioner agree in writing to the application or use of an alternative method of determining the combined measure of the tax, provided the Commissioner of Revenue Services shall consider approval of such petition only in the event that the petitioners have clearly established to the satisfaction of said commissioner that there are substantial intercorporate business transactions among such included corporations and that the proposed alternative method of determining the combined measure of the tax accurately reflects the activity, business, income or capital of the taxpayers within the state.
(3) The corporation elects, on forms authorized for such purpose by the commissioner, to calculate its tax on a unitary basis including all members of the unitary group, provided there are substantial intercorporate business transactions among such included corporations. Such election to file on a unitary basis shall be irrevocable for and applicable for five successive income years, but shall not be applicable to income years commencing on or after January 1, 2016. Nothing in this subsection shall be construed to limit or negate the commissioner's authority to otherwise enter into agreements and compromises otherwise allowed by law.
(4) The corporation and the related member are both members of a combined group required to file a combined unitary tax return pursuant to section 12-222.
(e) The adjustments required in subsection (b) of this section shall not apply if interest is paid to a related member located in a country with which the United States has a comprehensive income tax treaty.
(f) (1) Gross income, as defined in section 12-213, shall not include any amount received or accrued from a related member that is added back to the preapportionment income of such related member pursuant to subsection (b) of this section.
(2) The receipts factor determined under section 12-218 or 12-218b shall not include any amount received or accrued from a related member that is added back to the preapportionment income of such related member pursuant to subsection (b) of this section.
(g) Nothing in this section shall require a corporation to add to its net income more than once any amount of interest expenses and costs that the corporation pays, accrues or incurs to a related member described in subsection (b) of this section.
(h) Nothing in this section shall be construed to limit or negate the commissioner's authority to make adjustments under section 12-221a or 12-226a.
(June 30 Sp. Sess. P.A. 03-6, S. 78; P.A. 15-179, S. 4; 15-244, S. 152; June Sp. Sess. P.A. 15-5, S. 139, 147.)
History: June 30 Sp. Sess. P.A. 03-6 effective August 20, 2003, and applicable to income years commencing on or after January 1, 2003; P.A. 15-179 made technical changes in Subsec. (d), effective July 2, 2015; P.A. 15-244 amended Subsec. (d) to make technical changes, provide that election under Subdiv. (3) to file on unitary basis shall not be applicable to income years commencing on or after January 1, 2015, and add Subdiv. (4) re corporation and related member that are members of combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 152, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (d)(3) to provide that election not be applicable to income years commencing on or after January 1, 2016, effective January 1, 2016, and applicable to income years commencing on or after that date.
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Sec. 12-218e. Combined group's net income. Apportionment percentage. Net operating loss. Carryover. Additional tax base. Nexus combined base tax. (a) For purposes of this chapter, the combined group's net income shall be the aggregate net income or loss of each taxable member and nontaxable member of the combined group derived from a unitary business, which shall be determined as follows:
(1) For any member incorporated in the United States, included in a consolidated federal corporate income tax return and filing a federal corporate income tax return, the income to be included in calculating the combined group's net income shall be such member's gross income, less the deductions provided under section 12-217, as if the member were not consolidated for federal tax purposes.
(2) For any member not included in a consolidated federal corporate income tax return but required to file its own federal corporate income tax return, the income to be included in calculating the combined group's net income shall be such member's gross income, less the deductions provided under section 12-217.
(3) For any member not incorporated in the United States, not included in a consolidated federal corporate income tax return and not required to file its own federal corporate income tax return, the income to be included in the combined group's net income shall be determined from a profit and loss statement that shall be prepared for each foreign branch or corporation in the currency in which the books of account of the branch or corporation are regularly maintained, adjusted to conform it to the accounting principles generally accepted in the United States for the presentation of such statements and further adjusted to take into account any book-tax differences required by federal or Connecticut law. The profit and loss statement of each such member of the combined group and the apportionment factors related thereto, whether United States or foreign, shall be translated into or from the currency in which the parent company maintains its books and records on any reasonable basis consistently applied on a year-to-year or entity-by-entity basis. Income shall be expressed in United States dollars. In lieu of these procedures and subject to the determination of the commissioner that the income to be reported reasonably approximates income as determined under this chapter, income may be determined on any reasonable basis consistently applied on a year-to-year or entity-by-entity basis.
(4) (A) If the unitary business has income from an entity that is treated as a pass-through entity, the combined group's net income shall include its member's direct and indirect distributive share of the pass-through entity's unitary business income.
(B) The distributive share of income received by a limited partner from an investment partnership shall not be considered to be derived from a unitary business unless the general partner of such investment partnership and such limited partner have common ownership. To the extent that the limited partner is otherwise carrying on or doing business in Connecticut, it shall apportion its distributive share of income from an investment partnership in accordance with subdivision (2) of subsection (g) of section 12-218. If the limited partner is not otherwise carrying on or doing business in Connecticut, its distributive share of income from an investment partnership is not subject to tax under this chapter.
(5) All dividends paid by one member to another member of the combined group shall be eliminated from the income of the recipient.
(6) The principles set forth in the Treasury regulations promulgated under Section 1502 of the Internal Revenue Code, including the principles relating to deferrals, eliminations, and exclusions, shall apply to the extent consistent with the Connecticut combined group membership and combined unitary reporting principles. Upon the occurrence of either of the following events, deferred business income resulting from an intercompany transaction among members of a combined group shall be restored to the income of the seller and shall be included in the combined group's net income as if the seller had earned the income immediately before the event:
(A) The object of a deferred intercompany transaction is: (i) Resold by the buyer to an entity that is not a member of the combined group, (ii) resold by the buyer to an entity that is a member of the combined group for use outside the unitary business in which the buyer and seller are engaged, or (iii) converted by the buyer to a use outside the unitary business in which the buyer and seller are engaged; or
(B) The buyer and seller are no longer members of the same combined group, regardless of whether the members remain unitary.
(7) A charitable expense incurred by a member of a combined group shall, to the extent allowable as a deduction pursuant to Section 170 of the Internal Revenue Code, be subtracted first from the combined group's net income, subject to the income limitations of said section applied to the entire business income of the group. Any charitable deduction disallowed under the foregoing rule, but allowed as a carryover deduction in a subsequent year, shall be treated as originally incurred in the subsequent year by the same member and the rules of this section shall apply in the subsequent year in determining the allowable deduction for that year.
(8) Gain or loss from the sale or exchange of capital assets, property described by Section 1231(a)(3) of the Internal Revenue Code and property subject to an involuntary conversion shall be removed from the net income of each member of a combined group and shall be included in the combined group's net income as follows:
(A) For each class of gain or loss, whether short-term capital, long-term capital, Section 1231 of the Internal Revenue Code gain or loss, or gain or loss from involuntary conversions, all members' business gain and loss for the class shall be combined, without netting among such classes, and each class of net business gain or loss shall be apportioned to each member under subsection (b) of this section; and
(B) Any resulting income or loss apportioned to this state, as long as the loss is not subject to the limitations of Section 1211 of the Internal Revenue Code, of a taxable member produced by the application of subparagraph (A) of this subdivision shall then be applied to all other income or loss of that member apportioned to this state. Any resulting loss of a member apportioned to this state that is subject to the limitations of said Section 1211 shall be carried forward by that member and shall be treated as short-term capital loss apportioned to this state and incurred by that member for the year for which the carryover applies.
(9) Any expense of any member of the combined group that is directly or indirectly attributable to the income of any member of the combined group, which income this state is prohibited from taxing pursuant to the laws or Constitution of the United States, shall be disallowed as a deduction for purposes of determining the combined group's net income.
(b) A taxable member of a combined group shall determine its apportionment percentage as follows:
(1) Each taxable member shall determine its apportionment percentage based on the otherwise applicable apportionment formula provided in this chapter. In computing its denominators for all factors, the taxable member shall use the combined group's denominator for that factor. In computing the numerator of its receipts factor, each taxable member shall add to such numerator its share of receipts of nontaxable members assignable to this state, as provided in subdivision (3) of this subsection.
(2) The combined group shall determine its property and payroll factor denominators using the factors from all members, whether or not a member would otherwise apportion its income using such property and payroll factors.
(3) Receipts assignable to this state of each nontaxable member shall be determined based upon the apportionment formula that would be applicable to such member if it were a taxable member and shall be aggregated. Each taxable member of the combined group shall include in the numerator of its receipts factor a portion of the aggregate receipts assignable to this state of nontaxable members based on a ratio, the numerator of which is such taxable member's receipts assignable to this state, without regard to this subsection, and the denominator of which is the aggregate receipts assignable to this state of all the taxable members of the combined group, without regard to this subsection.
(4) In determining the numerator and denominator of the apportionment factors of taxable members, transactions between or among members of such combined group shall be eliminated.
(5) If any member of a combined group required to file a combined unitary tax return pursuant to section 12-222 is taxable without this state, or is a financial service company, as defined in section 12-218b, each taxable member shall be entitled to apportion its net income in accordance with this section.
(c) To calculate each taxable member's net income or loss apportioned to this state, each taxable member shall apply its apportionment percentage, as determined pursuant to subsection (b) of this section, to the combined group's net income.
(d) After calculating its net income or loss apportioned to this state, pursuant to subsection (c) of this section, each taxable member of a combined group required to file a combined unitary tax return pursuant to section 12-222 may deduct a net operating loss from its net income apportioned to this state as follows:
(1) For income years beginning on or after January 1, 2016, if the computation of a combined group's net income results in a net operating loss, a taxable member of such group may carry over its net loss apportioned to this state, as calculated under subsection (c) of this section, derived from the unitary business in a future income year to the extent that the carryover and deduction is otherwise consistent with subparagraph (A) of subdivision (4) of subsection (a) of section 12-217. Any taxable member that has more than one operating loss carryover shall apply the carryovers in the order that the operating loss was incurred, with the oldest carryover to be deducted first.
(2) Where a taxable member of a combined group has an operating loss carryover derived from a loss incurred by a combined group in an income year beginning on or after January 1, 2016, then the taxable member may share the operating loss carryover with other taxable members of the combined group if such other taxable members were members of the combined group in the income year that the loss was incurred. Any amount of operating loss carryover that is deducted by another taxable member of the combined group shall reduce the amount of operating loss carryover that may be carried over by the taxable member that originally incurred the loss.
(3) Where a taxable member of a combined group has an operating loss carryover derived from a loss incurred in an income year beginning prior to January 1, 2016, or derived from an income year during which the taxable member was not a member of such combined group, the carryover shall remain available to be deducted by that taxable member or other group members that, in the year the loss was incurred, were part of the same combined group as such taxable member under section 12-223a or same unitary group as such taxable member under subsection (d) of section 12-218d of the general statutes, revision of 1958, revised to January 1, 2015. Such carryover shall not be deductible by any other members of the combined group.
(e) Each taxable member shall multiply its income or loss apportioned to this state, as calculated under subsection (c) of this section and as further modified by subsection (d) of this section, by the tax rate set forth in section 12-214.
(f) The additional tax base of taxable and nontaxable members of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall be calculated as follows:
(1) Except as otherwise provided in subdivision (2) of this subsection, members of the combined group shall calculate the combined group's additional tax base by aggregating their separate additional tax bases under subsection (a) of section 12-219 provided (A) intercorporate stockholdings in the combined group shall be eliminated, (B) no deduction shall be allowed under subparagraph (B)(ii) of subdivision (1) of subsection (a) of section 12-219, for such intercorporate stockholdings, and (C) assets and liabilities attributable to transactions with another member of the combined group, including, but not limited to, a financial service company, as defined in section 12-218b, shall be eliminated. In calculating the combined group's additional tax base, the separate additional tax bases of nontaxable members shall be included, as if those nontaxable members were taxable members. The amount calculated under this subdivision shall be apportioned to those members pursuant to subdivision (1) of subsection (g) of this section.
(2) Members of the combined group that are financial service companies, as defined in section 12-218b, shall not be included in the calculation of the combined group's additional tax base set forth in subdivision (1) of this subsection. Financial service companies that are taxable members shall calculate their additional tax liability under subsection (d) of section 12-219.
(g) A taxable member of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall determine its apportionment percentage under section 12-219a as follows:
(1) A taxable member whose separate additional tax base is included in the calculation of the combined group's additional tax base under subdivision (1) of subsection (f) of this section shall apportion the combined group's additional tax base using the otherwise applicable apportionment formula provided in section 12-219a. However, the denominator of such apportionment fraction shall be the sum of subdivisions (1) and (2) of subsection (a) of said section 12-219a for all members whose separate additional tax bases are included in the calculation of the combined group's additional tax base under subdivision (1) of subsection (f) of this section. The numerator of such apportionment fraction shall be the sum of subparagraph (A) of subdivision (1) of subsection (a) of said section 12-219a and subparagraph (A) of subdivision (2) of subsection (a) of said section 12-219a for such taxable member.
(2) Taxable members of the combined group that are financial service companies, as defined in section 12-218b, shall each have an additional tax liability as described in subdivision (2) of subsection (h) of this section.
(h) (1) A taxable member whose separate additional tax base is included in the calculation of the combined group's additional tax base under subdivision (1) of subsection (f) of this section shall multiply the combined group's additional tax base, as calculated under subdivision (1) of subsection (f) of this section, by such member's apportionment fraction determined in subdivision (1) of subsection (g) of this section, by the tax rate set forth in subsection (a) of section 12-219. In no event shall the aggregate tax so calculated for all members of the combined group exceed one million dollars, nor shall a tax credit allowed against the tax imposed by this chapter reduce a taxable member's tax calculated under this subsection to an amount less than two hundred fifty dollars.
(2) Taxable members of the combined group that are financial service companies, as defined in section 12-218b, shall each have an additional tax liability of two hundred fifty dollars. In no event shall a tax credit allowed against the tax imposed by this chapter reduce a financial service company's tax calculated under this subsection to an amount less than two hundred fifty dollars.
(3) To the extent that the aggregate amount of tax calculated on each taxable member's additional tax base exceeds one million dollars, each taxable member will prorate its tax, in proportion to the group's tax calculated without regard to the one-million-dollar cap, such that the group's aggregate additional tax equals one million dollars.
(i) If the aggregate amount of tax calculated on each taxable member's apportioned net income under subsection (e) of this section equals or exceeds the aggregate amount of tax calculated on each taxable member's apportioned additional tax base under subsection (h) of this section, each taxable member shall be subject to tax on its net income. If the aggregate amount of tax calculated on each taxable member's apportioned additional tax base under subsection (h) of this section exceeds the aggregate amount of tax calculated on each taxable member's apportioned net income under subsection (e) of this section, each taxable member shall be subject to tax on its additional tax base.
(j) (1) Each taxable member of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall separately apply the provisions of sections 12-217ee and 12-217zz in determining the amount of tax credit available to such member.
(2) If a taxable member of a combined group earns a tax credit in an income year beginning on or after January 1, 2016, then the taxable member may share the credit with other taxable members of the combined group. Any amount of credit that is utilized by another taxable member of the combined group shall reduce the amount of credit carryover that may be carried over by the taxable member that originally earned the credit. If a taxable member of a combined group has a tax credit carryover derived from an income year beginning on or after January 1, 2016, then the taxable member may share the carryover credit with other taxable members of the combined group, if such other taxable members were members of the combined group in the income year in which the credit was earned.
(3) If a taxable member of a combined group has a tax credit carryover derived from an income year beginning prior to January 1, 2016, or derived from an income year during which the taxable member was not a member of such combined group, the credit carryover shall remain available to be utilized by such taxable member or other group members which, in the year the credit was earned, were part of the same combined group as such taxable member under section 12-223a or the same unitary group as such taxable member under subsection (d) of section 12-218d of the general statutes, revision of 1958, revised to January 1, 2015.
(4) To the extent a taxable member has more than one corporation business tax credit that it may utilize in an income year, whether such credits were earned by said member or are available to said member in accordance with subdivisions (2) and (3) of this subsection, the credits shall be claimed in the same order as provided in section 12-217aa.
(k) (1) In no event shall the tax calculated for a combined group on a combined unitary basis, prior to surtax and application of credits, exceed the nexus combined base tax described in subdivision (2) of this subsection by more than two million five hundred thousand dollars.
(2) (A) The nexus combined base tax equals the tax measured on the sum of the separate net income or loss of each taxable member or the minimum tax base of each taxable member as if such members were not required to file a combined unitary tax return, but only to the extent that such income, loss or minimum tax base of any taxable member is separately apportioned to Connecticut in accordance with the applicable provisions of section 12-218, 12-218b, 12-219a or 12-244. In computing such net income or loss, intercorporate dividends shall be eliminated, and in computing the combined additional tax base, intercorporate stockholdings shall be eliminated.
(B) In computing such net income or loss, any intangible expenses and costs, as defined in section 12-218c, any interest expenses and costs, as defined in section 12-218c, and any income attributable to such intangible expenses and costs or to such interest expenses and costs shall be eliminated, provided the corporation that is required to make adjustments under section 12-218c for such intangible expenses and costs or for such interest expenses and costs, and the related member or members, as defined in section 12-218c, are both taxable members of the combined group. If any such income and any such expenses and costs are eliminated as provided in this subparagraph, the intangible property, as defined in section 12-218c, of the corporation eliminating such income shall not be taken into account in apportioning under the provisions of section 12-219a the tax calculated under subsection (a) of section 12-219 of such corporation.
(C) In computing the apportionment fraction under this subdivision:
(i) Intercompany rents shall not be included in the computation of the value of property rented if the lessor and lessee are both taxable members in the combined unitary tax return; and
(ii) Intercompany business receipts, receipts by a taxable member included in a combined unitary tax return from any other taxable member included in such return, shall not be included.
(P.A. 15-244, S. 139; June Sp. Sess. P.A. 15-5, S. 139, 142, 143; Dec. Sp. Sess. P.A. 15-1, S. 36.)
History: P.A. 15-244 effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 139, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (d) by making Subdivs. (1) and (2) applicable to income years beginning on or after January 1, 2016, and Subdiv. (3) applicable to operating loss carryover derived from loss incurred in income year beginning prior to January 1, 2016, and amended Subsec. (j) by making Subdiv. (2) applicable to tax credit earned in income year beginning on or after January 1, 2016, and to tax credit carryover derived from income year beginning on or after January 1, 2016, and by making Subdiv. (3) applicable to tax credit carryover derived from income year beginning prior to January 1, 2016, and to refer to same unitary group as taxable member under Sec. 12-218d(d), effective January 1, 2016, and applicable to income years commencing on or after that date; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (a) by designating existing provision as Subpara. (A) and adding Subpara. (B) re consideration of distributive share of income received by limited partner from investment partnership in Subdiv. (4), and replacing provision re deferral of business income from intercompany transaction among members of same combined group to be similar to deferral under 26 CFR 1.1502-13 with provision re application of principles set forth in Treasury regulations promulgated under Sec. 1502 of Internal Revenue Code in Subdiv. (6), amended Subsec. (b) by adding reference to Secs. 12-218e to 12-218g in Subdiv. (1) and adding reference to financial service company in Subdiv. (5), amended Subsec. (f) by adding Subpara. designators (A) and (B) and adding Subpara. (C) re elimination of assets and liabilities attributable to transactions with another member of combined group in Subdiv. (1), and rewriting provisions re calculation of additional tax liability re financial services companies in Subdiv. (2), amended Subsec. (h) by adding reference to Secs. 12-218e to 12-218g in Subdivs. (1) and (2), and added Subsec. (k) re calculation of and cap on nexus combined base tax, effective January 1, 2016, and applicable to income years commencing on or after that date.
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Sec. 12-218f. Combined group determined on world-wide basis, affiliated group basis or water's-edge basis. Tax havens. (a) For purposes of this section, “affiliated group” means an affiliated group as defined in Section 1504 of the Internal Revenue Code, except such affiliated group shall include all domestic corporations that are commonly owned, directly or indirectly, by any member of such affiliated group, without regard to whether the affiliated group includes (1) corporations included in more than one federal consolidated return, (2) corporations engaged in one or more unitary businesses, or (3) corporations that are not engaged in a unitary business with any other member of the affiliated group. Such affiliated group shall also include any member of the combined group, determined on a world-wide basis, incorporated in a tax haven as determined by the commissioner in accordance with subdivision (4) of subsection (b) of this section, unless it is proven to the satisfaction of the commissioner that such member is incorporated in a tax haven for a legitimate business purpose.
(b) The designated taxable member of a combined group may elect to have the combined group determined on a world-wide basis or an affiliated group basis. If no such election is made, the combined group shall be determined on a water's-edge basis and will include only taxable members and those nontaxable members described in any one or more of the categories set forth in subdivisions (1) to (3), inclusive, of this subsection:
(1) Any member incorporated in the United States, or formed under the laws of the United States, any state, the District of Columbia, or any territory or possession of the United States, excluding such a member if eighty per cent or more of both its property and payroll during the income year are located outside the United States, the District of Columbia, and any territory or possession of the United States;
(2) Any member, wherever incorporated or formed, if twenty per cent or more of both its property and payroll during the income year are located in the United States, the District of Columbia, or any territory or possession of the United States;
(3) Any member that is incorporated in a jurisdiction that is determined by the commissioner to be a tax haven as that term is defined in subdivision (4) of this subsection, unless it is proven to the satisfaction of the commissioner that such member is incorporated in a tax haven for a legitimate business purpose; or
(4) For purposes of subsection (a) of this section and subdivision (3) of this subsection, “tax haven” means a jurisdiction that (A) has laws or practices that prevent effective exchange of information for tax purposes with other governments on taxpayers benefiting from the tax regime; (B) has a tax regime which lacks transparency; (C) facilitates the establishment of foreign-owned entities without the need for a local substantive presence or prohibits these entities from having any commercial impact on the local economy; (D) explicitly or implicitly excludes the jurisdiction's resident taxpayers from taking advantage of the tax regime benefits or prohibits enterprises that benefit from the regime from operating in the jurisdiction's domestic market; or (E) has created a tax regime which is favorable for tax avoidance, based upon an overall assessment of relevant factors, including whether the jurisdiction has a significant untaxed offshore financial or services sector relative to its overall economy. “Tax haven” does not include a jurisdiction that has entered into a comprehensive income tax treaty with the United States, which the Secretary of the Treasury has determined is satisfactory for purposes of Section 1(h)(11)(C)(i)(II) of the Internal Revenue Code.
(c) A world-wide election or an affiliated group election is effective only if made on a timely filed, original return for an income year by the designated taxable member of the combined group. Such election is binding for, and applicable to, the income year for which it is made and for the ten immediately succeeding income years.
(d) If the designated taxable member elects to determine the members of a combined group on an affiliated group basis, the taxable members shall take into account the net income or loss and apportionment factors of all of the members of its affiliated group, regardless of whether such members are engaged in a unitary business, that are subject to tax or would be subject to tax under this chapter, if doing business in this state.
(P.A. 15-244, S. 140; June Sp. Sess. P.A. 15-5, S. 139, 144; Dec. Sp. Sess. P.A. 15-1, S. 37.)
History: P.A. 15-244 effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 140, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (a) by adding exception when proven to commissioner that member is incorporated in tax haven for legitimate business purpose, amended Subsec. (b) to add new Subdiv. (3) re member that earns more than 20 per cent of its gross income from intangible property or service-related activities, redesignate existing Subdivs. (3) and (4) as Subdivs. (4) and (5), and amend redesignated Subdiv. (5) to reference Subsec. (a), provide that list of tax havens be published not later than September 30, 2016, and be applicable to income years commencing on or after January 1, 2016, and made conforming changes, effective January 1, 2016, and applicable to income years commencing on or after that date; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (b) by deleting former Subdiv. (3) re member that earns more than 20 per cent of gross income, directly or indirectly, from intangible property or service-related activities, redesignating existing Subdivs. (4) and (5) as Subdivs. (3) and (4), and deleting provisions re publication and applicability of list of jurisdictions the commissioner deems to be tax havens and adding exclusion to definition of “tax haven” in redesignated Subdiv. (4), and made conforming changes in Subsecs. (a) and (b), effective January 1, 2016, and applicable to income years commencing on or after that date.
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Sec. 12-218g. Net deferred tax liability and assets. Deductions. (a) For purposes of this section, “net deferred tax liability” means deferred tax liabilities that exceed the deferred tax assets of the combined group, as computed in accordance with generally accepted accounting principles, and “net deferred tax asset” means that deferred tax assets exceed the deferred tax liabilities of the combined group, as computed in accordance with generally accepted accounting principles.
(b) Only publicly traded companies, including affiliated corporations participating in the filing of a publicly traded company's financial statements prepared in accordance with generally accepted accounting principles, as of January 1, 2016, shall be eligible for this deduction.
(c) If the provisions of sections 12-218e and 12-218f result in an aggregate increase to the members' net deferred tax liability or an aggregate decrease to the members' net deferred tax asset, or an aggregate change from a net deferred tax asset to a net deferred tax liability, the combined group shall be entitled to a deduction, as determined in this section.
(d) For the thirty-year period beginning with the combined group's first income year that begins in 2021, a combined group shall be entitled to a deduction from combined group net income equal to one-thirtieth of the amount necessary to offset the increase in the net deferred tax liability or decrease in the net deferred tax asset, or the aggregate change thereof, from a net deferred tax asset to a net deferred tax liability, as computed in accordance with generally accepted accounting principles, that would have resulted from the imposition of the unitary reporting requirements under sections 12-218e and 12-218f, but for the deduction provided under this section. Such increase in the net deferred tax liability or decrease in the net deferred tax asset or the aggregate change thereof shall be computed based on the change that would have resulted from the imposition of the unitary reporting requirements under sections 12-218e and 12-218f as of January 1, 2016, but for the deduction provided under this section.
(e) The deduction calculated under this section shall not be reduced as a result of any events happening subsequent to such calculation, including, but not limited to, any disposition or abandonment of assets. Such deduction shall not alter the tax basis of any asset. If the deduction under this section is greater than combined group net income, any excess deduction shall be carried forward and applied as a deduction to combined group net income in future income years until fully utilized.
(f) Any combined group intending to claim a deduction under this section shall file a statement with the commissioner on or before July 1, 2017, specifying the total amount of the deduction which the combined group claims. The statement shall be made on such form and in such manner as prescribed by the commissioner and shall contain such information or calculations as the commissioner may specify. No deduction shall be allowed under this section for any income year except to the extent claimed on or before July 1, 2017, in the manner prescribed. Nothing in this subsection shall limit the authority of the commissioner to review or redetermine the proper amount of any deduction claimed, whether on the statement required under this subsection or on a tax return for any income year.
(P.A. 15-244, S. 141; June Sp. Sess. P.A. 15-5, S. 139, 145; June Sp. Sess. P.A. 17-2, S. 661; June Sp. Sess. P.A. 17-4, S. 19.)
History: P.A. 15-244 effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 141, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and substituted “combined group” for “unitary group” throughout, amended Subsec. (c) to allow deduction after aggregate change from net deferred tax asset to net deferred tax liability, amended Subsec. (d) to delete reference to change in net income of unitary group, and amended Subsec. (f) to change date re statement filing and deduction allowed from July 1, 2016, to July 1, 2017, effective January 1, 2016, and applicable to income years commencing on or after that date; June Sp. Sess. P.A. 17-2 amended Subsec. (d) to replace “seven-year” and “one-seventh” with “thirty-year” and “one-thirtieth”, respectively, and to make technical changes, and amended Subsec. (e) to delete “shall be calculated without regard to the federal tax effect and”, effective October 31, 2017; June Sp. Sess. P.A. 17-4 amended Subsec. (d) to replace “2018” with “2021”, effective November 21, 2017.
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Sec. 12-219. Capital base tax. Phase-out. Surcharge. (a)(1) Each company subject to the provisions of this part shall pay for the privilege of carrying on or doing business within the state, the larger of the tax, if any, imposed by section 12-214 and the tax calculated under this subsection. The tax calculated under this section shall be a tax of (A) three and one-tenth mills per dollar for income years commencing prior to January 1, 2024, (B) two and six-tenths mills per dollar for the income year commencing on or after January 1, 2024, and prior to January 1, 2025, (C) two and one-tenth mills per dollar for the income year commencing on or after January 1, 2025, and prior to January 1, 2026, (D) one and six-tenths mills per dollar for the income year commencing on or after January 1, 2026, and prior to January 1, 2027, (E) one and one-tenth mills per dollar for the income year commencing on or after January 1, 2027, and prior to January 1, 2028, and (F) zero mills per dollar for income years commencing on or after January 1, 2028, of the amount derived (i) by adding (I) the average value of the issued and outstanding capital stock, including treasury stock at par or face value, fractional shares, scrip certificates convertible into shares of stock and amounts received on subscriptions to capital stock, computed on the balances at the beginning and end of the taxable year or period, the average value of surplus and undivided profit computed on the balances at the beginning and end of the taxable year or period, and (II) the average value of all surplus reserves computed on the balances at the beginning and end of the taxable year or period, (ii) by subtracting from the sum so calculated (I) the average value of any deficit carried on the balance sheet computed on the balances at the beginning and end of the taxable year or period, and (II) the average value of any holdings of stock of private corporations including treasury stock shown on the balance sheet computed on the balances at the beginning and end of the taxable year or period, and (iii) by apportioning the remainder so derived between this and other states under the provisions of section 12-219a, provided in no event shall the tax so calculated exceed one million dollars or be less than two hundred fifty dollars.
(2) For purposes of this subsection, in the case of a new domestic company, the balances at the beginning of its first fiscal year or period shall be the balances immediately after its organization or immediately after it commences business operations, whichever is earlier; and in the case of a foreign company, the balances at the beginning of its first fiscal year or period in which it becomes liable for the filing of a return in this state shall be the balances as established at the beginning of the fiscal year or period for tax purposes. In the case of a domestic company dissolving or limiting its existence, the balances at the end of the fiscal year or period shall be the balances immediately prior to the final distribution of all its assets; and in the case of a foreign company filing a certificate of withdrawal, the balances at the end of the fiscal year or period shall be the balances immediately prior to the withdrawal of all of its assets. When a taxpayer has carried on or had the right to carry on business within the state for eleven months or less of the income year, the tax calculated under this subsection shall be reduced in proportion to the fractional part of the year during which business was carried on by such taxpayer. The tax calculated under this subsection shall, in no case, be less than two hundred fifty dollars for each income year. The taxpayer shall report the items set forth in this subsection at the amounts at which such items appear upon its books; provided, when, in the opinion of the Commissioner of Revenue Services, the books of the taxpayer do not disclose a reasonable valuation of such items, the commissioner may require any additional information which may be necessary for a reasonable determination of the tax calculated under this subsection and shall, on the basis of the best information available, calculate such tax and notify the taxpayer thereof.
(3) No tax credit allowed against the tax imposed by this chapter shall reduce a company's tax calculated under this subsection to an amount less than two hundred fifty dollars.
(b) (1) With respect to income years commencing on or after January 1, 2006, and prior to January 1, 2007, the additional tax imposed on any company and calculated in accordance with subsection (a) of this section shall, for each such income year, except when the tax so calculated is equal to two hundred fifty dollars, be increased by adding thereto an amount equal to twenty per cent of the additional tax so calculated for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The increased amount of tax payable by any company under this section, as determined in accordance with this subsection, shall become due and be paid, collected and enforced as provided in this chapter.
(2) (A) With respect to income years commencing on or after January 1, 2009, and prior to January 1, 2012, the additional tax imposed on any company and calculated in accordance with subsection (a) of this section shall, for each such income year, except when the tax so calculated is equal to two hundred fifty dollars, be increased by adding thereto an amount equal to ten per cent of the additional tax so calculated for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The increased amount of tax payable by any company under this section, as determined in accordance with this subsection, shall become due and be paid, collected and enforced as provided in this chapter.
(B) Any company whose gross income for the income year was less than one hundred million dollars shall not be subject to the additional tax imposed under subparagraph (A) of this subdivision. This exception shall not apply to companies filing a combined return for the income year under section 12-223a or a unitary return under subsection (d) of section 12-218d.
(3) (A) With respect to income years commencing on or after January 1, 2012, and prior to January 1, 2018, the additional tax imposed on any company and calculated in accordance with subsection (a) of this section shall, for each such income year, except when the tax so calculated is equal to two hundred fifty dollars, be increased by adding thereto an amount equal to twenty per cent of the additional tax so calculated for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The increased amount of tax payable by any company under this section, as determined in accordance with this subsection, shall become due and be paid, collected and enforced as provided in this chapter.
(B) Any company whose gross income for the income year was less than one hundred million dollars shall not be subject to the additional tax imposed under subparagraph (A) of this subdivision. With respect to income years commencing on or after January 1, 2012, and prior to January 1, 2016, this exception shall not apply to companies filing a combined return for the income year under section 12-223a or a unitary return under subsection (d) of section 12-218d. With respect to income years commencing on or after January 1, 2016, and prior to January 1, 2018, this exception shall not apply to taxable members of a combined group that files a combined unitary tax return.
(4) (A) With respect to income years commencing on or after January 1, 2018, and prior to January 1, 2023, the additional tax imposed on any company and calculated in accordance with subsection (a) of this section shall, for such income year, except when the tax so calculated is equal to two hundred fifty dollars, be increased by adding thereto an amount equal to ten per cent of the additional tax so calculated for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The increased amount of tax payable by any company under this section, as determined in accordance with this subsection, shall become due and be paid, collected and enforced as provided in this chapter.
(B) Any company whose gross income for the income year was less than one hundred million dollars shall not be subject to the additional tax imposed under subparagraph (A) of this subdivision. This exception shall not apply to taxable members of a combined group that files a combined unitary tax return.
(c) The tax imposed by this section shall be assessed and collected and be first applicable at the time or times herein provided for the tax measured by net income. This section shall not apply to insurance companies, real estate investment trusts, regulated investment companies, interlocal risk management agencies formed pursuant to chapter 113a or, except as otherwise provided by subsection (d) of this section, financial service companies, as defined in section 12-218b.
(d) Each financial service company, as defined in section 12-218b, shall pay for the privilege of carrying on or doing business within the state, the larger of the tax, if any, imposed by section 12-214 and the tax calculated under this subsection. For each such financial service company, the tax calculated under this subsection shall be two hundred fifty dollars for each income year. No tax credit allowed against the tax imposed by this chapter shall reduce a financial service company's tax calculated under this subsection to an amount less than two hundred fifty dollars.
(e) The additional tax base of taxable and nontaxable members of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall be calculated as provided in subsection (f) of section 12-218e.
(1949 Rev., S. 1900; 1951, 1953, June, 1955, S. 1096d; 1957, P.A. 560, S. 2; 649, S. 2; 1959, P.A. 394, S. 2; 1961, P.A. 428, S. 3; 604, S. 3; 1963, P.A. 141; February, 1965, P.A. 461, S. 8; June, 1969, P.A. 1, S. 15; 1971, P.A. 683, S. 2; June, 1971, P.A. 5, S. 112; 1972, P.A. 126, S. 1; 285, S. 7; P.A. 73-350, S. 11, 27; P.A. 75-213, S. 2, 53; P.A. 77-614, S. 139, 610; P.A. 78-121, S. 106, 113; P.A. 80-483, S. 56, 186; P.A. 81-66, S. 2, 5; 81-255, S. 22, 37; 81-411, S. 8, 42; Nov. Sp. Sess. P.A. 81-4, S. 30, 32; P.A. 82-325, S. 3, 7; P.A. 84-546, S. 32, 33, 173; P.A. 85-159, S. 2, 19; 85-469, S. 4, 6; P.A. 86-124, S. 1, 2; 86-132; 86-403, S. 131, 132; P.A. 89-16, S. 2, 31; 89-251, S. 21, 203; P.A. 90-174, S. 1, 3; June Sp. Sess. P.A. 91-3, S. 101, 168; P.A. 93-74, S. 8, 59, 67; May Sp. Sess. P.A. 94-4, S. 7, 85; P.A. 95-160, S. 64, 69; P.A. 96-197, S. 6, 11; P.A. 98-110, S. 19, 27; May 9 Sp. Sess. P.A. 02-1, S. 57; P.A. 03-2, S. 34; June 30 Sp. Sess. P.A. 03-1, S. 88; P.A. 05-251, S. 63; P.A. 06-186, S. 67; June Sp. Sess. P.A. 09-3, S. 102; P.A. 11-6, S. 79; P.A. 13-184, S. 74; P.A. 15-244, S. 84, 153; June Sp. Sess. P.A. 15-5, S. 139, 141; P.A. 19-117, S. 340, S. 342; June Sp. Sess. P.A. 21-2, S. 423, 424; P.A. 22-110, S. 13.)
History: 1959 act applied tax to each income year, added reference to deferred and unrealized profits in Subdiv. (B)(a)(3) and to treasury stock in Subdiv. (B)(b)(2); 1961 acts raised alternative tax rate from 1.9 mills to 2.5 mills, added exception to minimum tax for banking and financial corporations, and changed technical language; 1963 act added exception for small business investment companies; 1965 act set deadline for 2.5 mill rate to years beginning before January 1, 1966, and raised mill rate to two and five-eighths thereafter, set same deadline for $25 minimum tax, raised to $30 thereafter and set same deadline for 2% tax re banking institutions, raised to 2.1% thereafter; 1969 act for two years, January 1, 1969, to January 1, 1971, changed rates above to four mills, $45 and 3.2% respectively; 1971 acts divided section into Subsecs. and made basis for payments, the difference between tax imposed in Sec. 12-214 and tax calculated under Subdivs. (A) and (B) and changed ending dates for temporary increases in rates from 1971 to 1973; 1972 acts included maximum tax for income years beginning on or after January 1, 1972, for “any company, except companies subject to the gross earnings taxes under chapters 211 and 212, which, in arriving at net income ... is entitled to a deduction under section 12-217 for dividends as defined in the federal corporation income tax law” and made temporary increased tax rates the permanent rates; P.A. 73-350 made provisions applicable to years beginning on or after January 1, 1973, increased mill rate from 4 to 4.25 mills and specifically excluded regulated investment companies and real estate investment trusts, deleted par or face value of indebtedness and deferred and unrealized profits from calculation of taxable amount and set maximum and minimum charges of $100,000 and $50, respectively, and changed provisions formerly applicable to companies, “except companies subject to the gross earnings taxes under chapters 211 and 212” applicable to regulated investment companies or real estate investment trusts, set forth process for deriving amount subject to tax and established $50 minimum tax for such companies, increased figures in Subsec. (2)(B) from $45 to $50, changed rate for computation of interest and dividends from 2% to one-eighth of 1% and excluded insurance companies from provisions of section; P.A. 75-213 changed mill rate for companies other than regulated investment companies and real estate investment trusts from 0.25 mill to 0.31 mill and for regulated investment companies and real estate investment trusts from 0.4 to 0.5 mill, effective July 1, 1975, and applicable to income years commencing on or after January 1, 1975; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 78-121 deleted reference to private banks in Subsec. (1)(A); P.A. 80-483 deleted reference to building and loan associations in Subsec. (1)(A) and (2)(B); P.A. 81-66 raised mill rate in (1)(A) from 0.31 mill to 3.1 mills per dollar and increased minimum tax from $50 to $100, effective May 4, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-255 added the alternative computation of tax under Subdiv. (B) and increased the minimum tax to $250, effective July 1, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-411 added consideration of a loss for the income year in the alternative tax base under Subdiv. (B), and deleted provisions allowing deductions for contributions to retirement plan in determining salaries and other compensation, effective June 18, 1981, and applicable to income years commencing on or after January 1, 1981; Nov. Sp. Sess. P.A. 81-4 deleted Subsec. (1)(B) re alternative tax (if higher than that in Subdiv. (a)) consisting of 50% of corporation's net income or loss plus salaries and other compensation paid to elected or appointed corporation officers or to shareholders owning more than 1% of stock at rate of 5%, amending section accordingly, effective January 27, 1982, and applicable to income years commencing on or after January 1, 1983; P.A. 82-325 changed effective date of Nov. Sp. Sess. P.A. 81-4, but without affecting this section; P.A. 84-546 made technical change, substituting “scrip” for “script” in Subsec. (1); P.A. 85-159 reduced minimum tax to $100 for income years of corporations commencing on or after January 1, 1985; P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 86-124 revised section to conform to the style of the general statutes and amended Subsec. (a)(1)(C) to increase the maximum tax from $100,000 to $500,000, effective May 8, 1986, and applicable to income years of corporations commencing on or after January 1, 1986; P.A. 86-132 deleted provision limiting the types of regulated investment companies or real estate investment trusts to which the provisions concerning those types of companies and trusts applied; P.A. 86-403 changed effective date of P.A. 86-132 from October 1, 1986, to May 23, 1986 and applicable to income years of corporations commencing on or after January 1, 1986; P.A. 89-16 increased the minimum tax from $100 to $250 in Subsecs. (a) and (b), and amended Subsec. (c) to impose an additional tax as a percentage of the tax calculated under Subsec. (a) or Subsec. (b), effective March 23, 1989, and applicable to income years of corporations commencing on or after January 1, 1989; P.A. 89-251 increased the tax imposed under Subsec. (c), as amended by P.A. 89-16, as a percentage of the additional tax calculated under Subsec. (a) or Subsec. (b) from 15% to 20% of the additional tax, effective July 1, 1989, and applicable to income years commencing on or after January 1, 1989; P.A. 90-174 amended Subsec. (a)(2) to provide for a maximum tax under said subdivision of $50,000, effective July 1, 1990, and applicable to income years of corporations commencing on or after January 1, 1991; June Sp. Sess. P.A. 91-3 amended Subsec. (a)(1)(C) to increase the maximum tax from $500,000 to $1,000,000 and Subsec. (c) to provide that the 20% additional tax would be applicable with respect to income years commencing prior to January 1, 1992, and to impose a 10% additional tax applicable with respect to income years commencing on or after January 1, 1992, and prior to January 1, 1993, effective August 22, 1991, and applicable to income years of corporations commencing on or after January 1, 1991; P.A. 93-74 deleted Subsec. (a)(2) with respect to regulated investment company or real estate investment trusts, renumbering Subdiv. (3) accordingly and amended Subsec. (d) to exclude real estate investment trusts and regulated investment trusts from provisions of section, effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1993; May Sp. Sess. P.A. 94-4 in Subsec. (d) exempted interlocal risk management agencies formed pursuant to chapter 113a, effective June 9, 1994, and applicable to income years commencing on or after January 1, 1980; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 96-197 amended Subsecs. (a) and (b) to clarify that out-of-state businesses carrying on or doing business in the state are subject to the tax on the capital base and made technical changes, effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 98-110 deleted Subsec. (b) re certain banks, trusts, investment and financing entities, relettered existing Subsecs., excluded financial service companies and made technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999; May 9 Sp. Sess. P.A. 02-1 added Subsec. (a)(3) re the effect of tax credits on the minimum tax, amended Subsec. (c) by adding “except as otherwise provided by subsection (d) of this section” and added Subsec. (d) re a minimum tax for financial services companies, effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002; P.A. 03-2 added Subsec. (b)(3) re a surcharge for the 2003 income year, effective February 28, 2003, and applicable to income years commencing on or after January 1, 2003; June 30 Sp. Sess. P.A. 03-1 amended Subsec. (b) to include in surcharge provided under Subdiv. (3) amounts calculated under Sec. 91 of P.A. 03-1 of the June 30 special session and to add Subdiv. (4) re surcharge for the 2004 income year, effective August 16, 2003, and applicable to income years commencing on or after January 1, 2003; P.A. 05-251 amended Subsec. (b) by deleting references to Sec. 91 of June 30 Sp. Sess. 03-1 in Subdivs. (3) and (4) and by adding Subdivs. (5) and (7) re surcharge in income years 2006 and 2007, respectively, effective June 30, 2005, and applicable to income years commencing on or after January 1, 2006; P.A. 06-186 amended Subsec. (b) to eliminate former Subdiv. (6) re surcharge in income year commencing on or after January 1, 2007, and prior to January 1, 2008, effective July 1, 2006, and applicable to income years commencing on or after January 1, 2006; June Sp. Sess. P.A. 09-3 amended Subsec. (b) by adding Subdiv. (6) re surcharge of 10% for income years on or after January 1, 2009, and exemption for companies with gross income less than $100,000,000, effective September 9, 2009, and applicable to income years commencing on or after January 1, 2009; P.A. 11-6 amended Subsec. (b) to add Subdiv. (7) re 20% surcharge for 2012 and 2013 income years and exemption for companies with gross income less than $100,000,000, effective May 4, 2011, and applicable to income years commencing on or after January 1, 2011; P.A. 13-184 amended Subsec. (b)(7) to extend surcharge to income years prior to January 1, 2016, effective June 18, 2013; P.A. 15-244 amended Subsec. (b)(7)(A) to extend surcharge to income years prior to January 1, 2018, amended Subsec. (b)(7)(B) to provide that for income years commencing on or after January 1, 2015, and prior to January 1, 2018, exception shall not apply to taxable members of combined group filing a combined unitary tax return, added Subsec. (b)(8)(A) re surcharge for income year commencing on or after January 1, 2018, added Subsec. (b)(8)(B) re exemption for companies with gross income less than $100,000,000, and added Subsec. (e) re calculation of additional tax base of taxable and nontaxable members of combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 84 and 153, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (b)(7)(B) to provide that exception not apply to companies filing combined return or unitary return with respect to income years commencing prior to January 1, 2016, rather than January 1, 2015, and exception not apply to taxable members of a combined group that files a combined unitary tax return with respect to income years commencing on or after January 1, 2016, rather than January 1, 2015, and amended Subsec. (b)(8)(A) to provide that additional tax apply to income years commencing on or after January 1, 2018, and prior to January 1, 2019, effective January 1, 2016, and applicable to income years commencing on or after that date; P.A. 19-117 amended Subsec. (a)(1) by designating existing provisions re amount of tax as new Subpara. (A) and amended same by adding provisions phasing out tax over 3 years commencing January 1, 2021, redesignating existing Subparas. (A) and (B) as new clauses (i) and (ii), redesignating existing clauses (i) and (ii) as subclauses (I) and (II), and made a conforming change, effective June 26, 2019, and amended Subsec. (b)(8) by replacing “January 1, 2019” with “January 1, 2021”, effective June 26, 2019, and applicable to income years commencing on or after January 1, 2019; June Sp. Sess. P.A. 21-2 amended Subsec. (a)(1) by delaying commencement dates of tax phaseout in Subparas. (A) to (C) by 3 years, adding new Subpara. (D) to add phaseout rate of 1.6 mills per dollar for income year commencing on or after January 1, 2026, redesignating existing Subparas. (D) and (E) as Subparas. (E) and (F) and amending same to delay commencement dates of tax phaseout by 4 years, and amended Subsec. (b)(8) by replacing “January 1, 2021” with “January 1, 2023”, effective June 23, 2021; P.A. 22-110 amended Subsec. (b) by deleting former Subdivs. (1) to (4) re income years commencing prior to January 1, 2005, and redesignating existing Subdivs. (5) to (8) as Subdivs. (1) to (4).
Under former statute, indebtedness did not include indebtedness on which company not personally liable. 122 C. 143. Cited. Id., 550; 135 C. 57; 178 C. 240; 195 C. 284; 203 C. 198; 220 C. 665.
Cited. 2 CA 660.
Cited. 40 CS 77.
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Sec. 12-219a. Apportionment of tax base in and out of state. Insurance companies excepted. (a) If a taxpayer is taxable both within and without the state, a tax shall be imposed on the base as provided in section 12-219, apportioned on the following basis: (1) The average monthly value of all investments other than stock of private corporations, and all cash, credits and other intangible assets of the taxpayer shall be divided between (A) those having a tax situs within the state and (B) those having a tax situs without the state; (2) the average monthly net book value of the tangible property held and owned by the taxpayer during the income year shall be divided between (A) that held within the state and (B) that held without the state; the numerator of the allocation fraction shall consist of the sum of subparagraph (A) of subdivision (1) of this subsection and subparagraph (A) of subdivision (2) of this subsection, and the denominator shall consist of the sum of subdivisions (1) and (2) of this subsection; which allocation fraction shall be multiplied by the amount of the unallocated tax base as computed under the terms of said section 12-219 to obtain the tax base for such taxpayer. For the purposes of this section, the intangible assets of a company having its principal place of business within the state shall be deemed to have a tax situs within the state unless it can be clearly established that some or all of such assets are held in connection with business conducted during the income year without the state, and a similar rule shall apply to intangible assets of a company having its principal place of business without the state. Such assets shall be reported by the taxpayer at the valuations at which they appear upon its books, provided the Commissioner of Revenue Services shall exercise the powers with respect to such valuations granted him under the terms of said section 12-219. For the purpose of apportionment of the base as provided in said section 12-219, a taxpayer is taxable in another state if in such state such taxpayer conducts business and is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business or a corporate stock tax, or if such state has jurisdiction to subject such taxpayer to such a tax, regardless of whether such state does, in fact, impose such a tax.
(b) (1) Any company that is (A) a limited partner in a partnership, other than an investment partnership, that does business, owns or leases property or maintains an office within this state and (B) not otherwise carrying on or doing business in this state shall apportion the average value of its partnership interest within and without this state under the provisions of subsection (a) of this section, except that the numerator and the denominator of its apportionment fraction shall be its proportionate part of the partnership's apportionment factors. For purposes of this section, the partnership shall compute its apportionment fraction and the numerator and the denominator of its apportionment factors as if it were a company taxable both within and without this state. However, if the commissioner determines that the company and the partnership are, in substance, parts of a unitary business engaged in a single business enterprise, or, if the company is a member of a combined group that files a combined unitary tax return, the company shall be taxed in accordance with the provisions of subdivision (3) of this subsection and not in accordance with the provisions of this subdivision.
(2) Any company that is (A) a limited partner (i) in an investment partnership or (ii) in a limited partnership, other than an investment partnership, that does business, owns or leases property or maintains an office within this state and (B) otherwise carrying on or doing business in this state shall apportion its additional tax base, including the average value of its partnership interest, within and without the state under the provisions of subsection (a) of this section, except that the numerator and the denominator of its apportionment factors shall include its proportionate part of the numerator and the denominator of the partnership's apportionment factors. For purposes of this section, the partnership shall compute its apportionment fraction and the numerator and the denominator of its apportionment factors, as if it were a company taxable both within and without this state.
(3) Any company that is a general partner in a partnership that does business, owns or leases property or maintains an office within this state shall, whether or not it is otherwise carrying on or doing business in this state, apportion its additional tax base, including the average value of its partnership interest, within and without the state under the provisions of subsection (a) of this section, except that the numerator and the denominator of its apportionment factors shall include its proportionate part of the numerator and the denominator of the partnership's apportionment factors. For purposes of this section, the partnership shall compute its apportionment fraction and the numerator and the denominator of its apportionment factors, as if it were a company taxable both within and without this state.
(c) This section shall not apply to insurance companies.
(d) The additional tax base of taxable and nontaxable members of a combined group required to file a combined unitary tax return pursuant to section 12-222 shall be apportioned as provided in subsection (g) of section 12-218e.
(P.A. 73-350, S. 12, 27; 73-616, S. 53, 67; P.A. 75-501, S. 2, 3; P.A. 77-539, S. 2, 3; 77-614, S. 139, 610; P.A. 96-197, S. 7, 11; P.A. 15-244, S. 154; June Sp. Sess. P.A. 15-5, S. 139, 148.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 73-616 made previous provisions applicable to taxpayer maintaining continuous place of business without the state and provided that entire additional tax base is subject to tax if permanent or continuous place of business not maintained without the state, effective June 1, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 75-501 made provisions applicable to taxpayer who “is taxable both within and without the state” and defined what is meant by the term “taxable in another state”, effective July 3, 1975, and applicable to income years ending on or after that date; P.A. 77-539 included in terms of definition above taxpayers conducting business in another state as well as being subject to taxes; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 96-197 made existing section Subsec. (a) and added new Subsec. (b) re apportionment of net income re companies that are limited partners in a partnership and made technical changes, effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 15-244 added Subsec. (d) re apportionment of additional tax base of taxable and nontaxable members of combined group required to file combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 154, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (b)(1) to require company that is a member of a combined group that files combined unitary tax return to be taxed under Subsec. (b)(3), effective January 1, 2016, and applicable to income years commencing on or after that date.
Cited. 43 CS 42.
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Sec. 12-219b. Election with respect to apportionment of net income. (a) With respect to the taxation under this chapter in income years commencing on or after January 1, 1996, of a company's distributive share as a partner of partnership income or loss in all partnerships in which it is or may become a partner, a company may, on or before the due date, or, if applicable, the extended due date, of its corporation business tax return for its income year beginning during 1996, make an election, on its corporation business tax return for such income year, not to have the provisions of subsection (g) of section 12-218 and subsection (b) of section 12-219a apply. Except as otherwise provided by subsection (b) of this section, the election shall be irrevocable.
(b) If a company makes the election as provided in subsection (a) of this section, such company may revoke such election, on its corporation business tax return and such revocation shall not be effective for any income year beginning before January 1, 2001. The revocation, if any, of such election shall be irrevocable.
(P.A. 96-197, S. 8, 11; Dec. Sp. Sess. P.A 15-1, S. 44.)
History: P.A. 96-197 effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (a) by replacing reference to Sec. 12-218(e) with reference to Sec. 12-218(g), effective January 1, 2016.
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Secs. 12-220 to 12-221. Allocation of minimum tax base. Apportionment of additional tax. Allocation in special cases. Sections 12-220 to 12-221, inclusive, are repealed.
(1949, Rev., S. 1901, 1902; 1951, 1953, S. 1097d; 1957, P.A. 560, S. 3; 1961, P.A. 356; 1967, P.A. 586, S. 2, 3; 1969, P.A. 258, S. 2; 370, S. 1; 1971, P.A. 683, S. 3; P.A. 73-350, S. 13, 27.)
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Sec. 12-221a. Petition for alternative method of apportionment. Regulations. (a) If the method of apportionment prescribed in sections 12-218, 12-218a and 12-219a, as administered by the Commissioner of Revenue Services and applied to the business of any company, unfairly attributes to this state an undue proportion of its net income or minimum tax base, such company may petition for an alternate method of apportionment by filing with its return to the commissioner a statement of its objections and of such other proposed method of apportionment as it believes proper and equitable under the circumstances, accompanied by supporting details and proofs. The commissioner, within a reasonable time thereafter, shall notify the company whether the proposed method is accepted as reasonable and equitable and, if so accepted, shall adjust the return and tax accordingly.
(b) With respect to any company subject to the tax imposed under this chapter, the commissioner, at any time within three years after the due date for the filing of such return, or in the case of a completed return filed after such due date, within three years after the date on which such return was received by the commissioner, which return is based on the method of apportionment provided for in said sections 12-218, 12-218a and 12-219a, may change such method if, in his opinion, such method has operated or will operate so as to subject the company to taxation on a lesser portion of its net income or minimum tax base than is equitably attributable to this state and shall thereupon proceed to assess and collect taxes in accordance with such method as so changed by him. On and after January 1, 1995, the commissioner may change such method only in accordance with regulations establishing standards for such action, which the commissioner may adopt in accordance with the provisions of chapter 54.
(c) The provisions of this section shall also apply to a combined group required to file a combined unitary tax return pursuant to section 12-222.
(1969, P.A. 258, S. 1; 1971, P.A. 683, S. 4; P.A. 73-350, S. 14, 27; P.A. 77-614, S. 139, 610; P.A. 81-411, S. 3, 42; May Sp. Sess. P.A. 94-4, S. 8, 85; P.A. 95-160, S. 64, 69; P.A. 96-197, S. 9, 11; P.A. 15-244, S. 155; June Sp. Sess. P.A. 15-5, S. 139.)
History: 1971 act substituted “additional tax base” for “minimum tax base”; P.A. 73-350 substituted reference to Secs. 12-218a and 12-219a for reference to repealed Sec. 12-220a; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 81-411 deleted reference to allocation, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; May Sp. Sess. P.A. 94-4 divided existing section into Subsecs. (a) and (b) and in Subsec. (b) added provision requiring the adoption of regulations re change in apportionment methods, effective June 9, 1994; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 96-197 amended Subsecs. (a) and (b) re replace “additional” with “minimum” in reference to the tax base, effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 15-244 added Subsec. (c) providing that section apply to combined group required to file a combined unitary tax return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 155, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
Cited. 202 C. 412; 236 C. 156.
Under former section, taxpayer could not, on its own initiative, omit filing the return prescribed by statute and file only a return pursuant to an alternative method which had not yet been accepted or approved by tax commissioner. 26 CS 373. Cited. 41 CS 271; 44 CS 90.
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Sec. 12-222. Annual return. Designated taxable member of combined group. Duties. (a) Each company subject to the tax imposed under this part shall render to the commissioner an annual return, signed by one of its principal officers, on forms prescribed or furnished by the commissioner, stating specifically the name of the company and the location of its principal office, the state where organized and the date of organization, the names and locations of all subsidiaries, the amount of its paid-up capital and surplus at the end of the income year, the amount of its undivided profits and reserves at the end of such year, the par value of all indebtedness at the end of such year, the items of gross income received during such year, the deductions permitted by law, the interest and rental payments during such year, the dividend payments and changes in capital, surplus and undivided profits during such year, complete balance sheets at the beginning and end of such year or period and such other facts as the commissioner may require for the purpose of making any computation required by this part.
(b) Such return shall be due on or before the fifteenth day of the month next succeeding the due date of the company's corresponding federal income tax return for the income year, determined without regard to any extension of time for filing, or, in the case of any company that is not required to file a federal income tax return for the income year, on or before the fifteenth day of the fifth month next succeeding the end of the income year.
(c) The commissioner may grant a reasonable extension of time for filing a return, if the company files a tentative return and application for extension of time in which to file a return, on forms furnished or prescribed by the commissioner, and pays the tax reported to be due on such tentative return on or before the original due date of the return, as provided in subsection (b) of this section. Any additional tax which may be found to be due on the filing of the return as allowed by such extension shall bear interest at the rate of one per cent per month or fraction thereof from the original due date of the return to the date of actual payment. Notwithstanding the provisions of section 12-229, if the commissioner grants a reasonable extension of time for filing a return, no penalty shall be imposed on account of any failure to pay the amount of tax reported to be due on a return within the time specified under the provisions of this chapter if the excess of the amount of tax shown on the return over the amount of tax paid on or before the original due date of such return is no greater than ten per cent of the amount of tax shown on such return, and any balance due shown on such return is remitted with such return on or before the extended due date of such return.
(d) In any case in which the commissioner believes that it would be advantageous for the computation of the tax as imposed by this part, such state return shall be accompanied by a true copy of the last income tax return, if any, made to the Internal Revenue Service.
(e) The amount of tax reported to be due on such return or tentative return shall be due and payable on or before the original due date of the return, as defined in subsection (b) of this section.
(f) Payment shall be made in cash or by check, draft or money order drawn to the order of the Commissioner of Revenue Services.
(g) (1) A combined group shall file a combined unitary tax return under this chapter in the form and manner prescribed by the Commissioner of Revenue Services. The designated taxable member of a combined group shall file the combined unitary tax return on behalf of the taxable members of the combined group and shall pay the tax on behalf of such taxable members. A designated taxable member shall not be liable to, and shall be entitled to recover a payment made pursuant to this subdivision from, the taxable member on whose behalf the payment was made.
(2) If a member of a combined group has a different income year than the group income year, such member with a different income year shall report amounts from its return for its income year that ends during the group income year, provided no such reporting of amounts shall be required of such member until its first income year beginning on or after January 1, 2016.
(3) Notwithstanding the provisions of subdivision (1) of this subsection, each taxable member of a combined group is jointly and severally liable for the tax due from any taxable member under this chapter, whether or not such tax has been self-assessed, and for any interest, penalties or additions to tax due from any taxable member under this chapter.
(4) In all cases where a combined group is eligible to select the designated taxable member of the combined group, notice of the selection shall be submitted in written form to the commissioner not later than the due date, or, if an extension of time to file has been requested and granted, not later than the extended due date of the combined unitary tax return for the initial income year that such a return is required. The subsequent selection of another designated taxable member shall be subject to the approval of the commissioner.
(5) For purposes of this chapter, the designated taxable member is authorized to do the following acts on behalf of taxable and nontaxable members of the combined group, including, but not limited to: (A) Signing the combined unitary tax return, including any amendments to such return; (B) applying for extensions of time to file the return; (C) before the expiration of the time prescribed in section 12-233 for the examination of the return or the assessment of tax, consenting to an examination or assessment after such time and prior to the expiration of the period agreed upon; (D) making offers of compromise under section 12-2d; (E) entering into closing agreements under section 12-2e; and (F) receiving a refund or credit of a tax overpayment under this chapter.
(6) For purposes of this chapter, the commissioner may, at the commissioner's sole discretion: (A) Send any notice to either the designated taxable member or a taxable member or members of the combined group; (B) make any deficiency assessment against either the designated taxable member or a taxable member or members of the combined group; (C) refund or credit any overpayment to either the designated taxable member or a taxable member or members of the combined group; (D) require any payment to be made by electronic funds transfer; and (E) require the combined unitary tax return to be electronically filed.
(1949 Rev., S. 1903; 1955, S. 1098d; 1957, P.A. 560, S. 4; P.A. 77-614, S. 139, 610; P.A. 78-178, S. 1, 2; P.A. 85-381, S. 2; P.A. 87-37; P.A. 90-160, S. 1; P.A. 98-244, S. 7, 35; P.A. 99-121, S. 6, 28; June Sp. Sess. P.A. 01-6, S. 25, 85; P.A. 15-244, S. 156; June Sp. Sess. P.A. 15-5, S. 139, 149; P.A. 17-147, S. 24.)
History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 78-178 changed deadline for extension requests from fifteenth day of third month following close of taxable year to ninetieth day following close of taxable year, effective May 17, 1978, and applicable to income years ending after that date; P.A. 85-381 divided section into Subsecs., deleted “fiduciary” in referring to taxpayers subject to tax under part I of the corporation business tax and provided that the return and tax shall be due before the first day of the fourth month next succeeding the end of the taxpayer's income year and that payment shall be made by cash, check, draft or money order; P.A. 87-37 amended the due date for returns and payment of tax so as to include the last day on which such return or payment is due by substituting “on or before” preceding such date for the word “before” preceding such date; P.A. 90-160 amended Subsec. (a) by deleting the requirement that the annual return for a corporation be rendered under oath and inserted in lieu thereof the requirement that the return be signed by one of the corporation's principal officers; P.A. 98-244 moved due date of corporation business tax return of an S corporation from the first day of the fourth month following the close of the income year to the fifteenth day of the fourth month following the close of the income year, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; P.A. 99-121 amended Subsec. (c) to allow a taxpayer who has been granted an extension to avoid a late payment penalty as long as the balance due is 10% or less and is remitted with the corporation business tax return, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999; June Sp. Sess. P.A. 01-6 amended Subsecs. (b) to (e) to coordinate dates under section with corresponding federal returns and make conforming changes to other due dates and extension periods, effective July 1, 2001, and applicable to income years commencing on or after January 1, 2001; P.A. 15-244 added Subsec. (g) re filing of combined unitary tax return by combined group, duties and liabilities of designated taxable member of combined group, and commissioner's discretion re notice, deficiency assessments, refunds, payment requirements and electronic filings of returns, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 156, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (g)(2) to change member's reporting date to first income year beginning on or after January 1, 2016, effective January 1, 2016, and applicable to income years commencing on or after that date; P.A. 17-147 amended Subsec. (b) to replace “first day” with “fifteenth day” and replace “fourth month” with “fifth month”, effective July 7, 2017, and applicable to income years commencing on or after January 1, 2017.
Cited. 124 C. 406; 129 C. 664; 135 C. 61.
Cited. 44 CS 90; Id., 126.
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Sec. 12-223. Returns of affiliated corporations. Section 12-223 is repealed.
(1949 Rev., S. 1904; P.A. 73-350, S. 26, 27.)
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Sec. 12-223a. Combined corporation business tax return. (a) Subject to the provisions of subsection (e) of this section, any taxpayer included in a consolidated return with one or more other corporations for federal income tax purposes may elect to file a combined return under this chapter together with such other companies subject to the tax imposed thereunder as are included in the federal consolidated corporation income tax return and such combined return shall be filed in such form and setting forth such information as the Commissioner of Revenue Services may require. Notice of an election made pursuant to the provisions of this subsection and consent to such election must be submitted in written form to the Commissioner of Revenue Services by each corporation so electing not later than the due date, or if an extension of time to file has been requested and granted, the extended due date of the returns due from the electing corporations for the initial income year for which the election to file a combined return is made. Such election shall be in effect for such initial income year and for each succeeding income years unless and until such election is revoked in accordance with the provisions of subsection (d) of this section.
(b) Subject to the provisions of subsection (e) of this section, any taxpayer, other than a corporation filing a combined return with one or more other corporations under subsection (a) of this section, which owns or controls either directly or indirectly substantially all the capital stock of one or more corporations, or substantially all the capital stock of which is owned or controlled either directly or indirectly by one or more other corporations or by interests which own or control either directly or indirectly substantially all the capital stock of one or more other corporations, may, in the discretion of the Commissioner of Revenue Services, be required or permitted by written approval of the Commissioner of Revenue Services to make a return on a combined basis covering any such other corporations and setting forth such information as the Commissioner of Revenue Services may require, provided no combined return covering any corporation not subject to tax under this chapter shall be required unless the Commissioner of Revenue Services deems such a return necessary, because of intercompany transactions or some agreement, understanding, arrangement or transaction referred to in section 12-226a, in order properly to reflect the tax liability under this part.
(c) (1) (A) In the case of a combined return, the tax shall be measured by the sum of the separate net income or loss of each corporation included or the minimum tax base of the included corporations but only to the extent that said income, loss or minimum tax base of any included corporation is separately apportioned to Connecticut in accordance with the provisions of section 12-218, 12-218b, 12-219a or 12-244, whichever is applicable. In computing said net income or loss, intercorporate dividends shall be eliminated, and in computing the combined additional tax base, intercorporate stockholdings shall be eliminated.
(B) In computing said net income or loss, any intangible expenses and costs, as defined in section 12-218c, any interest expenses and costs, as defined in section 12-218c, and any income attributable to such intangible expenses and costs or to such interest expenses and costs shall be eliminated, provided the corporation that is required to make adjustments under section 12-218c for such intangible expenses and costs or for such interest expenses and costs, and the related member or members, as defined in section 12-218c, are included in such combined return. If any such income and any such expenses and costs are eliminated as provided in this subparagraph, the intangible property, as defined in section 12-218c, of the corporation eliminating such income shall not be taken into account in apportioning under the provisions of section 12-219a the tax calculated under subsection (a) of section 12-219 of such corporation.
(2) If the method of determining the combined measure of such tax in accordance with this subsection for two or more affiliated companies validly electing to file a combined return under the provisions of subsection (a) of this section is deemed by such companies to unfairly attribute an undue proportion of their total income or minimum tax base to this state, said companies may submit a petition in writing to the Commissioner of Revenue Services for approval of an alternate method of determining the combined measure of their tax not later than sixty days prior to the due date of the combined return to which the petition applies, determined with regard to any extension of time for filing such return, and said commissioner shall grant or deny such approval before said due date. In deciding whether or not the companies included in such combined return should be granted approval to employ the alternate method proposed in such petition, the Commissioner of Revenue Services shall consider approval only in the event that the petitioners have clearly established to the satisfaction of said commissioner that all the companies included in such combined return are, in substance, parts of a unitary business engaged in a single business enterprise and further that there are substantial intercorporate business transactions among such included companies.
(3) Upon the filing of a combined return under subsection (a) or (b) of this section, combined returns shall be filed for all succeeding income years or periods for those corporations reporting therein, provided, in the case of corporations filing under subsection (a) of this section, such corporations are included in a federal consolidated corporation income tax return filed for the succeeding income years and, in the case of a corporation filing under subsection (b) of this section, the aforesaid ownership or control continues in full force and effect and is not extended to other corporations, and further, provided no substantial change is made in the nature or locations of the operations of such corporations.
(d) Notwithstanding the provisions of subsections (a) and (c) of this section, any taxpayer which has elected to file a combined return under this chapter as provided in said subsection (a), may subsequently revoke its election to file a combined corporation business tax return and elect to file a separate corporation business tax return under this chapter, although continuing to be included in a federal consolidated corporation income tax return with other companies subject to tax under this chapter, provided such election shall not be effective before the fifth income year immediately following the initial income year in which the corporation elected to file a combined return under this chapter. Notice of an election made pursuant to the provisions of this subsection and consent to such election must be submitted in written form to the Commissioner of Revenue Services by each corporation that had been included in such combined return not later than the due date, or if an extension of time to file has been requested and granted, extended due date of the separate returns due from the electing corporations for the initial income year for which the election to file separate returns is made. The election to file separate returns shall be irrevocable for and applicable for five successive income years.
(e) The provisions of this section shall not apply to income years commencing on or after January 1, 2016.
(P.A. 73-350, S. 19, 27; P.A. 74-304, S. 1, 3; P.A. 77-534, S. 1, 2; 77-607, S. 1, 2; 77-614, S. 139, 587, 610; P.A. 78-303, S. 85, 136; P.A. 81-411, S. 4, 42; P.A. 96-197, S. 10, 11; P.A. 98-110, S. 21, 27; 98-244, S. 8, 35; P.A. 00-174, S. 26, 83; June Sp. Sess. P.A. 01-6, S. 26, 85; June 30 Sp. Sess. P.A. 03-1, S. 90; June 30 Sp. Sess. P.A. 03-6, S. 81; P.A. 15-244, S. 157; June Sp. Sess. P.A. 15-5, S. 139, 150.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 74-304 substituted “additional tax base” for “minimum base” and clarified provisions re combined returns, effective May 30, 1974, and applicable to income years beginning on or after January 1, 1973; P.A. 77-534 amended Subsec. (1) to add provisions re notice of election to submit combined return, effective June 29, 1977, and applicable to income years ending on or after that date; P.A. 77-607 clarified use of combined net income as basis for tax, added provisions re approval of alternate method of computing tax by tax commissioner and added Subsec. (4) re switching from combined filing to separate filing, effective July 6, 1977, and applicable to income years beginning on or after January 1, 1977; P.A. 77-614 and P.A. 78-303 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 81-411 changed reference to consolidated return to combined return and deleted reference to separate allocation, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; P.A. 96-197 amended Subdiv. (3) to replace “additional” with “minimum” in reference to the tax base, effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996; P.A. 98-110 added provisions re treatment of Sec. 12-218c and made technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999; P.A. 98-244 allowed corporations to revoke combined return status after the fifth income year immediately following the year of the election to file a combined return, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; P.A. 00-174 amended Subsec. (c)(1) to divide provisions into Subparas. (A) and (B) and to provide for treatment of intangible property for purposes of the tax imposed under Sec. 12-219 for corporations eliminating income, expenses or costs under this section, effective May 26, 2000, and applicable to income years commencing on or after January 1, 2000; June Sp. Sess. P.A. 01-6 amended Subsec. (c)(2) to provide for due dates of petitions in the case of returns for which there is an extension of time, effective July 1, 2001, and applicable to income years commencing on or after January 1, 2001, with respect to petitions filed on or after October 1, 2001; June 30 Sp. Sess. P.A. 03-1 made technical changes in Subsec. (a), amended Subsec. (c) to provide for calculation of tax in case of combined return, redesignated existing Subsec. (c)(2) as new Subsec. (d) and amended same by making technical changes and adding required finding re accuracy of tax liability, redesignated existing Subsecs. (c)(3) and (d) as Subsecs. (e) and (f), and made technical changes in Subsec. (f), effective August 16, 2003, and applicable to income years commencing on or after January 1, 2003; June 30 Sp. Sess. P.A. 03-6 repealed changes made by June 30 Sp. Sess. P.A. 03-1, restoring prior version of section, and added reference to Sec. 12-218b in Subsec. (c)(1)(A), effective August 20, 2003, and applicable to income years commencing on or after January 1, 2003; P.A. 15-244 added Subsec. (e) re section not to apply to income years commencing on or after January 1, 2015, and made conforming changes in Subsecs. (a) and (b), effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 157, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (e) to provide that section not apply to income years commencing on or after January 1, 2016, effective January 1, 2016, and applicable to income years commencing on or after that date.
Cited. 43 CS 91.
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Sec. 12-223b. Intercompany rents and business receipts. (a) Intercompany rents shall not be included in the computation of the value of property rented as a property factor in the apportionment fraction if the lessor and lessee are included in a combined return as provided in section 12-223a.
(b) Intercompany business receipts, receipts by a corporation included in a combined return under section 12-223a, from any other corporation included in such return, shall not be included in the computation of the receipts factor of the apportionment fraction.
(P.A. 73-350, S. 21, 22, 27; P.A. 74-304, S. 2, 3; P.A. 81-411, S. 5, 42; P.A. 15-244, S. 158; June Sp. Sess. P.A. 15-5, S. 139.)
History: P.A. 73-350, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 74-304 substituted “included in a combined return” for “taxed on a combined basis”, effective May 30, 1974, and applicable to income years beginning on or after January 1, 1973; P.A. 81-411 made technical change substituting receipts for sales, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; P.A. 15-244 amended Subsec. (b) to add reference to Sec. 12-223a re combined return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 158, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
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Sec. 12-223c. Minimum tax in combined return. Each corporation included in a combined return under section 12-223a shall pay the minimum tax of two hundred fifty dollars prescribed under section 12-219. No tax credit allowed against the tax imposed by this chapter shall reduce an included corporation's tax calculated under section 12-219 to an amount less than two hundred fifty dollars.
(P.A. 73-350, S. 23, 27; P.A. 81-66, S. 3, 5; 81-255, S. 23, 37; P.A. 85-159, S. 3, 19; 85-469, S. 4, 6; P.A. 89-16, S. 3, 31; May 9 Sp. Sess. P.A. 02-1, S. 58; P.A. 15-244, S. 159; June Sp. Sess. P.A. 15-5, S. 139.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 81-66 increased minimum tax from $50 to $100, effective May 4, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-255 increased minimum tax to $250, effective July 1, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 85-159 reduced minimum tax to $100, applicable with respect to income years of corporations commencing on or after January 1, 1985; P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 89-16 increased the minimum tax payable in accordance with this section to $250, effective March 23, 1989, and applicable to income years of corporations commencing on or after January 1, 1989; May 9 Sp. Sess. P.A. 02-1 deleted provision re corporation whose tax is computed and paid on the combined basis and added provision re the effect of tax credits on the minimum tax, effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002; P.A. 15-244 added “under section 12-223a” re combined return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 159, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
Cited. 220 C. 665.
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Sec. 12-223d. Assessments against one or more taxpayers in combined return. In case a combined return is made as provided by section 12-223a, the Commissioner of Revenue Services may assess the entire tax computed on the basis of such return against any one or more of the taxpayers covered by the return, in such proportions as he shall determine, but every such taxpayer shall be liable for the entire tax.
(P.A. 73-350, S. 24, 27; P.A. 77-614, S. 139, 610.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
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Sec. 12-223e. Readjustment of taxes on revision of combined return. If revision shall be made of a combined return under section 12-223a for the purpose of the tax of two or more corporations, or of an assessment based upon such a return, the Commissioner of Revenue Services shall have power to readjust the taxes of each taxpayer included in such return, or, if revision is made of a return or an assessment against a taxpayer which might have been included in a combined return when the tax was originally reported or assessed, the Commissioner of Revenue Services shall have power to resettle the tax against such taxpayer and any other taxpayers which might have been included in such report upon a combined basis, and shall adjust the taxes of each such taxpayer accordingly.
(P.A. 73-350, S. 25, 27; P.A. 77-614, S. 139, 610; P.A. 15-244, S. 160; June Sp. Sess. P.A. 15-5, S. 139.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 15-244 added “under section 12-223a” re combined return, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 160, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.
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Sec. 12-223f. Preference tax due from corporations filing a combined return. (a) Notwithstanding the provisions of sections 12-223a to 12-223e, inclusive, the tax due in relation to any corporations which have filed a combined return for any income year with other corporations for the tax imposed under this chapter in accordance with section 12-223a shall be determined as follows: (1) The tax which would be due from each such corporation if it were filing separately under this chapter shall be determined, and the total for all corporations included in the combined return shall be added together; (2) the tax which would be jointly due from all corporations included in the combined return in accordance with the provisions of said sections 12-223a to 12-223e, inclusive, shall be determined; and (3) the total determined pursuant to subdivision (2) of this section shall be subtracted from the amount determined pursuant to subdivision (1) of this section. The resulting amount, in an amount not to exceed five hundred thousand dollars, shall be added to the amount determined to be due pursuant to said sections 12-223a to 12-223e, inclusive, and shall be due and payable as a part of the tax imposed pursuant to this chapter.
(b) The provisions of this section shall not apply to income years commencing on or after January 1, 2016.
(P.A. 89-251, S. 23, 203; June 30 Sp. Sess. P.A. 03-6, S. 80; June Sp. Sess. P.A. 09-3, S. 103; Sept. Sp. Sess. P.A. 09-8, S. 39; P.A. 15-244, S. 161; June Sp. Sess. P.A. 15-5, S. 139, 151.)
History: P.A. 89-251, Sec. 23 effective July 1, 1989, and applicable to income years commencing on or after January 1, 1990; June 30 Sp. Sess. P.A. 03-6 increased the potential supplementary tax determined under this section from $25,000 to $250,000, effective August 20, 2003, and applicable to income years commencing on or after January 1, 2003; June Sp. Sess. P.A. 09-3 increased maximum tax from $250,000 to $500,000, effective September 9, 2009; Sept. Sp. Sess. P.A. 09-8 changed effective date provisions of June Sp. Sess. P.A. 09-3, S. 103, from September 9, 2009, to September 9, 2009, and applicable to income years commencing on or after January 1, 2009, effective October 5, 2009; P.A. 15-244 designated existing provisions as Subsec. (a) and added Subsec. (b) re section not to apply to income years commencing on or after January 1, 2015, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 161, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and amended Subsec. (b) to provide that section not apply to income years commencing on or after January 1, 2016, effective January 1, 2016, and applicable to income years commencing on or after that date.
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Sec. 12-224. Return of fiduciary. Any fiduciary who conducts or is liquidating the business or is selling the assets of any company shall be subject to the filing of returns in accord with, and to the payment of taxes imposed by, this part in the same manner and to the same extent as if the business were being conducted or liquidated or assets sold by agents or officers of such company. The return of a fiduciary who has been appointed during the income year shall include complete information for that part of the income year during which the company exercised its franchise as well as for that part of the income year in which the fiduciary himself was acting and taxes shall be paid by the fiduciary for both parts of such income year.
(1949 Rev., S. 1905.)
See Sec. 12-242f re obligations of fiduciary under part II of this chapter.
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Sec. 12-225. Supplemental and amended returns. Refund claim. (a) Any company which, either intentionally or through error, fails to include in its return items of income or invested capital or which claims unlawful deductions therefrom shall make a supplemental return disclosing such facts within three years from the due date of the return and, within thirty days thereafter, shall pay to the commissioner any tax due thereon, with interest upon the amount of such additional tax at the rate of one per cent per month or fraction thereof from the date when the original tax became due and payable.
(b) (1) Any company which fails to include in its return items of deductions or includes items of nontaxable income or makes any other error in such return may, within three years from the due date of the return, file with the commissioner an amended return, together with a claim for refund of taxes overpaid as shown by such amended return. Failure to file a claim within the time prescribed in this section constitutes a waiver of any demand against the state on account of overpayment. The commissioner shall, within one hundred eighty days of the receipt of such claim, determine whether such claim is valid and, if so, the commissioner shall notify the State Comptroller of the amount of such refund and the State Comptroller shall draw an order on the State Treasurer in the amount thereof for payment to such company. If the commissioner determines that such claim is not valid, either in whole or in part, he shall mail notice of the proposed disallowance in whole or in part of the claim to the company which notice shall set forth briefly the commissioner's findings of fact and the basis of disallowance in each case decided in whole or in part adversely to the claimant. Sixty days after the date on which it is mailed, a notice of proposed disallowance shall constitute a final disallowance except only for such amount as to which the company has filed, as provided in subdivision (2) of this subsection, a written protest with the commissioner. For the purposes of computing any refund due or adjusting net income as a result of the inclusion of income, the taxation of which by the state of Connecticut is prohibited by federal law, including the Constitution of the United States, as applied, no expenses related to such income shall be deducted in computing net income under this chapter.
(2) On or before the sixtieth day after the mailing of the proposed disallowance, the company may file with the commissioner a written protest against the proposed disallowance in which it sets forth the grounds on which the protest is based. If a protest is filed, the commissioner shall reconsider the proposed disallowance and, if the company has so requested, may grant or deny the company or its authorized representatives an oral hearing.
(3) The commissioner shall mail notice of his determination to the company, which notice shall set forth briefly the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to the company.
(4) The action of the commissioner on the company's protest shall be final upon the expiration of one month from the date on which he mails notice of his action to the company unless within such period the company seeks judicial review of the commissioner's determination pursuant to section 12-237.
(1949 Rev., S. 1906; 1949, S. 1099d; 1959, P.A. 66, S. 1; 1967, P.A. 82; 1969, P.A. 257, S. 1; 388, S. 2; P.A. 76-322, S. 2, 27; P.A. 80-307, S. 6, 31; P.A. 81-411, S. 14, 42; P.A. 84-423, S. 1; P.A. 93-74, S. 60, 67; May Sp. Sess. P.A. 94-4, S. 30, 85; P.A. 95-2, S. 19, 36, 37; P.A. 95-160, S. 64, 69; P.A. 96-139, S. 3, 13; P.A. 97-243, S. 52, 67.)
History: 1959 act changed interest rate; 1967 act added provisions re amended returns; 1969 acts changed time within which commissioner must act on amended return from 30 to 180 days and increased interest on overdue taxes from 0.5% to 0.75% per month; P.A. 76-322 increased interest rate to 1% per month; P.A. 80-307 increased interest temporarily to 1.25% for taxes due on or after July 1, 1980, but not later than June 30, 1981; P.A. 81-411 continued interest on delinquent taxes at 1.25% per month, effective July 1, 1981, and applicable to taxes becoming due on or after that date; P.A. 84-423 increased rate of interest applicable to amount of tax due on a supplemental return from 1.25% to 1.66% per month; P.A. 93-74 decreased interest rate from 1.66% to 1.25%, effective May 19, 1993, and applicable to taxes due and payable on and after January 1, 1994; May Sp. Sess. P.A. 94-4 reduced interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after said date (Revisor's note: In refund provision the words “their claim” were replaced editorially by the Revisors with “its claim” to correct grammatical error); P.A. 95-2, S. 19 divided section into Subsecs. (a) and (b) and amended Subsec. (b) to add provision re expenses related to computing refund due or adjusting net income as a result of inclusion of income, the taxation of which is prohibited by federal law, effective March 8, 1995; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 96-139 made no substantive changes; P.A. 97-243 amended Subsec. (b) to provide for an administrative hearing with the department before taking an appeal to the Superior Court, to establish the time for filing a claim and to provide that failure to file within the time prescribed constitutes a waiver of any demand against the state on account of overpayment, effective July 1, 1997, and applicable to claims for refund filed on or after said date.
History discussed. 153 C. 111. Cited. 178 C. 243.
Cited. 44 CS 90.
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Sec. 12-226. Correction of returns; additional tax; refunds. (a)(1) Any company whose income, profits or earnings are changed, adjusted or corrected for any income year by any official of the United States government, or any agency thereof, in any respect affecting the tax imposed by this part, shall provide notice of such change, adjustment or correction to the commissioner by filing, on or before the date that is ninety days after the final determination of such change, adjustment or correction, or as otherwise required by the commissioner, an amended return under this chapter, and shall concede the accuracy of such determination or state wherein it is erroneous, and thereafter promptly furnish to the commissioner any information, schedules, records, documents or papers relating to such change, adjustment or correction as the commissioner requires. The time for filing such return may be extended by the commissioner upon due cause shown. If, upon examination, the commissioner finds that the company is liable for the payment of an additional tax, the commissioner shall, within a reasonable time from the receipt of such return, notify the company of the amount of such additional tax, together with interest thereon computed at the rate of one per cent per month or fraction thereof from the date when the original tax became due and payable. Within thirty days of the mailing of such notice, the company shall pay to the commissioner, in cash or by check, draft or money order, drawn to the order of the Commissioner of Revenue Services, the amount of such additional tax and interest. If, upon examination of such return and related information, the commissioner finds that the company has overpaid the tax due the state and has not received from or been allowed by the United States government, or any agency thereof, a credit or a benefit as a deduction or otherwise, for or by reason of such overpayment, the State Treasurer shall pay the company, upon order of the State Comptroller, the amount of such overpayment. If the commissioner determines that the company's claim of overpayment is not valid, either in whole or in part, the commissioner shall mail notice to the company of the proposed disallowance of the claim in whole or in part, which notice shall set forth briefly the commissioner's findings of fact and the basis of disallowance in each case decided in whole or in part adversely to the claimant. Sixty days after the date on which it is mailed, a notice of proposed disallowance shall constitute a final disallowance except only for such amounts as to which the company has filed a written protest with the commissioner, as provided in subdivision (2) of this subsection.
(2) On or before the sixtieth day after the mailing of the proposed disallowance, the company may file with the commissioner a written protest against the proposed disallowance in which it sets forth the grounds on which the protest is based. If a protest is filed, the commissioner shall reconsider the proposed disallowance and, if the company has so requested, may grant or deny the company or its authorized representatives an oral hearing.
(3) The commissioner shall mail notice of his determination to the company, which notice shall set forth briefly the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to the company.
(4) The action of the commissioner on the company's protest shall be final upon the expiration of one month from the date on which he mails notice of his action to the company unless within such period the company seeks judicial review of the commissioner's determination pursuant to section 12-237.
(b) (1) Any company filing an amended return with any official of the United States government, or any agency thereof, shall make an amended return to the commissioner on or before the date that is ninety days after the final determination is made on the amended return by such federal official or agency. The commissioner shall treat any such amended return reporting a tax overpayment as filed in processible form, as described in subsection (c) of section 12-227, after proof of such final determination on such amended federal return by such federal official or agency is submitted to the commissioner. The time for filing such amended return may be extended by the commissioner upon due cause shown. If, upon examination, the commissioner finds that the company is liable for the payment of an additional tax, the commissioner shall, within a reasonable time from the receipt of such amended return, notify the company of the amount of such additional tax, together with interest thereon computed at the rate of one per cent per month or fraction thereof from the date when the original tax became due and payable. Within thirty days of the mailing of such notice, the company shall pay to the commissioner, in cash or by check, draft or money order, drawn to the order of the Commissioner of Revenue Services, the amount of such additional tax and interest. If, upon examination of such amended return and related information, the commissioner finds that the company has overpaid the tax due the state and has not received from or been allowed by the United States government, or any agency thereof, a credit or a benefit, as a deduction or otherwise, for or by reason of such overpayment, the company shall be paid by the State Treasurer, upon order of the Comptroller, the amount of such overpayment. If the commissioner determines that the company's claim of overpayment is not valid, either in whole or in part, the commissioner shall mail notice of the proposed disallowance in whole or in part of the claim to the company, which notice shall set forth briefly the commissioner's findings of fact and the basis of disallowance in each case decided in whole or in part adversely to the claimant. Sixty days after the date on which it is mailed, a notice of proposed disallowance shall constitute a final disallowance except only for such amounts as to which the company has filed, as provided in subdivision (2) of this subsection, a written protest with the commissioner.
(2) On or before the sixtieth day after the mailing of the proposed disallowance, the company may file with the commissioner a written protest against the proposed disallowance in which it sets forth the grounds on which the protest is based. If a protest is filed, the commissioner shall reconsider the proposed disallowance and, if the company has so requested, may grant or deny the company or its authorized representatives an oral hearing.
(3) The commissioner shall mail notice of his determination to the company, which notice shall set forth briefly the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to the company.
(4) The action of the commissioner on the company's protest shall be final upon the expiration of one month from the date on which he mails notice of his action to the company unless within such period the company seeks judicial review of the commissioner's determination pursuant to section 12-237.
(1949 Rev., S. 1907; 1949, 1951, S. 1100d; 1957, P.A. 489, S. 1; 560, S. 5; 1963, P.A. 651, S. 2; February, 1965, P.A. 428; 1969, P.A. 388, S. 3; P.A. 76-322, S. 3, 27; P.A. 77-614, S. 139, 610; P.A. 80-307, S. 7, 31; P.A. 81-411, S. 15, 42; P.A. 84-423, S. 2; P.A. 93-74, S. 61, 67; May Sp. Sess. P.A. 94-4, S. 31, 85; P.A. 95-160, S. 64, 69; P.A. 97-243, S. 53, 67; P.A. 00-174, S. 53, 83; P.A. 02-103, S. 46; P.A. 10-188, S. 5; P.A. 14-60, S. 6.)
History: 1963 act changed technical language, extended time for notifying commissioner of change from 30 to 90 days, and added provisions for amended returns; 1965 act distinguished between income, profits or earnings changed, adjusted or corrected by “any official of the United States government, or any agency thereof” and returns amended by the director of internal revenue; 1969 act increased interest rate from 0.5% to 0.75% per month; P.A. 76-322 increased interest rate to 1%; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 80-307 increased interest rate temporarily to 1.25% for taxes due on or after July 1, 1980, but not later than June 30, 1981; P.A. 81-411 continued interest on delinquent taxes at 1.25% per month, effective July 1, 1981, and applicable to taxes becoming due on or after that date; P.A. 84-423 increased rate of interest applicable to the amount of additional tax due on an amended return from 1.25% to 1.66% per month; P.A. 93-74 decreased interest rate from 1.66% to 1.25%, effective May 19, 1993, and applicable to taxes due and payable on and after January 1, 1994; May Sp. Sess. P.A. 94-4 reduced interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 97-243 divided existing section into Subsecs. (a) and (b), provided for an administrative hearing with the department before taking an appeal to the Superior Court, established the time for filing a claim and made technical changes, effective July 1, 1997, and applicable to claims for refund filed on or after said date; P.A. 00-174 amended Subsec. (a)(1) to delete requirement that information required to be reported under this section be in the form of an affidavit, to add provisions re filing an amended return and to make technical changes for purposes of gender neutrality, effective July 1, 2000; P.A. 02-103 made technical changes in Subsec. (a)(1); P.A. 10-188 amended Subsec. (b)(1) to change date for filing amended return from 90 days after filing with Director of Internal Revenue to 90 days after final determination on amended return is made by federal official or agency, add provision re treatment of amended return as filed in processible form and make technical changes, effective June 7, 2010, for income years commencing on or after January 1, 2010; P.A. 14-60 made a technical change in Subsec. (b)(1).
Cited. 135 C. 62. Where additional tax is determined to be due as result of changes, adjustments or corrections in corporation's returns to federal collector of internal revenue in accordance with provisions of section, tax commissioner must notify corporation of additional taxes due “within a reasonable time” and 3-year limitation set forth in Sec. 12-233 does not apply; history discussed. 153 C. 103.
Cited. 44 CS 90.
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Sec. 12-226a. Adjustments by the commissioner. Regulations. If it appears to the Commissioner of Revenue Services that any agreement, understanding or arrangement exists between the taxpayer and any other corporation or any person or firm, whereby the activity, business, income or capital of the taxpayer within the state is improperly or inaccurately reflected, the Commissioner of Revenue Services is authorized and empowered, in his or her discretion, provided such discretion is not arbitrarily, capriciously or unreasonably exercised, and in such manner as he or she may determine, to adjust items of income, deductions and capital, and to eliminate assets in computing any apportionment percentage under this chapter, provided any income directly traceable thereto shall also be excluded from entire net income, so as equitably to determine the tax. Where (1) any taxpayer conducts its activity or business under any agreement, arrangement or understanding in such manner as either directly or indirectly to benefit its members or stockholders, or any of them, or any person or persons directly or indirectly interested in such activity or business, by entering into any transaction at more or less than a fair price which, but for such agreement, arrangement or understanding, might have been paid or received therefor, or (2) any taxpayer, a substantial portion of whose capital stock is owned either directly or indirectly by another corporation, enters into any transaction with such other corporation on such terms as to create an improper loss or to reflect inaccurate net income, the Commissioner of Revenue Services may include in the entire net income of the taxpayer the fair profits, which, but for such agreement, arrangement or understanding, the taxpayer might have derived from such transaction. Not later than January 1, 1995, the commissioner shall adopt regulations, in accordance with the provisions of chapter 54, setting forth standards for taking the actions authorized under this section.
(P.A. 73-350, S. 20, 27; P.A. 77-614, S. 139, 610; P.A. 81-411, S. 6, 42; May Sp. Sess. P.A. 94-4, S. 9, 85; P.A. 95-160, S. 64, 69; May 9 Sp. Sess. P.A. 02-1, S. 61.)
History: P.A. 73-350, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective July 1, 1979; P.A. 81-411 deleted reference to allocation, substituting apportionment, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; May Sp. Sess. P.A. 94-4 required commissioner to adopt regulations setting forth standards for making any adjustments to income, deductions or capital, effective June 9, 1994; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; May 9 Sp. Sess. P.A. 02-1 added qualification that the commissioner's discretion not be arbitrarily, capriciously or unreasonably exercised and made technical changes, effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002.
Cited. 236 C. 156.
Cited. 43 CS 314. Commissioner of Revenue Services does not have unfettered discretionary powers and when the issue is a question of law, no deference is given to commissioner's actions. 47 CS 122.
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Sec. 12-227. Interest on refunds. (a) To any refunds granted as a result of overpayment of any tax imposed under this chapter or chapter 209, there shall, except as otherwise provided in subsection (b) or (c) of this section, be added interest at the rate of two-thirds of one per cent for each month and fraction of a month from the date of making such overpayment to a date, to be determined by the Commissioner of Revenue Services, preceding the date of the refund check by not more than thirty days.
(b) (1) Notwithstanding any provision of subsection (a) of this section, in the case of an overpayment of tax reported on a tax return, no interest shall be allowed or paid under this section on such overpayment for any month or fraction thereof before (A) the ninety-first day after the last day prescribed for filing the tax return on which such overpayment was reported, determined without regard to any extension of time for filing, or (B) the ninety-first day after the date such return was filed, whichever is later.
(2) Notwithstanding any provision of subsection (a) of this section, in the case of an overpayment of tax reported on an amended tax return, no interest shall be allowed or paid under this section on such overpayment for any month or fraction thereof before the ninety-first day after the date such amended tax return was filed. For purposes of this subsection, any amended return filed before the last day prescribed for filing the tax return for such year, determined without regard to any extension of time for filing, shall be considered as filed on such last day.
(c) For purposes of this section, a tax return or amended tax return shall not be treated as filed until it is filed in processible form. A tax return or amended tax return is in a processible form if such return is filed on a permitted form, and such return contains the taxpayer's name, address and identifying number and the required signatures, and sufficient required information, whether on the return or on required attachments, to permit the mathematical verification of tax liability shown on the return.
(1953, S. 1104d; 1957, P.A. 489, S. 2; 1959, P.A. 161, S. 1; 1963, P.A. 651, S. 15; P.A. 77-614, S. 139, 610; P.A. 89-343, S. 2, 17; May Sp. Sess. P.A. 94-4, S. 32, 85; P.A. 95-160, S. 64, 69; May 9 Sp. Sess. P.A. 02-1, S. 63.)
History: 1959 act added exception for refunds due on estimated payments with tentative returns; 1963 act added exception for refunds due on payments on account of estimated tax; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 89-343 increased the rate of interest from 0.5% to 0.75% per month or fraction thereof; May Sp. Sess. P.A. 94-4 reduced interest rate from 0.75% to 0.66%, effective July 1, 1995, and applicable to taxes due and owing on or after said date; (Revisor's note: In 1997 a reference to Sec. 12-242c, repealed by P.A. 95-327, was deleted editorially by the Revisors); P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; May 9 Sp. Sess. P.A. 02-1 designated existing provisions as Subsec. (a) and amended same to delete exception re refunds due on certain estimated payments, modify time period for which interest is calculated, delete reference to years commencing on or after May 19, 1959, and make technical changes, added Subsec. (b) re limits on interest periods for overpayments of tax reported on returns and added Subsec. (c) re the form of returns, effective July 1, 2002, and applicable to tax returns and amended tax returns filed on or after July 1, 2001, and not allowed and paid before July 1, 2002 (Revisor's note: Sec. 64 of May 9 Sp. Sess. P.A. 02-1 provided as follows: “The intent of subsection (b) of section 12-227 of the general statutes, as amended by this act, is to properly indicate that current law does not authorize the Department of Revenue Services to allow or pay interest on an overpayment that is reported on a late tax return or on an amended return for any month or fraction thereof that is before the date on which such late return or such amended return is filed with the Department of Revenue Services.”).
Cited. 31 CS 134.
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Sec. 12-228. Refunds to be made from General Fund. Section 12-228 is repealed.
(1949 Rev., S. 1908; 1959, P.A. 291, S. 1; P.A. 85-356, S. 8, 9.)
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Sec. 12-229. Failure to pay tax or make return. Penalty. Waiver of penalty authorized. (a) If any company fails to pay the amount of tax reported to be due on its return within the time specified under the provisions of this part, there shall be imposed a penalty equal to ten per cent of such amount due and unpaid, or fifty dollars, whichever amount is greater. Such amount shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax until the date of payment.
(b) If any company has not made its return within three months after the time specified under the provisions of this part, the commissioner may make such return at any time thereafter, according to the best information obtainable and according to the form prescribed. To the tax imposed upon the basis of such return, there shall be added an amount equal to ten per cent of such tax, or fifty dollars, whichever is greater. The tax shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax until the date of payment. No taxpayer shall be subject to a penalty under both subsections (a) and (b) of this section in relation to the same tax period.
(c) Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalties provided under this chapter when it is proven to his satisfaction that the failure to pay any tax on time was due to reasonable cause and was not intentional or due to neglect.
(1949 Rev., S. 1909; 1953, S. 1101d; 1957, P.A. 560, S. 6; 1961, P.A. 369; 1967, P.A. 41, S. 1; P.A. 81-64, S. 5, 23; P.A. 88-314, S. 4, 54; P.A. 93-74, S. 62, 67; May Sp. Sess. P.A. 94-4, S. 33, 85; P.A. 95-160, S. 64, 69; P.A. 00-174, S. 54, 83.)
History: 1961 act added reference to affidavit, and made making of return by commissioner discretionary rather than mandatory; 1967 act clarified applicability of provisions; P.A. 77-614 made “commissioner” refer to commissioner of revenue services rather than tax commissioner, effective January 1, 1979; P.A. 81-64 made penalty previously applicable to those who failed to pay within three months after time specified in Sec. 12-222 applicable in all cases, reducing per cent from 25% to 10%, deleted previous lesser penalty of $25 applicable to cases involving late filing and added waiver provision applicable to other state taxes; P.A. 88-314 provided technical clarification related to penalties imposed when tax is not paid within the time specified and when the commissioner prepares the return, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; P.A. 93-74 decreased interest rate from 1.66% to 1.25%, effective May 19, 1993, and applicable to taxes due and payable on and after January 1, 1994; May Sp. Sess. P.A. 94-4 in Subsecs. (a) and (b) reduced interest rate from 1.25% to 1% and provided that such interest may only be applied on the tax rather than on the tax and any penalty, effective July 1, 1995, and applicable to taxes due and owing on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 00-174 amended Subsec. (a) to delete a reference to affidavit, effective July 1, 2000.
Cited. 135 C. 62; 164 C. 497.
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Sec. 12-230. Forfeiture of corporate rights for failure to make returns. Any corporation required to file a return with the commissioner by the provisions of this part which neglects to file the same for two consecutive fiscal years shall be construed to have forfeited its corporate rights and powers, and its existence as a corporation shall be terminated in the manner provided in section 33-890. A certificate of the commissioner lodged in the office of the Secretary of the State showing the delinquency of any such corporation shall be prima facie evidence of such delinquency, and the secretary, in each such case of default, shall proceed in the manner prescribed in said section 33-890, except that, immediately following the lodgment of such certificate by the commissioner, the secretary shall notify such corporation and, if such corporation fails to file any return due the state within sixty days from the date of such notice, the secretary shall record in the records of corporations in his office a certificate signed by him showing that the corporate rights and powers of such corporation have been forfeited by reason of such default. Each such corporation may be reinstated and the property rights thereof and of the creditors and of all persons concerned shall be protected in the manner provided in section 33-892.
(1949 Rev., S. 1910; 1959, P.A. 70, S. 1; P.A. 82-472, S. 33, 183; P.A. 96-271, S. 157, 254.)
History: 1959 act substituted “return” for “report”; P.A. 82-472 substituted reference to Secs. 33-387 and 33-388 for repealed Sec. 33-21; P.A. 96-271 replaced references to Sec. 33-387 with Sec. 33-890 and reference to Sec. 33-388 with Sec. 33-892, effective January 1, 1997.
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Sec. 12-231. Penalties for wilful violation of requirements related to payment of tax or delivery of documentation. (a) Any person required under this part to pay any tax, or required under this part or by regulations adopted in accordance with the provisions of section 12-242 to make a return, keep any records or supply any information, who wilfully fails to pay such tax, make such return, keep such records or supply such information, at the time required by law or regulations, shall, in addition to any other penalty provided by law, be fined not more than one thousand dollars or imprisoned not more than one year or both. Notwithstanding the provisions of section 54-193, no person shall be prosecuted for a violation of the provisions of this subsection committed on or after July 1, 1997, except within three years next after such violation has been committed. As used in this subsection, person includes any officer or employee of a company under a duty to pay such tax, make such return, keep such records or supply such information.
(b) Any person who wilfully delivers or discloses to the commissioner or his authorized agent any list, return, account, statement or other document, known by him to be fraudulent or false in any material matter, shall, in addition to any other penalty provided by law, be guilty of a class D felony. No person shall be charged with an offense under both subsections (a) and (b) of this section in relation to the same tax period but such person may be charged and prosecuted for both such offenses upon the same information.
(1949 Rev., S. 1911; P.A. 78-280, S. 6, 127; P.A. 88-230, S. 1, 12; 88-314, S. 5, 54; P.A. 97-203, S. 2, 20; P.A. 00-174, S. 55, 83; P.A. 13-258, S. 43.)
History: P.A. 78-280 substituted “judicial district of Hartford-New Britain” for “Hartford county”; P.A. 88-230 proposed to replace reference to “judicial district of Hartford-New Britain” with “judicial district of Hartford” effective September 1, 1991, but said reference was deleted by P.A. 88-314; P.A. 88-314 substituted new language providing that any person who wilfully fails to pay the tax or file such return when required to do so shall be subject to fine or imprisonment and that any person who wilfully delivers to the commissioner any return or document known to be false shall be subject to fine or imprisonment, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; P.A. 97-203 amended Subsec. (a) to extend to three years the time within which persons wilfully failing to file tax returns or pay taxes may be criminally prosecuted, effective July 1, 1997; P.A. 00-174 amended Subsec. (a) to delete references to affidavit, effective July 1, 2000; P.A. 13-258 amended Subsec. (b) to change penalty from fine of not more than $5,000 or imprisonment of not more than 5 years or less than 1 year to a class D felony.
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Sec. 12-231a. Formation of insurance company affiliate of holding company to evade tax. If the commissioner finds in respect of an income year that an insurance company, other than a domestic insurance company, which is an affiliate of an insurance holding company system that includes a domestic insurance company has been formed or availed of for the principal purpose of avoidance or evasion of the tax imposed by this chapter, the commissioner may for purposes of such tax treat such company as if it were a domestic insurance company. The terms “affiliate” and “insurance holding company system” shall have the respective meanings given them in section 38a-129.
(P.A. 73-350, S. 7, 27.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973.
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Sec. 12-232. Authority to take testimony under oath; subpoenas. The commissioner and any agent of the commissioner authorized to conduct any inquiry, investigation or hearing hereunder may administer oaths and take testimony under oath relative to the matter of inquiry or investigation. At any hearing ordered by the commissioner, the commissioner or his agent authorized to conduct such hearing and having authority by law to issue such process may subpoena witnesses and require the production of books, papers and documents pertinent to such inquiry. No witness under subpoena authorized to be issued by the provisions of this part shall be excused from testifying or from producing books or papers on the ground that such testimony or the production of such books or other documentary evidence would tend to incriminate him, but such evidence or the books or papers so produced shall not be used in any criminal proceeding against him. If any person disobeys such process or, having appeared in obedience thereto, refuses to answer any pertinent question put to him by the commissioner or his authorized agent, or to produce any books and papers pursuant thereto, the commissioner or such agent may apply to the superior court for the judicial district wherein the taxpayer resides or wherein the business has been conducted, or to any judge of said court if the same is not in session, setting forth such disobedience to process or refusal to answer, and said court or such judge shall cite such person to appear before said court or such judge to answer such question or to produce such books and papers and, upon his refusal so to do, shall commit such person to a community correctional center until he testifies, but not for a longer period than sixty days. Notwithstanding the serving of the term of such commitment by any person, the commissioner may proceed in all respects with such inquiry and examination as if the witness had not previously been called upon to testify. Officers who serve subpoenas issued by the commissioner or under his authority and witnesses attending hearings conducted by him hereunder shall receive fees and compensation at the same rates as officers and witnesses in the courts of this state, to be paid on vouchers of the commissioner on order of the Comptroller from the proper appropriation for the administration of this part.
(1949 Rev., S. 1912; 1969, P.A. 297; P.A. 78-280, S. 2, 127.)
History: 1969 act substituted “community correctional center” for “jail”; P.A. 78-280 substituted “judicial district” for “county”.
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Sec. 12-233. Examination of returns by commissioner. Deadlines for mailing deficiency assessments. Penalties for deficiencies. Payment by taxpayer. (a)(1) The commissioner shall examine the tax return filed under this chapter by a taxpayer and may make such further audit or investigation as the commissioner deems necessary, and if the commissioner determines that there is a deficiency with respect to the payment of any tax due under this chapter, the commissioner shall notify the taxpayer thereof. Except as otherwise provided in this section, the commissioner shall (A) in the case of a return on which an operating loss is not reported, not later than three years after the due date for the filing of such return or not later than three years after the date on which such return was received by the commissioner, whichever period expires later, or (B) in the case of a return on which an operating loss is reported, not later than three years after the due date or the date of receipt by the commissioner, whichever period expires later, of the return on which a carry-over of such loss is fully utilized or deemed fully utilized because such loss is not available for deduction in any subsequent income year, examine it and, in case any error is disclosed by such examination, shall mail a notice of deficiency assessment to the taxpayer. Where, within the sixty-day period ending on the day on which the time prescribed in this section for mailing a notice of deficiency assessment for any income year would otherwise expire, the commissioner receives a written document signed by such taxpayer showing that such taxpayer owes an additional amount of tax for such income year, the commissioner then shall have up to sixty days after the day such written document is received in which to mail a notice of deficiency assessment.
(2) A notice of deficiency assessment may be mailed to the taxpayer at any time in the case of (A) failure to file a return, including any amended return required pursuant to section 12-226, or (B) a deficiency due to fraud or intent to evade the provisions of this chapter or regulations adopted thereunder.
(3) In the case of an omission from gross income of an amount properly includable therein that is in excess of twenty-five per cent of the amount of gross income stated in the return, a notice of deficiency assessment may be mailed to the taxpayer at any time not later than six years after the return was filed. For purposes of this subdivision, there shall not be taken into account any amount that is omitted from gross income stated in the return if such amount is disclosed in the return or in a statement attached to the return, in a manner adequate to apprise the commissioner of the nature and amount of such item.
(4) In the case of a failure to disclose a listed transaction, as defined in Section 6707A of the Internal Revenue Code, on the taxpayer's federal income tax return, a notice of deficiency assessment may be mailed to the taxpayer at any time not later than six years after the return required under this chapter for the same income year was filed.
(b) (1) When it appears that any part of the deficiency for which a deficiency assessment is made is due to negligence or intentional disregard of the provisions of this part or regulations adopted thereunder, there shall be imposed a penalty equal to ten per cent of the amount of such deficiency assessment, or fifty dollars, whichever is greater. When it appears that any part of the deficiency for which a deficiency assessment is made is due to fraud or intent to evade the provisions of this part or regulations adopted thereunder, there shall be imposed a penalty equal to twenty-five per cent of the amount of such deficiency assessment. For audits of returns commencing on or after January 1, 2006, when it appears that any part of the deficiency for which a deficiency assessment is made pursuant to this section is due to failure to disclose a listed transaction, as defined in Section 6707A of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, on the taxpayer's federal tax return, there shall be imposed a penalty equal to seventy-five per cent of the amount of such deficiency assessment.
(2) No taxpayer shall be subject to more than one penalty under this section in relation to the same tax period.
(3) Any decision rendered by any federal court holding that a taxpayer has filed a fraudulent return with the Director of Internal Revenue shall subject the taxpayer to the penalty imposed by this section without the necessity of further proof thereof, except when it can be shown that the return to the state so differed from the return to the federal government as to afford a reasonable presumption that the attempt to defraud did not extend to the return to the state.
(c) Not later than thirty days after the mailing of a notice of deficiency assessment, the taxpayer shall pay to the commissioner, in cash or by check, draft or money order drawn to the order of the Commissioner of Revenue Services, any additional amount of tax shown to be due by such notice, or such taxpayer shall be paid by the State Treasurer, upon order of the Comptroller, any amount shown to be due it by the corrected return. The failure of the taxpayer to receive any timely mailed notice required by this section shall not relieve such taxpayer of the obligation to pay the tax assessed under the terms of this part or any interest or penalties thereon.
(d) When, before the expiration of the time prescribed in this section for the examination of the return or the assessment of the tax, both the commissioner and the taxpayer have consented in writing to such examination or assessment after such time, the return may be examined and the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. The commissioner may also in such a case waive the statute of limitations against a claim for refund by such taxpayer.
(e) For purposes of this section, a tax return filed under this chapter before the last day prescribed by law or by any regulation adopted pursuant to this chapter for the filing of such return, determined without regard to any extension of time for filing, shall be deemed to be filed on such last day.
(1949 Rev., S. 1913; 1951, S. 1102d; 1957, P.A. 560, S. 7; P.A. 77-380, S. 1, 2; 77-614, S. 139, 610; P.A. 86-80, S. 1, 2; P.A. 88-314, S. 6, 54; May Sp. Sess. P.A. 94-4, S. 81, 85; P.A. 95-2, S. 20, 37; P.A. 95-160, S. 64, 69; P.A. 05-116, S. 2; 05-260, S. 7; P.A. 06-196, S. 89.)
History: P.A. 77-380 added provision re examination of return by commissioner in cases of returns on which an operating loss is reported and specified “timely mailed” notice, effective June 10, 1977, and applicable to income years ending after that date; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective July 1, 1979; P.A. 86-80 in reference to the period within which the commissioner shall examine a return on which an operating loss is carried-over, added the language that the expiration of such period is determined from the date of the return on which such loss is “fully” utilized or “deemed fully utilized”, effective May 6, 1986 and applicable to income years of corporations commencing on or after January 1, 1986; P.A. 88-314 deleted statement concerning the date when payment of tax is due, which is covered elsewhere in chapter 208, and added language concerning penalties when a deficiency assessment is made, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; May Sp. Sess. P.A. 94-4 made existing section a Subsec. (a) and added provision that commissioner may not make more than one assessment for a tax period and added a new Subsec. (b) re supplemental assessment, effective June 9, 1994; P.A. 95-2 deleted Subsec. (b) and provision in former Subsec. (a) that the commissioner may not make more than one assessment for a tax period, effective March 8, 1995; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 05-116 divided existing section into Subsecs. (a) to (d) and made conforming and technical changes throughout, amended Subsec. (a) to allow further audits and provide various deadlines for mailing deficiency notices, amended Subsec. (b) to provide a penalty for failure to disclose a listed transaction, and added Subsec. (e) re timing of filing of return, effective June 24, 2005, and applicable to income years commencing on or after January 1, 2005; P.A. 05-260 amended Subsec. (b)(1) to allow the 75% penalty for failure to disclose listed transaction to apply to returns audited on or after January 1, 2006, effective July 13, 2005; P.A. 06-196 made technical changes in Subsecs. (a)(1) and (2) and (b)(1), effective June 7, 2006.
See Sec. 12-30c re penalty on promoter of abusive tax shelters.
Cited. 124 C. 406; 135 C. 62. Where additional tax is determined to be due in accordance with Sec. 12-226 as result of changes, adjustments or corrections in corporation's returns to federal collector of internal revenue, tax commissioner must notify corporation of the additional taxes due “within a reasonable time” pursuant to said section and 3-year limitation set forth in this section does not apply; history discussed. 153 C. 103.
Cited. 26 CS 373; 44 CS 90.
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Sec. 12-234. Settlement with Treasurer. All funds received by the Commissioner of Revenue Services under the provisions of this part shall be recorded with the Comptroller and shall be deposited daily with the State Treasurer. The commissioner shall issue his receipt to any taxpayer for any payment upon request.
(1949 Rev., S. 1914; P.A. 77-614, S. 139, 610.)
History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
See Sec. 4-32 re state revenue accounting.
See Sec. 12-242e re disposition of installment payments under part II of this chapter.
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Sec. 12-235. Delinquent taxes; interest; collection. To any taxes which are assessed under section 12-233, there shall be added interest at the rate of one per cent per month or fraction thereof from the date when the original tax became due and payable. The amount of any tax, penalty or interest due and unpaid under the provisions of this part may be collected under the provisions of section 12-35. The warrant therein provided for shall be signed by the commissioner or his authorized agent. The amount of any such tax, penalty and interest shall be a lien, from the last day of the income year until discharged by payment, against all real estate of the company within the state, and a certificate of such lien signed by the commissioner may be filed for record in the office of the clerk of any town in which such real estate is situated, provided no such lien shall be effective as against any bona fide purchaser or qualified encumbrancer of any interest in any such property. When any tax with respect to which a lien has been recorded under the provisions of this section has been satisfied, the commissioner, upon request of any interested party, shall issue a certificate discharging such lien, which certificate shall be recorded in the same office in which the lien was recorded. Any action for the foreclosure of such lien shall be brought by the Attorney General in the name of the state in the superior court for the judicial district in which the property subject to such lien is situated, or, if such property is located in two or more judicial districts, in the superior court for any one such judicial district, and the court may limit the time for redemption or order the sale of such property or pass such other or further decree as it judges equitable.
(1949 Rev., S. 1915; 1959, P.A. 69, S. 1; 1969, P.A. 388, S. 4; P.A. 76-322, S. 4, 27; P.A. 77-614, S. 139, 610; P.A. 78-280, S. 2, 4, 127; P.A. 80-307, S. 8, 31; P.A. 81-411, S. 16, 42; Nov. Sp. Sess. P.A. 81-4, S. 4, 32; P.A. 82-325, S. 3, 7; P.A. 85-501, S. 2; P.A. 88-314, S. 7, 54; P.A. 93-74, S. 9, 67; May Sp. Sess. P.A. 94-4, S. 34, 85; P.A. 95-160, S. 64, 69.)
History: 1959 act decreased interest rate from 0.6% to 0.5% per month; 1969 act increased interest rate to 0.75%; P.A. 76-322 increased interest rate to 1%; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 78-280 substituted “judicial district” for “county”; P.A. 80-307 increased interest rate temporarily to 1.25% for taxes due on and after July 1, 1980, but not later than June 30, 1981; P.A. 81-411 continued interest on delinquent taxes at the rate of 1.25% per month, effective July 1, 1981, and applicable to taxes becoming due on or after that date; Nov. Sp. Sess. P.A. 81-4 raised interest rate from 1.25% to 1.66% per month, effective February 1, 1982 and applicable to taxes payable to the state which first become due on or after that date; P.A. 82-325 revised effective date of Nov. Sp. Sess. P.A. 81-4 but without affecting this section; P.A. 85-501 provided lien shall not be effective against a “qualified” encumbrancer as defined in Sec. 12-35b, deleting reference to purchaser or encumbrancer to whom property is transferred between last day of income year and date on which lien is recorded; P.A. 88-314 made technical changes in reference to the rate of interest added if the tax is not paid when due, conforming with the description used for most state taxes, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; P.A. 93-74 decreased interest rate from 1.66% to 1.25%, effective May 19, 1993, and applicable to taxes due and payable on and after January 1, 1994; May Sp. Sess. P.A. 94-4 reduced interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section.
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Sec. 12-235a. Disallowance of credits if taxes due and unpaid. The Commissioner of Revenue Services may disallow any credit otherwise allowable for a taxable year against the tax imposed under this chapter if the company claiming the credit has any amount of taxes due and unpaid to the state including interest, penalties, fees and other charges related thereto for which a period in excess of thirty days has elapsed following the date on which such taxes were due and which are not the subject of a timely filed administrative appeal to the commissioner or of a timely filed appeal pending before any court of competent jurisdiction. Before any such disallowance, the commissioner shall send written notice to the company, stating that it may pay the amount of such delinquent tax or enter into an agreement with the commissioner for the payment thereof, by the date set forth in said notice, provided, such date shall not be less than thirty days after the date of such notice. Failure on the part of the company to pay the amount of the delinquent tax or enter into an agreement to pay the amount thereof by said date shall result in a disallowance of the credit being claimed.
(P.A. 97-193, S. 2, 5.)
History: P.A. 97-193 effective June 24, 1997, and applicable to income years commencing on or after January 1, 1998.
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Sec. 12-236. Hearing by commissioner. Any taxpayer, aggrieved by the action of the commissioner or his authorized agent in fixing the amount of any tax, penalty or interest provided for by this part, may apply to the commissioner, in writing, within sixty days after the notice of such action is delivered or mailed to it, for a hearing and a correction of the amount of the tax, penalty or interest so fixed, setting forth the reasons why such hearing should be granted and the amount in which such tax, penalty or interest should be reduced. The commissioner shall promptly consider each such application and may grant or deny the hearing requested. If the hearing is denied, the applicant shall be notified thereof forthwith. If it is granted, the commissioner shall notify the applicant of the time and place fixed for such hearing. After such hearing the commissioner may make such order in the premises as appears to him just and lawful and shall furnish a copy of such order to the applicant. The commissioner may, by notice in writing, at any time within three years after the date when any return of any taxpayer has been due, order a hearing on his own initiative and require the taxpayer or any other individual whom he believes to be in possession of relevant information concerning the taxpayer to appear before him or his authorized agent with any specified books of account, papers or other documents, for examination under oath.
(1949 Rev., S. 1916; 1967, P.A. 9; P.A. 91-236, S. 2, 25.)
History: 1967 act included references to interest and made technical changes; P.A. 77-614 made “commissioner” refer to commissioner of revenue services rather than tax commissioner, effective January 1, 1979; P.A. 91-236 provided for 60, rather than 30, days to request a hearing, effective July 1, 1991, and applicable to taxes due on or after that date.
Application for hearing and reduction of tax evidently applies only to cases where commissioner increases tax by correcting return or imposes penalty. 124 C. 408. Cited. 135 C. 62; 202 C. 412; 203 C. 198; Id., 455; 220 C. 665; 235 C. 865.
Cited. 31 CS 134; 40 CS 77.
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Sec. 12-237. Appeal. Any taxpayer aggrieved because of any order, decision, determination or disallowance of the Commissioner of Revenue Services under the provisions of this part may, not later than thirty days after service upon the taxpayer of notice of such order, decision, determination or disallowance, take an appeal therefrom to the superior court for the judicial district of New Britain, which shall be accompanied by a citation to the Commissioner of Revenue Services to appear before said court. Such citation shall be signed by the same authority, and such appeal shall be returnable at the same time and served and returned in the same manner, as is required in case of a summons in a civil action. The authority issuing the citation shall take from the appellant a bond or recognizance to the state of Connecticut, with surety to prosecute the appeal to effect and to comply with the orders and decrees of the court in the premises. Such appeals shall be preferred cases, to be heard, unless cause appears to the contrary, at the first session, by the court or by a committee appointed by it. Said court may grant such relief as may be equitable and, if such tax has been paid prior to the granting of such relief, may order the Treasurer to pay the amount of such relief, with interest at the rate of eight per cent per annum, to the aggrieved taxpayer. If the appeal has been taken without probable cause, the court may tax double or triple costs, as the case demands; and, upon all such appeals which may be denied, costs may be taxed against the appellant at the discretion of the court, but no costs shall be taxed against the state.
(1949 Rev., S. 1917; 1955, S. 1103d; 1971, P.A. 870, S. 22; P.A. 76-436, S. 311, 681; P.A. 77-614, S. 139, 610; P.A. 78-280, S. 5, 127; P.A. 88-230, S. 1, 12; P.A. 89-343, S. 6, 17; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; May Sp. Sess. P.A. 94-4, S. 35, 85; P.A. 95-160, S. 64, 69; 95-220, S. 4–6; P.A. 99-215, S. 24, 29; P.A. 19-186, S. 13.)
History: 1971 act substituted court of common pleas for superior court, effective September 1, 1971, except that courts with cases pending retain jurisdiction unless action may be transferred; P.A. 76-436 substituted superior court for court of common pleas, effective July 1, 1978; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 78-280 substituted “judicial district of Hartford-New Britain” for “Hartford county”; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 89-343 increased the rate of interest on the amount of relief ordered by the court from 6% to 9% per annum; P.A. 90-98 changed effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; May Sp. Sess. P.A. 94-4 reduced interest rate from 9% to 8%, effective July 1, 1995, and applicable to taxes due and owing on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 95-220 changed the effective date of P.A. 88-230 from September 1, 1996, to September 1, 1998, effective July 1, 1995; P.A. 99-215 replaced “judicial district of Hartford” with “judicial district of New Britain”, effective June 29, 1999; P.A. 19-186 replaced “within one month” with “not later than thirty days”, effective July 8, 2019.
Cited. 122 C. 145. No appeal lies from commissioner's refusal to correct return upon hearing requested and held more than one month after time for payment of tax. 124 C. 403, 409. Cited. 135 C. 63; 178 C. 243; 179 C. 363; 199 C. 346; 202 C. 412; 203 C. 455; 204 C. 137; 213 C. 220; Id., 442; 220 C. 665; 224 C. 426; 228 C. 137; 232 C. 325; 235 C. 865; 236 C. 156; Id., 701; 242 C. 599. Scope of de novo review includes power to consider all factors relevant to determination of additional tax liability and trial court was not confined to a particular legal theory underlying the resistance to deficiency assessments that was asserted at the administrative proceeding. 251 C. 748.
Cited. 17 CA 82. “Service” defined as meaning taxpayer's receipt of notice, since that construction is consistent with fairness and due process, and preserves court's subject matter jurisdiction, but after enactment of Sec. 12-2f, “service” means mailing of notice by first class mail. 73 CA 757.
Cited. 31 CS 134; 41 CS 271; 42 CS 356; 43 CS 91; Id., 314.
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Sec. 12-238. Abatement of taxes. Section 12-238 is repealed, effective April 13, 1995.
(1949 Rev., S. 1918; September, 1957, P.A. 13, S. 1; P.A. 77-614, S. 141, 610; P.A. 95-4, S. 7, 8.)
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Sec. 12-239. Abatement of taxes on motor bus company in receivership. The Commissioner of Revenue Services, upon the advice of the Attorney General, may abate, in whole or in part, as the interest of the state requires, the taxes and interest thereon due the state from any motor bus company in the hands of a receiver during any year when such company, while in receivership, failed to earn the amount of the tax due the state and its operating expenses as defined in the uniform system of accounts established by the Department of Transportation.
(1957, P.A. 478; P.A. 75-486, S. 26, 69; P.A. 77-614, S. 142, 162, 610; P.A. 79-610, S. 4.)
History: P.A. 75-486 substituted public utilities control authority for public utilities commission; P.A. 77-614 substituted commissioner of revenue services for commissioner of finance and control, and division of public utility control within the department of business regulation for public utilities control authority, effective January 1, 1979; P.A. 79-610 substituted department of transportation for division of public utility control within the department of business regulation.
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Sec. 12-240. Publication and disclosure of information. The Commissioner of Revenue Services shall publish in his annual report data showing the amount of taxes upon net income, the amount of minimum taxes and the amount of penalties assessed under the provisions of this part, with such classifications of taxpayers, incomes and deductions and such other facts as he deems pertinent and valuable. Such published figures shall not disclose the operations of any taxpayer in such manner as to permit the identification of such taxpayer by those unassociated with his business.
(1949 Rev., S. 1919; P.A. 76-436, S. 312, 681; P.A. 77-614, S. 139, 610; P.A. 82-67, S. 2.)
History: P.A. 76-436 deleted reference to courts of common pleas and substituted “violation” for “infraction”, effective July 1, 1978; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 82-67 eliminated references to limitations on disclosure of information obtained in examining records or returns of taxpayers, which limitations are included in Sec. 12-15 as amended by P.A. 82-67.
See Sec. 12-242i re consideration of declaration as return.
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Sec. 12-241. Tax to be in lieu of other taxes. The taxes imposed by this part, and in the case of domestic insurance companies by chapter 207, shall be in lieu of all other taxes upon the intangible assets of any company, or upon the intangible assets of an employee's stock bonus, pension or profit-sharing trust established by any company, which trust is exempt from federal income taxation. As to any motor bus company engaged in the business of carrying passengers for hire over the highways of the state in common carrier motor vehicles, the tax imposed by this chapter shall be in lieu of all other taxes upon all common carrier motor buses owned by such company and used exclusively in the business of carrying passengers for hire and upon the franchises of such company, in lieu of fifty per cent of all other taxes on the real property and tangible personal property of a Connecticut motor bus company, other than motor buses, which real and tangible personal property is used directly in the conduct of its motor bus business, and in lieu of all other taxes upon or measured by income derived by such company from such operations, but receipts of any such company from activities other than such operations shall be unaffected by the provisions hereof, and the provisions hereof shall not be construed as exempting any company from taxation on its real estate and personal property other than common carrier motor buses used exclusively in the business of carrying passengers for hire, except as herein provided in the case of a Connecticut motor bus company, or from complying with the provisions of the general statutes relating to fees payable to the Commissioner of Motor Vehicles or for the licensing and registration of motor vehicles.
(1949 Rev., S. 1920; 1957, P.A. 515, S. 4; September, 1957, P.A. 20, S. 1; 1959, P.A. 673, S. 1; P.A. 73-350, S. 18, 27.)
History: 1959 act added provisions re property taxes on Connecticut motor bus companies; P.A. 73-350 made taxes due under chapter 207 in the case of domestic insurance companies in lieu of others on intangible assets, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973.
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Sec. 12-241a. Definition. As used in section 12-241, “Connecticut motor bus company” means any common carrier motor bus company, organized in this state and engaged in the business of carrying passengers for hire, to which a certificate has been issued under the provisions of section 13b-80 and seventy-five per cent of whose gross operating revenue in each calendar year is derived from operations within the state.
(1959, P.A. 673, S. 3, 4; 1961, P.A. 89, S. 1.)
History: 1961 act deleted limitation of relief for bus companies to taxes on assessment lists of 1959 and 1960.
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Sec. 12-242. Regulations. The Commissioner of Revenue Services may prescribe regulations and make rulings, not inconsistent with law, to carry into effect the provisions of this part, which regulations or rulings, when reasonably designed to carry out the intent and purpose of this chapter, shall be prima facie evidence of its proper interpretation. The commissioner shall, at least annually, and more often in his discretion, publish for distribution all regulations prescribed hereunder and such rulings as appear to him to be of general interest.
(1949 Rev., S. 1921; P.A. 77-614, S. 139, 610; P.A. 90-271, S. 6, 24.)
History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 90-271 made a technical change.
See Sec. 12-242h re regulations with respect to part II of this chapter.
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Secs. 12-242a to 12-242c. Definitions. When declaration of estimated tax required. Installment payment on estimated tax. Sections 12-242a to 12-242c, inclusive, are repealed, effective July 1, 1995, and applicable to estimated corporation business taxes for income years commencing on or after January 1, 1996.
(1963, P.A. 651, S. 7–9; P.A. 76-114, S. 8, 9, 21; P.A. 81-255, S. 25, 26, 37; Nov. Sp. Sess. P.A. 81-4, S. 1, 2, 32; P.A. 82-325, S. 3, 7; 82-472, S. 34, 183; P.A. 86-17, S. 2, 3; P.A. 87-89, S. 1, 2; P.A. 89-16, S. 13–15, 31; P.A. 90-148, S. 7, 34; P.A. 95-327, S. 9, 10.)
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Sec. 12-242d. Installment payment of estimated tax. Interest on under payments. (a) For purposes of this section, there shall be four required installments for each income year. The due date for the first required installment is the fifteenth day of the third month of the income year. The due date for the second required installment is the fifteenth day of the sixth month of the income year. The due date for the third required installment is the fifteenth day of the ninth month of the income year. The due date for the fourth required installment is the fifteenth day of the twelfth month of the income year.
(b) The amount of the first required installment shall be thirty per cent of the required annual payment, as defined in subsection (e) of this section. The amount of the second required installment shall be forty per cent of the required annual payment, as defined in subsection (e) of this section. The amount of the third required installment shall be ten per cent of the required annual payment, as defined in subsection (e) of this section. The amount of the fourth required installment shall be twenty per cent of the required annual payment, as defined in subsection (e) of this section.
(c) Except as otherwise provided in this section, in the case of any underpayment of estimated tax by a company, there shall be added to the tax an amount determined by applying interest (1) at the rate of one per cent per month or fraction thereof, (2) to the amount of the underpayment, (3) for the period of the underpayment.
(d) For purposes of this section, the amount of the underpayment shall be the excess of the required installment, over the amount, if any, of the installment paid on or before the due date for the installment. The period of the underpayment shall run from the due date for the installment to whichever of the following dates is earlier: (1) The fifteenth day of the fifth month of the next succeeding income year; or (2) with respect to any portion of the underpayment, the date on which such portion is paid. For purposes of this subsection, a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid.
(e) “Required annual payment” means the lesser of (1) ninety per cent of the tax shown on the return for the income year, or, if no return is filed, ninety per cent of the tax for such year, or (2) if the preceding income year was an income year of twelve months and if the company filed a return for the preceding income year showing a liability for tax, one hundred per cent of the tax shown on the return for the next preceding income year without regard to any credit under this chapter.
(f) (1) In the case of any required installment, if the company establishes that the annualized income installment is less than the amount determined under subsection (b) of this section, the amount of such required installment shall be the annualized income installment. Any reduction in a required installment resulting from the application of this subsection shall be recaptured by increasing the amount of the next required installment by the amount of such reduction and by increasing subsequent required installments to the extent that the reduction has not previously been recaptured under this subdivision.
(2) In the case of any required installment, the annualized income installment is the excess, if any, of (A) an amount equal to the applicable percentage of the tax for the income year computed by placing on an annualized basis its net income for months in the income year ending before the due date for the installment, over (B) the aggregate amount of any prior required installments for the taxable year.
(3) For purposes of this subsection, the applicable percentage for the first required installment is twenty-seven, the applicable percentage for the second required installment is sixty-three, the applicable percentage for the third required installment is seventy-two and the applicable percentage for the fourth required installment is ninety.
(g) The application of this section to income years of less than twelve months shall be in accordance with regulations adopted by the commissioner.
(h) No addition to tax shall be imposed under subsection (c) of this section for any income year if the tax shown on the return for such income year, or, if no return is filed, the tax, is one thousand dollars or less.
(i) For income years commencing on or after January 1, 2003, and prior to January 1, 2005, no addition to tax shall be imposed under subsection (c) of this section to the extent such underpayment was created or increased by section 12-218d.
(j) (1) The provisions of this section shall apply to taxable members of a combined group required to file a combined unitary tax return pursuant to section 12-222.
(2) The designated taxable member of a combined group shall be responsible for paying estimated tax installments, at the times and in the amounts specified in this section, on behalf of the taxable members of the combined group and in the form and manner prescribed by the Commissioner of Revenue Services.
(1963, P.A. 651, S. 10; 1969, P.A. 388, S. 5; P.A. 76-114, S. 10, 21; 76-322, S. 5, 27; P.A. 80-307, S. 9, 31; P.A. 81-255, S. 27, 37; 81-411, S. 17, 42; Nov. Sp. Sess. P.A. 81-4, S. 3, 32; P.A. 82-325, S. 3, 7; P.A. 89-16, S. 16, 31; P.A. 90-148, S. 8, 34; June Sp. Sess. P.A. 91-3, S. 102, 168; P.A. 93-74, S. 10, 67; 93-433, S. 2, 26; May Sp. Sess. P.A. 94-4, S. 10, 36, 85; P.A. 95-160, S. 64, 69; 95-327, S. 2, 10; P.A. 97-163, S. 1, 2; P.A. 98-244, S. 9, 35; P.A. 99-121, S. 7, 28; June 30 Sp. Sess. P.A. 03-6, S. 79; P.A. 15-244, S. 162; June Sp. Sess. P.A. 15-5, S. 139, 152; P.A. 17-147, S. 25.)
History: 1969 act changed interest rate in Subsec. (a) from 0.5% to 0.75% per month; P.A. 76-114 amended Subsec. (a) (1) to change deadline from fifteenth day of ninth month to fifteenth day of sixth month, to change figures in Subsec. (a)(1)(a) from 28% to 40% reduced by $4,000, rather than $2,800, to change figure in Subsec. (a)(1)(b) from 35% to 50% and to increase interest rate to 1%, effective July 1, 1976, and applicable to income years commencing on or after January 1, 1977; P.A. 76-322 also changed interest rate to 1%; P.A. 80-307 temporarily raised interest rate to 1.25% for installments due on or after July 1, 1980, but not later than June 30, 1981; P.A. 81-255 provided for interest on installments not paid by a company subject to tax under Sec. 12-219(1)(B), effective July 1, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-411 continued interest on delinquent taxes at 1.25% per month, effective July 1, 1981, and applicable to taxes becoming due on or after January 1, 1981; Nov. Sp. Sess. P.A. 81-4 and P.A. 82-325 amended Subsec. (a)(1) to require payment of installment equaling the lesser of 50% of tax or 60% of assumed tax, replacing 40% (reduced by $4,000) and 50% figures respectively, amended Subsec. (a)(2) to require payment of installment equaling the lesser of 64% of tax or 80% of assumed tax, replacing 56% (reduced by $5,600) and 70% figures, raised interest from 1.25% to 1.66% and removed provisions specifically applicable to companies subject to taxation under Sec. 12-219(1)(B) which had required payment of installment equaling the lesser of 40% of tax or 50% of assumed tax and had assessed interest at rate of 1% per month, effective January 27, 1982, and applicable to corporations' income years commencing on or after January 1, 1982; P.A. 89-16 added minimum payment requirements for each of the four installment payments on the estimated tax, and added Subsec. (c) re penalty applicable when any payment is based on an estimated tax which is less than the minimum amount required and Subsec. (d) re definition of assumed tax for purposes of the payment option based on the assumed tax, effective March 23, 1989, and applicable to income years commencing on or after January 1, 1989; P.A. 90-148 amended the reference in Subsec. (a) to the amount of installment in the sixth month of the income year to conform with the increase from 60% to 70% of the tax as provided in Sec. 12-242c, effective January 1, 1991, and applicable to corporation income years commencing on or after that date; June Sp. Sess. P.A. 91-3 deleted former Subsec. (c) concerning imposition of a penalty for failure to pay a minimum installment, effective August 22, 1991, and applicable to income years of corporations commencing on or after January 1, 1991; P.A. 93-74 decreased interest rate from 1.66% to 1.25%, effective May 19, 1993, and applicable to taxes due and payable on and after January 1, 1994; P.A. 93-433 amended Subsec. (a) to provide that any credit taken pursuant to Sec. 12-217n shall be disregarded in determining the tax due under the income tax, effective July 1, 1993; May Sp. Sess. P.A. 94-4 in Subsec. (a) provided that any credit under Sec. 12-217t shall only be taken on any filing made in accordance with the provisions of Sec. 12-222, effective June 9, 1994, and also reduced interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 95-327 deleted Subsecs. (a) to (c) and added new Subsecs. (a) to (g) re timing and amounts of installment payments on estimated taxes, interest on underpayments, defined required annual payment, required credit disregards, and provisions re application of section, effective July 1, 1995, and applicable to estimated corporation business taxes for income years commencing on or after January 1, 1996; P.A. 97-163 amended Subsec. (e) to change the required annual payment to 150% for income year 1997 and 100% for income years 1998 and thereafter, effective June 24, 1997, and applicable to income years commencing on or after January 1, 1997; P.A. 98-244 reorganized Subsec. (e) and removed obsolete provision, inserted new Subsec. (f) allowing annualization of estimated tax payments and redesignated former Subsecs. (f) and (g) as (g) and (h), effective June 8, 1998, and applicable to income years commencing on or after January 1, 1999; P.A. 99-121 amended Subsec. (f)(2) to remove reference to the minimum tax base for purposes of the annualized income installment, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1998; June 30 Sp. Sess. P.A. 03-6 added Subsec. (i) re underpayments created or increased by Sec. 12-218d, effective August 20, 2003; P.A. 15-244 added Subsec. (j) re applicability of section to taxable members of combined group required to file combined unitary tax return, taxable member's responsibility to pay estimated tax installments, and annual payment when preceding income year commenced on or after January 1, 2014, but prior to January 1, 2015, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 162, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015, and deleted Subsec. (j)(3) and (4) and made a conforming change, effective January 1, 2016, and applicable to income years commencing on or after that date; P.A. 17-147 amended Subsec. (d) to replace “first day” with “fifteenth day” and replace “fourth month” with “fifth month” and make a technical change, effective July 7, 2017, and applicable to income years commencing on or after January 1, 2017.
Cited. 44 CA 529.
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Sec. 12-242e. Disposition of installments. The amount of every installment of estimated tax, or payment on account thereof, shall be paid to the commissioner in cash or by check, draft or money order drawn to the order of the Commissioner of Revenue Services of the state of Connecticut. All funds received by the commissioner under the provisions of this part shall be recorded with the Comptroller and shall be deposited daily with the State Treasurer. The commissioner shall issue his receipt to any company or other person for any payment made under the provisions of this part, upon request.
(1963, P.A. 651, S. 11; P.A. 77-614, S. 139, 610.)
History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
See Sec. 4-32 re state revenue accounting procedures.
See Sec. 12-234 re disposition of funds received under part I of this chapter.
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Sec. 12-242f. Obligations of fiduciary. Any fiduciary who conducts or is liquidating the business or is selling the assets of any company shall be subject to the payment of taxes imposed by this part in the same manner and to the same extent as if the business were being conducted or liquidated or assets sold by agents or officers of such company. A fiduciary who has been appointed during an income year shall make payments on account of estimated taxes both for that part of the income year during which the company exercised its franchise as well as for that part of the income year in which the fiduciary himself was acting.
(1963, P.A. 651, S. 12; P.A. 95-327, S. 4, 10.)
History: P.A. 95-327 made technical changes to delete references to declarations, effective July 1, 1995, and applicable to estimated corporation business taxes for income years commencing on or after January 1, 1996.
See Sec. 12-224 re returns made by fiduciaries.
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Sec. 12-242g. Overpayments. (a) If a company has paid as an installment of estimated tax an amount in excess of the amount determined to be the correct amount of such installment, such amount shall be credited against any unpaid installment or against the tax. If the amount already paid, whether or not on the basis of installments, exceeds the amount determined to be the correct amount of the tax, the company shall be paid by the State Treasurer, upon order of the Comptroller, the amount of such overpayment.
(b) If a company has filed its tax return under this chapter for the income year on or before the due date of such return or, if an extension of time to file has been requested and granted, the extended due date of such return, any overpayment reported on such return, if the company has elected to credit such overpayment against the company's estimated tax for the succeeding income year, shall be treated as if paid on the due date of the first required installment of estimated tax for such succeeding income year. Such reported overpayment shall be credited against otherwise unpaid required installments in the order in which such installments are required to be paid under section 12-242d.
(1963, P.A. 651, S. 13(a); P.A. 95-327, S. 3, 10; P.A. 11-61, S. 56.)
History: P.A. 95-327 added authority for commissioner to prescribe regulations re crediting overpayment against estimated tax, effective July 1, 1995, and applicable to estimated corporation business taxes for income years commencing on or after January 1, 1996; P.A. 11-61 designated existing provisions as Subsec. (a) and amended same by removing regulations authority, and added Subsec. (b) re process for carrying overpayment forward, effective October 1, 2011, and applicable to estimated corporation business tax payments for income years commencing on or after January 1, 2012.
Cited. 44 CA 529.
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Sec. 12-242h. Regulations. The Commissioner of Revenue Services may prescribe regulations and make rulings, not inconsistent with law, to carry into effect the provisions of this part, which regulations or rulings, when reasonably designed to carry out the intent and purpose of this part, shall be prima facie evidence of its proper interpretation. The commissioner shall, from time to time, publish for distribution all regulations prescribed hereunder, including any of such rulings which appear to him to be of general interest.
(1963, P.A. 651, S. 13(b); P.A. 77-614, S. 139, 610.)
History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
See Sec. 12-242 re regulations with respect to part I of this chapter.
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Sec. 12-242i. Declaration as return. For all purposes of section 12-240, a declaration shall be deemed to constitute a return.
(1963, P.A. 651, S. 14.)
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Secs. 12-242j to 12-242z. Reserved for future use.
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