Substitute Senate Bill No. 525

Public Act No. 00-174

An Act Making Administrative Changes And Clarifications To Various Tax Statutes, Providing A Tax Credit For Insurance Guaranty Funds, And Exempting The Teachers' Retirement System From The Tax On Health Care Centers.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (2) of section 12-407 of the general statutes, as amended by section 10 of public act 99-173 and section 10 of public act 99-285, is repealed and the following is substituted in lieu thereof:

(2) "Sale" and "selling" mean and include: (a) Any transfer of title, exchange or barter, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration; (b) any withdrawal, except a withdrawal pursuant to a transaction in foreign or interstate commerce, of tangible personal property from the place where it is located for delivery to a point in this state for the purpose of the transfer of title, exchange or barter, conditional or otherwise, in any manner or by any means whatsoever, of the property for a consideration; (c) the producing, fabricating, processing, printing or imprinting of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting, including but not limited to, sign construction, photofinishing, duplicating and photocopying; (d) the furnishing and distributing of tangible personal property for a consideration by social clubs and fraternal organizations to their members or others; (e) the furnishing, preparing, or serving for a consideration of food, meals or drinks; (f) a transaction whereby the possession of property is transferred but the seller retains the title as security for the payment of the price; (g) a transfer for a consideration of the title of tangible personal property which has been produced, fabricated or printed to the special order of the customer, or of any publication, including but not limited to, sign construction, photofinishing, duplicating and photocopying; (h) a transfer for a consideration of the occupancy of any room or rooms in a hotel or lodging house for a period of thirty consecutive calendar days or less; (i) the rendering of certain services for a consideration, exclusive of such services rendered by an employee for [his] the employer, as follows: (A) Computer and data processing services, including but not limited to, time, and exclusive of services rendered in connection with the creation, development hosting or maintenance of all or part of a web site which is part of the graphical, hypertext portion of the Internet, commonly referred to as the World-Wide Web, (B) credit information and reporting services, (C) services by employment agencies and agencies providing personnel services, (D) private investigation, protection, patrol work, watchman and armored car services, exclusive of services of off-duty police officers and off-duty fire fighters, (E) painting and lettering services, (F) photographic studio services, (G) telephone answering services, (H) stenographic services, (I) services to industrial, commercial or income-producing real property, including, but not limited to, such services as management, electrical, plumbing, painting and carpentry and excluding any such services rendered in the voluntary evaluation, prevention, treatment, containment or removal of hazardous waste, as defined in section 22a-115, or other contaminants of air, water or soil, provided income-producing property shall not include property used exclusively for residential purposes in which the owner resides and which contains no more than three dwelling units, or a housing facility for low and moderate income families and persons owned or operated by a nonprofit housing organization, as defined in subsection (29) of section 12-412, (J) business analysis, management, management consulting and public relations services, excluding (i) any environmental consulting services, and (ii) any training services provided by an institution of higher education licensed or accredited by the Board of Governors of Higher Education pursuant to section 10a-34, (K) services providing "piped-in" music to business or professional establishments, (L) flight instruction and chartering services by a certificated air carrier on an aircraft, the use of which for such purposes, but for the provisions of subsection (4) of section 12-410 and subsection (12) of section 12-411, would be deemed a retail sale and a taxable storage or use, respectively, of such aircraft by such carrier, (M) motor vehicle repair services, including any type of repair, painting or replacement related to the body or any of the operating parts of a motor vehicle, (N) motor vehicle parking, including the provision of space, other than metered space, in a lot having thirty or more spaces, excluding (i) space in a seasonal parking lot provided by a person who is exempt from taxation under this chapter pursuant to subsection (1), (5) or (8) of section 12-412, (ii) space in a parking lot owned or leased under the terms of a lease of not less than ten years' duration and operated by an employer for the exclusive use of its employees, (iii) valet parking provided at any airport, and (iv) space in municipally-operated railroad parking facilities in municipalities located within an area of the state designated as a severe nonattainment area for ozone under the federal Clean Air Act, (O) radio or television repair services, (P) furniture reupholstering and repair services, (Q) repair services to any electrical or electronic device, including, but not limited to, [such] equipment used for purposes of refrigeration or air-conditioning, (R) lobbying or consulting services for purposes of representing the interests of a client in relation to the functions of any governmental entity or instrumentality, (S) services of the agent of any person in relation to the sale of any item of tangible personal property for such person, exclusive of the services of a consignee selling works of art, as defined in subsection (b) of section 12-376c, or articles of clothing or footwear intended to be worn on or about the human body other than (i) any special clothing or footwear primarily designed for athletic activity or protective use and which is not normally worn except when used for the athletic activity or protective use for which it was designed, and (ii) jewelry, handbags, luggage, umbrellas, wallets, watches and similar items carried on or about the human body but not worn on the body in the manner characteristic of clothing intended for exemption under subdivision (47) of section 12-412, under consignment, exclusive of services provided by an auctioneer, (T) locksmith services, (U) advertising or public relations services, including layout, art direction, graphic design, mechanical preparation or production supervision, not related to the development of media advertising or cooperative direct mail advertising, (V) landscaping and horticulture services, (W) window cleaning services, (X) maintenance services, (Y) janitorial services, (Z) exterminating services, (AA) swimming pool cleaning and maintenance services, (BB) renovation and repair services as set forth in this subparagraph, to other than industrial, commercial or income-producing real property: Paving of any sort, painting or staining, wallpapering, roofing, siding and exterior sheet metal work, (CC) miscellaneous personal services included in industry group 729 in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, or U.S. industry 532220, 812191, 812199 or 812990 in the North American Industrial Classification System United States manual, United States Office of Management and Budget, 1997 edition, exclusive of (i) services rendered by massage therapists licensed pursuant to chapter 384a, and (ii) services rendered by a hypertrichologist licensed pursuant to chapter 388, (DD) any repair or maintenance service to any item of tangible personal property including any contract of warranty or service related to any such item, (EE) business analysis, management or managing consulting services rendered by a general partner, or an affiliate thereof, to a limited partnership, provided (i) that the general partner, or an affiliate thereof, is compensated for the rendition of such services other than through a distributive share of partnership profits or an annual percentage of partnership capital or assets established in the limited partnership's offering statement, and (ii) the general partner, or an affiliate thereof, offers such services to others, including any other partnership. As used in subparagraph (EE)(i) "an affiliate of a general partner" means an entity which is directly or indirectly owned fifty per cent or more in common with a general partner; and (FF) notwithstanding the provisions of section 12-412, as amended, except subsection (87) thereof, patient care services, as defined in subsection [(30)] (29) of this section by a hospital; (j) the leasing or rental of tangible personal property of any kind whatsoever, including, but not limited to, motor vehicles, linen or towels, machinery or apparatus, office equipment and data processing equipment, provided for purposes of this subdivision and the application of sales and use tax to contracts of lease or rental of tangible personal property, the leasing or rental of any motion picture film by the owner or operator of a motion picture theater for purposes of display at such theater shall not constitute a sale within the meaning of this subsection; (k) the rendering of telecommunications service, as defined in subsection (26) of this section, for a consideration on or after January 1, 1990, exclusive of any such service rendered by an employee for [his] the employer of such employee, subject to the provisions related to telecommunications service in accordance with section 12-407a; (l) the rendering of community antenna television service, as defined in subsection (27) of this section, for a consideration on or after January 1, 1990, exclusive of any such service rendered by an employee for [his] the employer of such employee; (m) the transfer for consideration of space or the right to use any space for the purpose of storage or mooring of any noncommercial vessel, exclusive of dry or wet storage or mooring of such vessel during the period commencing on the first day of November in any year to and including the thirtieth day of April of the next succeeding year; (n) the sale for consideration of naming rights to any place of amusement, entertainment or recreation within the meaning of subdivision (3) of section 12-540; (o) the transfer for consideration of a prepaid telephone calling service, as defined in section 3 of this act, and the recharge of a prepaid telephone calling service, provided, if the sale or recharge of a prepaid telephone calling service does not take place at the retailer's place of business and an item is shipped by the retailer to the customer, the sale or recharge shall be deemed to take place at the customer's shipping address, but, if such sale or recharge does not take place at the retailer's place of business and no item is shipped by the retailer to the customer, the sale or recharge shall be deemed to take place at the customer's billing address or the location associated with the customer's mobile telephone number. Wherever in this chapter reference is made to the sale of tangible personal property or services, it shall be construed to include sales described in this subsection, except as may be specifically provided to the contrary.

Sec. 2. Subdivision (26) of section 12-407 of the general statutes, as amended by section 10 of public act 99-173, section 10 of public act 99-285 and sections 1 and 3 of this act, is repealed and the following is substituted in lieu thereof:

(26) (a) "Telecommunications service" means the transmission of any interactive electromagnetic communications including but not limited to voice, image, data and any other information, by means of but not limited to wire, cable, including fiber optical cable, microwave, radio wave or any combinations of such media, and the leasing of any such service. "Telecommunications service" includes but is not limited to basic telephone service, including any facility or service provided in connection with such basic telephone service, toll telephone service and teletypewriter or computer exchange service, including but not limited to residential and business service, directory assistance, two-way cable television service, cellular mobile telephone or telecommunication service, specialized mobile radio and pagers and paging service, including any form of mobile two-way communication. "Telecommunications service" does not include (1) nonvoice services in which computer processing applications are used to act on the information to be transmitted, (2) any one-way radio or television broadcasting transmission, (3) any telecommunications service (A) rendered by a company in control of such service when rendered for private use within its organization (B) used, allocated or distributed by a company within its organization, including in such organization affiliates, as defined in section 33-840, for the purpose of conducting business transactions of the organization if such service is purchased or leased from a company rendering telecommunications service and such purchase or lease is subject to tax under this chapter, and (4) access or interconnection service purchased by a provider of telecommunications service from another provider of such service for purposes of rendering such service, provided the purchaser submits to the seller a certificate attesting to the applicability of this exclusion, upon receipt of which the seller is relieved of any tax liability for such sale so long as the certificate is taken in good faith by the seller.

(b) For purposes of the tax imposed under this chapter (1) gross receipts from the rendering of telecommunications service shall include any subscriber line charge or charges as required by the Federal Communications Commission and any charges for access service collected by any person rendering such service unless otherwise excluded from such gross receipts under this chapter; [and] (2) gross receipts from the rendering of telecommunications service shall not include any local charge for calls from public or semipublic telephones; and (3) gross receipts from the rendering of telecommunications service shall not include any charge for calls purchased using a prepaid telephone calling service, as defined in section 3 of this act.

Sec. 3. Section 12-407 of the general statutes, as amended by section 10 of public act 99-173 and section 10 of public act 99-285, is amended by adding subsection (31) as follows:

(NEW) (31) "Prepaid telephone calling service" means the right to exclusively purchase telecommunications service, that must be paid for in advance and that enables the origination of calls using an access number or authorization code, or both, whether manually or electronically dialed, provided the remaining amount of units of service that have been prepaid shall be known on a continuous basis.

Sec. 4. Subsection (1) of section 12-408 of the general statutes, as amended by section 13 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(1) For the privilege of making any sales as defined in subdivision (2) of section 12-407, as amended by this act, at retail, in this state for a consideration, a tax is hereby imposed on all retailers at the rate of six per cent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail or from the rendering of any services constituting a sale in accordance with subdivision (2) of section 12-407, as amended by this act, except, in lieu of said rate of six per cent, (A) at a rate of twelve per cent with respect to each transfer of occupancy, from the total amount of rent received for such occupancy of any room or rooms in a hotel or lodging house for the first period not exceeding thirty consecutive calendar days, (B) with respect to the sale of a motor vehicle to any individual who is a member of the armed forces of the United States and is on full-time active duty in Connecticut and who is considered, under 50 App USC 574, a resident of another state, or to any such individual and the spouse thereof, at a rate of four and one-half per cent of the gross receipts of any retailer from such sales, provided such retailer requires and maintains [an affidavit] a declaration by such individual, prescribed as to form by the commissioner and bearing notice to the effect that false statements made in such declaration are punishable, or other evidence, satisfactory to the commissioner, concerning the purchaser's state of residence under 50 App USC 574, (C) with respect to the sales of computer and data processing services occurring on or after July 1, 1997, and prior to July 1, 1998, at the rate of five per cent, on or after July 1, 1998, and prior to July 1, 1999, at the rate of four per cent, on or after July 1, 1999, and prior to July 1, 2000, at the rate of three per cent, on or after July 1, 2000, and prior to July 1, 2001, at the rate of two per cent, on or after July 1, 2001, and prior to July 1, 2002, at the rate of one per cent and on and after July 1, 2002, such services shall be exempt from such tax, (D) with respect to the sales of labor [,] that is otherwise taxable under subdivision (c) or (g) of subsection (2) of section 12-407, as amended, on existing vessels and repair or maintenance services on vessels [, as defined in section 15-127,] occurring on and after July 1, 1999, such services shall be exempt from such tax, (E) with respect to sales of the renovation and repair services of paving of any sort, painting or staining, wallpapering, roofing, siding and exterior sheet metal work, to other than industrial, commercial or income-producing real property, occurring on or after July 1, 1999, and prior to July 1, 2000, at the rate of four per cent, with respect to such sales occurring on or after July 1, 2000, but prior to July 1, 2001, at the rate of two per cent, and on and after July 1, 2001, sales of such renovation and repair services shall be exempt from such tax, and (F) with respect to patient care services occurring on or after July 1, 1999, at the rate of five and three-fourths per cent. The rate of tax imposed by this chapter shall be applicable to all retail sales upon the effective date of such rate, except that a new rate which represents an increase in the rate applicable to the sale shall not apply to any sales transaction wherein a binding sales contract without an escalator clause has been entered into prior to the effective date of the new rate and delivery is made within ninety days after the effective date of the new rate. For the purposes of payment of the tax imposed under this section, any retailer of services taxable under subdivision (2)(i) of section 12-407, as amended, who computes taxable income, for purposes of taxation under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, on an accounting basis which recognizes only cash or other valuable consideration actually received as income and who is liable for such tax only due to the rendering of such services may make payments related to such tax for the period during which such income is received, without penalty or interest, without regard to when such service is rendered. [Information about the state sales tax rate of other states shall, upon request, be furnished by the commissioner.]

Sec. 5. Subsections (1) to (3), inclusive, of section 12-410 of the general statutes are repealed and the following is substituted in lieu thereof:

(1) For the purpose of the proper administration of this chapter and to prevent evasion of the sales tax it shall be presumed that all receipts are gross receipts that are subject to the tax until the contrary is established. The burden of proving that a sale of tangible personal property or service constituting a sale in accordance with subsection (2) of section 12-407, as amended by this act, is not a sale at retail is upon the person who makes the sale unless [he] such person takes in good faith from the purchaser a certificate to the effect that the property or service is purchased for resale.

(2) The certificate relieves the seller from the burden of proof only if taken in good faith from a person who is engaged in the business of selling tangible personal property or services constituting a sale in accordance with subsection (2) of section 12-407, as amended by this act, and who holds the permit provided for in section 12-409 and who, at the time of purchasing the tangible personal property or service: (A) Intends to sell it in the regular course of business; (B) intends to utilize such personal property in the delivery of landscaping or horticulture services, provided the total sale price of all such landscaping and horticulture services are taxable under this chapter or (C) is unable to ascertain at the time of purchase whether the property or service will be sold or will be used for some other purpose. The burden of establishing that a certificate is taken in good faith is on the seller. A certificate to the effect that property or service is purchased for resale taken from the purchaser by the seller shall be deemed to be taken in good faith if the tangible personal property or service purchased is similar to or of the same general character as property or service which the seller could reasonably assume would be sold by the purchaser in the regular course of business.

(3) The certificate shall be signed by and bear the name and address of the purchaser, shall indicate the number of the permit issued to the purchaser and shall indicate the general character of the tangible personal property or service sold by the purchaser in the regular course of business. The certificate shall be substantially in such form as the commissioner prescribes.

Sec. 6. Subsection (1) of section 12-411 of the general statutes, as amended by section 15 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(1) An excise tax is hereby imposed on the storage, acceptance, consumption or any other use in this state of tangible personal property purchased from any retailer for storage, acceptance, consumption or any other use in this state, the acceptance or receipt of any services constituting a sale in accordance with subdivision (2) of section 12-407, as amended by this act, purchased from any retailer for consumption or use in this state, or the storage, acceptance, consumption or any other use in this state of tangible personal property which has been manufactured, fabricated, assembled or processed from materials by a person, either within or without this state, for storage, acceptance, consumption or any other use by such person in this state, to be measured by the sales price of materials, at the rate of six per cent of the sales price of such property or services, except, in lieu of said rate of six per cent, (A) at a rate of twelve per cent of the rent paid for occupancy of any room or rooms in a hotel or lodging house for the first period of not exceeding thirty consecutive calendar days, (B) with respect to the storage, acceptance, consumption or use in this state of a motor vehicle purchased from any retailer for storage, acceptance, consumption or use in this state by any individual who is a member of the armed forces of the United States and is on full-time active duty in Connecticut and who is considered, under 50 App USC 574, a resident of another state, or to any such individual and the spouse of such individual at a rate of four and one-half per cent of the sales price of such vehicle, provided such retailer requires and maintains [an affidavit] a declaration by such individual, prescribed as to form by the commissioner and bearing notice to the effect that false statements made in such declaration are punishable, or other evidence, satisfactory to the commissioner, concerning the purchaser's state of residence under 50 App USC 574, (C) [with respect to the storage, acceptance, consumption or use in this state of a vessel purchased from any retailer for storage, acceptance, consumption or any other use in this state by any individual who does not maintain a permanent place of abode in this state and who is a resident of another state and who does not present such vessel for registration with the Department of Motor Vehicles in this state, at a rate which is the lesser of: (i) Six per cent of the sales price of such vessel; or (ii) the percentage of such sales price that is payable as a state use tax by purchasers making purchases in the purchaser's state of residence, provided the retailer requires and maintains an affidavit or other evidence, satisfactory to the commissioner, concerning the purchaser's state of residence, (D)] with respect to the [sales of] acceptance or receipt in this state of labor that is otherwise taxable under subdivision (c) or (g) of subsection (2) of section 12-407, as amended by this act, on existing vessels and repair or maintenance services on vessels [as defined in section 15-127,] occurring [on or after July 1, 1997, and prior to July 1, 1998, at the rate of four per cent, on or after July 1, 1998, and prior to July 1, 1999, at the rate of two per cent and] on and after July 1, 1999, such services shall be exempt from such tax, [(E)] (D) with respect to the acceptance or receipt in this state of computer and data processing services purchased from any retailer for consumption or use in this state occurring on or after July 1, 1997, and prior to July 1, 1998, at the rate of five per cent of such services, on or after July 1, 1998, and prior to July 1, 1999, at the rate of four per cent of such services, on or after July 1, 1999, and prior to July 1, 2000, at the rate of three per cent of such services, on or after July 1, 2000, and prior to July 1, 2001, at the rate of two per cent of such services, on and after July 1, 2001, and prior to July 1, 2002, at the rate of one per cent of such services and on and after July 1, 2002, such services shall be exempt from such tax, [(F)] (E) with respect to the acceptance or receipt in this state of patient care services purchased from any retailer for consumption or use in this state occurring on or after July 1, 1999, at the rate of five and three-fourths per cent, and [(G)] (F) with respect to acceptance of the renovation and repair services of paving of any sort, painting or staining, wallpapering, roofing, siding and exterior sheet metal work, to other than industrial, commercial or income-producing real property, occurring on or after July 1, 1999, and prior to July 1, 2000, at the rate of four per cent, with respect to such sales occurring on or after July 1, 2000, and prior to July 1, 2001, at the rate of two per cent, and on and after July 1, 2001, sales of such renovation and repair services shall be exempt from such tax. [Information about the state use tax rate of other states shall, upon request, be furnished by the commissioner.]

Sec. 7. Subsection (9) of section 12-411 of the general statutes is repealed and the following is substituted in lieu thereof:

(9) For the purpose of the proper administration of this chapter and to prevent evasion of the use tax and the duty to collect the use tax, it shall be presumed that services or tangible personal property sold by any person for delivery in this state is sold for storage, acceptance, consumption or other use in this state until the contrary is established. The burden of proving the contrary is upon the person who makes the sale unless [he] such person takes from the purchaser a certificate to the effect that the services or property is purchased for resale.

Sec. 8. Subdivision (5) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof:

(5) Sales of tangible personal property or services to and by nonprofit charitable hospitals in this state, nonprofit nursing homes, nonprofit rest homes and nonprofit residential care homes licensed by the state pursuant to chapter 368v for the exclusive purposes of such institutions except any such service transaction as described in subparagraph [(GG)] (FF) of subdivision (i) of subsection (2) of section 12-407, as amended by this act.

Sec. 9. Subsection (9) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof:

(9) Sales of food products, [and] meals, candy, confectionery and beverages, except alcoholic beverages, in a student cafeteria, dining-hall, dormitory, fraternity or sorority maintained in a private, public or parochial school, college or university, to members of such institutions or organizations, including all sales of such items to such members at such institutions or organizations using prepaid meal plan cards or arrangements; and sales of food products, [and] meals, candy, confectionery and beverages to patients, residents or care recipients in hospitals, residential care homes, assisted living facilities, senior centers, day care centers, convalescent homes, nursing homes and rest homes.

Sec. 10. Subsection (15) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof:

[(15) There are exempted from the taxes imposed by this chapter the gross receipts from the distribution of and the storage, use or other consumption in this state of motor vehicle fuel the distribution of which in this state is subject to the tax imposed by the laws of this state.]

(15) Sales of and the storage, use or other consumption in this state of motor vehicle fuel (A) for use in any motor vehicle licensed or required to be licensed to operate upon the public highways of this state, whether or not the tax imposed under chapter 221 has been paid on such fuel, or (B) for any other use, if the tax imposed under chapter 221 has been paid on such fuel and has not been refunded under the provisions of chapter 221.

Sec. 11. Subsection (48) of section 12-412 of the general statutes, as amended by section 18 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(48) Sales of the following drugs or medicines available for purchase without prescription for use in or on the [human] body: Vitamin or mineral concentrates; dietary supplements; natural or herbal drugs or medicines; products intended to be taken for coughs, colds, asthma or allergies; antihistamines; laxatives; antidiarrheal medicines; analgesics; antibiotic, antibacterial, antiviral and antifungal medicines; antiseptics; astringents; anesthetics; steroidal medicines; anthelmintics; emetics and antiemetics; antacids; and any medication prepared to be used in [a person's] the eyes, ears or nose, excluding cosmetics, dentifrices, mouthwash, shaving and hair care products, soaps and deodorants.

Sec. 12. Subdivision (63) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof:

(63) (A) Sales of and the storage, use or other consumption of tangible personal property exclusively for use in agricultural production, as defined in this subsection, by a farmer engaged in agricultural production as a trade or business and to whom the Department of Revenue Services has issued a farmer tax exemption permit, provided [in the farmer's immediately preceding taxable year for federal income tax purposes,] such farmer's gross income from such agricultural production, as reported for federal income tax purposes, shall have been (i) not less than two thousand five hundred dollars [, as reported for federal income tax purposes on Schedule C or Schedule F attached to Internal Revenue Service Form 1040, 1041 or 1065 where the business is conducted by an individual, estate, trust or partnership or would be reportable on Schedule C or Schedule F but for the fact that the business is conducted by a corporation] for the immediately preceding taxable year, or (ii) on average, not less than two thousand five hundred dollars for the two immediately preceding taxable years.

(B) The Commissioner of Revenue Services shall adopt regulations in accordance with chapter 54 requiring periodic registration for purposes of the issuance of farmer tax exemption permits, including [(1)] (i) a procedure related to the application for such permit, [(2)] such application to include a declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, to be signed by the applicant, and (ii) a form of notice concerning the penalty for misuse of such permit. [and (3) required notarization of the application of such permit.]

(C) As used in this subsection, (i) "agricultural production" means engaging, as a trade or business, in [(A)] (I) the raising and harvesting of any agricultural or horticultural commodity, [(B)] (II) dairy farming, [(C)] (III) forestry, [(D)] (IV) the raising, feeding, caring for, shearing, training or management of livestock, including horses, bees, poultry, fur-bearing animals or wildlife or [(E)] (V) the raising and harvesting of fish, oysters, clams, mussels or other molluscan shellfish; and (ii) "farmer" means any person engaged in agricultural production as a trade or business.

(D) The Department of Revenue Services may issue a farmer tax exemption permit to a farmer, notwithstanding the fact that, in the farmer's immediately preceding taxable year, such farmer's gross income from agricultural production engaged in as a trade or business may have been less than two thousand five hundred dollars, provided (i) such farmer purchased, during such farmer's current or immediately preceding taxable year, an agricultural trade or business from a seller who was issued a farmer tax exemption permit by such department at the time of such purchase and (ii) such agricultural production [trade or business] shall be carried on as a trade or business by such purchaser during the period commencing upon the purchase and ending [five] two years after the date of purchase. Such purchaser shall be liable for the tax otherwise imposed, during the period commencing upon such purchase and ending [five] two years after the date of purchase, if such agricultural production [trade or business] is not carried on as a trade or business by such purchaser during the period commencing upon such purchase and ending [five] two years after the date of purchase.

(E) (i) The Department of Revenue Services, under such regulations as the Commissioner of Revenue Services may adopt in accordance with the provisions of chapter 54, may issue a farmer tax exemption permit to an applicant, provided such applicant has satisfied the commissioner that the applicant intends to carry on agricultural production as a trade or business for at least two years, notwithstanding the fact that the applicant was not engaged in agricultural production as a trade or business in the immediately preceding taxable year or, if the applicant was engaged in agricultural production as a trade or business in the immediately preceding taxable year, notwithstanding the fact that the applicant's gross income from such agricultural production, as reported for federal income tax purposes, was less than two thousand five hundred dollars for the immediately preceding taxable year or, on average, less than two thousand five hundred dollars for the two immediately preceding taxable years.

(ii) Such applicant shall be liable for the tax imposed under this chapter during the period commencing upon the issuance of the permit and ending two years after the date of issuance of the permit if agricultural production is not carried on as a trade or business by such applicant during such entire period.

(iii) Such applicant shall also be liable for the tax otherwise imposed, during the period commencing upon the issuance of the permit and ending two years after the date of issuance of the permit, if (I) such applicant's gross income from such agricultural production, as reported for federal income tax purposes, is less than two thousand five hundred dollars for the immediately preceding taxable year or, on average, less than two thousand five hundred dollars for the two immediately preceding taxable years and (II) such applicant's expenses from such agricultural production, as reported for federal income tax purposes, are less than two thousand five hundred dollars for the immediately preceding taxable year or, on average, less than two thousand five hundred dollars for the two immediately preceding taxable years.

(iv) Any applicant liable for tax under subparagraph (ii) or (iii) of this paragraph shall not be eligible to be issued another permit under subparagraph (i) of this subdivision.

Sec. 13. Section 12-413 of the general statutes is amended by adding subdivision (4) as follows:

(NEW) (4) The use tax shall not apply to the purchase of any articles of tangible personal property by a retailer for resale, if those articles are subsequently withdrawn from inventory and donated by the retailer to (A) the United States, the state of Connecticut or any of the political subdivisions thereof, or its or their respective agencies, or (B) any organization that is exempt from federal income tax under Section 501(a) 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 that the United States Treasury Department has expressly determined, by letter, to be an organization that is described in Section 501(c)(3) of said internal revenue code.

Sec. 14. Section 12-416a of the general statutes is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services is authorized to pay to a municipal agency an amount not to exceed fifty per cent of the tax actually collected as the result of an assessment made under section 12-415, as amended, or 12-416, as amended, against the purchaser of a vessel, as defined in subdivision (24) of section 12-407, if said commissioner, in [his] the commissioner's sole discretion, determines that information provided by such agency was instrumental in the making of such assessment. Notwithstanding the provisions of section 12-15, as amended, the commissioner may disclose to a municipal agency that receives a payment under this section the name and address of the person against whom the assessment is made, the amount of the tax actually assessed and the amount of the tax actually collected with respect to which such a payment may be made.

Sec. 15. Section 12-418 of the general statutes, as amended by section 14 of public act 99-121, is repealed and the following is substituted in lieu thereof:

(1) (A) Any person against whom as assessment is made under section 12-414a, 12-415, as amended, [or] 12-416, as amended, or 12-424, as amended by this act, or any person directly interested may petition for a reassessment not later than sixty days after service upon such person of notice thereof. If a petition for reassessment is not filed within the sixty-day period, the assessment becomes final at the expiration of the period.

(B) Any person against whom an assessment is made under section 12-417, as amended, or any person directly interested may petition for a reassessment not later than ten days after service of notice upon such person. If a petition for reassessment is not filed within such ten-day period, the assessment becomes final at the expiration of the period.

(2) If a petition for reassessment is filed within the sixty-day period, in the case of an assessment made under section 12-414a, 12-415, as amended, [or] 12-416, as amended, or 12-424, as amended by this act, or within the ten-day period, in the case of an assessment made under section 12-417, as amended, the commissioner shall reconsider the assessment and, if the person has so requested in the petition, shall, in the commissioner's discretion, grant the person an oral hearing and shall give such person ten days' notice of the time and place of the hearing. The commissioner may continue the hearing from time to time, as may be necessary, and may assign the conduct of such hearing to a representative of the commissioner.

(3) The commissioner may decrease or increase the amount of the assessment before it becomes final, but the amount may be increased only if a claim for the increase is asserted by the commissioner at or before the hearing.

(4) The order or decision of the commissioner upon a petition for reassessment becomes final one month after service upon the petitioner of notice thereof unless within such period the petitioner seeks judicial review of the commissioner's order or decision pursuant to section 12-422.

(5) All assessments made by the commissioner under [sections] section 12-414a, 12-415, as amended, [and] 12-416, as amended, or 12-424, as amended by this act, are due and payable at the time they become final.

(6) Any notice required by this section shall be served personally or by mail in the manner prescribed for service of notice of a deficiency assessment.

Sec. 16. Section 12-424 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) If any [retailer] person liable for any amount under this chapter sells out his or her business or stock of goods or quits the business, [his] such person's successors or assigns shall withhold sufficient of the purchase price to cover such amount until the former owner produces a receipt from the commissioner showing that it has been paid or a certificate stating that no amount is due.

(2) If the purchaser of a business or stock of goods fails to withhold the purchase price as required, [he] such purchaser becomes personally liable for the payment of the amount required to be withheld by [him] the purchaser to the extent of the purchase price, valued in money. Within sixty days after receiving a written request from the purchaser for a certificate, the commissioner shall either issue the certificate or mail notice to the purchaser at [his] said purchaser's address as it appears on the records of the commissioner of the amount that must be paid as a condition of issuing the certificate. Failure of the commissioner to mail the notice shall release the purchaser from any further obligation to withhold the purchase price as above provided. The time within which the obligation of the successor may be enforced shall start to run at the time the [retailer] person sells out his or her business or stock of goods or quits the business or at the time that the assessment against [the retailer] such person becomes final, whichever event occurs later.

Sec. 17. Subsection (7) of section 12-430 of the general statutes is repealed and the following is substituted in lieu thereof:

(7) (a) (i) When a nonresident contractor enters into a contract with a person other than a direct payment permit holder, as the term is used in section 12-409a, as amended, pursuant to which, or in the carrying out of which, tangible personal property will be consumed or used in this state, such nonresident contractor shall deposit with the Commissioner of Revenue Services at the commencement of such contract a sum equivalent to five per cent of the total amount to be paid under the contract or shall furnish the Commissioner of Revenue Services with a guarantee bond satisfactory to said commissioner in a sum equivalent to five per cent of such total amount, to secure payment of the taxes payable with respect to tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes, and shall obtain a certificate from the Commissioner of Revenue Services that the requirements of this subsection have been met. [; ]

(ii) When a nonresident contractor enters into a contract with a direct payment permit holder pursuant to which, or in the carrying out of which, tangible personal property will be consumed or used in this state, such nonresident contractor shall deposit with the Commissioner of Revenue Services at the commencement of such contract a sum equivalent to two per cent of the total amount to be paid under the contract or shall furnish the Commissioner of Revenue Services with a guarantee bond satisfactory to said commissioner in a sum equivalent to two per cent of such total amount, to secure payment of the taxes payable with respect to tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes, and shall obtain a certificate from the Commissioner of Revenue Services that the requirements of this subsection have been met.

(b) [any] (i) Any person other than a direct payment permit holder dealing with a nonresident contractor without first obtaining a copy of such certificate from said commissioner shall no later than thirty days after the commencement of such contract deduct five per cent of all amounts payable to such nonresident contractor and pay it over to said commissioner on behalf of or as agent for such nonresident contractor or shall furnish said commissioner with a guarantee bond satisfactory to said commissioner in a sum equivalent to five per cent of such total amount, to secure payment of the taxes payable with respect to such tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes. [;]

(ii) Any direct payment permit holder dealing with a nonresident contractor without first obtaining a copy of such certificate from said commissioner shall no later than thirty days after the commencement of such contract deduct two per cent of all amounts payable to such nonresident contractor and pay it over to said commissioner on behalf of or as agent for such nonresident contractor or shall furnish said commissioner with a guarantee bond satisfactory to said commissioner in a sum equivalent to two per cent of such total amount, to secure payment of the taxes payable with respect to such tangible personal property consumed or used pursuant to or in the carrying out of such contract or any other state taxes.

(c) [if] If any person dealing with such nonresident contractor fails to comply with subdivision (b) of this subsection, such person shall be personally liable for payment of the taxes imposed by this chapter with respect to such tangible personal property consumed or used pursuant to or in carrying out such contract or any other state taxes. [;]

(d) [when] When a nonresident contractor enters into a contract with the state, said contractor shall provide the Labor Department with evidence demonstrating compliance with the provisions of chapters 567 and 568, the prevailing wage requirements of chapter 557 and any other provisions of the general statutes related to conditions of employment.

Sec. 18. Subsection (a) of section 12-431 of the general statutes, as amended by section 29 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(a) [In] (1) Except as otherwise provided in subdivision (2) of this subsection, in case of the purchase of any motor vehicle, snowmobile, vessel or aircraft other than from a licensed motor vehicle dealer or licensed motor vehicle lessor, a snowmobile dealer, a licensed marine dealer or a retailer of aircraft, respectively, the receipts therefrom shall not be included in the measure of the sales tax, but the purchaser thereof shall pay a use tax on the total purchase price thereof to the Commissioner of Revenue Services, as provided in section 12-411, as amended, in the case of tangible personal property purchased from a retailer, and, in the case of motor vehicles, vessels and snowmobiles, before obtaining an original or transferal registration, in accordance with regulations prescribed by the Commissioner of Revenue Services and on forms approved by the Commissioner of Revenue Services and the Commissioner of Motor Vehicles, and, in the case of aircraft, before obtaining an original or transferal registration, in accordance with regulations prescribed by the Commissioner of Revenue Services and on forms approved by the Commissioner of Revenue Services and the Commissioner of Transportation. [; provided no]

(2) No use tax shall be payable in cases of purchase [(1)] (A) when the purchaser is the spouse, mother, father, brother, sister or child of the seller, [(2)] (B) when a motor vehicle or vessel is sold in connection with the organization, reorganization or liquidation of an incorporated business, provided [(A)] the last taxable sale or use of the motor vehicle or vessel was subjected to a tax imposed by this chapter [, (B)] and the purchaser is the incorporated business or a stockholder thereof, [and (C) any gain or loss to the seller is not recognized for federal income tax purposes under the provisions of the Internal Revenue Code and Treasury regulations and rulings issued thereunder, (3)] (C) when a motor vehicle is sold in connection with the organization or termination of a partnership or limited liability company, provided [(A)] the last taxable sale or use of the motor vehicle was subjected to a tax imposed by this chapter [, (B)] and the purchaser is the partnership or limited liability company, as the case may be, or a partner or member, thereof, as the case may be, [and (C) any gain or loss to the seller is not recognized for federal income tax purposes under the provisions of the Internal Revenue Code and Treasury regulations and rulings issued thereunder, or (4)] or (D) when a motor vehicle which has been declared a total loss pursuant to the provisions of section 14-16c, as amended, is rebuilt for sale or use, provided the purchaser was subjected to the tax imposed by this chapter for the last taxable sale of said vehicle.

Sec. 19. Subdivision (4) of section 12-540 of the general statutes, as amended by section 49 of public act 99-173 and section 3 of public act 99-235, is repealed and the following is substituted in lieu thereof:

(4) "Dues" shall include assessment charges to members irrespective of the purpose for which made and any charges for social, athletic or sporting privileges or facilities for any period of more than six days but not including charges made for instruction, charges for locker rental or charges for special assessments made (A) for the construction or reconstruction of any social, athletic or sporting facility or any increase in charges made after June 29, 1999, which increase is to be used for the acquisition of land provided such land is "farm land", "open space land" or "forest land", as defined in section 12-107b, and further provided that an application or applications pursuant to section 12-107c, 12-107d or 12-107e are made for the assessment list next following the acquisition of such land, or (B) for the construction or reconstruction of any capital addition to any such facility, or (C) furnishings or fixtures, including installation charges, for any such facility, to the extent that such furnishings or fixtures are required, by reason of the construction or reconstruction described in subdivision (A) or (B) of this subsection, for the use of such facility upon completion of such construction or reconstruction; except that, in the case of any such amount which is not expended for such construction, reconstruction, furnishings or fixtures, including installation charges, within three years after the date of payment of such amount, the exemption provided by this subsection shall cease to apply upon the expiration of such three-year period, and the club shall be liable for any tax imposed by section 12-543, as amended, in respect of such payment, as if such payment had been made on the first day following the expiration of such three-year period.

Sec. 20. Subsection (a) of section 12-556g of the general statutes is repealed and the following is substituted in lieu thereof:

(a) A facilities surcharge shall be imposed on the admission charge, as defined in subsection (3) of section [12-450] 12-540, as amended, to the events at facilities owned or managed by the Tennis Foundation of Connecticut or any successor organization. The surcharge shall be imposed at a rate of ten per cent of such admission charge and shall be in addition to any tax otherwise applicable to such transaction. The surcharge shall be imposed on sponsors and promoters of events held at facilities owned or managed by the Tennis Foundation of Connecticut or any successor organization and reimbursement for the surcharge shall be collected by the sponsor or promoter from the purchaser. Such reimbursement shall be paid by the purchaser to the sponsor or promoter. The surcharge, when added to the admission charge, shall be a debt from the purchaser to the sponsor or promoter and shall be recoverable at law.

Sec. 21. Subparagraph (A) of subdivision (20) of subsection (a) of section 12-213 of the general statutes is repealed and the following is substituted in lieu thereof:

(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, as amended, or generation entity or affiliate, as defined in section 16-1, [or,] as amended, 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, as amended, 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, as amended, or, until unbundled in accordance with section 16-244e, electric company, as defined in section 16-1, as amended.

Sec. 22. Subsection (a) of section 12-217e of the general statutes is repealed and the following is substituted in lieu thereof:

(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, as amended by this act.

Sec. 23. Section 12-217s of the general statutes is repealed and the following is substituted in lieu thereof:

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 [instituted] conducted in this state by such corporation in response to the provisions of sections 13b-38o, 13b-38p, 13b-38t, 13b-38v, as amended, 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.

Sec. 24. Subdivision (5) of subsection (a) of section 12-217u of the general statutes is repealed and the following is substituted in lieu thereof:

(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 Commissioner of Banking 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.

Sec. 25. Subdivision (2) of subsection (a) of section 12-217y of the general statutes, as amended by section 1 of public act 99-203, is repealed and the following is substituted in lieu thereof:

(2) "Qualifying employee" means [(A) during fiscal year 1999, any employee who is employed not less than twenty-five hours per week by the same business firm and who, at the time of being hired by such business firm, is and has been receiving benefits from the temporary family assistance program for more than nine months and meets other requirements that the Labor Commissioner may establish in regulations adopted in accordance with chapter 54, or (B)] during [and after] fiscal year 2000 or with respect to the business firm's income year commencing in 2000 or thereafter, any employee who is employed not less than thirty hours per week by the same business firm and who, at the time of being hired by such business firm, is and has been receiving benefits from the temporary family assistance program for more than nine months and meets other requirements that the Labor Commissioner may establish in regulations adopted in accordance with chapter 54. For [purpose] purposes of this subdivision, the number of hours per week an employee participates in a job training program approved by the Labor Commissioner shall be included in calculating the number of hours such employee is employed.

Sec. 26. Subdivision (1) of subsection (c) of section 12-223a of the general statutes is repealed and the following is substituted in lieu thereof:

(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, as amended, 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.

Sec. 27. Subsection (b) of section 12-264 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) (1) Each such company and municipal utility shall, on or before the last day of January, April, July and October of each year, render to the Commissioner of Revenue Services a return on forms prescribed or furnished by the commissioner and signed by its treasurer or the person performing the duties of treasurer, or by an authorized agent or officer, specifying [(1)] (A) the name and location of such company or municipal utility, [(2)] (B) the amount of gross earnings from operations for the quarter ending with the last day of the preceding month, [(3)] (C) the gross earnings from the sale or rental of appliances using water, steam, gas or electricity and the cost of such appliances sold, cost to be interpreted as net invoice price plus transportation costs of such appliances, [(4)] (D) the gross earnings from all sales for resale of water, steam, gas and electricity, whether or not the purchasers are public service corporations, municipal utilities, located in the state or subject to the tax imposed by this chapter, [(5)] (E) the number of miles of water or steam pipes, gas mains or electric wires operated by such company or municipal utility within this state on the first day and on the last day of the calendar year immediately preceding, and [(6)] (F) the number of miles of water or steam pipes, gas mains or electric wires wherever operated by such company or municipal utility on said dates. Gas pipeline and gas transmission companies which do not manufacture or buy gas in this state for resale in this state shall be subject to the provisions of chapter 208 and shall not be subject to the provisions of this chapter and chapter 212a.

(2) No person, firm, corporation or municipality that is chartered or authorized by this state to transmit or sell gas within a franchise area shall transmit gas for any person that sells gas to be used for light, heat or power to an end user or users located in this state, unless such seller has registered with the Department of Revenue Services for purposes of the tax imposed under this chapter. The provisions of this subdivision shall not apply to the transmission of gas for any seller that is a gas company, as defined in section 16-1, as amended, municipal gas utility established under chapter 101 or any other gas utility owned, leased, maintained, operated, managed or controlled by any unit of local government under any general statute or any public or special act, or a gas pipeline or gas transmission company subject to the provisions of chapter 208.

(3) The Commissioner of Revenue Services may make public the names and addresses of each person that sells gas to be used for light, heat or power to an end user or users located in this state and has registered with the Department of Revenue Services for purposes of the tax imposed under this chapter, and that is not a gas company, as defined in section 16-1, as amended, a municipal gas utility established under chapter 101 or any other gas utility owned, leased, maintained, operated, managed or controlled by any unit of local government under any general statute or any public or special act, or a gas pipeline or gas transmission company subject to the provisions of chapter 208.

Sec. 28. Subsection (c) of section 12-265 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) The rate of tax on the sale, furnishing or distribution of electricity or natural gas for use directly by a company engaged in a manufacturing production process, in accordance with the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, classifications 2000 to 3999, inclusive, or Sector 31, 32 or 33 in the North American Industrial Classification System United States manual, United States Office of Management and Budget, 1997 edition, shall be four per cent with respect to calendar quarters commencing on or after January 1, 1994, and prior to January 1, 1995, three per cent with respect to calendar quarters commencing on or after January 1, 1995, and prior to January 1, 1996, and two per cent with respect to calendar quarters commencing on or after January 1, 1996, and prior to January 1, 1997. The sale, furnishing or distribution of electricity or natural gas for use by a company as provided in this subsection shall not be subject to the provisions of this chapter with respect to calendar quarters commencing on or after January 1, 1997. Not later than thirty days after May 19, 1993, and thirty days after the effective date of each rate decrease provided for in this section, each electric and gas public service company, as defined in section 16-1, as amended, which does not have a proposed rate amendment under section 16-19 pending before the Department of Public Utility Control at such time, shall request the department to reopen the proceeding under section 16-19 on the company's most recent rate amendment, solely for the purpose of decreasing the company's rates to reflect the decreases required under this section. The department shall immediately reopen such proceedings, solely for such purpose.

Sec. 29. Section 12-286 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) The commissioner shall, after May 25, 1994, require for an initial application for a distributor's license, in addition to such other information deemed to be necessary, the filing of three affidavits from three recognized manufacturers of cigarettes stating such manufacturers' intent to supply the distributor if the applicant is granted a license. A chain store shall be exempt from filing such affidavits. Any pending application on May 25, 1994, and any person purchasing the business of a licensed distributor shall be exempt from filing such affidavits. For purposes of this subsection, "chain store" means the operator or franchisor of five or more retail establishments with common ownership and control.

(2) The commissioner may make public a list of recognized manufacturers of cigarettes.

(b) A separate license shall be required for each class of business if the applicant is engaged in business both as a distributor and dealer. The commissioner shall prescribe the form of application for a distributor's license and for a dealer's license. Each license so issued shall be conspicuously displayed on the premises covered by the license.

(c) The commissioner shall make regulations not inconsistent with the law for the licensing of vending machines.

(d) The commissioner may, in [his] the commissioner's discretion, refuse to issue a license if [he has] there is reasonable ground to believe (1) that the applicant has wilfully made any false statement of substance with respect to such application for license, (2) that the applicant has neglected to pay any taxes due to this state or (3) that the applicant has been convicted of violating any of the cigarette tax laws of this or any other state or the cigarette tax laws of the United States or has such a criminal record that the commissioner reasonably believes that such applicant is not a suitable person to be issued a license, provided no refusal shall be rendered under this subdivision except in accordance with the provisions of sections 46a-80 and 46a-81. [Each license so issued shall be conspicuously displayed on the premises covered by the license.]

(e) Any person who knowingly sells, offers for sale or possesses with intent to sell any cigarettes, without a license as provided in this chapter, shall be fined not more than five hundred dollars or imprisoned for not more than three months, or both, for each offense. Each day of such unauthorized operation may be deemed a separate offense. [The commissioner shall prescribe the form of application for a distributor's license and for a dealer's license. For purposes of this section, "chain store" means the operator or franchisor of five or more retail establishments with common ownership and control.]

Sec. 30. Section 12-330d of the general statutes is repealed and the following is substituted in lieu thereof:

Each licensed distributor and each licensed unclassified importer shall file with the commissioner, on or before the [tenth] twenty-fifth day of each month, a report for the calendar month immediately preceding in such form and containing such information as the commissioner may [, by regulations adopted in accordance with chapter 54,] prescribe. The return shall be accompanied by a payment of the amount of the tax shown to be due thereon. The commissioner may, by regulations adopted in accordance with chapter 54, require that each distributor and unclassified importer report the names and addresses of [their] its customers, if any, annually, with changes in such lists to be reported to the commissioner monthly not later than the tenth day of each month. If any person fails to pay the amount of tax reported due on its report within the time specified under this section, there shall be imposed a penalty equal to ten per cent of such amount due and unpaid, or fifty dollars, whichever 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. Subject to the provisions of section 12-3a, as amended, the commissioner may waive all or part of the penalties provided under this chapter when it is proven to [his] the commissioner's satisfaction that the failure to pay any tax was due to reasonable cause and was not intentional or due to neglect.

Sec. 31. Subdivision (2) of subsection (b) of section 12-436 of the general statutes, as amended by section 15 of public act 99-121, is repealed and the following is substituted in lieu thereof:

(2) No person shall ship, transport or import alcoholic beverages into this state unless such alcoholic beverages are delivered to a licensed distributor or to an internal revenue or United States customs bonded warehouse under regulations prescribed by the Commissioner of Revenue Services, or are transported in bonded trucks to vessels in Connecticut ports for export; provided (A) any individual may import alcoholic beverages purchased by such individual within the territorial limits of the United States to an amount not to exceed five gallons in any sixty-day period for such individual's own consumption, (B) any individual may import alcoholic beverages, whether or not purchased by such individual, from outside the territorial limits of the United States to an amount not to exceed five gallons in any three-hundred-sixty-five-day period for such individual's own consumption, and (C) any individual who has resided outside the United States for a period of six months or more may, on one occasion and in conjunction with the return of such individual's personal and household goods and effects upon the termination of such foreign residency, import wine to an amount not to exceed one hundred gallons, of which not more than twenty gallons shall be of the same brand and spirits not to exceed ten gallons of which not more than two gallons shall be of the same brand, after making application in each such case to the Department of [Consumer Protection] Revenue Services and presenting with the application a [certificate from the Commissioner of Revenue Services to the effect that the tax provided for in section 12-435 has been paid] tax return prescribed by the Commissioner of Revenue Services and reporting the taxes under this chapter and under chapter 219 for which the applicant is liable. Payment of such taxes shall accompany such application and tax return. A copy of the importation certificate issued by the Department of [Consumer Protection] Revenue Services shall accompany each such shipment.

Sec. 32. Section 12-456 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) Each distributor shall, before transacting the business of a distributor, apply for a license issued by the Commissioner of Revenue Services to engage in said business within this state, which license shall remain in full force and effect until cancelled, suspended or revoked.

(2) The commissioner may, in [his] the commissioner's discretion, refuse to issue a license if [he has] there is reasonable ground to believe [(1)] that the distributor has wilfully made any false statement of substance with respect to such application for license, [(2) that] the distributor has neglected to pay any taxes due to this state or [(3) that] the distributor has been convicted of violating any of the motor fuels tax laws of this or any other state or the motor fuels tax laws of the United States or has such a criminal record that the commissioner reasonably believes that such distributor is not a suitable person to be issued a license, provided no refusal shall be rendered under this subdivision except in accordance with the provisions of sections 46a-80 and 46a-81.

(3) Before the commissioner issues such license, the commissioner shall require such distributor [shall] annually to file with, and to the satisfaction of, the commissioner and [shall] to maintain for the [duration of such license] year a bond [of] issued by a surety company authorized to do business in this state or other security acceptable to the commissioner, in [the amount of five thousand dollars or an] such amount [determined by] as the commissioner [as an estimate of taxes that would be paid if all fuels sold or used by such distributor were subject to the tax imposed under section 12-458, whichever amount is greater] may fix, to secure the payment of any sums due from such distributor pursuant to the provisions of this chapter. Such bond or other security shall remain in full force and effect for a period of three years and one month following the [expiration of such license] end of such year, unless a certificate is issued by the commissioner to the effect that all taxes due the state have been paid.

(b) If such distributor is a foreign corporation or a person nonresident of this state with no designated agent or representative in this state upon whom service of process may be made, then, in any litigation for the collection of any tax due from such distributor, service of such process may be made upon the Secretary of the State with as full force and effect as if made upon such distributor. Any such distributor being such a foreign corporation or nonresident person shall, in the application for a distributor's license, consent to such service of process upon the Secretary of the State and also consent that any such litigation may be brought to the superior court for the judicial district of Hartford having jurisdiction of the amount claimed to be due in such litigation. Any license to any such distributor shall be issued subject to such service of process upon said secretary and subject to such litigation being brought to such court.

(c) The commissioner may suspend or revoke the license of any distributor for failure to comply with any of the provisions of this chapter or regulations related thereto, following a hearing with respect to which notice in writing, specifying the time and place of such hearing and requiring such distributor to show cause why such license should not be revoked, is mailed or delivered to such distributor not less than ten days preceding the date of such hearing. Such notice may be served personally or by registered or certified mail.

(d) The commissioner shall not issue a new license to a distributor whose license is revoked unless the commissioner is satisfied that such distributor will comply with the provisions of this chapter and regulations related thereto.

Sec. 33. Subdivision (8) of subsection (a) of section 12-458 of the general statutes is repealed and the following is substituted in lieu thereof:

(8) A distributor who is exclusively making sales of fuel on which the tax imposed by this chapter is not payable may be permitted, [to file reports, under oath or affirmation, on a form prescribed by said commissioner,] as specified in regulations adopted in accordance with the provisions of chapter 54, to file reports [. The regulations may authorize reports to be submitted] less frequently than monthly but not less frequently than annually if the commissioner determines that enforcement of this section would not be adversely affected by less frequent filings. [The report] Distributors permitted to file such reports shall maintain records that shall detail (A) the persons from whom the fuel was purchased, (B) the persons to whom, the quantities in which and the dates on which such fuel was sold, and (C) any other information deemed necessary by the commissioner.

Sec. 34. Subsections (b) and (c) of section 12-587 of the general statutes, as amended by section 20 of public act 99-121, are repealed and the following is substituted in lieu thereof:

(b) (1) Except as otherwise provided in subdivision (2) of this subsection, any company which is engaged in the refining or distribution, or both, of petroleum products and which distributes such products in this state shall pay a quarterly tax on its gross earnings derived from the first sale of petroleum products within this state. Each company shall on or before the last day of the month next succeeding each quarterly period render to the commissioner a return on forms prescribed or furnished by the commissioner and signed by the person performing the duties of treasurer or an authorized agent or officer, including the amount of gross earnings derived from the first sale of petroleum products within this state for the quarterly period and such other facts as the commissioner may require for the purpose of making any computation required by this chapter. Except as otherwise provided in subdivision (3) of this subsection, the rate of tax shall be five per cent.

(2) Gross earnings derived from the first sale of the following petroleum products within this state shall be exempt from tax: (A) Any petroleum products sold for exportation from this state for sale or use outside this state; (B) the product designated by the American Society for Testing and Materials as "Specification for Heating Oil D396-69", commonly known as number 2 heating oil, to be used exclusively for heating purposes or to be used in a commercial fishing vessel, which vessel qualifies for an exemption pursuant to section 12-412, as amended; (C) kerosene, commonly known as number 1 oil, to be used exclusively for heating purposes, provided delivery is of both number 1 and number 2 oil, and via a truck with a metered delivery ticket to a residential dwelling or to a centrally metered system serving a group of residential dwellings; (D) the product identified as propane gas, to be used exclusively for heating purposes; (E) bunker fuel oil, intermediate fuel, marine diesel oil and marine gas oil to be used in any vessel having a displacement exceeding four thousand dead weight tons; (F) for any first sale occurring prior to January 1, 2000, propane gas to be used as a fuel for a motor vehicle; (G) for any first sale occurring on or after July 1, 2002, grade number 6 fuel oil, as defined in regulations adopted pursuant to section 16a-22c, to be used exclusively by a company which, in accordance with census data contained in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, is included in code classifications 2000 to 3999, inclusive, or in Sector 31, 32 or 33 in the North American Industrial Classification System United States manual, United States Office of Management and Budget, 1997 edition; or (H) for any first sale occurring on or after July 1, 2002, number 2 heating oil to be used exclusively in a vessel primarily engaged in interstate commerce, which vessel qualifies for an exemption under section 12-412, as amended.

(3) The rate of tax on gross earnings derived from the first sale of grade number 6 fuel oil, as defined in regulations adopted pursuant to section 16a-22c, to be used exclusively by a company which, in accordance with census data contained in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, is included in code classifications 2000 to 3999, inclusive, or in Sector 31, 32 or 33 in the North American Industrial Classification System United States manual, United States Office of Management and Budget, 1997 edition, or number 2 heating oil used exclusively in a vessel primarily engaged in interstate commerce, which vessel qualifies for an exemption under section 12-412 shall be: (A) Four per cent with respect to calendar quarters commencing on or after July 1, 1998, and prior to July 1, 1999; (B) three per cent with respect to calendar quarters commencing on or after July 1, 1999, and prior to July 1, 2000; (C) two per cent with respect to calendar quarters commencing on or after July 1, 2000, and prior to July 1, 2001; and (D) one per cent with respect to calendar quarters commencing on or after July 1, 2001, and prior to July 1, 2002.

(c) (1) Any company which imports or causes to be imported into this state petroleum products for sale, use or consumption in this state, other than a company subject to and having paid the tax on such company's gross earnings from first sales of petroleum products within this state, which earnings include gross earnings attributable to such imported or caused to be imported petroleum products, in accordance with subsection (b) of this section, shall pay a quarterly tax on the consideration given or contracted to be given for such petroleum product if the consideration given or contracted to be given for all such deliveries during the quarterly period for which such tax is to be paid exceeds one hundred thousand dollars. Except as otherwise provided in subdivision (3) of this subsection, the rate of tax shall be five per cent. Fuel in the fuel supply tanks of a motor vehicle, which fuel tanks are directly connected to the engine, shall not be considered a delivery for the purposes of this subsection.

(2) Consideration given or contracted to be given for petroleum products, gross earnings from the first sale of which are exempt from tax under subdivision (2) of subsection (b) of this section, shall be exempt from tax.

(3) The rate of tax on consideration given or contracted to be given for grade number 6 fuel oil, as defined in regulations adopted pursuant to section 16a-22c, to be used exclusively by a company which, in accordance with census data contained in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, is included in code classifications 2000 to 3999, inclusive, or in Sector 31, 32 or 33 in the North American Industrial Classification System United States manual, United States Office of Management and Budget, 1997 edition, or number 2 heating oil used exclusively in a vessel primarily engaged in interstate commerce, which vessel qualifies for an exemption under section 12-412 shall be: (A) Four per cent with respect to calendar quarters commencing on or after July 1, 1998, and prior to July 1, 1999; (B) three per cent with respect to calendar quarters commencing on or after July 1, 1999, and prior to July 1, 2000; (C) two per cent with respect to calendar quarters commencing on or after July 1, 2000, and prior to July 1, 2001; and (D) one per cent with respect to calendar quarters commencing on or after July 1, 2001, and prior to July 1, 2002.

Sec. 35. Section 12-632a of the general statutes is repealed and the following is substituted in lieu thereof:

If, for any fiscal year, all of the proposals submitted to the Commissioner of Revenue Services pursuant to section 12-632, as amended, claim tax credits in excess of the [three-million-dollar] limit provided for in subsection (h) of said section 12-632, as amended, the commissioner on or before November fifteenth of each year shall prorate the [three million dollars of] tax credits, as limited by said subsection (i), for such year among the neighborhood organizations the programs of which business firms have proposed to contribute to pursuant to this chapter.

Sec. 36. Subsection (b) of section 12-638b of the general statutes is repealed and the following is substituted in lieu thereof:

(b) The tax imposed by subsection (a) of this section shall not apply to (1) any sale or transfer of a controlling interest in any entity which possesses an interest in real property located in an area of any municipality designated as an enterprise zone in accordance with section 32-70, or (2) any sale or transfer of a controlling interest in any entity to effectuate a mere change of identity or form of ownership or organization where there is no change in beneficial ownership.

Sec. 37. Subsection (e) of section 12-700a of the general statutes is repealed and the following is substituted in lieu thereof:

(e) A resident or part-year resident shall be allowed a credit against the tax otherwise due under this section in the amount of any similar tax imposed on such resident or part-year resident for the taxable year by another state of the United States or a political subdivision thereof or the District of Columbia [or any province of Canada] on income which is derived from sources therein and which is also subject to tax under this section. In the case of a resident, the credit provided under this subsection shall not exceed the proportion of the tax otherwise due under this section that the amount of the taxpayer's adjusted federal tentative minimum tax derived from or connected with sources in the other taxing jurisdiction, as the phrase is used in section 12-704, bears to the taxpayer's adjusted federal tentative minimum tax. In the case of a part-year resident, the credit provided under this subsection shall not exceed the proportion of the tax otherwise due during the period of residency that the amount of the taxpayer's adjusted federal tentative minimum tax derived from or connected with sources in the other taxing jurisdiction, as the phrase is used in said section 12-704, during the period of residency bears to such taxpayer's adjusted federal tentative minimum tax during the period of residency, nor shall the allowance of the credit provided under this subsection reduce the tax otherwise due under this section to an amount less than what would have been due if the amount subject to similar taxation by such other jurisdiction were excluded in the calculation of the adjusted federal tentative minimum tax.

Sec. 38. Subdivision (1) of subsection (a) of section 12-701 of the general statutes is repealed and the following is substituted in lieu thereof:

(1) "Resident of this state" means any natural person (A) who is domiciled in this state, [provided if a] unless (i) the person [(i)] maintains no permanent place of abode in this state, [(ii)] maintains a permanent place of abode elsewhere and [(iii)] spends in the aggregate not more than thirty days of the taxable year in this state, [such person shall be deemed not a resident] or (ii) within any period of five hundred forty-eight consecutive days the person is present in a foreign country or countries for at least four hundred fifty days, and during such period of five hundred forty-eight consecutive days the person is not present in this state for more than ninety days and does not maintain a permanent place of abode in this state at which such person's spouse, unless such spouse is legally separated, or minor children are present for more than ninety days, and during the nonresident portion of the taxable year with or within which such period of five hundred forty-eight consecutive days begins and the nonresident portion of the taxable year with or within which such period ends, such person is present in this state for a number of days which does not exceed an amount which bears the same ratio to ninety as the number of days contained in such portion of the taxable year bears to five hundred forty-eight, or (B) who is not domiciled in this state but maintains a permanent place of abode in this state and is in this state for an aggregate of more than one hundred eighty-three days of the taxable year, unless such person, not being domiciled in this state, is in active service in the armed forces of the United States.

Sec. 39. Subdivision (20) of subsection (a) of section 12-701 of the general statutes, as amended by section 1 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(20) "Connecticut adjusted gross income" means adjusted gross income, with the following modifications: (A) There shall be added thereto (i) to the extent not properly includable in gross income for federal income tax purposes, any interest income from obligations issued by or on behalf of any state, political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity, exclusive of such income from obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut and exclusive of any such income with respect to which taxation by any state is prohibited by federal law, (ii) any exempt-interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, exclusive of such exempt-interest dividends derived from obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut and exclusive of such exempt-interest dividends derived from obligations, the income with respect to which taxation by any state is prohibited by federal law, (iii) any interest or dividend income on obligations or securities of any authority, commission or instrumentality of the United States which federal law exempts from federal income tax but does not exempt from state income taxes, (iv) to the extent included in gross income for federal income tax purposes for the taxable year, the total taxable amount of a lump sum distribution for the taxable year deductible from such gross income in calculating federal adjusted gross income, (v) to the extent properly includable in determining the net gain or loss from the sale or other disposition of capital assets for federal income tax purposes, any loss from the sale or exchange of obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, in the income year such loss was recognized, (vi) to the extent deductible in determining federal adjusted gross income, any income taxes imposed by this state, (vii) to the extent deductible in determining federal adjusted gross income, any interest on indebtedness incurred or continued to purchase or carry obligations or securities the interest on which is exempt from tax under this chapter and (viii) expenses paid or incurred during the taxable year for the production or collection of income which is exempt from taxation under this chapter or the management, conservation or maintenance of property held for the production of such income, and the amortizable bond premium for the taxable year on any bond the interest on which is exempt from tax under this chapter to the extent that such expenses and premiums are deductible in determining federal adjusted gross income. (B) There shall be subtracted therefrom (i) to the extent properly includable in gross income for federal income tax purposes, any income with respect to which taxation by any state is prohibited by federal law, (ii) to the extent allowable under section 12-718, exempt dividends paid by a regulated investment company, (iii) the amount of any refund or credit for overpayment of income taxes imposed by this state, or any other state of the United States or a political subdivision thereof, or the District of Columbia, [or any province of Canada,] to the extent properly includable in gross income for federal income tax purposes, (iv) to the extent properly includable in gross income for federal income tax purposes, any tier 1 railroad retirement benefits, (v) with respect to any natural person who is a shareholder of an S corporation which is carrying on, or which has the right to carry on, business in this state, as said term is used in section 12-214, the amount of such shareholder's pro rata share of such corporation's nonseparately computed items, as defined in Section 1366 of the Internal Revenue Code, that is subject to tax under chapter 208, in accordance with subsection (c) of section 12-217, as amended, multiplied by such corporation's apportionment fraction, if any, as determined in accordance with section 12-218, as amended, (vi) to the extent properly includable in gross income for federal income tax purposes, any interest income from obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, (vii) to the extent properly includable in determining the net gain or loss from the sale or other disposition of capital assets for federal income tax purposes, any gain from the sale or exchange of obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, in the income year such gain was recognized, (viii) any interest on indebtedness incurred or continued to purchase or carry obligations or securities the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such interest on indebtedness is not deductible in determining federal adjusted gross income and is attributable to a trade or business carried on by such individual, (ix) ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income which is subject to taxation under this chapter but exempt from federal income tax, or the management, conservation or maintenance of property held for the production of such income, and the amortizable bond premium for the taxable year on any bond the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such expenses and premiums are not deductible in determining federal adjusted gross income and are attributable to a trade or business carried on by such individual, (x) (I) for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is less than fifty thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than fifty thousand dollars, [and] or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income for such taxable year is less than sixty thousand dollars or a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is less than sixty thousand dollars, an amount equal to the Social Security benefits includable for federal income tax purposes; and (II) for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, [and] or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is sixty thousand dollars or more or for a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is sixty thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes [under the provisions of Section 13215 of the Omnibus Budget Reconciliation Act of 1993 and fifty per cent of the amount of such Social Security benefits includable for federal income tax purposes under 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, prior to August 10, 1993] and the lesser of twenty-five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code, (xi) to the extent properly includable in gross income for federal income tax purposes, any amount rebated to a taxpayer pursuant to section 12-746, and (xii) to the extent properly includable in the gross income for federal income tax purposes of a designated beneficiary, any distribution to such beneficiary from any qualified state tuition program, as defined in Section 529(b) of the Internal Revenue Code, established and maintained by this state or any official, agency or instrumentality of the state. With respect to a person who is the beneficiary of a trust or estate, there shall be added or subtracted, as the case may be, from adjusted gross income such person's share, as determined under section 12-714, in the Connecticut fiduciary adjustment.

Sec. 40. Subsection (a) of section 12-702 of the general statutes, as amended by section 5 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(a) (1) (A) Any person, other than a trust or estate, subject to the tax under this chapter for any taxable year who files under the federal income tax for such taxable year as a married individual filing separately or, for taxable years commencing prior to January 1, 2000, who files income tax for such taxable year as an unmarried individual shall be entitled to a personal exemption of twelve thousand dollars in determining Connecticut taxable income for purposes of this chapter.

(B) In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds twenty-four thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption.

(2) For taxable years commencing on or after January 1, 2000, any person, other than a trust or estate, subject to the tax under this chapter for any taxable year who files under the federal income tax for such taxable year as an unmarried individual shall be entitled to a personal exemption in determining Connecticut taxable income for purposes of this chapter as follows:

(A) For taxable years commencing on or after January 1, 2000, but prior to January 1, 2001, twelve thousand two hundred fifty dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds [twenty-five] twenty-four thousand five hundred dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(B) For taxable years commencing on or after January 1, 2001, but prior to January 1, 2002, twelve thousand five hundred dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds [twenty-six] twenty-five thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(C) For taxable years commencing on or after January 1, 2002, but prior to January 1, 2003, twelve thousand seven hundred fifty dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds [twenty-seven] twenty-five thousand five hundred dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(D) For taxable years commencing on or after January 1, 2003, but prior to January 1, 2004, thirteen thousand dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds [twenty-eight] twenty-six thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(E) For taxable years commencing on or after January 1, 2004, but prior to January 1, 2005, thirteen thousand five hundred dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds [twenty-nine] twenty-seven thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(F) For taxable years commencing on or after January 1, 2005, but prior to January 1, 2006, fourteen thousand dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds [thirty] twenty-eight thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(G) For taxable years commencing on or after January 1, 2006, but prior to January 1, 2007, fourteen thousand five hundred dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds twenty-nine thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(H) For taxable years commencing on or after January 1, 2007, fifteen thousand dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds thirty thousand dollars, the exemption amount shall be reduced by one thousand dollars for each one thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income for the taxable year exceeds the said amount. In no event shall the reduction exceed one hundred per cent of the exemption.

Sec. 41. Section 12-723 of the general statutes, as amended by section 22 of public act 99-121, is repealed and the following is substituted in lieu thereof:

The commissioner may for reasonable cause extend the time for the filing of any return, statement or other document due or required under this chapter and the payment of tax due pursuant to this chapter in accordance with regulations adopted in accordance with chapter 54. Said commissioner may require the filing of a tentative return and the payment of the tax reported to be due thereon in connection with such extension. Any additional tax which may be found to be due on the filing of a return, statement or other document 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 such tax to the date of actual payment. Notwithstanding the provisions of section 12-735, as amended by this act, no penalty shall be imposed on account of any failure to pay the amount of tax reported to be due on a return, statement or other document within the time specified under the provisions of this chapter if the excess of the amount of tax shown on the return, statement or other document over the amount of tax paid on or before the original due date of such return, statement or other document is no greater than ten per cent of the amount of tax shown on such return, statement or other document, and any balance due shown on such return, statement or other document is remitted with such return, statement or other document on or before the extended due date of such return, statement or other document.

Sec. 42. Subdivision (1) of subsection (b) of section 12-727 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) (1) If the amount of a taxpayer's federal adjusted gross income, in the case of an individual, or federal taxable income, in the case of a trust or estate, reported on such taxpayer's federal income tax return for any taxable year is changed or corrected by the United States Internal Revenue Service or other competent authority, or as the result of a renegotiation of a contract or subcontract with the United States, the taxpayer shall provide notice of such change or correction in federal adjusted gross income or federal taxable income, as the case may be, to the commissioner by filing, on or before the date that is ninety days after the final determination of such change, correction or renegotiation, 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. The provisions of the preceding sentence shall also apply if an individual's computation of tax under Section 1341(a)(4) or (5) of the Internal Revenue Code is changed or corrected by the United States Internal Revenue Service or other competent authority. The commissioner may redetermine and the taxpayer shall be required to pay the tax for any taxable year affected, regardless of any otherwise applicable statute of limitations.

Sec. 43. Subdivision (1) of subsection (a) of section 12-732 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) If any tax has been overpaid, the taxpayer may file a claim for refund in writing with the commissioner within three years from the due date for which such overpayment was made, stating the specific grounds upon which the claim is founded, provided if the commissioner has extended the time for the filing of an income tax return by the taxpayer, the taxpayer may file a claim for refund within three years after the date on which the income tax return is filed by the taxpayer or within three years after the extended due date of the income tax return, whichever is earlier. Not later than ninety days following receipt of such claim for refund the commissioner shall determine whether such claim is valid and, if so, said 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 the taxpayer. For purposes of this section, [an income tax return] a claim for refund that is filed before the last day prescribed by law or by a regulation adopted pursuant to law for the filing [thereof] of an income tax return, determined without regard to any extension of time for filing, shall be deemed to be filed on such last day. To the amount of such refund, there shall be added interest at the rate of two-thirds of one per cent for each month or fraction thereof which elapses between (A) the ninetieth day following receipt by the commissioner of such claim for refund on a permitted form, containing the taxpayer's name, address and Social Security number or federal employer identification number, the required signature, and sufficient required information, whether on the return or on required attachments, to permit the mathematical verification of tax liability shown on the return, and (B) the date of notice by the commissioner that such refund is due. 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. If the commissioner determines that such claim is not valid, either in whole or in part, [he] said commissioner shall mail notice of the disallowance in whole or in part of the claim to the claimant and such 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 claimant has filed, as provided in subdivision (2) of this subsection, a written protest with the commissioner.

Sec. 44. Section 12-733 of the general statutes, as amended by section 25 of public act 99-121, is repealed and the following is substituted in lieu thereof:

(a) Except as otherwise provided in this chapter, a notice of proposed deficiency assessment shall be mailed to the taxpayer within three years after the return is filed. No deficiency shall be assessed or collected with respect to the year for which the return is filed unless the notice is mailed within the three-year period or the period otherwise fixed. Where, within the sixty-day period ending on the day on which the time prescribed by this chapter for mailing a notice of proposed deficiency assessment for any taxable year would otherwise expire, the commissioner receives a written document signed by a taxpayer showing that the taxpayer owes an additional amount of tax for such taxable year, the period during which a notice of proposed deficiency assessment may be mailed shall not expire before the day sixty days after the day on which the commissioner receives such document.

(b) (1) If the taxpayer omits from Connecticut adjusted gross income, in the case of an individual, or from Connecticut taxable income, in the case of a trust or estate, an amount properly includable therein which is in excess of twenty-five per cent of the amount of Connecticut adjusted gross income or Connecticut taxable income, as the case may be, stated in the return, a notice of a proposed deficiency assessment may be mailed to the taxpayer within six years after the return is filed. For purposes of this subsection, there shall not be taken into account any amount which is omitted 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 Revenue Services of the nature and the amount of such item.

(2) If the taxpayer omits from the Connecticut adjusted gross income derived from or connected with sources within this state, in the case of a nonresident individual or part-year resident individual, or from Connecticut taxable income derived from or connected with sources within this state, in the case of a nonresident trust or estate of part-year resident trust, an amount properly includable therein which is in excess of twenty-five per cent of the amount of Connecticut adjusted gross income derived from or connected with sources within this state or Connecticut taxable income derived from or connected with sources within this state, as the case may be, stated in the return, a notice of a proposed deficiency assessment may be mailed to the taxpayer within six years after the return is filed. For purposes of this subsection, there shall not be taken into account any amount which is omitted 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 Revenue Services of the nature and the amount of such item.

(c) If no return is filed or if a taxpayer makes, wilfully or otherwise, a false [and] or fraudulent return, [is filed with intent to evade the tax,] a notice of deficiency may be mailed to the taxpayer at any time.

(d) (1) If a taxpayer fails to comply with the requirements of section 12-727, as amended by this act, by not reporting a change or correction by the United States Internal Revenue Service or other competent authority increasing, in the case of an individual, the individual's federal adjusted gross income or, in the case of a trust or estate, its federal taxable income, or by not reporting a change or correction which is treated in the same manner as if it were a deficiency for federal income tax purposes, or by not filing an amended return, a notice of a proposed deficiency assessment may be mailed to the taxpayer at any time. The provisions of the preceding sentence shall also apply if an individual's computation of tax under Section 1341(a)(4) or (5) of the Internal Revenue Code is changed or corrected by the United States Internal Revenue Service or other competent authority, and the individual fails to comply with the requirements of section 12-727, as amended by this act.

(2) If a taxpayer fails to comply with the requirements of subsection (b) of section 12-704 by not reporting a change or correction by tax officers or other competent authority of another jurisdiction affecting the amount of tax of such other jurisdiction that the taxpayer is finally required to pay, or by not filing an amended return, a notice of a proposed deficiency assessment may be mailed to the taxpayer at any time.

(e) (1) If the taxpayer, pursuant to section 12-727, as amended by this act, reports a change or correction by the United States Internal Revenue Service or other competent authority increasing, in the case of an individual, the individual's federal adjusted gross income or, in the case of a trust or estate, its federal taxable income or reports a change or correction which is treated in the same manner as if it were a deficiency for federal income tax purposes, or files an amended return, the assessment, if not deemed to have been made upon the filing of the report or amended return, may be made at any time not later than three years after such report or amended return is filed. The provisions of the preceding sentence shall also apply if an individual's computation of tax under Section 1341(a)(4) or (5) of the Internal Revenue Code is changed or corrected by the United States Internal Revenue Service or other competent authority, and the individual, pursuant to section 12-727, as amended by this act, reports the change or correction.

(2) If the taxpayer, pursuant to subsection (b) of section 12-704, reports a change or correction by tax officers or other competent authority of another jurisdiction affecting the amount of tax of such other jurisdiction that the taxpayer is finally required to pay, or files an amended return, the assessment, if not deemed to have been made upon the filing of the report or amended return, may be made not later than three years after such report or amended return is filed.

(f) Where, before the expiration of the time prescribed in this section for the assessment of a deficiency, both the commissioner and the taxpayer shall have consented in writing to its assessment after such time, the deficiency may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by a subsequent agreement in writing made before the expiration of the period previously agreed upon and the commissioner may, in such a case, waive the statute of limitations against a claim for refund by such taxpayer.

(g) For purposes of this section an income tax return filed before the last day prescribed by law or by any regulation adopted pursuant to law for the filing thereof, determined without regard to any extension of time for filing, shall be deemed to be filed on such last day. If a return of withholding tax for any period ending with or within a calendar year is filed before April fifteenth of the succeeding calendar year, such return shall be deemed to be filed on April fifteenth of such succeeding calendar year.

Sec. 45. Subsection (b) of section 12-735 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) If any person has not made [his] a return within three months after the time specified under the provisions of this chapter, the commissioner may make such return at any time thereafter, according to the best information obtainable and according to the form prescribed. The making of a return by the commissioner pursuant to the authority conferred under this section shall not constitute the filing of a return by such person for purposes of subsection (c) of section 12-733, as amended by this act, or subsection (a) of section 12-737. 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.

Sec. 46. (NEW) (a) (1) If an item of income was included in the Connecticut adjusted gross income of an individual for a preceding taxable year or years because it appeared that the individual had an unrestricted right to such item, and, based on the repayment of such item by such individual during the taxable year, such individual properly determines his or her federal income tax liability for the taxable year under Section 1341(a)(4) or (5) of the Internal Revenue Code, then the tax imposed by chapter 229 of the general statutes for the taxable year on such individual shall be an amount equal to (A) the tax for the taxable year computed without regard to this section, minus (B) the decrease in tax under said chapter 229 for the preceding taxable year or years which would result solely from the exclusion of such item or portion thereof from the Connecticut adjusted gross income of such individual for such preceding taxable year or years. This section shall not apply if such repayment is properly deductible in determining the individual's federal adjusted gross income for the taxable year, and such individual properly determines his or her federal income tax liability for the taxable year under Section 1341(a)(4) of the Internal Revenue Code by deducting such repayment.

(2) In determining the decrease in tax under said chapter 229 for the preceding taxable year or years which would result solely from the exclusion of such item or portion thereof from the Connecticut adjusted gross income of such individual for such preceding taxable year or years, any item excluded from the Connecticut adjusted gross income of an individual for a preceding year or years in which such individual was a nonresident individual or part-year resident individual, shall, to the extent that such item is derived from or connected with sources within this state, be excluded from Connecticut adjusted gross income derived from or connected with sources within this state for such preceding year or years.

(3) If the decrease in tax under said chapter 229 for the preceding taxable year or years which would result solely from the exclusion of such item or portion thereof from the Connecticut adjusted gross income of such individual for such preceding taxable year or years exceeds the tax for the taxable year computed without regard to this section, such excess shall be considered to be a payment of tax on the last day prescribed under said chapter 229 for the payment of tax for the taxable year, and, subject to the provisions of sections 12-35f, 12-739 and 12-742 of the general statutes, shall be refunded or credited in the same manner as if it were an overpayment for such taxable year.

(b) If an individual properly determines his or her liability for the tax imposed by chapter 229 of the general statutes for the taxable year under subsection (a) of this section, and properly determines his or her federal income tax liability for the taxable year under Section 1341(a)(4) of the Internal Revenue Code, then, in any case where the deduction under Section 1341(a)(4) of the Internal Revenue Code results in a net operating loss for federal income tax purposes, no claim for refund shall be allowable by the commissioner for an overpayment of the tax imposed by said chapter 229 for a preceding taxable year or years to the extent attributable to such loss being carried back to such year or years.

Sec. 47. Subdivision (2) of subsection (b) of section 16-50v of the general statutes is repealed and the following is substituted in lieu thereof:

(2) As used in this subdivision, "communications services" means services involving transmitting or receiving signals in the electromagnetic spectrum for a public or commercial purpose pursuant to a Federal Communications Commission license. Before December thirty-first of each year, the council shall review the anticipated amount of administrative expenses attributable to facilities used for providing communications services for the next fiscal year, excluding expenses under subsection (c), (d), (e), (g) or (h) of this section, at a public meeting, notice of which shall be given to each person subject to assessment under this subsection, and at which interested persons shall be heard. After the meeting, the council shall determine the anticipated amount of such expenses and submit its determination to the joint standing committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies. [Upon notification of the council, the Commissioner of Revenue Services] The council shall apportion and assess the anticipated amount of expenses equitably in proportion to the frequency of appearance, the degree of regulation required and the percentage of the council's workload, among those persons which provide communications services and have come before the council in the preceding calendar year. Each such person shall pay the assessment and submit a return, on a form prescribed by the [commissioner] council, to the [Commissioner of Revenue Services] council in four equal instalments, on or before July 1, 1994, and July thirty-first of each year thereafter, October 31, 1994, and October thirty-first of each year thereafter, January 31, 1995, and January thirty-first of each year thereafter, and April 30, 1995, and April thirtieth of each year thereafter. The [commissioner] council shall transfer all payments received pursuant to this section to the Treasurer who shall credit such payments to the Siting Council Fund. Such payments shall be considered administrative expenses recovered from communications services providers.

Sec. 48. Subsection (d) of section 32-9p of the general statutes, as amended by section 16 of public act 99-1 of the June special session, is repealed and the following is substituted in lieu thereof:

(d) "Manufacturing facility" means any plant, building, other real property improvement, or part thereof, (1) which (A) is constructed or substantially renovated or expanded on or after July 1, 1978, in a distressed municipality, a targeted investment community as defined in section 32-222, as amended, or an enterprise zone designated pursuant to section 32-70 or (B) is acquired on or after July 1, 1978, in a distressed municipality, a targeted investment community as defined in section 32-222, as amended, or an enterprise zone designated pursuant to said section 32-70, by a business organization which is unrelated to and unaffiliated with the seller, after having been idle for at least one year prior to its acquisition and regardless of its previous use; (2) which is to be used for the manufacturing, processing or assembling of raw materials, parts or manufactured products, for research and development facilities directly related to manufacturing, for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use, or, except as provided in this subsection, for warehousing and distribution or, (A) if located in an enterprise zone designated pursuant to said section 32-70, which is to be used by an establishment, an auxiliary or an operating unit of an establishment as such terms are defined in the Standard Industrial Classification Manual, in the categories of depository institutions, nondepository credit institutions, insurance carriers, holding or other investment offices, business services, health services, fishing, hunting and trapping, motor freight transportation and warehousing, water transportation, transportation by air, transportation services, security and commodity brokers, dealers, exchanges and services, telemarketing or engineering, accounting, research, management and related services including, but not limited to, management consulting services from the Standard Industrial Classification Manual, which establishment, auxiliary or operating unit shows a strong performance in exporting goods and services, as further defined by the commissioner through regulations adopted under chapter 54, or in Sector 48, 49, 52, 54, 55, or 62, Subsector 114 or 561, or industry group 5621 in the North American Industrial Classification System, United States manual, United States Office of Management and Budget, 1997 edition, or (B) if located in an enterprise zone designated pursuant to said section 32-70, which is to be used by an establishment primarily engaged in supplying goods or services in the fields of computer hardware or software, computer networking, telecommunications or communications, or (C) if located in a municipality with an entertainment district designated under section 32-76 or established under section 2 of public act 93-311*, is to be used in the production of entertainment products, including multimedia products, or as part of the airing, display or provision of live entertainment for stage or broadcast, including support services such as set manufacturers, scenery makers, sound and video equipment providers and manufacturers, stage and screen writers, providers of capital for the entertainment industry and agents for talent, writers, producers and music properties and technological infrastructure support including, but not limited to, fiber optics, necessary to support multimedia and other entertainment formats, except entertainment provided by or shown at a gambling or gaming facility or a facility whose primary business is the sale or serving of alcoholic beverages; and (3) for which the department has issued an eligibility certificate in accordance with section 32-9r. In the case of facilities which are acquired, the department may waive the requirement of one year of idleness if it determines that, absent qualification as a manufacturing facility under subdivisions (59) and (60) of section 12-81, and sections 12-217e, as amended by this act, 32-9p to 32-9s, inclusive, as amended, and 32-23p, there is a high likelihood that the facility will remain idle for one year. In the case of facilities located in an enterprise zone designated pursuant to said section 32-70, (A) the idleness requirement in subparagraph (B) of subdivision (1) of this subsection, for business organizations which over the six months preceding such acquisition have had an average total employment of between six and nineteen employees, inclusive, shall be reduced to a minimum of six months, and (B) the idleness requirement shall not apply to business organizations with an average total employment of five or fewer employees, provided no more than one eligibility certificate shall be issued under this subparagraph for the same facility within a three-year period. Of those facilities which are for warehousing and distribution, only those which are newly constructed or which represent an expansion of an existing facility qualify as manufacturing facilities. In the event that only a portion of a plant is acquired, constructed, renovated or expanded, only the portion acquired, constructed, renovated or expanded constitutes the manufacturing facility. A manufacturing facility which is leased may for the purposes of subdivisions (59) and (60) of section 12-81 and sections 12-217e, as amended by this act, 32-9p to 32-9s, inclusive, as amended, and 32-23p, be treated in the same manner as a facility which is acquired if the provisions of the lease serve to further the purposes of subdivisions (59) and (60) of section 12-81, and sections 12-217e, as amended by this act, 32-9p to 32-9s, inclusive, as amended, and 32-23p and demonstrate a substantial, long-term commitment by the occupant to use the manufacturing facility, including a contract for lease for an initial minimum term of five years with provisions for the extension of the lease at the request of the lessee for an aggregate term which shall not be less than ten years, or the right of the lessee to purchase the facility at any time after the initial five-year term, or both. For a facility located in an enterprise zone designated pursuant to said section 32-70, and occupied by a business organization with an average total employment of ten or fewer employees over the six-month period preceding acquisition, such contract for lease may be for an initial minimum term of three years with provisions for the extension of the lease at the request of the lessee for an aggregate term which shall not be less than six years, or the right of the lessee to purchase the facility at any time after the initial three-year term, or both, and may also include the right for the lessee to relocate to other space within the same enterprise zone, provided such space is under the same ownership or control as the originally leased space or if such space is not under such same ownership or control as the originally leased space, permission to relocate is granted by the lessor of such originally leased space, and such relocation shall not extend the duration of benefits granted under the original eligibility certificate. Except as provided in subparagraph (B) of subdivision (1) of this subsection, a manufacturing facility does not include any plant, building, other real property improvement or part thereof used or usable for such purposes which existed before July 1, 1978.

Sec. 49. Subsection (f) of section 32-9r of the general statutes is repealed and the following is substituted in lieu thereof:

(f) The commissioner shall adopt regulations in accordance with chapter 54 to carry out the provisions of this section. Such regulations shall provide that establishments in the category of business services, as defined in the Standard Industrial Classification Manual, or in Sector 48, 49, 52, 54, 55, or 62, Subsector 114 or 561, or industry group 5621 in the North American Industrial Classification System United States manual, United States Office of Management and Budget, 1997 edition, shall be eligible for a certificate if they are located in an enterprise zone.

Sec. 50. Subsection (h) of section 38a-866 of the general statutes is repealed and the following is substituted in lieu thereof:

(h) Each insurer paying an assessment under sections 38a-858 to 38a-875, inclusive, may offset fifty per cent of the amount of such assessment against its premium tax liability to this state accrued with respect to business transacted in such year. Each insurer which has offset assessments paid to the association [from] against its premium tax liability to the state shall pay to the [state] Department of Revenue Services fifty per cent of any sums which are acquired by refund from the association pursuant to subsection (f) of this section. The association shall promptly notify the commissioner [that such] of the name and address of the insurers to which such refunds have been made, the amount of such refunds, and the date on which such refunds were mailed to such insurer. If the amount that an insurer is required to pay to the Department of Revenue Services has not been so paid on or before the thirtieth day after the date of mailing of such refunds, the insurer shall be liable for interest on such amount at the rate of one per cent per month or fraction thereof from such thirtieth day to the date of payment.

Sec. 51. Subsections (a) and (b) of section 12-15 of the general statutes, as amended by section 1 of public act 99-121, are repealed and the following is substituted in lieu thereof:

(a) No officer or employee, including any former officer or former employee, of the state or of any other person who has or had access to returns or return information in accordance with subdivision [(2)] 12 of subsection [(c)] (b) of this section shall disclose or inspect any return or return information, except as provided in this section.

(b) The commissioner may disclose (1) returns or return information to (A) an authorized representative of another state agency or office, upon written request by the head of such agency or office, when required in the course of duty or when there is reasonable cause to believe that any state law is being violated, or (B) an authorized representative of an agency or office of the United States, upon written request by the head of such agency or office, when required in the course of duty or when there is reasonable cause to believe that any federal law is being violated, provided no such agency or office shall disclose such returns or return information, other than in a judicial or administrative proceeding to which such agency or office is a party pertaining to the enforcement of state or federal law, as the case may be, in a form which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer except that the names and addresses of jurors or potential jurors and the fact that the names were derived from the list of taxpayers pursuant to chapter 884 may be disclosed by the judicial branch; (2) returns or return information to the Auditors of Public Accounts, when required in the course of duty under chapter 23; (3) returns or return information to tax officers of another state or of a Canadian province or of a political subdivision of such other state or province or of the District of Columbia or to any officer of the United States Treasury Department or the United States Department of Health and Human Services, authorized for such purpose in accordance with an agreement between this state and such other state, province, political subdivision, the District of Columbia or department, respectively, when required in the administration of taxes imposed under the laws of such other state, province, political subdivision, the District of Columbia or the United States, respectively, and when a reciprocal arrangement exists; (4) returns or return information in any action, case or proceeding in any court of competent jurisdiction, when the commissioner or any other state department or agency is a party, and when such information is directly involved in such action, case or proceeding; (5) returns or return information to a taxpayer or its authorized representative, upon written request for a return filed by or return information on such taxpayer; (6) returns or return information to a successor, receiver, trustee, executor, administrator, assignee, guardian or guarantor of a taxpayer, when such person establishes, to the satisfaction of the commissioner, that such person has a material interest which will be affected by information contained in such [return] returns or return information; (7) information to the assessor or an authorized representative of the chief executive officer of a Connecticut municipality, when the information disclosed is limited to (A) a list of real or personal property that is or may be subject to property taxes in such municipality or (B) a list containing the name of each person who is issued any license, permit or certificate which is required, under the provisions of this title, to be conspicuously displayed and whose address is in such municipality; (8) real estate conveyance tax return information or controlling interest transfer tax return information to the town clerk or an authorized representative of the chief executive officer of a Connecticut municipality to which the information relates; (9) estate tax returns and estate tax return information to the Probate Court Administrator or to the court of probate for the district within which a decedent resided at the date of the decedent's death, or within which the commissioner contends that a decedent resided at the date of the decedent's death or, if a decedent died a nonresident of this state, in the court of probate for the district within which real estate or tangible personal property of the decedent is situated, or within which the commissioner contends that real estate or tangible personal property of the decedent is situated; (10) returns or return information to the Secretary of the Office of Policy and Management for purposes of subsection (b) of section 12-7a; (11) return information to the Jury Administrator, when the information disclosed is limited to the names, addresses, federal Social Security numbers and dates of birth, if available, of residents of this state, as defined in subdivision (1) of subsection (a) of section 12-701; (12) pursuant to regulations adopted by the commissioner, returns or return information to any person to the extent necessary in connection with the processing, storage, transmission or reproduction of such returns or return information, and the programming, maintenance, repair, testing or procurement of equipment, or the providing of other services, for purposes of tax administration; [and] (13) without written request and unless the commissioner determines that disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation, returns and return information which may constitute evidence of a violation of any civil or criminal law of this state or the United States to the extent necessary to apprise the head of such agency or office charged with the responsibility of enforcing such law, in which event the head of such agency or office may disclose such return information to officers and employees of such agency or office to the extent necessary to enforce such law; and (14) names and addresses of operators, as defined in section 12-407, as amended, to tourism districts, as defined in section 32-302, as amended.

Sec. 52. Subsection (b) of section 12-35 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) (1) Any such warrant on any intangible personal property of any person may be served by mailing a certified copy of such warrant by certified mail, return receipt requested, to any third person in possession of, or obligated with respect to, receivables, bank accounts, evidences of debt, securities, salaries, wages, commissions, compensation or other intangible personal property subject to such warrant, ordering such third person to forthwith deliver such property or pay the amount due or payable to the state collection agency which has made out such warrant, provided such warrant may be issued only after the state collection agency making out such warrant has notified the person owning such property, in writing, of its intention to issue such warrant. The notice of intent shall be: [(1)] (A) Given in person; [(2)] (B) left at the dwelling or usual place of business of such person; or [(3)] (C) sent by certified mail, return receipt requested, to such person's last known address, not less than thirty days before the day the warrant is to be issued.

(2) Any such warrant on any intangible personal property of any person may be served by electronic mail or facsimile machine on any third person in possession of, or obligated with respect to, receivables, bank accounts, evidences of debt, securities, salaries, wages, commissions, compensation or other intangible personal property subject to such warrant, ordering such third person to forthwith deliver such property or pay the amount due or payable to the state collection agency which has made out such warrant provided such warrant may be issued only after the state collection agency making out such warrant has notified the person owning such property, in writing, of its intention to issue such warrant. The notice of intent shall be: (A) Given in person; (B) left at the dwelling or usual place of business of such person; or (C) sent by certified mail, return receipt requested, to such person's last-known address, not less than thirty days before the day the warrant is to be issued.

Sec. 53. Subdivision (1) of subsection (a) of section 12-226 of the general statutes is repealed and the following is substituted in lieu thereof:

(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 [within] 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, [submit to the commissioner an affidavit disclosing such changes or adjustments,] 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 [he] the commissioner requires. The time for filing such [affidavit] 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, [he] the commissioner shall, within a reasonable time from the receipt of such [affidavit] 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 [affidavit] 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, [he] 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.

Sec. 54. Subsection (a) of section 12-229 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) If any company fails to pay the amount of tax reported to be due on its return [or affidavit] 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.

Sec. 55. Subsection (a) of section 12-231 of the general statutes is repealed and the following is substituted in lieu thereof:

(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, [or affidavit,] keep any records or supply any information, who wilfully fails to pay such tax, make such return, [or affidavit,] 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, [or affidavit,] keep such records or supply such information.

Sec. 56. Subdivision (3) of subsection (c) of section 12-264 of the general statutes is repealed and the following is substituted in lieu thereof:

(3) Each electric distribution company shall, on or before the last day of January, April, July and October of each year, render to the Commissioner of Revenue Services [under oath of its treasurer, or the person performing the duties of treasurer, or of an authorized agent or officer,] a return on forms prescribed or furnished by the commissioner and signed by its treasurer, or the person performing the duties of treasurer, or of a authorized agent or officer, with such other information as the Commissioner of Revenue Services deems necessary.

Sec. 57. Subsection (a) of section 12-293a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Each licensed distributor and dealer shall file with the Commissioner of Revenue Services, on or before the twenty-fifth day of each month, a report for the calendar month immediately preceding in such form and containing such information as the commissioner may prescribe. The return shall be accompanied by a payment of the amount of the tax shown to be due thereon. The commissioner by regulation may exempt from the monthly reporting requirements of this section those distributors and dealers who do not acquire unstamped cigarettes and in lieu thereof [he] may require an [affidavit or] annual report, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such report are punishable, if, in [his] the commissioner's discretion, the enforcement of this chapter would not be adversely affected.

Sec. 58. Section 12-348 of the general statutes is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services may require, from any corporation, institution, society, association or trust claiming exemption from the succession tax upon any transfer to it pursuant to the provisions of section 12-347, as amended, or claiming a refund under the provisions of said section 12-347, as amended, [an affidavit under oath of] a declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, by its president or chief executive officer to the effect that no officer, member, shareholder or employee thereof is receiving or has previously received any pecuniary profit from the operation thereof except reasonable compensation for services in effecting one or more of the purposes for which it is formed or as a proper beneficiary of a strictly charitable purpose.

Sec. 59. Subdivision (1) of subsection (e) of section 12-349 of the general statutes is repealed and the following is substituted in lieu thereof:

(e) (1) If, within ten years immediately following the death of the decedent, real property in the gross estate of the decedent, classified as farm land in accordance with section 12-107c and the value of which, for purposes of the tax imposed under this chapter, was determined in accordance with provisions applicable to farm land in section 12-63, as amended, as provided in subsection (a) of this section, is transferred to anyone other than a beneficiary or distributee in class AA, A or B as provided in section 12-344 or is no longer classified as farm land in accordance with section 12-107c, such beneficiary or distributee shall be liable for a tax applicable to such transfer or change in classification. Said tax shall be in an amount equal to the difference between the amount of tax paid under this chapter with respect to such farm land and the amount of tax which would have been paid if such farm land had been assessed at fair market value for purposes of determining the amount of tax under this chapter, and accordingly, the succession tax return of the decedent shall include, in such manner as required by the Commissioner of Revenue Services for purposes of this section, a [sworn statement] declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, as to the fair market value of such farm land, based on its highest and best use value, as of the date of death of the decedent. Said tax shall be paid to the Commissioner of Revenue Services within sixty days following the date of such transfer or change in classification, and if not so paid shall bear interest at the rate of twelve per cent per annum, commencing at the expiration of such sixty days, until paid. The Commissioner of Revenue Services may, for cause shown, on written application of the beneficiary or distributee, filed with said commissioner at or before the expiration of such sixty days, extend the time for payment of said tax or any part thereof.

Sec. 60. Subsection (a) of section 12-359 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Except as herein provided, within six months after the death of the transferor the administrator, executor, administrator for tax purposes, administrator c.t.a. or administrator d.b.n. or administrator d.b.n., c.t.a. or, if there is no such fiduciary, any transferee of property, the transfer of which may be taxable under the provisions of section 12-341, 12-341b, 12-342, 12-343, 12-345 or sections 12-345b to 12-345e, inclusive, shall file with the court of probate for the district within which the transferor resided at the date of his or her death or, if the transferor died a nonresident of this state, with the court of probate for the district within which the real estate or tangible personal property is situated, a [sworn] return, in duplicate, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made therein are punishable and containing all items necessary to the correct computation and assessment of the tax. Such return shall include among other things: (1) A copy of the written instrument evidencing any transfer which may be taxable under the provisions of subsection (c) or (d) of section 12-341 or 12-341b or of section 12-342, 12-343, 12-345 or sections 12-345b to 12-345e, inclusive, or, if there is no written evidence, a written statement fully disclosing the circumstances under which the transfer was made; provided, in the case of a transfer evidenced by an insurance, annuity, pension plan, profit-sharing plan or other similar contract with an insurance company, in lieu of such copy of the written instrument, a summary thereof may be so filed; (2) an appraisal by the fiduciary or transferee, at its fair market value on the date of decedent's death, of each item of property, the transfer of which may be taxable under the provisions of section 12-341, 12-341b, 12-342, 12-343, 12-345 or sections 12-345b to 12-345e, inclusive; (3) a statement as to whether, or to what extent, the reported transfers are conceded taxable; (4) all items claimed as deductions under the provisions of section 12-350 or 12-352, with an explanation of the circumstances under which each deduction is allowable; (5) a statement containing the name and relationship to the transferor of each individual, corporation, institution, society, association or trust benefiting by reason of any succession or transfer of property as set forth in sections 12-340 to 12-343, inclusive, sections 12-345 and 12-345b to 12-345e, inclusive, and the value of the estate passing to each such beneficiary; (6) such other information as the Commissioner of Revenue Services may deem necessary for the correct computation and assessment of the tax and the proper administration thereof. The fiduciary or transferee may correct any item on the succession tax return by filing with the probate court an amendment thereto in duplicate, [sworn to as the original return,] prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made therein are punishable and containing such changes in the return as the fiduciary desires to make, but no such amendment shall be permitted which would change the reported value of any property or withdraw a concession of taxability after a hearing has been held thereon pursuant to the provisions of subsection (b) of this section and no such amendment shall be permitted after the computation of the tax has become final. The probate court shall, within ten days of the filing of such return or an amendment thereto, forward a certified copy thereof to the Commissioner of Revenue Services.

Sec. 61. Section 12-390d of the general statutes is repealed and the following is substituted in lieu thereof:

If the amount of federal generation-skipping transfer tax reported on a federal generation-skipping transfer tax return is changed or corrected by the United States Internal Revenue Service or other competent authority, the person required to make and file the generation-skipping transfer tax return under this chapter shall [within] provide notice of such change or correction to the commissioner by filing, on or before the date that is ninety days after the final determination of such change or correction, or as otherwise required by the commissioner, [submit to the commissioner an affidavit disclosing such change or correction] 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 or correction as [he] the commissioner requires. The time for filing such [affidavit] return may be extended by the commissioner upon due cause shown. If, upon examination, the commissioner finds that such person is liable for the payment of an additional tax, [he] the commissioner shall, within a reasonable time from the receipt of such [affidavit] return, notify such person 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, such person 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 [affidavit] return and related information, the commissioner finds that such person 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, such person shall be paid by the State Treasurer, upon order of the Comptroller, the amount of such overpayment.

Sec. 62. Subsection (a) of section 12-398 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) If the amount of federal estate tax reported on an estate's federal estate tax return is changed or corrected by the United States Internal Revenue Service or other competent authority, the person required to make and file the estate tax return under this chapter shall [, within] provide notice of such change or correction to the commissioner by filing, on or before the date that is ninety days after the final determination of such change or correction, or as otherwise required by the commissioner, [submit to the commissioner an affidavit disclosing such change or correction] 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 or correction as [he] the commissioner requires. The time for filing such [affidavit] return may be extended by the commissioner upon due cause shown. If, upon examination, the commissioner finds that the estate is liable for the payment of an additional tax, [he] the commissioner shall, within a reasonable time from the receipt of such [affidavit] return, notify the estate 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 estate 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 [affidavit] return and related information, the commissioner finds that the estate 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 estate shall be paid by the State Treasurer, upon order of the Comptroller, the amount of such overpayment.

Sec. 63. Subdivision (3) of subsection (b) of section 12-408c of the general statutes is repealed and the following is substituted in lieu thereof:

(3) The permit issued under subdivision (2) of this subsection shall authorize the holder to the extent and in the manner specified in the regulations adopted under said subdivision (2), to purchase tangible personal property from a retailer on which the taxes imposed by this chapter shall not be payable. The regulations adopted under this subsection shall require (A) [an affidavit] a declaration, prescribed as to form by the commissioner [, affirming] and bearing notice to the effect that false statements made in such declaration are punishable, stating that such property is purchased for a purpose permitted by this subsection, (B) a report to be submitted with, and to be a part of, each return that is required to be filed under section 12-414 by the holder of such permit detailing the persons from whom such tangible personal property was purchased during the period covered by such return, the quantities in which and the dates on which such property was purchased and any other information deemed necessary by the commissioner, and (C) periodic registration, at least annually, for the purpose of the issuance of a permit, including procedures relating to the application for the permit [,] and notice concerning the penalty for misuse of the permit. [, and required notarization of the application for such permit.]

Sec. 64. Subsection (60) of section 12-412 of the general statutes, as amended by section 21 of public act 99-173, is repealed and the following is substituted in lieu thereof:

(60) The sale of any motor vehicle or vessel, as defined in section 15-127, in this state when the purchaser of such motor vehicle or vessel is not a resident of this state and does not maintain a permanent place of abode in this state, provided such motor vehicle or vessel is not presented for registration with the Department of Motor Vehicles in this state and such purchaser submits [any affidavit] a declaration, prescribed as to form by the commissioner and bearing notice to the effect that false statements made in such declaration are punishable, or other evidence as may be requested by the Commissioner of Revenue Services concerning such purchaser's residency or place of abode.

Sec. 65. Subdivision (3) of subsection (a) of section 12-458 of the general statutes is repealed and the following is substituted in lieu thereof:

(3) Said tax shall not be payable on such fuel as may have been (A) sold to the United States, (B) sold to a municipality of this state, (i) for use by any contractor performing a service for such municipality in accordance with a contract, provided such fuel is used by such contractor exclusively for the purposes of and in accordance with such contract or (ii) for use exclusively in a school bus, as defined in section 14-275, (C) sold to a municipality of this state, a transit district of this state, or this state, at other than a retail outlet, for governmental purposes and for use in vehicles owned and operated, or leased and operated by such municipality, such transit district or this state, (D) sold to a person licensed as a distributor in this state under section 12-456, (E) transferred from storage within this state to some point without this state, (F) sold to the holder of a permit issued under section 12-458a for sale or use without this state, (G) sold to the holder of a permit issued under subsection (63) of section 12-412, provided (i) such fuel is not used in motor vehicles registered or required to be registered to operate upon the public highways of this state, unless such fuel is used in motor vehicles registered exclusively for farming purposes, (ii) such fuel is not delivered, upon such sale, to a tank in which such person keeps fuel for personal and farm use and (iii) [an affidavit] a statement, prescribed as to form by the Commissioner of Revenue Services [, affirming] and bearing notice to the effect that false statements made under this section are punishable, that such fuel is used exclusively for farming purposes, is submitted by such person to the distributor, (H) sold exclusively to furnish power for an industrial plant in the actual fabrication of finished products to be sold, or for the fishing industry, (I) sold exclusively for heating purposes, (J) sold exclusively to furnish gas, water, steam or electricity, if delivered to consumers through mains, lines or pipes, (K) sold to the owner or operator of an aircraft, as defined in section 15-34, exclusively for aviation purposes, provided (i) for purposes of this subdivision, "aviation purposes" means for the purpose of powering an aircraft or an aircraft engine, (ii) such fuel is delivered, upon such sale, to a tank in which fuel is kept exclusively for aviation purposes, and (iii) [an affidavit] a statement, prescribed as to form by the Commissioner of Revenue Services [, affirming] and bearing notice to the effect that false statements made under this section are punishable, that such fuel is used exclusively for aviation purposes, is submitted by such person to the distributor, (L) sold to a dealer who is licensed under section 12-462 and whose place of business is located upon an established airport within this state, or (M) diesel fuel sold exclusively for use in portable power system generators that are larger than one hundred fifty kilowatts.

Sec. 66. Section 12-646 of the general statutes is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services may require the donor or the donee to show the property subject to the tax, as provided in this chapter, to the commissioner upon demand and may employ a suitable person to appraise the property. The donor shall [make and subscribe his oath] submit a declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, that the property shown by [him] said donor on [his] said donor's return to the commissioner includes all of the property transferred by gift for the calendar year involved and not excluded herein.

Sec. 67. Subsection (b) of section 12-646a of the general statutes is repealed and the following is substituted in lieu thereof:

(b) If, within ten years immediately following a transfer to a donee where, as provided in subsection (a) of this section, the value is determined in accordance with the provisions of section 12-63, as amended, such farm land is transferred by the donee to a party other than the donee's lineal descendant or the spouse thereof or is no longer classified as farm land in accordance with section 12-107c, such donee or, if such land was transferred to such donee's lineal descendant or the spouse thereof, such descendant or the spouse thereof shall be liable for the difference between the tax that was due from the donor under the provisions of subsection (a) of this section and the tax that would have been due if such land had been valued based upon its fair market value, rather than at its value as land classified as farm land pursuant to section 12-107c, at the time of such transfer by such donor. The gift tax return of the donor shall include, in such manner as required by the Commissioner of Revenue Services for purposes of this section, a [sworn statement] declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, as to the fair market value of such farm land, based on its highest and best use value, as of the time of such transfer by such donor. The tax imposed under this subsection shall be paid to the commissioner within sixty days following the date of such transfer or change in classification, and if not so paid shall bear interest at the rate of one per cent per month or fraction thereof, commencing at the expiration of such sixty days, until paid. The commissioner may, for cause shown, on written application of such donee or, if such land was transferred to the donee's lineal descendant or the spouse thereof, such descendant or the spouse thereof, filed with said commissioner at or before the expiration of such sixty days, extend the time for payment of said tax or any part thereof.

Sec. 68. Section 12-263a of the general statutes, as amended by section 31 of public act 99-173, is repealed and the following is substituted in lieu thereof:

As used in sections 12-263a to 12-263e, inclusive:

(1) "Hospital" means any health care facility or institution, as defined in section 19a-630, which is licensed as a short-term general hospital by the Department of Public Health but does not include (A) any hospital which, on October 1, 1997, is within the class of hospitals licensed by the department as children's general hospitals, or (B) a short-term acute hospital operated exclusively by the state other than a short-term acute hospital operated by the state as a receiver pursuant to chapter 920;

(2) "Gross revenue" means the amount of a hospital's total charges for all patient care services minus any refunds resulting from errors or overcharges;

(3) "Contractual allowance" means the percentage amount of discounts that are provided to nongovernmental payers pursuant to subsections (c), (d) and (e) of section 19a-646;

(4) "Uncompensated care" means the cost of care that is written off as a bad debt or provided free under a free care policy that has been approved by the Office of Health Care Access;

(5) "Other allowances" means any financial requirements, as authorized by the Office of Health Care Access, of a hospital resulting from circumstances including, but not limited to, an insurance settlement of a liability case or satisfaction of a lien or encumbrance, any difference between charges for employee self-insurance and related expenses. For fiscal years commencing on and after October 1, 1994, "other allowances" means the amount of any difference between charges for employee self-insurance and related expenses determined using the hospital's overall relationship of costs to charges as determined by the Office of Health Care Access;

(6) "Net revenue" means the amount of a hospital's gross revenue minus the hospital's (A) contractual allowances, (B) the difference between government charges and government payments, (C) uncompensated care and (D) other allowances;

(7) "Hospital gross earnings" means the amount of a hospital's net revenue minus (A) the amount that is projected to be received by the hospital from the federal government for Medicare patients, based on the hospital's budget authorization, and (B) the amount that is projected to be received by the hospital from the Department of Social Services, based on the hospital's budget authorization;

(8) "Patient care services" means therapeutic and diagnostic medical services provided by the hospital to inpatients and outpatients, including tangible personal property transferred in connection with such services.

Sec. 69. Subsection (29) of section 12-407 of the general statutes is repealed and the following is substituted in lieu thereof:

(29) "Patient care services" means therapeutic and diagnostic medical services provided by the hospital to inpatients and outpatients including tangible personal property transferred [incidental to] in connection with such services.

Sec. 70. The intent of section 12-263a and subsection (29) of section 12-407 of the general statutes, as amended by sections 68 and 69 of this act, is to clarify that current law includes in the base of the hospital gross earnings tax sales of tangible personal property transferred in connection with patient care services and that current law imposes sales tax on the sale of tangible personal property transferred in connection with patient care services.

Sec. 71. Subsection (2) of section 12-407 of the general statutes, as amended by section 10 of public act 99-173, section 10 of public act 99-285 and section 1 of this act, is repealed and the following is substituted in lieu thereof:

(2) "Sale" and "selling" mean and include: (a) Any transfer of title, exchange or barter, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration; (b) any withdrawal, except a withdrawal pursuant to a transaction in foreign or interstate commerce, of tangible personal property from the place where it is located for delivery to a point in this state for the purpose of the transfer of title, exchange or barter, conditional or otherwise, in any manner or by any means whatsoever, of the property for a consideration; (c) the producing, fabricating, processing, printing or imprinting of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting, including but not limited to, sign construction, photofinishing, duplicating and photocopying; (d) the furnishing and distributing of tangible personal property for a consideration by social clubs and fraternal organizations to their members or others; (e) the furnishing, preparing, or serving for a consideration of food, meals or drinks; (f) a transaction whereby the possession of property is transferred but the seller retains the title as security for the payment of the price; (g) a transfer for a consideration of the title of tangible personal property which has been produced, fabricated or printed to the special order of the customer, or of any publication, including but not limited to, sign construction, photofinishing, duplicating and photocopying; (h) a transfer for a consideration of the occupancy of any room or rooms in a hotel or lodging house for a period of thirty consecutive calendar days or less; (i) the rendering of certain services for a consideration, exclusive of such services rendered by an employee for his employer, as follows: (A) Computer and data processing services, including but not limited to, time, programming, code writing, modification of existing programs, feasibility studies and installation and implementation of software programs and systems even where such services are rendered in connection with the development, creation or production of canned or custom software or the license of custom software, and exclusive of services rendered in connection with the creation, development hosting or maintenance of all or part of a web site which is part of the graphical, hypertext portion of the Internet, commonly referred to as the World-Wide Web, (B) credit information and reporting services, (C) services by employment agencies and agencies providing personnel services, (D) private investigation, protection, patrol work, watchman and armored car services, exclusive of services of off-duty police officers and off-duty fire fighters, (E) painting and lettering services, (F) photographic studio services, (G) telephone answering services, (H) stenographic services, (I) services to industrial, commercial or income-producing real property, including but not limited to, such services as management, electrical, plumbing, painting and carpentry and excluding any such services rendered in the voluntary evaluation, prevention, treatment, containment or removal of hazardous waste, as defined in section 22a-115, or other contaminants of air, water or soil, provided income-producing property shall not include property used exclusively for residential purposes in which the owner resides and which contains no more than three dwelling units, or a housing facility for low and moderate income families and persons owned or operated by a nonprofit housing organization, as defined in subsection (29) of section 12-412, (J) business analysis, management, management consulting and public relations services, excluding (i) any environmental consulting services, and (ii) any training services provided by an institution of higher education licensed or accredited by the Board of Governors of Higher Education pursuant to section 10a-34, (K) services providing "piped-in" music to business or professional establishments, (L) flight instruction and chartering services by a certificated air carrier on an aircraft, the use of which for such purposes, but for the provisions of subsection (4) of section 12-410 and subsection (12) of section 12-411, would be deemed a retail sale and a taxable storage or use, respectively, of such aircraft by such carrier, (M) motor vehicle repair services, including any type of repair, painting or replacement related to the body or any of the operating parts of a motor vehicle, (N) motor vehicle parking, including the provision of space, other than metered space, in a lot having thirty or more spaces, excluding (i) space in a seasonal parking lot provided by a person who is exempt from taxation under this chapter pursuant to subsection (1), (5) or (8) of section 12-412, (ii) space in a parking lot owned or leased under the terms of a lease of not less than ten years' duration and operated by an employer for the exclusive use of its employees, (iii) valet parking provided at any airport, and (iv) space in municipally-operated railroad parking facilities in municipalities located within an area of the state designated as a severe nonattainment area for ozone under the federal Clean Air Act, (O) radio or television repair services, (P) furniture reupholstering and repair services, (Q) repair services to any electrical or electronic device, including but not limited to, such equipment used for purposes of refrigeration or air-conditioning, (R) lobbying or consulting services for purposes of representing the interests of a client in relation to the functions of any governmental entity or instrumentality, (S) services of the agent of any person in relation to the sale of any item of tangible personal property for such person, exclusive of the services of a consignee selling works of art, as defined in subsection (b) of section 12-376c, or articles of clothing or footwear intended to be worn on or about the human body other than (i) any special clothing or footwear primarily designed for athletic activity or protective use and which is not normally worn except when used for the athletic activity or protective use for which it was designed and (ii) jewelry, handbags, luggage, umbrellas, wallets, watches and similar items carried on or about the human body but not worn on the body in the manner characteristic of clothing intended for exemption under subdivision (47) of section 12-412, under consignment, exclusive of services provided by an auctioneer, (T) locksmith services, (U) advertising or public relations services, including layout, art direction, graphic design, mechanical preparation or production supervision, not related to the development of media advertising or cooperative direct mail advertising, (V) landscaping and horticulture services, (W) window cleaning services, (X) maintenance services, (Y) janitorial services, (Z) exterminating services, (AA) swimming pool cleaning and maintenance services, (BB) renovation and repair services as set forth in this subparagraph, to other than industrial, commercial or income-producing real property: Paving of any sort, painting or staining, wallpapering, roofing, siding and exterior sheet metal work, (CC) miscellaneous personal services included in industry group 729 in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, exclusive of (i) services rendered by massage therapists licensed pursuant to chapter 384a, and (ii) services rendered by a hypertrichologist licensed pursuant to chapter 388, (DD) any repair or maintenance service to any item of tangible personal property including any contract of warranty or service related to any such item, (EE) business analysis, management or managing consulting services rendered by a general partner, or an affiliate thereof, to a limited partnership, provided (i) that the general partner, or an affiliate thereof, is compensated for the rendition of such services other than through a distributive share of partnership profits or an annual percentage of partnership capital or assets established in the limited partnership's offering statement, and (ii) the general partner, or an affiliate thereof, offers such services to others, including any other partnership. As used in subparagraph (EE)(i) "an affiliate of a general partner" means an entity which is directly or indirectly owned fifty per cent or more in common with a general partner; and (FF) notwithstanding the provisions of section 12-412, except subsection (87) thereof, patient care services, as defined in subsection (30) of this section by a hospital; (j) the leasing or rental of tangible personal property of any kind whatsoever, including but not limited to, motor vehicles, linen or towels, machinery or apparatus, office equipment and data processing equipment, provided for purposes of this subdivision and the application of sales and use tax to contracts of lease or rental of tangible personal property, the leasing or rental of any motion picture film by the owner or operator of a motion picture theater for purposes of display at such theater shall not constitute a sale within the meaning of this subsection; (k) the rendering of telecommunications service, as defined in subsection (26) of this section, for a consideration on or after January 1, 1990, exclusive of any such service rendered by an employee for his employer, subject to the provisions related to telecommunications service in accordance with section 12-407a; (l) the rendering of community antenna television service, as defined in subsection (27) of this section, for a consideration on or after January 1, 1990, exclusive of any such service rendered by an employee for his employer; (m) the transfer for consideration of space or the right to use any space for the purpose of storage or mooring of any noncommercial vessel, exclusive of dry or wet storage or mooring of such vessel during the period commencing on the first day of November in any year to and including the thirtieth day of April of the next succeeding year; (n) the sale for consideration of naming rights to any place of amusement, entertainment or recreation within the meaning of subdivision (3) of section 12-540. Wherever in this chapter reference is made to the sale of tangible personal property or services, it shall be construed to include sales described in this subsection, except as may be specifically provided to the contrary.

Sec. 72. Subsection (13) of section 12-407 of the general statutes, as amended by section 10 of public act 99-173, section 10 of public act 99-285 and section 1 of this act, is repealed and the following is substituted in lieu thereof:

(13) "Tangible personal property" means personal property which may be seen, weighed, measured, felt or touched or which is in any other manner perceptible to the senses including canned or prewritten computer software. Tangible personal property includes the distribution, generation or transmission of electricity.

Sec. 73. Section 12-407 of the general statutes, as amended by section 10 of public act 99-173 and section 10 of public act 99-285, is amended by adding subsections (31) and (32) as follows:

(NEW) (31) "Canned or prewritten software" means all software, other than custom software, that is held or existing for general or repeated sale, license or lease, even if the program was initially developed as custom software for in-house use.

(NEW) (32) "Custom software" means a computer program prepared to the special order of a single customer. The combining of two or more prewritten programs or modification of prewritten software to accommodate the individual hardware requirements of a customer does not constitute custom software.

Sec. 74. The intent of subsections (2), (13), (31) and (32) of section 12-407 of the general statutes, as amended by sections 71 to 73, inclusive, of this act is to clarify that current law subjects the sale of canned software to sales and use taxes as a sale of tangible personal property and subjects the sale of computer and data processing services, as defined in said sections, to sales and use taxes as a sale of services constituting a sale in accordance with subsection (2) of section 12-407 of the general statutes, as amended by this act.

Sec. 75. Subsection (40) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof:

(40) (A) Sales of and the storage, use or other consumption of any vessel, as defined in section 15-127, used exclusively in commercial fishing and any machinery or equipment for use on a commercial fishing vessel, provided in the [calendar] purchaser's taxable year ending immediately preceding the [date of] taxable year during which any such sale, storage, use or other consumption occurred, not less than fifty per cent of the gross income of the purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing, subject to proof satisfactory to the commissioner of revenue services.

(B) (i) Sales of and the storage, use or other consumption of any vessel used exclusively in commercial fishing and any machinery or equipment for use on a commercial fishing vessel, where in the purchaser's taxable year ending immediately preceding the taxable year during which any such sale, storage, use or other consumption occurred, less than fifty per cent of gross income of the purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing, provided such purchaser has satisfied the commissioner that the purchaser intends to carry on commercial fishing as a trade or business for at least two years after the date of such purchase.

(ii) Such purchaser shall be liable for the tax otherwise imposed, during the period commencing upon the purchase of such vessel, machinery or equipment and ending two years after the date of such purchase, if commercial fishing is not carried on as a trade or business by such applicant during such entire period.

(iii) Such purchaser shall also be liable for the tax otherwise imposed, during the period commencing upon the purchase of such vessel, machinery or equipment and ending two years after the date of such purchase, if less than fifty per cent of the gross income of such purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing for the taxable year immediately preceding the taxable year during which such two-year period ends or if, on average, less than fifty per cent of the gross income of such purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing for the two taxable years immediately preceding the taxable year during which such two-year period ends.

(iv) Any purchaser liable for tax under subparagraph (ii) or (iii) of this subsection shall not be eligible to make another purchase under subparagraph (i) of this subparagraph.

(C) For purposes of this subsection, commercial fishing vessels shall include any vessel with a certificate of documentation issued by the United States Coast Guard for coastwise fishery.

Sec. 76. Subsection (h) of section 38a-866 of the general statutes is repealed and the following is substituted in lieu thereof:

(h) (1) Each insurer paying an assessment under sections 38a-858 to 38a-875, inclusive, may offset [fifty] one hundred per cent of the amount of such assessment against its premium tax liability to this state under chapter 207. [accrued with respect to business transacted in such year.] Such offset shall be taken over a period of the five successive tax years following the year of payment of the assessment, at the rate of twenty per cent per year of the assessment paid to the association. Each insurer which has offset assessments paid to the association from its premium tax liability to the state shall pay to the state [fifty] one hundred per cent of any sums which are acquired by refund from the association pursuant to subsection (f) of this section. The association shall notify the commissioner that such refunds have been made.

(2) An insurer may transfer any offset provided under this subsection to an affiliate, as defined in section 38a-1, of that insurer.

Sec. 77. Section 38a-841 of the general statutes is amended by adding subdivision (3) as follows:

(NEW) (3) (A) Each insurer paying an assessment under sections 38a-836 to 38a-853, inclusive, may offset one hundred per cent of the amount of such assessment against its premium tax liability to this state under chapter 207. Such offset shall be taken over a period of the five successive tax years following the year of payment of the assessment, at the rate of twenty per cent per year of the assessment paid to the association. Each insurer which has offset assessments paid to the association from its premium tax liability to the state shall pay to the state one hundred per cent of any sums which are acquired by refund from the association pursuant to subdivision (2) of this section. The association shall notify the commissioner that such refunds have been made.

(B) An insurer may transfer any offset provided under this subdivision to an affiliate, as defined in section 38a-1, of that insurer.

Sec. 78. Section 12-202a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Each health care center, as defined in section 38a-175, shall pay a tax to the Commissioner of Revenue Services for the calendar year commencing on January 1, 1995, and annually thereafter, at the rate of one and three-quarters per cent of the total net direct subscriber charges received on any new or renewal contract or policy by such health care center during each such calendar year, which shall be in addition to any other payment required under section 38a-48.

(b) Notwithstanding the provisions of subsection (a) of this section, the tax shall not apply to: (1) Any new or renewal contract or policy entered into with the state on or after July 1, 1997, to provide health care coverage to state employees, retirees and their dependents; (2) any subscriber charges received from the federal government to provide coverage for Medicare patients; (3) any subscriber charges received under a contract or policy entered into with the state to provide health care coverage to Medicaid recipients under the Medicaid managed care program established pursuant to section 17b-28, as amended, which charges are attributable to a period on or after January 1, 1998; (4) any new or renewal contract or policy entered into with the state on or after April 1, 1998, to provide health care coverage to eligible beneficiaries under the HUSKY Medicaid Plan [,] Part A, HUSKY Part B, or the HUSKY Plus programs, each as defined in section 17b-290, as amended; [or] (5) any new or renewal contract or policy entered into with the state on or after April 1, 1998, to provide health care coverage to recipients of state-administered general assistance pursuant to section 17b-257; or (6) any new or renewal contract or policy entered into with the state on or after February 1, 2000, to provide health care coverage to retired teachers, spouses or surviving spouses covered by plans offered by the state teachers' retirement system.

(c) The provisions of this chapter pertaining to the filing of returns, declarations, instalment payments, assessments and collection of taxes, penalties, administrative hearings and appeals imposed on domestic insurance companies shall apply with respect to the charge imposed under this section.

Sec. 79. Section 12 of public act 98-237 is repealed and the following is substituted in lieu thereof:

The payment obligations of any contingency reserve loan agreement, or modification thereof, between the Municipal Liability Trust Fund Committee established pursuant to section 19 of public act 86-350, and an interlocal risk management agency, which agreement was made in accordance with public act 86-350, shall be due on or before [July 1, 2000] June 30, 2001, notwithstanding the provision of any such agreement regarding repayment of such loan.

Sec. 80. Subsection (a) of section 12-587 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As used in this chapter: (1) "Company" includes a corporation, partnership, limited partnership, limited liability company, limited liability partnership, association, individual or any fiduciary thereof; (2) "quarterly period" means a period of three calendar months commencing on the first day of January, April, July or October and ending on the last day of March, June, September or December, respectively; (3) "gross earnings" means all consideration received from the first sale within this state of a petroleum product; (4) "petroleum products" means those products which contain or are made from petroleum or a petroleum derivative, except paraffin or microcrystalline waxes; (5) "first sale of petroleum products within this state" means the initial sale of a petroleum product delivered to a location in this state; (6) "export" or "exportation" means the conveyance of petroleum products from within this state to a location outside this state for the purpose of sale or use outside this state; and (7) "sale for exportation" means a sale of petroleum products to a purchaser which itself exports such products.

Sec. 81. Section 12-330c of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) A tax is imposed on all tobacco products held in this state by any person, said tax to be at the rate of twenty per cent of the wholesale sales price of such products.

(2) A tax is imposed on all snuff tobacco products held in this state by any person, said tax to be imposed as follows: Forty cents per ounce of snuff and a proportionate tax at the like rate on all fractional parts of an ounce of snuff. For purposes of this subsection, the tax on snuff tobacco products shall be computed on the net weight as listed by the manufacturer.

(b) Said tax shall be imposed on the distributor or the unclassified importer at the time the tobacco product or snuff tobacco product is manufactured, purchased, imported, received or acquired in this state.

(c) Said tax shall not be imposed on any tobacco products or snuff tobacco products which (1) are exported from the state, or (2) are not subject to taxation by this state pursuant to any laws of the United States.

Sec. 82. Section 38a-849 of the general statutes and section 35 of public act 00-170 are repealed.

Sec. 83. This act shall take effect from its passage, except that sections 1 to 13, inclusive, shall take effect October 1, 2000, for sales made on or after said date, except that sections 14 and 15 shall take effect July 1, 2000, and shall be applicable to assessments made on or after said date; section 16 shall take effect October 1, 2000, and shall be applicable to sales of a business or stock of goods occurring on or after said date; section 17 shall take effect October 1, 2000, and shall be applicable to contracts entered into on or after said date; and sections 19 and 20 shall take effect October 1, 2000, and shall be applicable to charges made on or after said date; except that sections 23, 25 and 26 shall be applicable to income years commencing on or after January 1, 2000; section 27 shall take effect July 1, 2000, and shall be applicable to calendar quarters commencing on or after said date; section 29 shall take effect July 1, 2000; sections 30 and 33 shall be applicable to reports for periods commencing on or after July 1, 2000; sections 31 and 32 shall take effect July 1, 2000, and shall be applicable to applications filed on or after said date; section 36 shall be applicable to sales or transfers occurring on or after July 1, 2000; sections 37, 38 and 39 shall be applicable to taxable years commencing on or after January 1, 2000; sections 41 and 43 shall be applicable to returns for taxable years commencing on or after January 1, 2000; sections 42, 44 and 45 shall be applicable to returns for taxable years commencing on or after January 1, 1999; section 46 shall be applicable to taxable years commencing on or after January 1, 1999, but no interest shall be allowed or paid on any overpayment resulting from the application of said section for the taxable year commencing on or after January 1, 1999, but prior to January 1, 2000; section 47 shall be applicable to assessments first due and payable on or after July 31, 2000; and section 50 shall be applicable to refunds made on or after July 1, 2000; and sections 53 to 67, inclusive, shall take effect July 1, 2000, and sections 68 to 74, inclusive, shall apply to all open tax periods, and section 75 shall take effect October 1, 2000, and shall be applicable to sales occurring on and after October 1, 2000, and sections 76 and 77 shall be applicable to income years commencing on and after January 1, 2000, and sections 80 to 82, inclusive, shall take effect July 1, 2000.

Approved May 26, 2000