Chapter 229 - Income Tax

(1) At the rate of four and one-half per cent of such Connecticut taxable income for taxable years commencing on or after January 1, 1992, and prior to January 1, 1996.

(2) For taxable years commencing on or after January 1, 1996, but prior to January 1, 1997, in accordance with the following schedule:

(A) For any person who files a return under the federal income tax for such taxable year as an unmarried individual or as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $2,250		3.0%
Over $2,250		$67.50, plus 4.5% of the
		excess over $2,250

(B) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $3,500		3.0%
Over $3,500		$105.00, plus 4.5% of the
		excess over $3,500

(C) For any husband and wife who file a return under the federal income tax for such taxable year as married individuals filing jointly or a person who files a return under the federal income tax as a surviving spouse, as defined in Section 2(a) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $4,500		3.0%
Over $4,500		$135.00, plus 4.5% of the
		excess over $4,500

(D) For trusts or estates, the rate of tax shall be 4.5% of their Connecticut taxable income.

(3) For taxable years commencing on or after January 1, 1997, but prior to January 1, 1998, in accordance with the following schedule:

(A) For any person who files a return under the federal income tax for such taxable year as an unmarried individual or as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $6,250		3.0%
Over $6,250		$187.50, plus 4.5% of the
		excess over $6,250

(B) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000		$300.00, plus 4.5% of the
		excess over $10,000

(C) For any husband and wife who file a return under the federal income tax for such taxable year as married individuals filing jointly or any person who files a return under the federal income tax for such taxable year as a surviving spouse, as defined in Section 2(a) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $12,500		3.0%
Over $12,500		$375.00, plus 4.5% of the
		excess over $12,500

(D) For trusts or estates, the rate of tax shall be 4.5% of their Connecticut taxable income.

(4) For taxable years commencing on or after January 1, 1998, but prior to January 1, 1999, in accordance with the following schedule:

(A) For any person who files a return under the federal income tax for such taxable year as an unmarried individual or as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $7,500		3.0%
Over $7,500		$225.00, plus 4.5% of the
		excess over $7,500

(B) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $12,000		3.0%
Over $12,000		$360.00, plus 4.5% of the
		excess over $12,000

Connecticut Taxable Income		Rate of Tax
Not over $15,000		3.0%
Over $15,000		$450.00, plus 4.5% of the
		excess over $15,000

(D) For trusts or estates, the rate of tax shall be 4.5% of their Connecticut taxable income.

(5) For taxable years commencing on or after January 1, 1999, but prior to January 1, 2003, in accordance with the following schedule:

(A) For any person who files a return under the federal income tax for such taxable year as an unmarried individual or as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000		$300.00, plus 4.5% of the
		excess over $10,000

(B) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $16,000		3.0%
Over $16,000		$480.00, plus 4.5% of the
		excess over $16,000

Connecticut Taxable Income		Rate of Tax
Not over $20,000		3.0%
Over $20,000		$600.00, plus 4.5% of the
		excess over $20,000

(D) For trusts or estates, the rate of tax shall be 4.5% of their Connecticut taxable income.

(6) For taxable years commencing on or after January 1, 2003, but prior to January 1, 2009, in accordance with the following schedule:

(A) For any person who files a return under the federal income tax for such taxable year as an unmarried individual or as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000		$300.00, plus 5.0% of the
		excess over $10,000

(B) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $16,000		3.0%
Over $16,000		$480.00, plus 5.0% of the
		excess over $16,000

Connecticut Taxable Income		Rate of Tax
Not over $20,000		3.0%
Over $20,000		$600.00, plus 5.0% of the
		excess over $20,000

(D) For trusts or estates, the rate of tax shall be 5.0% of the Connecticut taxable income.

(7) For taxable years commencing on or after January 1, 2009, but prior to January 1, 2011, in accordance with the following schedule:

(A) For any person who files a return under the federal income tax for such taxable year as an unmarried individual:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000 but not		$300.00, plus 5.0% of the
over $500,000		excess over $10,000
Over $500,000		$24,800, plus 6.5% of the
		excess over $500,000

(B) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $16,000		3.0%
Over $16,000 but not		$480.00, plus 5.0% of the
over $800,000		excess over $16,000
Over $800,000		$39,680, plus 6.5% of the
		excess over $800,000

Connecticut Taxable Income		Rate of Tax
Not over $20,000		3.0%
Over $20,000 but not		$600.00, plus 5.0% of the
over $1,000,000		excess over $20,000
Over $1,000,000		$49,600, plus 6.5% of the
		excess over $1,000,000

(D) For any person who files a return under the federal income tax for such taxable year as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000 but not		$300.00, plus 5.0% of the
over $500,000		excess over $10,000
Over $500,000		$24,800, plus 6.5% of the
		excess over $500,000

(E) For trusts or estates, the rate of tax shall be 6.5% of the Connecticut taxable income.

(8) For taxable years commencing on or after January 1, 2011, but prior to January 1, 2015, in accordance with the following schedule:

(A) (i) For any person who files a return under the federal income tax for such taxable year as an unmarried individual:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000 but not		$300.00, plus 5.0% of the
over $50,000		excess over $10,000
Over $50,000 but not		$2,300, plus 5.5% of the
over $100,000		excess over $50,000
Over $100,000 but not		$5,050, plus 6.0% of the
over $200,000		excess over $100,000
Over $200,000 but not		$11,050, plus 6.5% of the
over $250,000		excess over $200,000
Over $250,000		$14,300, plus 6.70% of the
		excess over $250,000

(ii) Notwithstanding the provisions of subparagraph (A)(i) of this subdivision, for each taxpayer whose Connecticut adjusted gross income exceeds fifty-six thousand five hundred dollars, the amount of the taxpayer's Connecticut taxable income to which the three-per-cent tax rate applies shall be reduced by one thousand dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount. Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the three-per-cent tax rate does not apply shall be an amount to which the five-per-cent tax rate shall apply.

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds two hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (A)(i) and (A)(ii) of this subdivision, an amount equal to seventy-five dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds two hundred thousand dollars, up to a maximum payment of two thousand two hundred fifty dollars.

(B) (i) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $16,000		3.0%
Over $16,000 but not		$480.00, plus 5.0% of the
over $80,000		excess over $16,000
Over $80,000 but not		$3,680, plus 5.5% of the
over $160,000		excess over $80,000
Over $160,000 but not		$8,080, plus 6.0% of the
over $320,000		excess over $160,000
Over $320,000 but not		$17,680, plus 6.5% of the
over $400,000		excess over $320,000
Over $400,000		$22,880, plus 6.70% of the
		excess over $400,000

(ii) Notwithstanding the provisions of subparagraph (B)(i) of this subdivision, for each taxpayer whose Connecticut adjusted gross income exceeds seventy-eight thousand five hundred dollars, the amount of the taxpayer's Connecticut taxable income to which the three-per-cent tax rate applies shall be reduced by one thousand six hundred dollars for each four thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount. Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the three-per-cent tax rate does not apply shall be an amount to which the five-per-cent tax rate shall apply.

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds three hundred twenty thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (B)(i) and (B)(ii) of this subdivision, an amount equal to one hundred twenty dollars for each eight thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds three hundred twenty thousand dollars, up to a maximum payment of three thousand six hundred dollars.

(C) (i) For any husband and wife who file a return under the federal income tax for such taxable year as married individuals filing jointly or any person who files a return under the federal income tax for such taxable year as a surviving spouse, as defined in Section 2(a) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $20,000		3.0%
Over $20,000 but not		$600.00, plus 5.0% of the
over $100,000		excess over $20,000
Over $100,000 but not		$4,600, plus 5.5% of the
over $200,000		excess over $100,000
Over $200,000 but not		$10,100, plus 6.0% of the
over $400,000		excess over $200,000
Over $400,000 but not		$22,100, plus 6.5% of the
over $500,000		excess over $400,000
Over $500,000		$28,600, plus 6.70% of the
		excess over $500,000

(ii) Notwithstanding the provisions of subparagraph (C)(i) of this subdivision, for each taxpayer whose Connecticut adjusted gross income exceeds one hundred thousand five hundred dollars, the amount of the taxpayer's Connecticut taxable income to which the three-per-cent tax rate applies shall be reduced by two thousand dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount. Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the three-per-cent tax rate does not apply shall be an amount to which the five-per-cent tax rate shall apply.

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds four hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (C)(i) and (C)(ii) of this subdivision, an amount equal to one hundred fifty dollars for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds four hundred thousand dollars, up to a maximum payment of four thousand five hundred dollars.

(D) (i) For any person who files a return under the federal income tax for such taxable year as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000 but not		$300.00, plus 5.0% of the
over $50,000		excess over $10,000
Over $50,000 but not		$2,300, plus 5.5% of the
over $100,000		excess over $50,000
Over $100,000 but not		$5,050, plus 6.0% of the
over $200,000		excess over $100,000
Over $200,000 but not		$11,050, plus 6.5% of the
over $250,000		excess over $200,000
Over $250,000		$14,300, plus 6.70% of the
		excess over $250,000

(ii) Notwithstanding the provisions of subparagraph (D)(i) of this subdivision, for each taxpayer whose Connecticut adjusted gross income exceeds fifty thousand two hundred fifty dollars, the amount of the taxpayer's Connecticut taxable income to which the three-per-cent tax rate applies shall be reduced by one thousand dollars for each two thousand five hundred dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount. Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the three-per-cent tax rate does not apply shall be an amount to which the five-per-cent tax rate shall apply.

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds two hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (D)(i) and (D)(ii) of this subdivision, an amount equal to seventy-five dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds two hundred thousand dollars, up to a maximum payment of two thousand two hundred fifty dollars.

(E) For trusts or estates, the rate of tax shall be 6.70% of the Connecticut taxable income.

(9) For taxable years commencing on or after January 1, 2015, in accordance with the following schedule:

(A) (i) For any person who files a return under the federal income tax for such taxable year as an unmarried individual:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000 but not		$300.00, plus 5.0% of the
over $50,000		excess over $10,000
Over $50,000 but not		$2,300, plus 5.5% of the
over $100,000		excess over $50,000
Over $100,000 but not		$5,050, plus 6.0% of the
over $200,000		excess over $100,000
Over $200,000 but not		$11,050, plus 6.5% of the
over $250,000		excess over $200,000
Over $250,000 but not		$14,300, plus 6.9% of the
over $500,000		excess over $250,000
Over $500,000		$31,550, plus 6.99% of the
		excess over $500,000

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds two hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (A)(i) and (A)(ii) of this subdivision, an amount equal to ninety dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds two hundred thousand dollars, up to a maximum payment of two thousand seven hundred dollars.

(iv) Each taxpayer whose Connecticut adjusted gross income exceeds five hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (A)(i), (A)(ii) and (A)(iii) of this subdivision, an amount equal to fifty dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds five hundred thousand dollars, up to a maximum payment of four hundred fifty dollars.

(B) (i) For any person who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code:

Connecticut Taxable Income		Rate of Tax
Not over $16,000		3.0%
Over $16,000 but not		$480.00, plus 5.0% of the
over $80,000		excess over $16,000
Over $80,000 but not		$3,680, plus 5.5% of the
over $160,000		excess over $80,000
Over $160,000 but not		$8,080, plus 6.0% of the
over $320,000		excess over $160,000
Over $320,000 but not		$17,680, plus 6.5% of the
over $400,000		excess over $320,000
Over $400,000 but not		$22,880, plus 6.9% of the
over $800,000		excess over $400,000
Over $800,000		$50,480, plus 6.99% of the
		excess over $800,000

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds three hundred twenty thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (B)(i) and (B)(ii) of this subdivision, an amount equal to one hundred forty dollars for each eight thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds three hundred twenty thousand dollars, up to a maximum payment of four thousand two hundred dollars.

(iv) Each taxpayer whose Connecticut adjusted gross income exceeds eight hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (B)(i), (B)(ii) and (B)(iii) of this subdivision, an amount equal to eighty dollars for each eight thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds eight hundred thousand dollars, up to a maximum payment of seven hundred twenty dollars.

Connecticut Taxable Income		Rate of Tax
Not over $20,000		3.0%
Over $20,000 but not		$600.00, plus 5.0% of the
over $100,000		excess over $20,000
Over $100,000 but not		$4,600, plus 5.5% of the
over $200,000		excess over $100,000
Over $200,000 but not		$10,100, plus 6.0% of the
over $400,000		excess over $200,000
Over $400,000 but not		$22,100, plus 6.5% of the
over $500,000		excess over $400,000
Over $500,000 but not		$28,600, plus 6.9% of the
over $1,000,000		excess over $500,000
Over $1,000,000		$63,100, plus 6.99% of the
		excess over $1,000,000

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds four hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (C)(i) and (C)(ii) of this subdivision, an amount equal to one hundred eighty dollars for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds four hundred thousand dollars, up to a maximum payment of five thousand four hundred dollars.

(iv) Each taxpayer whose Connecticut adjusted gross income exceeds one million dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (C)(i), (C)(ii) and (C)(iii) of this subdivision, an amount equal to one hundred dollars for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds one million dollars, up to a maximum payment of nine hundred dollars.

(D) (i) For any person who files a return under the federal income tax for such taxable year as a married individual filing separately:

Connecticut Taxable Income		Rate of Tax
Not over $10,000		3.0%
Over $10,000 but not		$300.00, plus 5.0% of the
over $50,000		excess over $10,000
Over $50,000 but not		$2,300, plus 5.5% of the
over $100,000		excess over $50,000
Over $100,000 but not		$5,050, plus 6.0% of the
over $200,000		excess over $100,000
Over $200,000 but not		$11,050, plus 6.5% of the
over $250,000		excess over $200,000
Over $250,000 but not		$14,300, plus 6.9% of the
over $500,000		excess over $250,000
Over $500,000		$31,550, plus 6.99% of the
		excess over $500,000

(iii) Each taxpayer whose Connecticut adjusted gross income exceeds two hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (D)(i) and (D)(ii) of this subdivision, an amount equal to ninety dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds two hundred thousand dollars, up to a maximum payment of two thousand seven hundred dollars.

(iv) Each taxpayer whose Connecticut adjusted gross income exceeds five hundred thousand dollars shall pay, in addition to the tax computed under the provisions of subparagraphs (D)(i), (D)(ii) and (D)(iii) of this subdivision, an amount equal to fifty dollars for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds five hundred thousand dollars, up to a maximum payment of four hundred fifty dollars.

(E) For trusts or estates, the rate of tax shall be 6.99% of the Connecticut taxable income.

(10) The provisions of this subsection shall apply to resident trusts and estates and, wherever reference is made in this subsection to residents of this state, such reference shall be construed to include resident trusts and estates, provided any reference to a resident's Connecticut adjusted gross income derived from sources without this state or to a resident's Connecticut adjusted gross income shall be construed, in the case of a resident trust or estate, to mean the resident trust or estate's Connecticut taxable income derived from sources without this state and the resident trust or estate's Connecticut taxable income, respectively.

(b) There is hereby imposed on the Connecticut taxable income derived from or connected with sources within this state of each nonresident a tax which shall be the product of an amount equal to the tax computed as if such nonresident were a resident, multiplied by a fraction, the numerator of which is the nonresident's Connecticut adjusted gross income derived from or connected with sources within this state and the denominator of which is the nonresident's Connecticut adjusted gross income, provided, if the nonresident's Connecticut adjusted gross income is less than such nonresident's Connecticut adjusted gross income derived from or connected with sources within this state, (1) such nonresident's Connecticut adjusted gross income derived from or connected with sources within this state, reduced by the amount of the exemption provided in section 12-702, shall be such nonresident's Connecticut taxable income derived from or connected with sources within this state and shall be multiplied by the tax rate specified in subsection (a) of this section for the purposes of determining the tax pursuant to this section and (2) such nonresident's Connecticut adjusted gross income derived from or connected with sources within this state shall be such nonresident's Connecticut adjusted gross income for the purposes of determining the credit pursuant to section 12-703. The provisions of this subsection shall also apply to nonresident trusts and estates and, wherever reference is made in this subsection to nonresidents of this state, such reference shall be construed to include nonresident trusts and estates, provided any reference to a nonresident's Connecticut adjusted gross income derived from sources within this state or to a nonresident's Connecticut adjusted gross income shall be construed, in the case of a nonresident trust or estate, to mean the nonresident trust or estate's Connecticut taxable income derived from sources within this state and the nonresident trust or estate's Connecticut taxable income, respectively.

(c) (1) There is hereby imposed on the Connecticut taxable income derived from or connected with sources within this state of each part-year resident a tax which shall be a product equal to the tax computed as if such part-year resident were a resident, multiplied by a fraction, the numerator of which is the part-year resident's Connecticut adjusted gross income derived from or connected with sources within this state, as described in subsection (a) of section 12-717, and the denominator of which is the part-year resident's Connecticut adjusted gross income, as described in subdivision (2) of this subsection, provided, if the part-year resident's Connecticut adjusted gross income is less than such part-year resident's Connecticut adjusted gross income derived from or connected with sources within this state, (A) such part-year resident's Connecticut adjusted gross income derived from or connected with sources within this state, reduced by the amount of the exemption provided in section 12-702, shall be such part-year resident's Connecticut taxable income derived from or connected with sources within this state and shall be multiplied by the tax rate specified in subsection (a) of this section for the purposes of determining the tax pursuant to this section and (B) such part-year resident's Connecticut adjusted gross income derived from or connected with sources within this state shall be such part-year resident's adjusted gross income for the purposes of determining the credit pursuant to section 12-703. The provisions of this subsection shall apply to part-year resident trusts and, wherever reference is made in this subsection to part-year residents, such reference shall be construed to include part-year resident trusts, provided any reference to a part-year resident's Connecticut adjusted gross income derived from sources within this state or a part-year resident's Connecticut adjusted gross income shall be construed, in the case of a part-year resident trust, to mean the part-year resident trust's Connecticut taxable income derived from sources within this state and the part-year resident trust's Connecticut taxable income, respectively.

(2) For purposes of subdivision (1) of this subsection and subsection (a) of this section, the Connecticut adjusted gross income of a part-year resident (A) changing such resident's status from resident to nonresident shall be increased or decreased, as the case may be, by the items accrued under subdivision (1) of subsection (c) of section 12-717, to the extent not otherwise includable in Connecticut adjusted gross income for the taxable year, and (B) changing such resident's status from nonresident to resident shall be increased or decreased, as the case may be, by the items accrued under subdivision (2) of subsection (c) of section 12-717, to the extent included in Connecticut adjusted gross income for the taxable year.

(d) The provisions of this chapter shall be applicable with respect to any person, trust or estate. Whenever, in this chapter, “any person” appears without “trust or estate”, the reference to any person shall be deemed to include any trust and any estate unless, in the context of the particular provision, the reference to any person could not be applicable in the case of a trust or in the case of an estate.

(June Sp. Sess. P.A. 91-3, S. 51, 168; May Sp. Sess. P.A. 92-5, S. 1, 37; P.A. 93-74, S. 63, 67; 93-332, S. 6, 42; P.A. 95-160, S. 30, 69; P.A. 96-139, S. 8, 12, 13; P.A. 97-309, S. 8, 23; 97-322, S. 5, 7, 9; P.A. 03-2, S. 22; June Sp. Sess. P.A. 09-3, S. 119; P.A. 11-6, S. 107; P.A. 15-244, S. 66; P.A. 16-146, S. 10; P.A. 18-26, S. 25, 26.)

History: June Sp. Sess. P.A. 91-3, S. 51, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 93-74 amended Subsec. (c) to add provisions re applicability of tax for part-year residents as Subdiv. (2), designating previously existing provisions as Subdiv. (1) and prior Subdivs. as Subparas. (A) and (B), effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1993; P.A. 93-332 amended Subsec. (c)(2) making technical changes, effective June 25, 1993, and applicable to taxable years on or after January 1, 1993; P.A. 95-160 amended Subsecs. (a) to (c) to decrease tax rate to 3% from 4.5% in accordance with the schedules in Subsec. (a)(2) and (3), effective June 1, 1995, and applicable to income years commencing on or after January 1, 1996; P.A. 96-139 amended Subsec. (a) to add references to filing return status under the federal income tax as defined in the Internal Revenue Code, and amended Subsec. (a)(3)(C) to change the rate of tax for persons filing joint returns on taxable income over $9,000 from $180.00 to $270.00, plus 4.5% of the excess over $9,000, effective May 29, 1996, and changed effective date of P.A. 95-160 but without affecting this section; P.A. 97-309 added Subsec. (a)(4) to increase amount of taxable income taxed at 3% for the taxable year commencing January 1, 1998, and Subsec. (a)(5) to increase amount of taxable income taxed at 3% for taxable years commencing on or after January 1, 1999, effective the later of July 1, 1997, or the first day of the calendar month immediately following the last action necessary to make effective a final budget for the biennium ending June 30, 1999, provided for purposes of this section any legislative action to continue the appropriations for the fiscal year ending June 30, 1997, with adjustments shall not constitute a final budget for the biennium ending June 30, 1999, and shall be applicable to income years commencing on or after January 1, 1998; P.A. 97-322 amended Subsec. (a)(3) and (5) to increase amount of taxable income subject to 3% rate, effective July 1, 1997 and revised effective date of P.A. 97-309 but without affecting this section; P.A. 03-2 amended Subsec. (a)(5) and added new Subdiv. (6) to increase the top rate to 5% and redesignated existing Subdiv. (6) as Subdiv. (7), effective February 28, 2003, and applicable to taxable years commencing on or after January 1, 2003; June Sp. Sess. P.A. 09-3 amended Subsec. (a) to add “but prior to January 1, 2009,” in Subdiv. (6), to add Subdiv. (7) re new rate schedule and to redesignate existing Subdiv. (7) as Subdiv. (8), effective September 9, 2009, and applicable to taxable years commencing on or after January 1, 2009; P.A. 11-6 amended Subsec. (a) to add Subdiv. (8) re tax rates for taxable years commencing on or after January 1, 2011, re phasing out the 3% tax rate for certain taxpayers and re benefit recapture for certain taxpayers, and redesignated existing Subdiv. (8) as Subdiv. (9), effective May 4, 2011, and applicable to taxable years commencing on or after January 1, 2011; P.A. 15-244 amended Subsec. (a) to add “but prior to January 1, 2015” in Subdiv. (8), add new Subdiv. (9) re tax rates for taxable years commencing on or after January 1, 2015, and re phasing out 3% tax rate for certain taxpayers, benefit recapture for certain taxpayers and rate for trusts or estates, and redesignate existing Subdiv. (9) as Subdiv. (10), effective June 30, 2015, and applicable to taxable years commencing on or after January 1, 2015; P.A. 16-146 amended Subsec. (a)(9)(B)(i) by replacing “$50,400” with “$50,480” in provision re tax rate for person filing as head of household for taxable years commencing on or after January 1, 2015, effective June 9, 2016; P.A. 18-26 made technical changes in Subsecs. (a)(9)(C)(i) and (c)(2).

See chapter 228z re affected business entity tax.

State has power to tax separate from that of federal government and therefore it cannot be limited by federal statutes or regulations. 49 CS 38.

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Sec. 12-700a. Alternative minimum tax. (a) Every resident individual, as defined in section 12-701, subject to and required to pay the federal alternative minimum tax under Section 55 of the Internal Revenue Code shall pay, in addition to the tax imposed under section 12-700, the net Connecticut minimum tax. The tax shall be the difference computed by subtracting the tax imposed under subsection (a) of section 12-700 from the Connecticut minimum tax, as provided in subdivision (26) of subsection (a) of section 12-701. The provisions of this subsection shall apply to resident trusts and estates, as defined in said section 12-701, and, wherever reference is made in this section to resident individuals, such reference shall be construed to include resident trusts and estates, provided any reference to a resident individual's Connecticut adjusted gross income shall be construed, in the case of a resident trust or estate, to mean the resident trust or estate's Connecticut taxable income.

(b) Every nonresident individual, as defined in section 12-701, subject to and required to pay the federal alternative minimum tax under Section 55 of the Internal Revenue Code shall pay, in addition to the tax imposed under section 12-700, the net Connecticut minimum tax, as calculated herein. The tax shall be the difference computed by subtracting the tax imposed under subsection (b) of section 12-700 from the product of the nonresident individual's Connecticut minimum tax, as provided in subdivision (26) of subsection (a) of section 12-701, multiplied by a fraction, the numerator of which is the amount of income associated with the nonresident individual's adjusted federal tentative minimum tax that is derived from or connected with sources within this state, as such phrase is defined in sections 12-711 and 12-713, and the denominator of which is the amount of income associated with the nonresident individual's adjusted federal tentative minimum tax that is derived from or connected with sources within and without this state. The provisions of this subsection shall apply to nonresident trusts and estates, as defined in said section 12-701, and, wherever reference is made in this section to nonresident individuals, such reference shall be construed to include nonresident trusts and estates, provided any reference to a nonresident individual's Connecticut adjusted gross income shall be construed, in the case of a nonresident trust or estate, to mean the nonresident trust or estate's Connecticut taxable income.

(c) Every part-year resident individual, as defined in said section 12-701, subject to and required to pay the federal alternative minimum tax under Section 55 of the Internal Revenue Code shall pay, in addition to the tax imposed under section 12-700, the net Connecticut minimum tax, as calculated herein. The tax shall be the difference computed by subtracting the tax imposed under subsection (c) of section 12-700 from the product of the part-year resident individual's Connecticut minimum tax, as provided in subdivision (26) of subsection (a) of section 12-701, multiplied by a fraction, the numerator of which is the amount of income associated with the part-year resident individual's adjusted federal tentative minimum tax derived from or connected with sources within this state, as such phrase is defined in section 12-717, and the denominator of which is the amount of income associated with the part-year resident individual's adjusted federal tentative minimum tax that is derived from or connected with sources within and without this state. For the purposes of such calculation, the provisions of subsection (c) of said section 12-717 providing for the accrual of items of income, gain, loss or deduction shall apply to the calculation of the part-year resident individual's adjusted federal tentative minimum tax. The provisions of this subsection shall apply to part-year resident trusts, as defined in said section 12-701, and, wherever reference is made in this section to part-year resident individuals, such reference shall be construed to include part-year resident trusts, provided any reference to a part-year resident individual's Connecticut adjusted gross income shall be construed, in the case of a part-year resident trust, to mean the part-year resident trust's Connecticut taxable income.

(d) (1) For taxable years beginning on or after January 1, 1994, a credit shall be allowed as provided herein in an amount equal to the excess, if any, of the adjusted net Connecticut minimum tax imposed for all prior taxable years beginning on or after January 1, 1993, over the amount allowable as a credit under this subsection for such prior taxable years.

(2) The credit allowable for a taxable year under this subsection is limited to the amount, if any, by which (A)(i) the tax imposed under section 12-700, (ii) less the credit, if any, allowed under section 12-704 exceeds (B)(i) the Connecticut minimum tax, determined without regard to whether the individual or the trust or estate is subject to and required to pay for that taxable year the federal alternative minimum tax under Section 55 of the Internal Revenue Code, (ii) less the credit, if any, allowed under subsection (e) of this section.

(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 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.

(P.A. 93-74, S. 54, 67; 93-332, S. 15, 42; May Sp. Sess. P.A. 94-4, S. 70, 85; P.A. 95-5, S. 4, 6; 95-160, S. 64, 69; P.A. 97-286, S. 1, 8; P.A. 00-174, S. 37, 83.)

History: P.A. 93-74 effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1993; P.A. 93-332 amended Subsecs. (a) and (c) to make technical changes deleting reference to rate of 23% of the “adjusted federal tentative minimum tax”, effective June 25, 1993, and applicable to taxable years commencing on or after January 1, 1993; May Sp. Sess. P.A. 94-4, in Subsecs. (a) to (d), inclusive, made changes in tax in order to based said tax on the adjusted federal tentative minimum tax, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1993; P.A. 95-5 amended Subsec. (d)(2) to add new Subparas. (A)(ii) and (B)(ii) re less credit under Subsec. (e), effective April 13, 1995, and applicable to taxable years commencing on or after January 1, 1995; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 97-286 amended Subsec. (d) to make technical changes, effective June 26, 1997, and applicable to taxable years commencing on or after January 1, 1997; P.A. 00-174 amended Subsec. (e) to eliminate a credit for tax payments to provinces of Canada, effective May 26, 2000, and applicable to taxable years commencing on or after January 1, 2000.

Subsec. (d):

When application of Subdiv. (2) resulted in double taxation and a mathematical impossibility for a taxpayer to recoup a credit due to wording of statute, court provided equitable relief under Sec. 12-730. 98 CA 439.

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Sec. 12-700b. Computation of tax for withholding from wages and other payments and for payment of estimated tax. Section 12-700b is repealed, effective October 1, 2002.

(P.A. 95-160, S. 68, 69; P.A. 96-139, S. 12, 13; P.A. 97-322, S. 6, 9; P.A. 99-173, S. 8, 65; S.A. 02-12, S. 1.)

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Sec. 12-700c. Use tax table in personal income tax return form. The Commissioner of Revenue Services shall revise the personal income tax return form to include in such form a statement of the rate of the use tax imposed pursuant to section 12-411, and a table listing the amount of tax due that corresponds to the amount spent.

(June Sp. Sess. P.A. 09-3, S. 115.)

History: June Sp. Sess. P.A. 09-3 effective September 9, 2009.

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Sec. 12-701. Definitions. Regulations. (a) For purposes of this chapter:

(1) “Resident of this state” means any natural person (A) who is domiciled in this state, unless (i) the person maintains no permanent place of abode in this state, maintains a permanent place of abode elsewhere and spends in the aggregate not more than thirty days of the taxable year in this state, 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.

(2) “Nonresident of this state” means any natural person who is not a resident of this state for any portion of the taxable year.

(3) “Part-year resident of this state” means any natural person who is not either a resident of this state for the entire taxable year or a nonresident of this state for the entire taxable year.

(4) “Resident trust or estate” means (A) the estate of a decedent who at the time of his death was a resident of this state, (B) the estate of a person who, at the time of commencement of a case under Title 11 of the United States Code, was a resident of this state, (C) a trust, or a portion of a trust, consisting of property transferred by will of a decedent who at the time of his death was a resident of this state, and (D) a trust, or a portion of a trust, consisting of the property of (i) a person who was a resident of this state at the time the property was transferred to the trust if the trust was then irrevocable, (ii) a person who, if the trust was revocable at the time the property was transferred to the trust, and has not subsequently become irrevocable, was a resident of this state at the time the property was transferred to the trust or (iii) a person who, if the trust was revocable when the property was transferred to the trust but the trust has subsequently become irrevocable, was a resident of this state at the time the trust became irrevocable. For purposes of this chapter, if any trust or portion of a trust, other than a trust created by the will of a decedent, has one or more nonresident noncontingent beneficiaries, the Connecticut taxable income of the trust, as defined in subdivision (9) of this subsection, shall be modified as follows: The Connecticut taxable income of the trust shall be the sum of all such income derived from or connected with sources within this state and that portion of such income derived from or connected with all other sources which is derived by applying to all such income derived from or connected with all other sources a fraction the numerator of which is the number of resident noncontingent beneficiaries and the denominator of which is the total number of noncontingent beneficiaries. For purposes of section 12-700a, if any trust or portion of a trust, other than a trust created by the will of a decedent, has one or more nonresident noncontingent beneficiaries, its adjusted federal alternative minimum taxable income, as defined in section 12-700a shall be modified as follows: The adjusted federal alternative minimum taxable income of the trust shall be the sum of all such income derived from or connected with sources within this state and that portion of such income derived from or connected with all other sources which is derived by applying to all such income derived from or connected with all other sources a fraction, the numerator of which is the number of resident noncontingent beneficiaries and the denominator of which is the total number of noncontingent beneficiaries. As used in this subdivision, “noncontingent beneficiary” means a beneficiary whose interest is not subject to a condition precedent.

(5) “Nonresident trust or estate” means any trust or estate other than a resident trust or estate or a part-year resident trust.

(6) “Part-year resident trust” means any trust which is not either a resident trust or a nonresident trust for the entire taxable year.

(7) “Taxable year” means taxable year as determined in accordance with section 12-708.

(8) “Connecticut taxable income of a resident” means the Connecticut adjusted gross income of a natural person with respect to any taxable year reduced by the amount of the exemption provided in section 12-702.

(9) “Connecticut taxable income of a resident trust or estate” means the taxable income of the fiduciary of such trust or estate as determined for purposes of the federal income tax, to which (A) there shall be added or subtracted, as the case may be, the share of the trust or estate, as determined under section 12-716, in the Connecticut fiduciary adjustment, and (B) with respect to any trust, there shall be added the amount of any includable gain, reduced by any deductions properly allocable thereto, upon which a tax is imposed for the taxable year pursuant to Section 644 of the Internal Revenue Code.

(10) “Connecticut fiduciary adjustment” means the net positive or negative total of the following items relating to income, gain, loss or deduction of a trust or estate:

(A) There shall be added together:

(i) 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 that federal law exempts from federal income tax but does not exempt from state income taxes;

(iv) 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;

(v) To the extent deductible in determining federal taxable income prior to deductions relating to distributions to beneficiaries, any income taxes imposed by this state;

(vi) To the extent deductible in determining federal taxable income prior to deductions relating to distributions to beneficiaries, 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;

(vii) Expenses paid or incurred during the taxable year for the production or collection of income which is exempt from tax 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 taxation under this chapter, to the extent that such expenses and premiums are deductible in determining federal taxable income prior to deductions relating to distributions to beneficiaries;

(viii) To the extent deductible in determining federal taxable income prior to deductions relating to distributions to beneficiaries, the deduction allowable as qualified domestic production activities income, pursuant to Section 199 of the Internal Revenue Code; and

(ix) To the extent not includable in federal taxable income prior to deductions relating to distributions to beneficiaries, the total amount of a lump sum distribution for the taxable year.

(B) There shall be subtracted from the sum of such items:

(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) With respect to any trust or estate that is a shareholder of an S corporation which is carrying on, or that 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 multiplied by such corporation's apportionment fraction, if any, as determined in accordance with section 12-218;

(iv) 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;

(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 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;

(vi) 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 taxable income prior to deductions relating to distributions to beneficiaries;

(vii) Ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income that 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 taxable income prior to deductions relating to distributions to beneficiaries; and

(viii) The amount of any refund or credit for overpayment of income taxes imposed by this state, to the extent properly includable in gross income for federal income tax purposes for the taxable year and to the extent deductible in determining federal taxable income prior to deductions relating to distributions to beneficiaries for the preceding taxable year.

(11) “Estimated tax” means the amount which the individual estimates to be his income tax under this chapter for the taxable year less the amount which such individual estimates to be the sum of any credits allowable for tax withheld.

(12) “Required annual payment” means the lesser of (A) ninety per cent of the tax shown on the return for the taxable year, or, if no return is filed, ninety per cent of the tax for such year, or (B) if the preceding taxable year was a taxable year of twelve months and the individual filed a return for the preceding taxable year, one hundred per cent of the tax shown on the return of the individual for such preceding taxable year.

(13) “Regulated investment company” means a regulated investment company as defined in Section 851 of the Internal Revenue Code.

(14) “Exempt dividends” means any dividend or part thereof, other than a capital gain dividend, paid by a regulated investment company and designated by it as an exempt dividend, in accordance with section 12-718, in a written notice mailed to its shareholders not later than sixty days after the close of its taxable year.

(15) “Taxpayer” means any person, trust or estate subject to the tax imposed under this chapter.

(16) “Internal Revenue Code” means the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended.

(17) “S corporation” means any corporation which is an S corporation for federal income tax purposes.

(18) “Person” means a person as defined in section 12-1, but shall not include any corporation or association which is taxable as a corporation for the purposes of chapter 208, provided, for purposes of sections 12-735, 12-736 and 12-737, the term “person” shall include an individual, corporation or partnership and any officer or employee of any corporation, including a dissolved corporation, and a member or employee of any partnership who, as such officer, employee or member, is under a duty to perform the act in respect of which the violation occurs.

(19) “Adjusted gross income” means the adjusted gross income of a natural person with respect to any taxable year, as determined for federal income tax purposes and as properly reported on such person's federal income tax return.

(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;

(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;

(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;

(ix) For property placed in service after September 27, 2017, any additional allowance for depreciation under subsection (k) of Section 168 of the Internal Revenue Code, to the extent deductible in determining federal adjusted gross income;

(x) To the extent deductible in determining federal adjusted gross income, the deduction allowable as qualified domestic production activities income, pursuant to Section 199 of the Internal Revenue Code;

(xi) To the extent not properly includable in gross income for federal income tax purposes for the taxable year, any income from the discharge of indebtedness, in taxable years ending after December 31, 2008, in connection with any reacquisition, after December 31, 2008, and before January 1, 2011, of an applicable debt instrument or instruments, as those terms are defined in Section 108 of the Internal Revenue Code, as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009, the inclusion of which income in federal gross income for the taxable year is deferred, as provided by said Section 1231;

(xii) To the extent not properly includable in gross income for federal income tax purposes, an amount equal to (I) any distribution from a manufacturing reinvestment account not used in accordance with subdivision (3) of subsection (c) of section 32-9zz to the extent that a contribution to such account was subtracted from federal adjusted gross income pursuant to clause (xix) of subparagraph (B) of this subdivision in computing Connecticut adjusted gross income for the current or a preceding taxable year, and (II) any return of money from a manufacturing reinvestment account pursuant to subsection (d) of section 32-9zz to the extent that a contribution to such account was subtracted from federal adjusted gross income pursuant to clause (xix) of subparagraph (B) of this subdivision in computing Connecticut adjusted gross income for the current or a preceding taxable year;

(xiii) To the extent not properly includable in gross income for federal income tax purposes, an amount equal to any compensation required to be recognized under Section 457A of the Internal Revenue Code that is attributable to services performed within this state; and

(xiv) For taxable years commencing on or after January 1, 2018, eighty per cent of any deduction claimed for federal purposes under Section 179 of the Internal Revenue Code.

(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) To the extent properly includable in gross income for federal income tax purposes, 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;

(iv) To the extent properly includable in gross income for federal income tax purposes and not otherwise subtracted from federal adjusted gross income pursuant to clause (x) of this subparagraph in computing Connecticut adjusted gross income, any tier 1 railroad retirement benefits;

(v) To the extent any additional allowance for depreciation under Section 168(k) of the Internal Revenue Code for property placed in service after September 27, 2017, was added to federal adjusted gross income pursuant to subparagraph (A)(ix) of this subdivision in computing Connecticut adjusted gross income, twenty-five per cent of such additional allowance for depreciation in each of the four succeeding taxable years;

(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 taxable years commencing prior to January 1, 2019, 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, 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;

(II) For taxable years commencing prior to January 1, 2019, 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, 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 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;

(III) For the taxable year commencing January 1, 2019, and each taxable year thereafter, 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 seventy-five thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, 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 one hundred 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 one hundred thousand dollars, an amount equal to the Social Security benefits includable for federal income tax purposes; and

(IV) For the taxable year commencing January 1, 2019, and each taxable year thereafter, 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 seventy-five thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is seventy-five thousand dollars or more, 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 one hundred 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 one hundred thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes 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;

(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;

(xiii) To the extent allowable under section 12-701a, contributions to accounts established pursuant to 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;

(xiv) To the extent properly includable in gross income for federal income tax purposes, the amount of any Holocaust victims' settlement payment received in the taxable year by a Holocaust victim;

(xv) To the extent properly includable in gross income for federal income tax purposes of an account holder, as defined in section 31-51ww, interest earned on funds deposited in the individual development account, as defined in section 31-51ww, of such account holder;

(xvi) To the extent properly includable in the gross income for federal income tax purposes of a designated beneficiary, as defined in section 3-123aa, interest, dividends or capital gains earned on contributions to accounts established for the designated beneficiary pursuant to the Connecticut Homecare Option Program for the Elderly established by sections 3-123aa to 3-123ff, inclusive;

(xvii) To the extent properly includable in gross income for federal income tax purposes, any income received from the United States government as retirement pay for a retired member of (I) the Armed Forces of the United States, as defined in Section 101 of Title 10 of the United States Code, or (II) the National Guard, as defined in Section 101 of Title 10 of the United States Code;

(xviii) To the extent properly includable in gross income for federal income tax purposes for the taxable year, any income from the discharge of indebtedness in connection with any reacquisition, after December 31, 2008, and before January 1, 2011, of an applicable debt instrument or instruments, as those terms are defined in Section 108 of the Internal Revenue Code, as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009, to the extent any such income was added to federal adjusted gross income pursuant to subparagraph (A)(xi) of this subdivision in computing Connecticut adjusted gross income for a preceding taxable year;

(xix) To the extent not deductible in determining federal adjusted gross income, the amount of any contribution to a manufacturing reinvestment account established pursuant to section 32-9zz in the taxable year that such contribution is made;

(xx) To the extent properly includable in gross income for federal income tax purposes, (I) for the taxable year commencing January 1, 2015, ten per cent of the income received from the state teachers' retirement system, (II) for the taxable years commencing January 1, 2016, to January 1, 2020, inclusive, twenty-five per cent of the income received from the state teachers' retirement system, and (III) for the taxable year commencing January 1, 2021, and each taxable year thereafter, fifty per cent of the income received from the state teachers' retirement system or, for a taxpayer whose federal adjusted gross income does not exceed the applicable threshold under clause (xxi) of this subparagraph, the percentage pursuant to said clause of the income received from the state teachers' retirement system, whichever deduction is greater;

(xxi) To the extent properly includable in gross income for federal income tax purposes, except for retirement benefits under clause (iv) of this subparagraph and retirement pay under clause (xvii) of this subparagraph, 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 seventy-five thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, or as a head of household whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, 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 one hundred thousand dollars, (I) for the taxable year commencing January 1, 2019, fourteen per cent of any pension or annuity income, (II) for the taxable year commencing January 1, 2020, twenty-eight per cent of any pension or annuity income, (III) for the taxable year commencing January 1, 2021, forty-two per cent of any pension or annuity income, and (IV) for the taxable year commencing January 1, 2022, and each taxable year thereafter, one hundred per cent of any pension or annuity income;

(xxii) The amount of lost wages and medical, travel and housing expenses, not to exceed ten thousand dollars in the aggregate, incurred by a taxpayer during the taxable year in connection with the donation to another person of an organ for organ transplantation occurring on or after January 1, 2017;

(xxiii) To the extent properly includable in gross income for federal income tax purposes, the amount of any financial assistance received from the Crumbling Foundations Assistance Fund or paid to or on behalf of the owner of a residential building pursuant to sections 8-442 and 8-443;

(xxiv) To the extent properly includable in gross income for federal income tax purposes, the amount calculated pursuant to subsection (b) of section 12-704g for income received by a general partner of a venture capital fund, as defined in 17 CFR 275.203(l)-1, as amended from time to time;

(xxv) To the extent any portion of a deduction under Section 179 of the Internal Revenue Code was added to federal adjusted gross income pursuant to subparagraph (A)(xiv) of this subdivision in computing Connecticut adjusted gross income, twenty-five per cent of such disallowed portion of the deduction in each of the four succeeding taxable years;

(xxvi) To the extent properly includable in gross income for federal income tax purposes, 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 seventy-five thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, or as a head of household whose federal adjusted gross income for such taxable year is less than seventy-five thousand dollars, 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 one hundred thousand dollars, (I) for the taxable year commencing January 1, 2023, twenty-five per cent of any distribution from an individual retirement account other than a Roth individual retirement account, (II) for the taxable year commencing January 1, 2024, fifty per cent of any distribution from an individual retirement account other than a Roth individual retirement account, (III) for the taxable year commencing January 1, 2025, seventy-five per cent of any distribution from an individual retirement account other than a Roth individual retirement account, and (IV) for the taxable year commencing January 1, 2026, and each taxable year thereafter, any distribution from an individual retirement account other than a Roth individual retirement account; and

(xxvii) To the extent properly includable in gross income for federal income tax purposes, for the taxable year commencing January 1, 2022, the amount or amounts paid or otherwise credited to any eligible resident of this state under (I) the 2020 Earned Income Tax Credit enhancement program from funding allocated to the state through the Coronavirus Relief Fund established under the Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136, and (II) the 2021 Earned Income Tax Credit enhancement program from funding allocated to the state pursuant to Section 9901 of Subtitle M of Title IX of the American Rescue Plan Act of 2021, P.L. 117-2.

(C) 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.

(21) “Commissioner” means the Commissioner of Revenue Services or his authorized agent.

(22) “Department” means the Department of Revenue Services.

(23) “Federal tentative minimum tax” means tentative minimum tax, as determined pursuant to Section 55 of the Internal Revenue Code, reduced by the alternative minimum tax foreign tax credit.

(24) “Adjusted federal tentative minimum tax” of an individual means such individual's federal tentative minimum tax or, in the case of an individual whose Connecticut adjusted gross income includes modifications described in subparagraph (A)(i), (A)(ii), (A)(v), (A)(vi), (A)(vii) or (A)(viii) of subdivision (20) of this subsection or subparagraph (B)(i), (B)(ii), (B)(v), (B)(vi), (B)(vii), (B)(viii), (B)(ix), (B)(x), (B)(xiii) or (B)(xv) of subdivision (20) of this subsection, the amount that would have been the federal tentative minimum tax if such tax were calculated by including, to the extent not includable in federal alternative minimum taxable income, the modifications described in subparagraph (A)(i), (A)(ii), (A)(v), (A)(vi), (A)(vii) or (A)(viii) of subdivision (20) of this subsection, by excluding, to the extent includable in federal alternative minimum taxable income, the modifications described in subparagraph (B)(i), (B)(ii), (B)(v), (B)(vi), (B)(vii), (B)(viii), (B)(ix), (B)(x), (B)(xiii) or (B)(xv) of subdivision (20) of this subsection, and by excluding, to the extent includable in federal alternative minimum taxable income, the amount of any interest income or exempt-interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, from obligations that are 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 that is created under the laws of the state of Connecticut, or from obligations that are issued by or on behalf of any territory or possession of the United States, any political subdivision of such territory or possession, or public instrumentality, authority, district or similar public entity of such territory or possession, the income with respect to which taxation by any state is prohibited by federal law. If such individual is a beneficiary of a trust or estate, then, in calculating his or her federal tentative minimum tax, his or her federal alternative taxable income shall be increased or decreased, as the case may be, by the net amount of such individual's proportionate share of the Connecticut fiduciary adjustment relating to modifications that are described in, to the extent not includable in federal alternative minimum taxable income, subparagraph (A)(i), (A)(ii), (A)(v), (A)(vi), (A)(vii) or (A)(viii) of subdivision (20) of this subsection or, to the extent includable in federal alternative minimum taxable income, subparagraph (B)(i), (B)(ii), (B)(v), (B)(vi), (B)(vii), (B)(viii), (B)(ix), (B)(x), (B)(xiii) or (B)(xv) of subdivision (20) of this subsection.

(25) “Net Connecticut minimum tax” means the amount by which the Connecticut minimum tax exceeds the income tax imposed under section 12-700.

(26) (A) “Connecticut minimum tax” of an individual means the lesser of (i) nineteen per cent of the adjusted federal tentative minimum tax, as defined in subdivision (24) of this subsection, or (ii) five and one-half per cent of the adjusted federal alternative minimum taxable income, as defined in subdivision (30) of this subsection. (B) “Connecticut minimum tax” of a trust or estate means the lesser of (i) nineteen per cent of the adjusted federal tentative minimum tax, as defined in subdivision (28) of this subsection, or (ii) five and one-half per cent of the adjusted federal alternative minimum taxable income, as defined in subdivision (31) of this subsection.

(27) “Adjusted net Connecticut minimum tax” means (A) if the Connecticut minimum tax is calculated under subparagraph (A)(i) or (B)(i), as the case may be, of subdivision (26) of this subsection, the excess, if any, of (i) the net Connecticut minimum tax, less the credit allowed under subsection (e) of section 12-700a, over (ii) the amount that would have been the net Connecticut minimum tax provided the adjustments and items of preference specified in Section 53(d) of the Internal Revenue Code had been used in determining the net Connecticut minimum tax, less the credit that would have been allowed under subsection (e) of section 12-700a for a similar tax determined by using only the adjustments and items of preference specified in Section 53(d) of the Internal Revenue Code, or (B) if the Connecticut minimum tax is calculated under subparagraph (A)(ii) or (B)(ii), as the case may be, of subdivision (26) of this subsection, then the product of the excess that is described in subparagraph (A) of this subdivision and that is determined without regard to said subparagraph (A)(ii) or (B)(ii), as the case may be, of subdivision (26) of this subsection, multiplied by a fraction, the numerator of which is the net Connecticut minimum tax, as if the Connecticut minimum tax were calculated under said subparagraph (A)(ii) or (B)(ii), as the case may be, of subdivision (26) of this subsection and the denominator of which is the net Connecticut minimum tax, as if the Connecticut minimum tax were calculated under said subparagraph (A)(i) or (B)(i), as the case may be, of subdivision (26) of this subsection.

(28) “Adjusted federal tentative minimum tax” of a trust or estate means its federal tentative minimum tax or, in the case of a trust or estate whose Connecticut taxable income includes modifications described in subparagraph (A)(i), (A)(ii), (A)(iv), (A)(v), (A)(vi) or (A)(vii) of subdivision (10) of this subsection or subparagraph (B)(i), (B)(ii), (B)(iii), (B)(iv), (B)(v), (B)(vi) or (B)(vii) of subdivision (10) of this subsection, the amount that would have been the federal tentative minimum tax if such tax were calculated by including, to the extent not includable in federal alternative minimum taxable income, the modifications described in subparagraph (A)(i), (A)(ii), (A)(iv), (A)(v), (A)(vi) or (A)(vii) of subdivision (10) of this subsection, by excluding, to the extent includable in federal alternative minimum taxable income, the modifications described in subparagraph (B)(i), (B)(ii), (B)(iii), (B)(iv), (B)(v), (B)(vi) or (B)(vii) of subdivision (10) of this subsection, and by excluding, to the extent includable in federal alternative minimum taxable income, the amount of any interest income or exempt-interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, from obligations that are 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 that is created under the laws of the state of Connecticut, or from obligations that are issued by or on behalf of any territory or possession of the United States, any political subdivision of such territory or possession, or public instrumentality, authority, district or similar public entity of such territory or possession, the income with respect to which taxation by any state is prohibited by federal law. If such trust or estate is itself a beneficiary of a trust or estate, then, for purposes of calculating its adjusted federal alternative minimum tax, its federal alternative minimum taxable income shall also be increased or decreased, as the case may be, by the net amount of such trust or estate's proportionate share of the Connecticut fiduciary adjustment relating to modifications that are described, to the extent not includable in federal alternative minimum taxable income, in subparagraph (A)(i), (A)(ii), (A)(iv), (A)(v), (A)(vi) or (A)(vii) of subdivision (10) of this subsection or, to the extent includable in federal alternative minimum taxable income, subparagraph (B)(i), (B)(ii), (B)(iii), (B)(iv), (B)(v), (B)(vi) or (B)(vii) of subdivision (10) of this subsection.

(29) “Federal alternative minimum taxable income” means alternative minimum taxable income, as defined in Section 55(b)(2) of the Internal Revenue Code.

(30) “Adjusted federal alternative minimum taxable income” of an individual means his or her federal alternative minimum taxable income or, in the case of an individual whose Connecticut adjusted gross income includes modifications described in subparagraph (A)(i), (A)(ii), (A)(v), (A)(vi), (A)(vii) or (A)(viii) of subdivision (20) of this subsection or subparagraph (B)(i), (B)(ii), (B)(v), (B)(vi), (B)(vii), (B)(viii), (B)(ix), (B)(x), (B)(xiii) or (B)(xv) of subdivision (20) of this subsection, the amount that would have been the federal alternative minimum taxable income if such amount were calculated by including, to the extent not includable in federal alternative minimum taxable income, the modifications described in subparagraph (A)(i), (A)(ii), (A)(v), (A)(vi), (A)(vii) or (A)(viii) of subdivision (20) of this subsection, by excluding, to the extent includable in federal alternative minimum taxable income, the modifications described in subparagraph (B)(i), (B)(ii), (B)(v), (B)(vi), (B)(vii), (B)(viii), (B)(ix), (B)(x), (B)(xiii) or (B)(xv) of subdivision (20) of this subsection, and by excluding, to the extent includable in federal alternative minimum taxable income, the amount of any interest income or exempt-interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, from obligations that are 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 that is created under the laws of the state of Connecticut, or from obligations that are issued by or on behalf of any territory or possession of the United States, any political subdivision of such territory or possession, or public instrumentality, authority, district or similar public entity of such territory or possession, the income with respect to which taxation by any state is prohibited by federal law. If such individual is a beneficiary of a trust or estate, then, for purposes of calculating his or her adjusted federal alternative minimum taxable income, his or her federal alternative minimum taxable income shall also be increased or decreased, as the case may be, by the net amount of such individual's proportionate share of the Connecticut fiduciary adjustment relating to modifications to the extent not includable in federal alternative minimum taxable income, that are described in subparagraph (A)(i), (A)(ii), (A)(v), (A)(vi), (A)(vii) or (A)(viii) of subdivision (20) of this subsection or, to the extent includable in federal alternative minimum taxable income, subparagraph (B)(i), (B)(ii), (B)(v), (B)(vi), (B)(vii), (B)(viii), (B)(ix), (B)(x), (B)(xiii) or (B)(xv) of subdivision (20) of this subsection.

(31) “Adjusted federal alternative minimum taxable income” of a trust or estate means its federal alternative minimum taxable income or, in the case of a trust or estate whose Connecticut taxable income includes modifications described in subparagraph (A)(i), (A)(ii), (A)(iv), (A)(v), (A)(vi) or (A)(vii) of subdivision (10) of this subsection or subparagraph (B)(i), (B)(ii), (B)(iii), (B)(iv), (B)(v), (B)(vi) or (B)(vii) of subdivision (10) of this subsection, the amount that would have been the federal alternative minimum taxable income if such amount were calculated by including, to the extent not includable in federal alternative minimum taxable income, the modifications described in subparagraph (A)(i), (A)(ii), (A)(iv), (A)(v), (A)(vi) or (A)(vii) of subdivision (10) of this subsection, by excluding, to the extent includable in federal alternative minimum taxable income, the modifications described in subparagraph (B)(i), (B)(ii), (B)(iii), (B)(iv), (B)(v), (B)(vi) or (B)(vii) of subdivision (10) of this subsection, and by excluding, to the extent includable in federal alternative minimum taxable income, the amount of any interest income or exempt-interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, from obligations that are 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 that is created under the laws of the state of Connecticut, or from obligations that are issued by or on behalf of any territory or possession of the United States, any political subdivision of such territory or possession, or public instrumentality, authority, district or similar public entity of such territory or possession, the income with respect to which taxation by any state is prohibited by federal law. If such trust or estate is itself a beneficiary of a trust or estate, then, for purposes of calculating its adjusted federal alternative minimum taxable income, its federal alternative minimum taxable income shall also be increased or decreased, as the case may be, by the net amount of such trust or estate's proportionate share of the Connecticut fiduciary adjustment relating to modifications that are described, to the extent not includable in federal alternative minimum taxable income, in subparagraph (A)(i), (A)(ii), (A)(iv), (A)(v), (A)(vi) or (A)(vii) of subdivision (10) of this subsection or, to the extent includable in federal alternative minimum taxable income, subparagraph (B)(i), (B)(ii), (B)(iii), (B)(iv), (B)(v), (B)(vi) or (B)(vii) of subdivision (10) of this subsection.

(32) “Pay” means the payment by an individual of the tax imposed on his Connecticut adjusted gross income or the payment by a fiduciary of a trust or estate of the tax imposed on its Connecticut taxable income, and includes the payment over by an employer or other person of the tax that such employer or other person is required to collect, deduct or withhold and to truthfully account for.

(33) “Partnership” means a partnership as defined in Section 7701(a)(2) of the Internal Revenue Code and the regulations adopted thereunder, as from time to time amended, and any reference in this chapter or in regulations adopted under this chapter to a partnership shall include a limited liability company that is treated as a partnership for federal income tax purposes.

(34) “Partner” means a partner as defined in Section 7701(a)(2) of the Internal Revenue Code and the regulations adopted thereunder, as from time to time amended, and any reference in this chapter or in regulations adopted under this chapter to a partner shall include a member of a limited liability company that is treated as a partnership for federal income tax purposes.

(35) “Holocaust victim settlement payment” means a payment received: (A) As a result of a settlement of the action entitled In re Holocaust Victims' Asset Litigation, C.A. No. 96-4849, in the United States District Court for the Eastern District of New York; (B) under the German act regulating unresolved property claims, also known as Gesetz zur Regelung offener Vermogensfragen, or any other foreign law providing payments for Holocaust claims; or (C) as a result of the settlement of any other Holocaust claim, including insurance claims, claims relating to looted art, claims relating to looted financial assets, or claims relating to slave labor wages. “Holocaust victim settlement payment” includes any interest on any such payment accumulated or accrued through the date of payment. “Holocaust victim settlement payment” does not include any amount received from any asset acquired with any asset recovered, returned, or otherwise given as compensation to a Holocaust victim as a Holocaust victim settlement payment or with the proceeds from the sale of any asset recovered, returned, or otherwise given as compensation to a Holocaust victim as a Holocaust victim settlement payment.

(36) “Holocaust victim” means an individual who died or lost property as a result of discriminatory laws, policies or actions targeted against discrete groups of individuals based on race, religion, ethnicity, sexual orientation or national origin, whether or not the individual was actually a member of any of those groups, or because the individual assisted or allegedly assisted any of those groups, between January 1, 1929, and December 31, 1945, in the country of Nazi Germany, areas occupied by Nazi Germany, those European countries allied with Nazi Germany, areas occupied by those European countries allied with Nazi Germany or any other neutral European country or area in Europe under the influence or threat of invasion by Nazi Germany or by any European country allied with or occupied by Nazi Germany. “Holocaust victim” includes the spouse or descendant of a Holocaust victim.

(37) “Organ” means human bone marrow or all or part of a human liver, pancreas, kidney, intestine or lung.

(b) Any term used in this chapter has the same meaning as when used in a comparable context in the laws of the United States relating to income taxes unless a different meaning is clearly required. Any reference in this chapter to the laws of the United States means the provisions of the Internal Revenue Code and any other provisions of the laws of the United States relating to income tax as the same may be or become effective, at any time or from time to time, for the taxable year. Terms preceded by the word “federal” refer to the corresponding terms defined in the laws of the United States.

(c) The commissioner shall, by regulation, define the term “derived from or connected with sources within this state” as used in this chapter.

(June Sp. Sess. P.A. 91-3, S. 52, 168; May Sp. Sess. P.A. 92-5, S. 2, 37; May Sp. Sess. P.A. 92-17, S. 11, 43, 59; P.A. 93-74, S. 38, 39, 57, 58, 67; 93-332, S. 27, 42; May Sp. Sess. P.A. 94-4, S. 26, 71–74, 85; P.A. 95-5, S. 1–3, 6; 95-160, S. 64, 69; P.A. 96-139, S. 9–11, 13; 96-175, S. 2, 3, 5; 96-180, S. 29–31, 166; 96-221, S. 22, 25; P.A. 97-286, S. 2, 3, 8; 97-309, S. 9, 23; 97-322, S. 7, 9; P.A. 98-110, S. 4, 27; 98-252, S. 58, 80; 98-255, S. 3, 24; P.A. 99-173, S. 1, 65; P.A. 00-82, S. 1–4, 6; 00-174, S. 38, 39, 83; 00-192, S. 6, 102; June Sp. Sess. P.A. 01-6, S. 35, 36, 85; May 9 Sp. Sess. P.A. 02-1, S. 77; P.A. 03-225, S. 13; June 30 Sp. Sess. P.A. 03-6, S. 72; P.A. 05-251, S. 71–73; P.A. 06-186, S. 76, 77; P.A. 07-130, S. 7, 8; P.A. 08-140, S. 1; June Sp. Sess. P.A. 09-3, S. 120, 121; June 19 Sp. Sess. P.A. 09-2, S. 5; June 12 Sp. Sess. P.A. 12-1, S. 196; P.A. 14-47, S. 50; 14-69, S. 3; 14-122, S. 99, 100; 14-155, S. 16; P.A. 15-179, S. 3; 15-244, S. 65; P.A. 17-147, S. 2; June Sp. Sess. P.A. 17-2, S. 342, 641, 642; June Sp. Sess. P.A. 17-4, S. 18; P.A. 18-26, S. 27; 18-49, S. 11; 18-147, S. 2; P.A. 19-117, S. 332; June Sp. Sess. P.A. 21-2, S. 433; P.A. 22-110, S. 32, 33; 22-118, S. 410.)

History: June Sp. Sess. P.A. 91-3, S. 52, effective August 22, 1991, and applicable to taxable years of taxpayers occurring on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; May Sp. Sess. P.A. 92-17 amended Subsec. (a)(4) to delete standards for nontaxation of a resident trust and to create a formula for modification of the Connecticut taxable income of a trust based on the residence of the beneficiaries, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1993, and added Subsec. (c), concerning a definition of the term “derived from or connected with sources within this state”, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 93-74 amended Subsec. (a)(12), deleting existing definition of “assumed tax” and replacing it with definition of “required annual payment”, amended Subsec. (a)(18), defining “person” by changing statutory citation from Sec. 1-1 to Sec. 12-1, made technical change in Subsec. (a)(20) and added Subdivs. (23) to (27), inclusive, to Subsec. (a) defining “federal tentative minimum tax”, “adjusted federal tentative minimum tax”, “net Connecticut minimum tax”, “Connecticut minimum tax” and “adjusted net Connecticut minimum tax”, effective May 19, 1993, and applicable to taxable years on and after January 1, 1993; P.A. 93-332 amended Subsec. (a)(4) to modify definition of “resident trust or estate” to include trust or estate which has one or more nonresident beneficiaries, effective June 25, 1993, and applicable to taxable years commencing on or after January 1, 1993; May Sp. Sess. P.A. 94-4 in Subsec. (a)(4) made changes in definition of “resident trust or estate” relative to the calculation of the alternative minimum tax, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1993, in Subsec. (a)(20) eliminated the modification for moving expenses and added a new Subpara. (x) re eliminating the federal increase in social security taxes, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1994, in Subsec. (a)(24) modified definition to exclude the amount of certain interest income or exempt-interest dividends, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1993, in Subsec. (a)(26) and (27) modified definitions of “Connecticut minimum tax” and “adjusted net Connecticut minimum tax” to provide that the Connecticut minimum tax is the lesser of 19% of the adjusted federal tentative minimum tax or 5% of the adjusted federal alternative minimum taxable income, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1993, and added Subdivs. (28) to (31), inclusive, defining “adjusted federal tentative minimum tax”, “federal alternative minimum taxable income”, “adjusted federal alternative minimum taxable income of an individual” and “adjusted federal alternative minimum taxable income of a trust or an estate”, respectively, effective June 9, 1994, and applicable to taxable years commencing on or after January 1, 1993; P.A. 95-5 amended Subsec. (a)(18) to include reference to Secs. 12-735 and 12-737, amended Subsec. (a)(26) and (27) to add a definition of “Connecticut minimum tax” of a trust or estate and to provide that adjusted net Connecticut minimum tax is less the credit under Sec. 12-700a(e) and made technical changes, and added new Subdiv. (32) defining “pay” effective April 13, 1995, and applicable to taxable years commencing on or after January 1, 1995; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 96-139 amended Subsec. (a)(10), (28) and (31) to make technical relettering and renumbering corrections, effective May 29, 1996; P.A. 96-175 amended Subsec. (a)(10) and (20) to add reference to Sec. 12-217(c), effective May 31, 1996, and applicable to income years commencing on or after January 1, 1997; P.A. 96-180 amended Subsec. (a)(10), (28) and (31) to make technical relettering and renumbering changes in Subpara. and clause designations, effective June 3, 1996; P.A. 96-221 added Subsec. (a)(10)(B)(viii) re amount of any refund or credit for overpayment of tax, effective June 4, 1996, and applicable to income years commencing on or after January 1, 1992 (Revisor's note: The Revisors editorially corrected clerical errors in Subdivs. (28), (30) and (31) by changing references to “... such territory of possession, ...” to “... such territory or possession, ...” for consistency with the other references in the section); P.A. 97-286 amended Subsec. (a)(27) to make technical changes to definition and to add new Subdivs. (33) and (34) defining “partnership” and “partner”, effective June 26, 1997, and applicable to taxable years commencing on or after January 1, 1997; P.A. 97-309 amended Subsec. (a)(20)(B)(x) to increase the amount of Social Security income that is exempt, effective July 1, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 97-322 changed effective date of P.A. 97-309 but without affecting this section; P.A. 98-110 added Subsec. (a)(20)(B)(xi) excluding amount of rebate, effective May 19, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 98-252 and P.A. 98-255 both added Subsec. (a)(20)(B)(xii) re distributions from qualified state tuition programs, effective July 1, 1998; P.A. 99-173 amended Subsec. (a)(20) to exempt the remaining 25% of taxable Social Security income for joint filers and heads of household with an adjusted gross income under $60,000 and single filers with an adjusted gross income under $50,000, effective June 23, 1999, and applicable to taxable years commencing on or after January 1, 1999; P.A. 00-82 amended Subsec. (a)(20) to exclude Holocaust victim's settlement payments from Connecticut adjusted gross income, amended Subsec. (a)(24) and (30) to make said Subdivs. consistent with substantive changes in said act and to make technical changes for purposes of gender neutrality and added Subsec. (a)(35) and (36) defining “Holocaust victim settlement payment” and “Holocaust victim”, respectively, effective May 26, 2000, and applicable to taxable years commencing on or after January 1, 2000; P.A. 00-174 amended Subsec. (a)(1) to modify the domicile provisions in the definition of “resident of this state” and amended Subsec. (a)(20) to eliminate a subtraction modification for tax refunds or credits from any province of Canada, to modify provisions in the Social Security benefit adjustment and to make technical changes, effective May 26, 2000, and applicable to taxable years commencing on or after January 1, 2000; P.A. 00-192 amended Subsec. (a)(20)(B) to delete reference to any province of Canada and to add provisions re interest earned on funds deposited in individual development accounts, effective January 1, 2001, and applicable to taxable years commencing on or after that date; June Sp. Sess. P.A. 01-6, S. 35 amended Subsec. (a)(19) to provide that “adjusted gross income” shall be the income that is properly reported on the taxpayer's federal return, effective July 1, 2001, and applicable to all open tax periods (Revisor's note: June Sp. Sess. P.A. 01-6, S. 36, provided as follows: “Sec. 36. The intent of the amendment made by section 35 of this act to subdivision (19) of subsection (a) of section 12-701 of the general statutes is to clarify that a natural person's adjusted gross income is not further modified in determining such person's Connecticut adjusted gross income for purposes of chapter 229 of the general statutes, except as expressly provided in subdivision (20) of subsection (a) of said section 12-701.”); May 9 Sp. Sess. P.A. 02-1 amended Subsec. (a)(20)(A) to require an addition to income for any allowance for depreciation under the federal Job Creation and Worker Assistance Act of 2002, effective July 1, 2002, and applicable to taxable years commencing on or after January 1, 2002; P.A. 03-225 amended Subsec. (a)(20)(B)(iv) and (v) to provide for a corresponding subtraction modification for the bonus depreciation “decoupling” adopted the previous year and to eliminate an overlap between Social Security and railroad retirement benefits, effective July 9, 2003, and applicable to taxable years commencing on or after January 1, 2003; June 30 Sp. Sess. P.A. 03-6 amended Subsec. (a)(26) to increase applicable percentage of alternative minimum taxable income from 5% to 5.5% and to make a technical change, effective August 20, 2003 and applicable to taxable years commencing on and after January 1, 2003; P.A. 05-251 added Subsec. (a)(20)(B)(xv) excluding 50% of military retirement pay, and amended Subsecs. (a)(24) and (a)(30) to add reference to Subsec. (a)(20)(B)(xv) re military retirement pay, effective June 30, 2005, and applicable for taxable years commencing on or after January 1, 2008; P.A. 06-186 added Subsec. (a)(20)(B)(xiii) re contributions to qualified state tuition programs, and redesignating existing clauses (xiii) to (xv) as clauses (xiv) to (xvi), effective July 1, 2006, and applicable to taxable years commencing on or after January 1, 2006; P.A. 07-130 amended Subsec. (a)(20)(B) by adding new clause (xvi) re contributions to accounts established for designated beneficiary pursuant to Connecticut Homecare Option Program for the Elderly, effective October 1, 2007, and applicable to taxable years commencing on or after January 1, 2007, and by redesignating existing clause (xvi) as clause (xvii), effective October 1, 2007, and applicable to taxable years commencing on or after January 1, 2008; P.A. 08-140 amended Subsec. (a)(20)(B)(xvi) by adding as allowable deduction dividends or capital gains earned on contributions to accounts established under Connecticut Homecare Option Program for the Elderly, effective July 1, 2008, and applicable to taxable years commencing on or after January 1, 2008; June Sp. Sess. P.A. 09-3 amended Subsec. (a) by adding Subdivs. (10)(A)(viii) and (20)(A)(x) re deduction for qualified domestic production activities income, effective September 9, 2009, and applicable to taxable years commencing on or after January 1, 2009; June 19 Sp. Sess. P.A. 09-2 amended Subsec. (a)(20) by adding Subpara. (A)(x), codified by the Revisors as Subpara. (A)(xi), and Subpara. (B)(xviii) re treatment of income from discharge of indebtedness, effective June 22, 2009, and applicable to taxable years ending after December 31, 2008; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a)(20) by adding clauses (xii) and (xiii) re distribution from a manufacturing reinvestment account in Subpara. (A) and adding clause (xix) re contribution to a manufacturing reinvestment account in Subpara. (B), effective June 15, 2012, and applicable to taxable years commencing on or after January 1, 2011; P.A. 14-47 amended Subsec. (a)(20)(B) by adding clause (xx) re deduction for income from state teachers' retirement system, effective July 1, 2015, and applicable to taxable years commencing on or after January 1, 2015; P.A. 14-69 amended Subsec. (a)(20)(A) by deleting former clause (xii) re manufacturing reinvestment account distribution and redesignating existing clause (xiii) as clause (xii), effective July 1, 2014, and applicable to taxable years commencing on or after January 1, 2014; P.A. 14-122 made technical changes in Subsecs. (a)(9) and (b); P.A. 14-155 amended Subsec. (a)(10)(A) by adding clause (ix) re lump sum distribution, effective June 11, 2014, and applicable to taxable years commencing on or after January 1, 2014; P.A. 15-179 made a technical change in Subsec. (a)(20)(B)(xviii), effective July 1, 2015; P.A. 15-244 amended Subsec. (a)(20)(B)(xvii) to increase deduction for Armed Forces and National Guard retirement income from 50 per cent of such income to any such income, effective July 1, 2015, and applicable to taxable years commencing on or after January 1, 2015; P.A. 17-147 amended Subsec. (a)(20)(A) by adding clause (xiii) re compensation required to be recognized under Sec. 457A of the Internal Revenue Code, effective July 1, 2017, and applicable to taxable years commencing on or after January 1, 2017; June Sp. Sess. P.A. 17-2 amended Subsec. (a)(20) by adding Subpara. (B)(xxi), codified by the Revisors as Subpara. (B)(xxiii), re amount of financial assistance received from Crumbling Foundations Assistance Fund or paid to or on behalf of owner pursuant to Secs. 8-442 and 8-443, effective October 31, 2017, and applicable to taxable years commencing on and after January 1, 2017, and amended Subsec. (a)(20)(B) by adding subclauses (III) and (IV) re deduction of Social Security benefits for taxable years commencing January 1, 2018, in clause (x), replacing “January 1, 2017” with “January 1, 2019” re implementation of 50 per cent deduction of teachers' retirement income, adding provision re percentage, if applicable, pursuant to clause (xxi) and adding subclause designators in clause (xx), adding clause (xxi) re deduction of pension or annuity income, adding clause (xxii) re deduction of lost wages and medical, travel and housing expenses incurred in connection with certain organ donations, and making technical and conforming changes, effective October 31, 2017, and applicable to taxable years commencing on or after January 1, 2017, and further amended Subsec. (a) by adding Subdiv. (37) re definition of “organ”, effective October 31, 2017, and applicable to taxable years commencing on or after January 1, 2017; June Sp. Sess. P.A. 17-4 amended Subsec. (a)(20)(B)(x) by replacing “2018” with “2019”, effective November 21, 2017; P.A. 18-26 amended Subsec. (a)(20) to make technical changes and add “and each taxable year thereafter,” in Subpara. (B)(xxi)(VII); P.A. 18-49 amended Subsec. (a)(20) by replacing “September 10, 2001, but prior to September 11, 2004, in taxable years ending after September 10, 2001” with “September 27, 2017” and deleting reference to Sec. 101 of the Job Creation and Worker Assistance Act of 2002 in Subpara. (A)(ix), adding Subpara. (A)(xiv) re 80 per cent addback of deduction claimed for federal purposes under Sec. 179 of Internal Revenue Code, deleting reference to Sec. 101 of Job Creation and Worker Assistance Act of 2002, replacing “December 31, 2001, but prior to September 10, 2004” with “September 27, 2017” and deleting reference to taxable year ending after December 31, 2001, in Subpara. (B)(v), adding Subpara. (B)(xxiv), codified by the Revisors as Subpara. (B)(xxv), re deduction of disallowed portion pursuant to Subpara. (A)(xiv), and making technical changes, effective May 31, 2018, and applicable to taxable years commencing on or after January 1, 2017; P.A. 18-147 amended Subsec. (a)(20)(B) by adding clause (xxiv) re deduction for venture capital income calculated pursuant to Sec. 12-704g, effective July 1, 2018, and applicable to taxable years commencing on or after January 1, 2018; P.A. 19-117 amended Subsec. (a)(20)(B)(xx) by replacing “January 1, 2017, and January 1, 2018” with “to January 1, 2020, inclusive” in subclause (II) re income received from state teachers' retirement system, and replacing “2019” with “2021” in subclause (III), and made a technical change in Subsec. (a)(20)(B)(xxiii), effective June 26, 2019, and applicable to taxable years commencing on or after January 1, 2019; June Sp. Sess. P.A. 21-2 amended Subsec. (a)(20)(B) by deleting “the percentage, if applicable, pursuant to” in clause (xx) and adding provision re taxpayer whose federal adjusted gross income does not exceed applicable threshold under clause (xxi), and adding clause (xxvi) re deductions for the taxable years commencing on and after January 1, 2023, for distribution from individual retirement account other than Roth individual retirement account, effective June 23, 2021; P.A. 22-110 amended Subsec. (a) by making technical changes in Subdivs. (10), (24), (26), (28), (30) and (31); P.A. 22-118 amended Subsec. (a)(20) by making 100 per cent of pension or annuity income deductible for the taxable year commencing January 1, 2022, and each taxable year thereafter for taxpayers with federal adjusted gross income below certain thresholds in Subpara. (B)(xxi)(IV), and adding Subpara. (B)(xxvii) re amount or amounts paid or otherwise credited under the 2020 and 2021 federal Earned Income Tax Credit enhancement programs, effective May 7, 2022.

Subsec. (a):

Federal tax benefit rule is incorporated into definition of “adjusted gross income”. 253 C. 761.

Cited. 44 CS 461. Subdiv. (4): Commerce and due process clauses do not invalidate Connecticut's tax on testamentary trust income. 45 CS 368.

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Sec. 12-701a. Subtraction for contributions to qualified state tuition program. The maximum amount that may be subtracted under subparagraph (B)(xiii) of subdivision (20) of subsection (a) of section 12-701 shall be equal to the amount of contributions to all accounts established pursuant to 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, but shall not exceed five thousand dollars for each individual taxpayer, or ten thousand dollars for taxpayers filing a joint return. Any amount of a contribution that is not subtracted by the taxpayer in the year for which the contribution is made, on or after January 1, 2006, may be carried forward as a subtraction from income for the succeeding five years; provided the amount subtracted shall not exceed the maximum allowed in each subsequent taxable year.

(P.A. 06-186, S. 78; P.A. 22-110, S. 34.)

History: P.A. 06-186 effective July 1, 2006, and applicable to taxable years commencing on or after January 1, 2006; P.A. 22-110 replaced “annual modification” with “amount that may be subtracted”.

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Sec. 12-702. Exemptions. (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 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-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 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, 2004, twelve thousand five hundred dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds 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 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, 2004, but prior to January 1, 2007, twelve thousand six hundred twenty-five dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds twenty-five thousand two hundred fifty 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 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, 2007, but prior to January 1, 2008, twelve thousand seven hundred fifty dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds 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 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, 2008, but prior to January 1, 2012, thirteen thousand dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds 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 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, 2012, but prior to January 1, 2013, thirteen thousand five hundred dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds 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 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, 2013, but prior to January 1, 2014, fourteen thousand dollars. In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds 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 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, 2014, but prior to January 1, 2016, 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 said amount. In no event shall the reduction exceed one hundred per cent of the exemption;

(I) For taxable years commencing on or after January 1, 2016, 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 said amount. In no event shall the reduction exceed one hundred per cent of the exemption.

(b) (1) Any person subject to tax under this chapter who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code, shall be entitled to a personal exemption of nineteen thousand dollars in determining Connecticut taxable income for purposes of this chapter.

(2) In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds thirty-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.

(c) (1) Any husband and wife subject to tax under this chapter for any taxable year who file a return under the federal income tax for such taxable year as married individuals filing a joint return or any person who files a return for such taxable year as a surviving spouse, as defined in Section 2(a) of the Internal Revenue Code, shall be entitled to a single personal exemption of twenty-four thousand dollars in determining Connecticut taxable income for purposes of this chapter. Any husband and wife who elect to file a joint return under the federal income tax for any taxable year shall be required to file jointly with respect to such taxable year for purposes of this chapter, in which event their tax liability under this chapter shall be joint and several, except as otherwise provided in section 12-702a, and any husband and wife who elect to file separately under the federal income tax for any taxable year shall be required to file separately with respect to such taxable year for purposes of this chapter, provided (A) if either the husband or wife is a resident and the other is a nonresident, separate taxes shall be determined on their separate Connecticut taxable incomes on separate forms as married individuals filing separately unless such husband and wife determine their federal taxable income jointly and both elect to determine their joint Connecticut taxable income as if both were residents, or (B) if any husband and wife, both of whom are nonresidents, elect to file a joint return under the federal income tax for any taxable year and only one of them has income derived from or connected with sources within this state during such taxable year, only the spouse with income derived from or connected with sources within this state shall be required to file a return in this state and, if only the spouse with income derived from or connected with this state files such a return in this state, a separate tax shall be determined on such spouse's separate Connecticut taxable income as a married individual filing separately unless such husband and wife both elect to determine their joint Connecticut taxable income as if both had income derived from or connected with sources within this state.

(2) In the case of any such taxpayer whose Connecticut adjusted gross income for the taxable year exceeds forty-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.

(June Sp. Sess. P.A. 91-3, S. 53, 168; May Sp. Sess. P.A. 92-5, S. 3, 37; May Sp. Sess. P.A. 92-17, S. 12, 59; P.A. 99-48, S. 3, 10; 99-173, S. 5, 65; P.A. 00-174, S. 40, 83; 00-230, S. 10, 11; May 9 Sp. Sess. P.A. 02-1, S. 78; June 30 Sp. Sess. P.A. 03-1, S. 115; P.A. 05-251, S. 74; June Sp. Sess. P.A. 09-3, S. 122; P.A. 15-244, S. 67.)

History: June Sp. Sess. P.A. 91-3, S. 53, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; May Sp. Sess. P.A. 92-17 amended Subsec. (c)(1) to create a method by which a nonresident taxpayer with a nonresident spouse who has no Connecticut sourced income could file a separate return even if the couple filed jointly for federal purposes, commencing June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 99-48 amended Subsec. (c)(1) to add provision re joint and several liability, effective May 27, 1999; P.A. 99-173 amended Subsec. (a) to increase, annually, the unmarried single filer standard exemption from 50% to 62.5% of the joint filer standard exemption over an eight-year period, from $12,250 in tax year commencing January 1, 2000, to $15,000 in tax year commencing January 1, 2007, effective June 23, 1999, and applicable to tax years commencing on or after January 1, 2000; P.A. 00-174 amended Subsec. (a)(2) to adjust the exemption amounts for single filers, effective May 26, 2000; P.A. 00-230 made technical changes in Subsecs. (a) and (c); May 9 Sp. Sess. P.A. 02-1 amended Subsec. (a)(2) to defer by two years the increase in the exemption for single filers, effective July 1, 2002, and applicable to taxable years commencing on or after January 1, 2002; June 30 Sp. Sess. P.A. 03-1 added Subsec. (a)(2)(C) re exemption amount for unmarried filers for taxable year 2004, redesignated existing Subparas. (C) to (H) as Subparas. (D) to (I) and amended said Subparas. to delay the increased exemption amounts for unmarried filers by one year, effective August 16, 2003, and applicable to taxable years commencing on or after January 1, 2004; P.A. 05-251 amended Subsec. (a)(2) to defer by two years the increase in the exemption for single filers, effective June 30, 2005, and applicable to taxable years commencing on or after January 1, 2005; June Sp. Sess. P.A. 09-3 amended Subsec. (a)(2)(E) to (I) to delay increase in single filers' exemption for 3 years, effective September 9, 2009, and applicable to taxable years commencing on or after January 1, 2009; P.A. 15-244 amended Subsec. (a)(2)(H) and (I) to delay increase in exemption for any taxpayer filing as an unmarried individual for one year, effective June 30, 2015, and applicable to taxable years commencing on or after January 1, 2015.

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Sec. 12-702a. Relief from joint tax liability. (a) Any individual who has made a joint return under this chapter may elect to seek relief under the provisions of subsection (b) of this section and if such individual is eligible to elect the application of subsection (c) of this section, such individual may, in addition to any election under subsection (b) of this section, elect to limit such individual's liability for any deficiency with respect to such joint return in the manner prescribed under subsection (c) of this section. Any individual who has made a joint return under this chapter may elect to seek relief under the provisions of subsection (f) of this section, even if such individual is not eligible to seek relief under subsection (b) or (c) of this section.

(b) (1) Under procedures prescribed by the commissioner, if (A) a joint return has been made for a taxable year and on such return there is an understatement of tax attributable to erroneous items of one individual filing the joint return; (B) the other individual filing the joint return establishes that in signing the return such other individual did not know, and had no reason to know, that there was such an understatement; (C) taking into account all the facts and circumstances, it is inequitable to hold such other individual liable for the deficiency in tax for such taxable year attributable to such understatement or portion of such understatement, as the case may be; and (D) such other individual elects the application of this subsection, in such form as the Commissioner of Revenue Services may prescribe, not later than the date which is two years after the date the commissioner has begun collection activities with respect to the individual making the election, such other individual shall be relieved of liability for tax, including interest, penalties and other amounts due for such taxable year to the extent such liability is attributable to such understatement.

(2) If the electing individual satisfies the conditions of subdivision (1) of this subsection except subparagraph (B) of said subdivision (1), and establishes that in signing the return such individual did not know, and had no reason to know, the extent of such understatement, such individual shall be relieved of liability for tax, including interest, penalties and other amounts due for such taxable year to the extent such liability is attributable to the portion of such understatement of which such individual did not know and had no reason to know.

(c) (1) If an individual who has made a joint return for any taxable year elects the application of this subsection, the individual's liability for any deficiency which is assessed with respect to the return shall not exceed the portion of such deficiency properly allocable to such individual under subsection (d) of this section.

(2) The electing individual shall have the burden of proof with respect to establishing the portion of any deficiency allocable to such individual.

(3) An individual shall be eligible to elect the application of this subsection if (A) at the time such election is filed, such individual is no longer married to, or is legally separated from, the individual with whom such individual filed the joint return to which the election relates, or (B) such individual was not a member of the same household as the individual with whom such joint return was filed at any time during the twelve-month period ending on the date such election is filed.

(4) If the commissioner demonstrates that assets were transferred between individuals filing a joint return as part of a fraudulent scheme by such individuals, an election under this subsection by either individual shall be invalid.

(5) If the commissioner demonstrates that the individual electing under this subsection had actual knowledge, at the time such individual signed the return, of any item giving rise to a deficiency or portion thereof which is not allocable to such individual under subsection (d) of this section, the election shall not apply to such deficiency or portion thereof, unless the individual with actual knowledge establishes that the electing individual signed the return under duress.

(6) The portion of the deficiency for which the individual electing under this subsection is liable shall be increased by the value of any disqualified asset transferred to the individual. For purposes of this section, “disqualified asset” means any property or right to property transferred to an electing individual with respect to a joint return by the other individual filing such joint return if the principal purpose of the transfer was the avoidance of tax or payment of tax. Any transfer which is made after the date which is one year before the date on which a notice of proposed deficiency assessment is sent, other than any transfer pursuant to a decree of divorce or separate maintenance or a written instrument incident to such a decree or to any transfer which an individual establishes did not have as its principal purpose the avoidance of tax or payment of tax, shall be presumed to have as its principal purpose the avoidance of tax or payment of tax.

(7) An election under this subsection for any taxable year shall be made not later than two years after the date on which the commissioner has begun collection activities with respect to the individual making the election.

(d) (1) The portion of any deficiency on a joint return allocated to an individual electing under subsection (c) of this section shall be the amount which bears the same ratio to such deficiency as the net amount of items taken into account in computing the deficiency and allocable to the individual under this subdivision bears to the net amount of all items taken into account in computing the deficiency.

(2) If a deficiency or portion thereof is attributable to the disallowance of a credit, and such item is allocated to one individual under subdivision (3) of this subsection, such deficiency or portion thereof shall be allocated to such individual. Any such item shall not be taken into account under subdivision (1) of this subsection.

(3) Except as provided in subdivisions (4) and (5) of this subsection, any item giving rise to a deficiency on a joint return shall be allocated to individuals filing the return in the same manner as it would have been allocated if the individuals had filed separate returns for the taxable year. If the commissioner establishes that the allocation of any item is appropriate due to fraud of one or both individuals, the commissioner may provide for such allocation in a manner as prescribed in regulations adopted in accordance with chapter 54.

(4) If an exemption under section 12-702 or a credit under section 12-703 would be disallowed in its entirety solely because a separate return is filed, such disallowance shall be disregarded and the item shall be computed as if a joint return had been filed and then allocated between the joint filers appropriately.

(5) If the liability of a child of a taxpayer is included on a joint return, such liability shall be disregarded in computing the separate liability of either joint filer and such liability shall be allocated appropriately between the joint filers.

(e) (1) The commissioner shall determine what relief, if any, is available to an electing individual under this section and shall mail notice of the proposed determination to such individual. Such notice shall set forth briefly the commissioner's findings of fact and the basis of the determination in each case decided in whole or in part adversely to such individual. Sixty days after the date on which it is mailed, a notice of proposed determination shall constitute a final determination except only for such amounts as to which such individual has filed a written protest with the commissioner in accordance with subdivision (2) of this subsection.

(2) On or before the sixtieth day after the mailing of the proposed determination, such individual may file with the commissioner a written protest against the proposed determination in which such individual sets forth the grounds on which the protest is based. If a protest is filed, the commissioner shall reconsider the proposed determination and, if such individual has so requested, may grant or deny such individual or such individual's authorized representative an oral hearing.

(3) The commissioner shall mail notice of the commissioner's determination to such individual, which notice shall set forth briefly the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to such individual.

(4) The action of the commissioner on such individual's protest shall be final upon the expiration of one month from the date on which the commissioner mails notice of the commissioner's action to such individual unless within such period such individual seeks judicial review of the commissioner's determination pursuant to section 12-730.

(f) Under procedures prescribed by the commissioner, if taking into account all the facts and circumstances, it is inequitable to hold such individual liable for any unpaid tax or any deficiency, or any portion of such unpaid tax or deficiency, and relief is not otherwise available to such individual under this section, the commissioner may relieve such individual of such liability.

(g) The commissioner may adopt regulations, in accordance with chapter 54, as are necessary to carry out the provisions of this section, including regulations providing the opportunity for an individual to have notice of, and an opportunity to participate in, any administrative proceeding with respect to an election made under this section by the other individual filing the joint return.

(h) The provisions of this section shall be applicable with respect to any liability arising after May 27, 1999, and any liability arising on or before May 27, 1999, if such liability remains unpaid as of said date, provided the two-year period to make an election under subsection (b) or (c) of this section shall not expire before the date that is two years after the date of the first collection activity after May 27, 1999.

(P.A. 99-48, S. 4, 10; P.A. 00-230, S. 12; June Sp. Sess. P.A. 15-5, S. 124, 125.)

History: P.A. 99-48 effective May 27, 1999; P.A. 00-230 made technical changes in Subsec. (a); June Sp. Sess. P.A. 15-5 amended Subsec. (a) to allow individual who made joint return to elect relief under Subsec. (f) even if not eligible for relief under Subsec. (b) or (c), amended Subsec. (f) to make a technical change, amended Subsec. (g) to make regulations permissive, rather than mandatory, and amended Subsec. (h) to add reference to Subsec. (b) or (c) re two-year period to make an election, effective June 30, 2015.

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Sec. 12-703. Credits based on adjusted gross income. (a)(1) 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 under the federal income tax for such taxable year as an unmarried individual shall be entitled to a credit in determining the amount of tax liability for purposes of this chapte in accordance with the following schedule:

Connecticut Adjusted Gross Income		Amount of Credit
Over $12,000 but
not over $15,000		75%
Over $15,000 but
not over $15,500		70%
Over $15,500 but
not over $16,000		65%
Over $16,000 but
not over $16,500		60%
Over $16,500 but
not over $17,000		55%
Over $17,000 but
not over $17,500		50%
Over $17,500 but
not over $18,000		45%
Over $18,000 but
not over $18,500		40%
Over $18,500 but
not over $20,000		35%
Over $20,000 but
not over $20,500		30%
Over $20,500 but
not over $21,000		25%
Over $21,000 but
not over $21,500		20%
Over $21,500 but
not over $25,000		15%
Over $25,000 but
not over $25,500		14%
Over $25,500 but
not over $26,000		13%
Over $26,000 but
not over $26,500		12%
Over $26,500 but
not over $27,000		11%
Over $27,000 but
not over $48,000		10%
Over $48,000 but
not over $48,500		9%
Over $48,500 but
not over $49,000		8%
Over $49,000 but
not over $49,500		7%
Over $49,500 but
not over $50,000		6%
Over $50,000 but
not over $50,500		5%
Over $50,500 but
not over $51,000		4%
Over $51,000 but
not over $51,500		3%
Over $51,500 but
not over $52,000		2%
Over $52,000 but
not over $52,500		1%

(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 credit in determining the amount of tax liability for purposes of this chapter in accordance with the following schedule:

(A) For taxable years commencing on or after January 1, 2000, but prior to January 1, 2001:

Connecticut Adjusted Gross Income		Amount of Credit
Over $12,250 but
not over $15,300		75%
Over $15,300 but
not over $15,800		70%
Over $15,800 but
not over $16,300		65%
Over $16,300 but
not over $16,800		60%
Over $16,800 but
not over $17,300		55%
Over $17,300 but
not over $17,800		50%
Over $17,800 but
not over $18,300		45%
Over $18,300 but
not over $18,800		40%
Over $18,800 but
not over $20,400		35%
Over $20,400 but
not over $20,900		30%
Over $20,900 but
not over $21,400		25%
Over $21,400 but
not over $21,900		20%
Over $21,900 but
not over $25,500		15%
Over $25,500 but
not over $26,000		14%
Over $26,000 but
not over $26,500		13%
Over $26,500 but
not over $27,000		12%
Over $27,000 but
not over $27,500		11%
Over $27,500 but
not over $49,000		10%
Over $49,000 but
not over $49,500		9%
Over $49,500 but
not over $50,000		8%
Over $50,000 but
not over $50,500		7%
Over $50,500 but
not over $51,000		6%
Over $51,000 but
not over $51,500		5%
Over $51,500 but
not over $52,000		4%
Over $52,000 but
not over $52,500		3%
Over $52,500 but
not over $53,000		2%
Over $53,000 but
not over $53,500		1%

(B) For taxable years commencing on or after January 1, 2001, but prior to January 1, 2004:

Connecticut Adjusted Gross Income		Amount of Credit
Over $12,500 but
not over $15,600		75%
Over $15,600 but
not over $16,100		70%
Over $16,100 but
not over $16,600		65%
Over $16,600 but
not over $17,100		60%
Over $17,100 but
not over $17,600		55%
Over $17,600 but
not over $18,100		50%
Over $18,100 but
not over $18,600		45%
Over $18,600 but
not over $19,100		40%
Over $19,100 but
not over $20,800		35%
Over $20,800 but
not over $21,300		30%
Over $21,300 but
not over $21,800		25%
Over $21,800 but
not over $22,300		20%
Over $22,300 but
not over $26,000		15%
Over $26,000 but
not over $26,500		14%
Over $26,500 but
not over $27,000		13%
Over $27,000 but
not over $27,500		12%
Over $27,500 but
not over $28,000		11%
Over $28,000 but
not over $50,000		10%
Over $50,000 but
not over $50,500		9%
Over $50,500 but
not over $51,000		8%
Over $51,000 but
not over $51,500		7%
Over $51,500 but
not over $52,000		6%
Over $52,000 but
not over $52,500		5%
Over $52,500 but
not over $53,000		4%
Over $53,000 but
not over $53,500		3%
Over $53,500 but
not over $54,000		2%
Over $54,000 but
not over $54,500		1%

Connecticut Adjusted Gross Income		Amount of Credit
Over $12,625 but
not over $15,750		75%
Over $15,750 but
not over $16,250		70%
Over $16,250 but
not over $16,750		65%
Over $16,750 but
not over $17,250		60%
Over $17,250 but
not over $17,750		55%
Over $17,750 but
not over $18,250		50%
Over $18,250 but
not over $18,750		45%
Over $18,750 but
not over $19,250		40%
Over $19,250 but
not over $21,050		35%
Over $21,050 but
not over $21,550		30%
Over $21,550 but
not over $22,050		25%
Over $22,050 but
not over $22,550		20%
Over $22,550 but
not over $26,300		15%
Over $26,300 but
not over $26,800		14%
Over $26,800 but
not over $27,300		13%
Over $27,300 but
not over $27,800		12%
Over $27,800 but
not over $28,300		11%
Over $28,300 but
not over $50,500		10%
Over $50,500 but
not over $51,000		9%
Over $51,000 but
not over $51,500		8%
Over $51,500 but
not over $52,000		7%
Over $52,000 but
not over $52,500		6%
Over $52,500 but
not over $53,000		5%
Over $53,000 but
not over $53,500		4%
Over $53,500 but
not over $54,000		3%
Over $54,000 but
not over $54,500		2%
Over $54,500 but
not over $55,000		1%

(D) For taxable years commencing on or after January 1, 2007, but prior to January 1, 2008:

Connecticut Adjusted Gross Income		Amount of Credit
Over $12,750 but
not over $15,900		75%
Over $15,900 but
not over $16,400		70%
Over $16,400 but
not over $16,900		65%
Over $16,900 but
not over $17,400		60%
Over $17,400 but
not over $17,900		55%
Over $17,900 but
not over $18,400		50%
Over $18,400 but
not over $18,900		45%
Over $18,900 but
not over $19,400		40%
Over $19,400 but
not over $21,300		35%
Over $21,300 but
not over $21,800		30%
Over $21,800 but
not over $22,300		25%
Over $22,300 but
not over $22,800		20%
Over $22,800 but
not over $26,600		15%
Over $26,600 but
not over $27,100		14%
Over $27,100 but
not over $27,600		13%
Over $27,600 but
not over $28,100		12%
Over $28,100 but
not over $28,600		11%
Over $28,600 but
not over $51,000		10%
Over $51,000 but
not over $51,500		9%
Over $51,500 but
not over $52,000		8%
Over $52,000 but
not over $52,500		7%
Over $52,500 but
not over $53,000		6%
Over $53,000 but
not over $53,500		5%
Over $53,500 but
not over $54,000		4%
Over $54,000 but
not over $54,500		3%
Over $54,500 but
not over $55,000		2%
Over $55,000 but
not over $55,500		1%

(E) For taxable years commencing on or after January 1, 2008, but prior to January 1, 2012:

Connecticut Adjusted Gross Income		Amount of Credit
Over $13,000 but
not over $16,300		75%
Over $16,300 but
not over $16,800		70%
Over $16,800 but
not over $17,300		65%
Over $17,300 but
not over $17,800		60%
Over $17,800 but
not over $18,300		55%
Over $18,300 but
not over $18,800		50%
Over $18,800 but
not over $19,300		45%
Over $19,300 but
not over $19,800		40%
Over $19,800 but
not over $21,700		35%
Over $21,700 but
not over $22,200		30%
Over $22,200 but
not over $22,700		25%
Over $22,700 but
not over $23,200		20%
Over $23,200 but
not over $27,100		15%
Over $27,100 but
not over $27,600		14%
Over $27,600 but
not over $28,100		13%
Over $28,100 but
not over $28,600		12%
Over $28,600 but
not over $29,100		11%
Over $29,100 but
not over $52,000		10%
Over $52,000 but
not over $52,500		9%
Over $52,500 but
not over $53,000		8%
Over $53,000 but
not over $53,500		7%
Over $53,500 but
not over $54,000		6%
Over $54,000 but
not over $54,500		5%
Over $54,500 but
not over $55,000		4%
Over $55,000 but
not over $55,500		3%
Over $55,500 but
not over $56,000		2%
Over $56,000 but
not over $56,500		1%

(F) For taxable years commencing on or after January 1, 2012, but prior to January 1, 2013:

Connecticut Adjusted Gross Income		Amount of Credit
Over $13,500 but
not over $16,900		75%
Over $16,900 but
not over $17,400		70%
Over $17,400 but
not over $17,900		65%
Over $17,900 but
not over $18,400		60%
Over $18,400 but
not over $18,900		55%
Over $18,900 but
not over $19,400		50%
Over $19,400 but
not over $19,900		45%
Over $19,900 but
not over $20,400		40%
Over $20,400 but
not over $22,500		35%
Over $22,500 but
not over $23,000		30%
Over $23,000 but
not over $23,500		25%
Over $23,500 but
not over $24,000		20%
Over $24,000 but
not over $28,100		15%
Over $28,100 but
not over $28,600		14%
Over $28,600 but
not over $29,100		13%
Over $29,100 but
not over $29,600		12%
Over $29,600 but
not over $30,100		11%
Over $30,100 but
not over $54,000		10%
Over $54,000 but
not over $54,500		9%
Over $54,500 but
not over $55,000		8%
Over $55,000 but
not over $55,500		7%
Over $55,500 but
not over $56,000		6%
Over $56,000 but
not over $56,500		5%
Over $56,500 but
not over $57,000		4%
Over $57,000 but
not over $57,500		3%
Over $57,500 but
not over $58,000		2%
Over $58,000 but
not over $58,500		1%

(G) For taxable years commencing on or after January 1, 2013, but prior to January 1, 2014:

Connecticut Adjusted Gross Income		Amount of Credit
Over $14,000 but
not over $17,500		75%
Over $17,500 but
not over $18,000		70%
Over $18,000 but
not over $18,500		65%
Over $18,500 but
not over $19,000		60%
Over $19,000 but
not over $19,500		55%
Over $19,500 but
not over $20,000		50%
Over $20,000 but
not over $20,500		45%
Over $20,500 but
not over $21,000		40%
Over $21,000 but
not over $23,300		35%
Over $23,300 but
not over $23,800		30%
Over $23,800 but
not over $24,300		25%
Over $24,300 but
not over $24,800		20%
Over $24,800 but
not over $29,200		15%
Over $29,200 but
not over $29,700		14%
Over $29,700 but
not over $30,200		13%
Over $30,200 but
not over $30,700		12%
Over $30,700 but
not over $31,200		11%
Over $31,200 but
not over $56,000		10%
Over $56,000 but
not over $56,500		9%
Over $56,500 but
not over $57,000		8%
Over $57,000 but
not over $57,500		7%
Over $57,500 but
not over $58,000		6%
Over $58,000 but
not over $58,500		5%
Over $58,500 but
not over $59,000		4%
Over $59,000 but
not over $59,500		3%
Over $59,500 but
not over $60,000		2%
Over $60,000 but
not over $60,500		1%

(H) For taxable years commencing on or after January 1, 2014, but prior to January 1, 2016:

Connecticut Adjusted Gross Income		Amount of Credit
Over $14,500 but
not over $18,100		75%
Over $18,100 but
not over $18,600		70%
Over $18,600 but
not over $19,100		65%
Over $19,100 but
not over $19,600		60%
Over $19,600 but
not over $20,100		55%
Over $20,100 but
not over $20,600		50%
Over $20,600 but
not over $21,100		45%
Over $21,100 but
not over $21,600		40%
Over $21,600 but
not over $24,200		35%
Over $24,200 but
not over $24,700		30%
Over $24,700 but
not over $25,200		25%
Over $25,200 but
not over $25,700		20%
Over $25,700 but
not over $30,200		15%
Over $30,200 but
not over $30,700		14%
Over $30,700 but
not over $31,200		13%
Over $31,200 but
not over $31,700		12%
Over $31,700 but
not over $32,200		11%
Over $32,200 but
not over $58,000		10%
Over $58,000 but
not over $58,500		9%
Over $58,500 but
not over $59,000		8%
Over $59,000 but
not over $59,500		7%
Over $59,500 but
not over $60,000		6%
Over $60,000 but
not over $60,500		5%
Over $60,500 but
not over $61,000		4%
Over $61,000 but
not over $61,500		3%
Over $61,500 but
not over $62,000		2%
Over $62,000 but
not over $62,500		1%

(I) For taxable years commencing on or after January 1, 2016:

Connecticut Adjusted Gross Income		Amount of Credit
Over $15,000 but
not over $18,800		75%
Over $18,800 but
not over $19,300		70%
Over $19,300 but
not over $19,800		65%
Over $19,800 but
not over $20,300		60%
Over $20,300 but
not over $20,800		55%
Over $20,800 but
not over $21,300		50%
Over $21,300 but
not over $21,800		45%
Over $21,800 but
not over $22,300		40%
Over $22,300 but
not over $25,000		35%
Over $25,000 but
not over $25,500		30%
Over $25,500 but
not over $26,000		25%
Over $26,000 but
not over $26,500		20%
Over $26,500 but
not over $31,300		15%
Over $31,300 but
not over $31,800		14%
Over $31,800 but
not over $32,300		13%
Over $32,300 but
not over $32,800		12%
Over $32,800 but
not over $33,300		11%
Over $33,300 but
not over $60,000		10%
Over $60,000 but
not over $60,500		9%
Over $60,500 but
not over $61,000		8%
Over $61,000 but
not over $61,500		7%
Over $61,500 but
not over $62,000		6%
Over $62,000 but
not over $62,500		5%
Over $62,500 but
not over $63,000		4%
Over $63,000 but
not over $63,500		3%
Over $63,500 but
not over $64,000		2%
Over $64,000 but
not over $64,500		1%

(b) Any person subject to tax under this chapter who files a return under the federal income tax for such taxable year as a head of household, as defined in Section 2(b) of the Internal Revenue Code, shall be entitled to a credit in determining the amount of tax liability for purposes of this chapter in accordance with the following schedule:

Connecticut Adjusted Gross Income		Amount of Credit
Over $19,000 but
not over $24,000		75%
Over $24,000 but
not over $24,500		70%
Over $24,500 but
not over $25,000		65%
Over $25,000 but
not over $25,500		60%
Over $25,500 but
not over $26,000		55%
Over $26,000 but
not over $26,500		50%
Over $26,500 but
not over $27,000		45%
Over $27,000 but
not over $27,500		40%
Over $27,500 but
not over $34,000		35%
Over $34,000 but
not over $34,500		30%
Over $34,500 but
not over $35,000		25%
Over $35,000 but
not over $35,500		20%
Over $35,500 but
not over $44,000		15%
Over $44,000 but
not over $44,500		14%
Over $44,500 but
not over $45,000		13%
Over $45,000 but
not over $45,500		12%
Over $45,500 but
not over $46,000		11%
Over $46,000 but
not over $74,000		10%
Over $74,000 but
not over $74,500		9%
Over $74,500 but
not over $75,000		8%
Over $75,000 but
not over $75,500		7%
Over $75,500 but
not over $76,000		6%
Over $76,000 but
not over $76,500		5%
Over $76,500 but
not over $77,000		4%
Over $77,000 but
not over $77,500		3%
Over $77,500 but
not over $78,000		2%
Over $78,000 but
not over $78,500		1%

(c) Any husband and wife subject to tax under this chapter for any taxable year who file a return under the federal income tax for such taxable year as married individuals filing joint returns or any person who files a return for such taxable year as a surviving spouse, as defined in Section 2(a) of the Internal Revenue Code, shall be entitled to a credit in determining the amount of tax liability for purposes of this chapter in accordance with the following schedule:

Connecticut Adjusted Gross Income		Amount of Credit
Over $24,000 but
not over $30,000		75%
Over $30,000 but
not over $30,500		70%
Over $30,500 but
Not over $31,000		65%
Over $31,000 but
Not over $31,500		60%
Over $31,500 but
not over $32,000		55%
Over $32,000 but
Not over $32,500		50%
Over $32,500 but
not over $33,000		45%
Over $33,000 but
not over $33,500		40%
Over $33,500 but
not over $40,000		35%
Over $40,000 but
not over $40,500		30%
Over $40,500 but
not over $41,000		25%
Over $41,000 but
not over $41,500		20%
Over $41,500 but
not over $50,000		15%
Over $50,000 but
not over $50,500		14%
Over $50,500 but
not over $51,000		13%
Over $51,000 but
not over $51,500		12%
Over $51,500 but
not over $52,000		11%
Over $52,000 but
not over $96,000		10%
Over $96,000 but
not over $96,500		9%
Over $96,500 but
not over $97,000		8%
Over $97,000 but
not over $97,500		7%
Over $97,500 but
not over $98,000		6%
Over $98,000 but
not over $98,500		5%
Over $98,500 but
not over $99,000		4%
Over $99,000 but
not over $99,500		3%
Over $99,500 but
not over $100,000		2%
Over $100,000 but
not over $100,500		1%

(June Sp. Sess. P.A. 91-3, S. 54, 168; May Sp. Sess. P.A. 92-5, S. 4, 37; May Sp. Sess. P.A. 94-4, S. 25, 85; P.A. 95-160, S. 64, 69; P.A. 99-173, S. 6, 65; May 9 Sp. Sess. P.A. 02-1, S. 79; June 30 Sp. Sess. P.A. 03-1, S. 116; P.A. 05-251, S. 75; June Sp. Sess. P.A. 09-3, S. 123; P.A. 15-244, S. 68.)

History: June Sp. Sess. P.A. 91-3, S. 54, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; May Sp. Sess. P.A. 94-4 amended section to graduate the tax credits from 75% to 1% and to expand the income levels eligible for the credits from $48,000 to $52,000 for individuals, from $74,000 to $78,500 for heads of households and from $96,000 to $100,500, effective January 1, 1995, and applicable to taxable years commencing on or after said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 99-173 amended Subsec. (a) to adjust the credit schedule for unmarried single filers over an eight-year period from a starting amount of $12,250 in 2000 to $15,000 in 2007, effective June 23, 1999, and applicable to tax years commencing on or after January 1, 2000; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (a)(2) to defer by two years the increase in the credit for single filers, effective July 1, 2002, and applicable to taxable years commencing on or after January 1, 2002; June 30 Sp. Sess. P.A. 03-1 added Subsec. (a)(2)(C) re credit amount for unmarried filers for taxable year 2004, redesignating existing Subparas. (C) to (H) as Subparas. (D) to (I) and amending said Subparas. to delay the change in credit amounts for unmarried filers by one year, effective August 16, 2003, and applicable to taxable years commencing on or after January 1, 2004; P.A. 05-251 amended Subsec. (a)(2)(C) to (I) to delay for two years the change in credit amounts for single filers, effective June 30, 2005, and applicable to taxable years commencing on or after January 1, 2005; June Sp. Sess. P.A. 09-3 amended Subsec. (a)(2)(E) to (I) to delay change in credit amounts for single filers for 3 years, effective September 9, 2009, and applicable to taxable years commencing on or after January 1, 2009; P.A. 15-244 amended Subsec. (a)(2)(H) and (I) to delay change in credit amounts for any taxpayer filing as an unmarried individual for one year, effective June 30, 2015, and applicable to taxable years commencing on or after January 1, 2015.

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Sec. 12-704. Credits for income taxes paid to other states. (a)(1) Any resident or part-year resident of this state shall be allowed a credit against the tax otherwise due under this chapter in the amount of any income 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 on income derived from sources therein and which is also subject to tax under this chapter.

(2) In the case of a resident, the credit provided under this section shall not exceed the proportion of the tax otherwise due under this chapter that the amount of the taxpayer's Connecticut adjusted gross income derived from or connected with sources in the other taxing jurisdiction bears to such taxpayer's Connecticut adjusted gross income under this chapter. The provisions of this section shall also apply to resident trusts and estates and, wherever reference is made in this section to residents of this state, such reference shall be construed to include resident trusts and estates.

(3) In the case of a part-year resident, the credit provided under this section shall not exceed the proportion of the tax otherwise due during the period of residency under this chapter that the amount of the taxpayer's Connecticut adjusted gross income derived from or connected with sources in the other jurisdiction during the period of residency bears to such taxpayer's Connecticut adjusted gross income during the period of residency under this chapter. The provisions of this section shall also apply to part-year resident trusts and, wherever reference is made in this section to part-year residents of this state, such reference shall be construed to include part-year resident trusts.

(4) The allowance of the credit provided under this section shall not reduce the tax otherwise due under this chapter to an amount less than what would have been due if the income subject to taxation by such other jurisdiction were excluded from Connecticut adjusted gross income.

(5) For purposes of this subsection, a tax on wages that is paid to another state of the United States or a political subdivision thereof or the District of Columbia by an employer on behalf of an employee and for which a credit is allowed by such other jurisdiction shall be considered an income tax and a comparable credit may be claimed by the resident or part-year resident, subject to the limitations set forth in this subsection, in the form and manner prescribed by the commissioner.

(b) (1) (A) If, as a direct result of (i) the change to or correction of a taxpayer's income tax return filed with another state of the United States or a political subdivision thereof or the District of Columbia by the tax officers or other competent authority of such jurisdiction, or (ii) a taxpayer paying an assessment issued against the taxpayer by the tax officers or other competent authority of such jurisdiction for any taxable year for which the taxpayer has not filed an income tax return with such jurisdiction, the amount of tax of such other jurisdiction that the taxpayer is finally required to pay is different from the amount used to determine the credit allowed to any taxpayer under this section for any taxable year, the taxpayer shall provide notice of such difference to the commissioner by filing, on or before the date that is ninety days after the final determination of such amount, an amended return under this chapter, and shall concede the accuracy of such determination or state wherein it is erroneous. 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.

(B) If a taxpayer files an amended return under this subdivision as a direct result of the taxpayer paying an assessment as set forth in subparagraph (A)(ii) of this subdivision, the taxpayer shall not be eligible for a refund if the amended return is filed more than five years after the original due date of the taxpayer's Connecticut income tax return, even if such amended return is filed within the time prescribed under subdivision (2) of subsection (b) of section 12-732.

(2) If, as a direct result of a taxpayer filing an amended income tax return with another state of the United States or a political subdivision thereof or the District of Columbia, the amount of tax of such other jurisdiction that the taxpayer is required to pay is different from the amount used to determine the credit allowed to any taxpayer under this section for any taxable year, the taxpayer shall provide notice of such difference to the commissioner by filing, on or before the date that is ninety days after the final determination is made on such amended return by the tax officers or other competent authority of such other jurisdiction, an amended return under this chapter and shall give such information as the commissioner may require. The commissioner shall treat any such amended return under this chapter reporting a tax overpayment as containing sufficient required information after proof of such final determination on such amended income tax return of such other jurisdiction by the tax officers or other competent authority of such other jurisdiction is submitted to the commissioner. 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.

(3) The commissioner may by regulation prescribe such exceptions to the requirements of this subsection as he deems appropriate.

(c) A taxpayer shall not be allowed credit under this section if such taxpayer has claimed or will claim a credit against the income tax imposed by such other jurisdiction for the tax paid or payable under this chapter.

(d) Notwithstanding the provisions of subsection (c) of this section, if an individual 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 a taxable year and such individual is domiciled in another state of the United States, a political subdivision of such state, or the District of Columbia for the taxable year, such individual shall be allowed a credit under this section against the tax otherwise due under this chapter for income tax imposed by and paid to the qualifying jurisdiction in which such individual is domiciled on such individual's income from intangible personal property, to the extent such income is from property not employed in a business, trade, profession or occupation carried on in this state, and on such individual's income derived from or connected with sources within another state of the United States or the District of Columbia that does not impose an income tax on such income. This subsection shall apply only where the jurisdiction in which such individual is domiciled allows an income tax credit for the tax imposed by this state to an individual who is domiciled in this state for a taxable year but maintains a permanent place of abode in such jurisdiction and is in such jurisdiction for an aggregate of more than one hundred eighty-three days of the taxable year that is analogous to that provided in this subsection.

(June Sp. Sess. P.A. 91-3, S. 55, 168; May Sp. Sess. P.A. 92-5, S. 5, 37; P.A. 93-74, S. 40, 67; P.A. 96-94, S. 1, 2; P.A. 97-286, S. 4, 8; P.A. 98-244, S. 28, 35; June Sp. Sess. P.A. 01-6, S. 68, 85; P.A. 06-196, S. 92; P.A. 10-188, S. 12; P.A. 18-49, S. 19; 18-169, S. 42; P.A. 22-117, S. 2.)

History: June Sp. Sess. P.A. 91-3, S. 55, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing January 1, 1992; P.A. 93-74 made technical change in Subsec. (c), effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1993; P.A. 96-94 amended Subsec. (b) to make it applicable to taxable years commencing on or after January 1, 1991, effective May 8, 1996; P.A. 97-286 added new Subsec. (e) to enable commissioner to enter into agreements with other state taxing authorities, effective June 26, 1997, and applicable to taxable years commencing on or after January 1, 1997; P.A. 98-244 extended from 30 to 90 days the time period within which to report the filing of an amended return with another jurisdiction or changes or corrections made to the return filed by tax officials of another jurisdiction and eliminated the credit for taxes paid to a Canadian province, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; June Sp. Sess. P.A. 01-6 amended Subsec. (a) to divide existing provisions into Subdivs. (1) to (4), making technical changes in Subdivs. (3) and (4), and to apply section to trusts and estates, effective July 1, 2001; P.A. 06-196 made technical changes in Subsec. (b)(1) and (2), effective June 7, 2006; P.A. 10-188 amended Subsec. (b)(2) to change date for filing amended return from 90 days after filing with another jurisdiction to 90 days after final determination on amended return is made by tax officers or other authority of such other jurisdiction, and to add provision re amended return treated as containing sufficient information after submission of proof of such final determination, effective June 7, 2010, and applicable to taxable years commencing on or after January 1, 2010; P.A. 18-49 amended Subsec. (a) to add Subdiv. (5) re comparable credit for tax on wages that is paid to another state, political subdivision thereof or the District of Columbia, effective May 31, 2018, and applicable to taxable years commencing on or after January 1, 2019; P.A. 18-169 made identical change as P.A. 18-49, effective June 14, 2018, and applicable to taxable years commencing on or after January 1, 2019; P.A. 22-117 amended Subsec. (b)(1) to redesignate existing provisions as Subpara. (A), add clause (i) designator and add clause (ii) re taxpayer paying assessment issued by other jurisdiction, and add Subpara. (B) re taxpayer filing amended return as direct result of paying such assessment, effective May 27, 2022, and applicable to taxable years commencing on or after January 1, 2022.

Cited. 44 CS 461.

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Secs. 12-704a and 12-704b. Tax credit for personal property taxes paid on motor vehicles. Tax credit for portion of property tax paid on primary residence or motor vehicle. Sections 12-704a and 12-704b are repealed, effective July 1, 1997.

(May Sp. Sess. P.A. 94-4, S. 79, 85; P.A. 95-160, S. 31, 64, 69; P.A. 96-139, S. 7, 12, 13; 96-180, S. 138, 166; P.A. 97-309, S. 22, 23.)

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Sec. 12-704c. Credits for taxes paid on primary residence or motor vehicle. (a) Any resident of this state, as defined in subdivision (1) of subsection (a) of section 12-701, subject to the tax under this chapter for any taxable year shall be entitled to a credit in determining the amount of tax liability under this chapter, for all or a portion, as permitted by this section, of the amount of property tax, as defined in this section, first becoming due and actually paid during such taxable year by such person on such person's primary residence or motor vehicle in accordance with the provisions of this section, provided in the case of a person who files a return under the federal income tax for such taxable year as an unmarried individual, a married individual filing separately or a head of household, one motor vehicle shall be eligible for such credit and in the case of a husband and wife who file a return under federal income tax for such taxable year as married individuals filing jointly, no more than two motor vehicles shall be eligible for a credit under the provisions of this section.

(b) (1) The credit allowed under this section shall not exceed (A) for taxable years commencing on or after January 1, 2011, but prior to January 1, 2016, three hundred dollars; (B) for taxable years commencing on or after January 1, 2016, but prior to January 1, 2022, two hundred dollars; and (C) for taxable years commencing on or after January 1, 2022, three hundred dollars. In the case of any husband and wife who file a return under the federal income tax for such taxable year as married individuals filing a joint return, the credit allowed, in the aggregate, shall not exceed such amount for each such taxable year.

(2) Notwithstanding the provisions of subsection (a) of this section, for the taxable years commencing January 1, 2017, to January 1, 2021, inclusive, the credit under this section shall be allowed only for a resident of this state (A) who has attained age sixty-five before the close of the applicable taxable year, or (B) who files a return under the federal income tax for the applicable taxable year validly claiming one or more dependents.

(c) (1) (A) For taxable years commencing on or after January 1, 2011, but prior to January 1, 2013, in the case of any such taxpayer who files under the federal income tax for such taxable year as an unmarried individual whose Connecticut adjusted gross income exceeds fifty-six thousand five hundred dollars, the amount of the credit shall be reduced by fifteen per cent for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(B) For taxable years commencing on or after January 1, 2013, but prior to January 1, 2014, in the case of any such taxpayer who files under the federal income tax for such taxable year as an unmarried individual whose Connecticut adjusted gross income exceeds sixty thousand five hundred dollars, the amount of the credit shall be reduced by fifteen per cent for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(C) For taxable years commencing on or after January 1, 2014, but prior to January 1, 2016, in the case of any such taxpayer who files under the federal income tax for such taxable year as an unmarried individual whose Connecticut adjusted gross income exceeds forty-seven thousand five hundred dollars, the amount of the credit shall be reduced by fifteen per cent for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(D) For taxable years commencing on or after January 1, 2016, in the case of any such taxpayer who files under the federal income tax for such taxable year as an unmarried individual whose Connecticut adjusted gross income exceeds forty-nine thousand five hundred dollars, the amount of the credit shall be reduced by fifteen per cent for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(2) In the case of any such taxpayer who files under the federal income tax for such taxable year as a married individual filing separately whose Connecticut adjusted gross income exceeds thirty-five thousand two hundred fifty dollars, the amount of the credit shall be reduced by fifteen per cent for each five thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(3) In the case of a taxpayer who files under the federal income tax for such taxable year as a head of household whose Connecticut adjusted gross income exceeds fifty-four thousand five hundred dollars, the amount of the credit shall be reduced by fifteen per cent for each ten thousand dollars or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(4) In the case of a taxpayer who files under federal income tax for such taxable year as married individuals filing jointly whose Connecticut adjusted gross income exceeds seventy thousand five hundred dollars, the amount of the credit shall be reduced by fifteen per cent for each ten thousand dollars, or fraction thereof, by which the taxpayer's Connecticut adjusted gross income exceeds said amount.

(d) (1) Notwithstanding the provisions of subsections (b) and (c) of this section, for taxable years commencing on or after January 1, 2023, for any taxpayer who paid the conveyance tax on real property at the rate prescribed by subparagraph (C)(ii) of subdivision (2) of subsection (b) of section 12-494, the credit allowed under this section shall not exceed thirty-three and one-third per cent of the amount of the conveyance tax paid in excess of one and one-quarter per cent on that portion of the consideration taxed under section 12-494 that is in excess of eight hundred thousand dollars, in each of the three taxable years beginning with the third taxable year after the taxable year in which such conveyance tax was paid. For any taxable year such taxpayer claims the credit or portion thereof under this subsection, such credit shall be in lieu of any credit such taxpayer may be eligible to claim under subsection (b) or (c) of this section.

(2) If any credit allowed under this subsection or portion thereof is not used because the amount of the credit exceeds the tax due and owing by the taxpayer or the amount of property tax paid by the taxpayer, the unused amount may be carried forward to each of the successive taxable years until such amount is fully taken, except that in no event may any amount of the credit be carried forward for a period of more than six taxable years.

(e) The credit allowed under this section shall be available for any person leasing a motor vehicle pursuant to a written agreement for a term of more than one year. Such lessee shall be entitled to the credit in accordance with the provisions of this section for the taxes actually paid by the lessor or lessee on such leased vehicle, provided the lessee was lawfully in possession of the motor vehicle at such time when the taxes first became due. The lessor shall provide the lessee with documentation establishing, to the satisfaction of the Commissioner of Revenue Services, the amount of property tax paid during the time period in which the lessee was lawfully in possession of the motor vehicle. The lessor of the motor vehicle shall not be entitled to a credit under the provisions of this section.

(f) The credit may only be used to reduce a qualifying taxpayer's tax liability for the year for which such credit is applicable and shall not be used to reduce such tax liability to less than zero.

(g) The amount of tax due pursuant to sections 12-705 and 12-722 shall be calculated without regard to this credit.

(h) For the purposes of this section: (1) “Property tax” means the amount of property tax exclusive of any interest, fees or charges thereon for which a taxpayer is liable, or in the case of any husband and wife who file a return under the federal income tax for such taxable year as married individuals filing a joint return, for which the husband or wife or both are liable, to a Connecticut political subdivision on the taxpayer's primary residence or motor vehicles; (2) “motor vehicle” means a motor vehicle, as defined in section 14-1, that is privately owned or leased; and (3) property tax first becomes due, if due and payable in a single installment, on the date designated by the legislative body of the municipality as the date on which such installment shall be due and payable and, if due and payable in two or more installments, on the date designated by the legislative body of the municipality as the date on which such installment shall be due and payable or, at the election of the taxpayer, on the date designated by the legislative body of the municipality as the date on which any earlier installment of such tax shall be due and payable.

(P.A. 97-309, S. 7, 23; 97-322, S. 4, 7, 9; P.A. 98-110, S. 1, 27; 98-262, S. 15, 22; P.A. 99-173, S. 2, 7, 65; May 9 Sp. Sess. P.A. 02-1, S. 80; June 30 Sp. Sess. P.A. 03-1, S. 101; P.A. 04-216, S. 52; P.A. 05-251, S. 76, 77; P.A. 06-186, S. 79; June Sp. Sess. P.A. 09-3, S. 124; P.A. 11-6, S. 111; P.A. 15-244, S. 70; June Sp. Sess. P.A. 17-2, S. 644; P.A. 19-117, S. 335; June Sp. Sess. P.A. 21-2, S. 432; P.A. 22-117, S. 20; 22-118, S. 408.)

History: P.A. 97-309 effective July 1, 1997, and applicable to income years commencing on or after January 1, 1997; P.A. 97-322 amended Subsec. (b) to increase amount of credit for taxable years commencing on or after January 1, 1998, from $275 to $285, effective July 1, 1997, and changed effective date of P.A. 97-309 but without affecting this section; P.A. 98-110 amended Subsec. (b) to increase amount of credit from $285 to $350, effective May 19, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 98-262 allowed credit for installment in January 1998, and amended definition of property tax to clarify that interest, fees and charges are excluded, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 99-173 amended Subsec. (b) to increase credit from $350 to $425 for tax years commencing on or after January 1, 1999, and from $425 to $500 for tax years commencing on or after January 1, 2000, effective June 23, 1999, and applicable to taxable years commencing on or after January 1, 1999, and divided Subsec. (c) into Subdivs., adding new Subparas. (B) to (I) inclusive, re income limits for unmarried single filers in Subdiv. (1), effective June 23, 1999, and applicable to tax years commencing on or after January 1, 2000; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (c)(1) to defer by two years the increase in the credit for single filers, effective July 1, 2002, and applicable to taxable years commencing on or after January 1, 2002; June 30 Sp. Sess. P.A. 03-1 amended Subsec. (b) to lower the maximum credit to $350 and amended Subsec. (c) to eliminate minimum credit of $100, to add new Subdiv. (2)(D) re credit amount for unmarried filers for taxable year 2004, to redesignate existing Subparas. (D) to (I) as Subparas. (E) to (J) in Subdiv. (2) and to amend said Subparas. to delay change in credit amounts for unmarried filers by one year, effective August 16, 2003, and applicable to taxable years commencing on or after January 1, 2003; P.A. 04-216 amended Subsec. (b) to increase the maximum credit to $500 for taxable years commencing January 1, 2005, effective July 1, 2005, and applicable to taxable years commencing on or after January 1, 2005; P.A. 05-251 amended Subsec. (b) to decrease the maximum credit amount to $350 prior to January 1, 2006, and $400 thereafter, effective July 1, 2005, and applicable to taxable years commencing on or after January 1, 2005, and amended Subsec. (c)(1)(D) to (J) to delay for two years the change in credit amounts for single filers, effective June 30, 2005, and applicable to taxable years commencing on or after January 1, 2005; P.A. 06-186 amended Subsec. (b) to increase credit from $400 to $500, effective July 1, 2006, and applicable to taxable years commencing on or after January 1, 2006; June Sp. Sess. P.A. 09-3 amended Subsec. (c)(1)(F) to (J) to delay change in credit amounts for single filers for 3 years, effective September 9, 2009, and applicable to taxable years commencing on or after January 1, 2009; P.A. 11-6 amended Subsec. (b) to reduce maximum property tax credit from $500 to $300, amended Subsec. (c) to reduce income threshold in Subdiv. (1)(G) from $58,500 to $56,500, and to increase the reduction in amount of the credit in Subdiv. (1)(G)to (J) and Subdivs. (2) to (4) from 10% to 15% and made technical changes, effective May 4, 2011, and applicable to taxable years commencing on or after January 1, 2011; P.A. 15-244 amended Subsec. (a) to make a technical change, amended Subsec. (b) to decrease maximum credit amount to $200 for taxable years commencing on or after January 1, 2016, amended Subsec. (c)(1)(I) to delay for one year the change in credit amount for any taxpayer who files as an unmarried individual and reduce the income threshold from $62,500 to $47,500, amended Subsec. (c)(1)(J) to delay for one year the change in credit amount for any taxpayer who files as an unmarried individual and reduce the income threshold from $64,500 to $49,500, and amended Subsec. (c)(2) to (4) to reduce the income thresholds, effective July 1, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 17-2 amended Subsec. (b) to designate existing provisions as Subdiv. (1), amend same to delete credit amounts for taxable years prior to January 1, 2006 and add Subpara. designators, and add Subdiv. (2) re limits on credit eligibility for taxable years commencing January 1, 2017, and January 1, 2018, effective October 31, 2017, and applicable to taxable years commencing on or after January 1, 2017; P.A. 19-117 amended Subsec. (b) to delete Subpara. (A) re credit for taxable years commencing on or after January 1, 2006, but prior to January 1, 2011, redesignate existing Subparas. (B) and (C) as new Subparas. (A) and (B) and make a technical change in Subdiv. (1), and replace “and January 1, 2018” with “to January 1, 2020, inclusive” in Subdiv. (2), amended Subsec. (c)(1) to delete former Subparas. (A) to (F) re credit reductions for taxable years commencing prior to January 1, 2011, and redesignate existing Subparas. (G) to (J) as new Subparas. (A) to (D), added new Subsec. (d) re property tax credit for taxable years commencing on or after January 1, 2021, redesignated existing Subsecs. (e) to (g) as Subsecs. (f) to (h) and made a technical change in redesignated Subsecs. (f) and (h), effective June 26, 2019; June Sp. Sess. P.A. 21-2 amended Subsec. (b)(2) to replace “January 1, 2020” with “January 1, 2022”, effective June 23, 2021, and applicable to taxable years commencing on or after January 1, 2021; P.A. 22-117 amended Subsec. (d)(1) to replace “January 1, 2021” with “January 1, 2023”, “at such rate” with provision re amount in excess of 1.25 per cent of portion of consideration in excess of $800,000, and “next succeeding the second” with “beginning with the third”, effective May 27, 2022; P.A. 22-118 amended Subsec. (b) to increase maximum credit amount to $300 for taxable years commencing on or after January 1, 2022, in Subdiv. (1) and replace “January 1, 2022” with “January 1, 2021” in Subdiv. (2), effective May 7, 2022.

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Sec. 12-704d. Credits for angel investors. (a) As used in this section:

(1) “Angel investor” means an accredited investor, as defined by the Securities and Exchange Commission, or network of accredited investors who review new or proposed businesses for potential investment and who may seek active involvement, such as consulting and mentoring, in a qualified Connecticut business or a qualified cannabis business, but “angel investor” does not include (A) a person controlling fifty per cent or more of the Connecticut business or cannabis business invested in by the angel investor, (B) a venture capital company, or (C) any bank, bank and trust company, insurance company, trust company, national bank, savings association or building and loan association for activities that are a part of its normal course of business;

(2) “Cash investment” means the contribution of cash, at a risk of loss, to a qualified Connecticut business or a qualified cannabis business in exchange for qualified securities;

(3) “Connecticut business” means any business, other than a cannabis business, with its principal place of business in Connecticut;

(4) “Bioscience” means manufacturing pharmaceuticals, medicines, medical equipment or medical devices and analytical laboratory instruments, operating medical or diagnostic testing laboratories, or conducting pure research and development in life sciences;

(5) “Advanced materials” means developing, formulating or manufacturing advanced alloys, coatings, lubricants, refrigerants, surfactants, emulsifiers or substrates;

(6) “Photonics” means generation, emission, transmission, modulation, signal processing, switching, amplification, detection and sensing of light from ultraviolet to infrared and the manufacture, research or development of opto-electronic devices, including, but not limited to, lasers, masers, fiber optic devices, quantum devices, holographic devices and related technologies;

(7) “Information technology” means software publishing, motion picture and video production, teleproduction and postproduction services, telecommunications, data processing, hosting and related services, custom computer programming services, computer system design, computer facilities management services, other computer related services and computer training;

(8) “Clean technology” means the production, manufacture, design, research or development of clean energy, green buildings, smart grid, high-efficiency transportation vehicles and alternative fuels, environmental products, environmental remediation and pollution prevention;

(9) “Qualified securities” means any form of equity, including a general or limited partnership interest, common stock, preferred stock, with or without voting rights, without regard to seniority position that must be convertible into common stock;

(10) “Emerging technology business” means any business that is engaged in bioscience, advanced materials, photonics, information technology, clean technology or any other emerging technology as determined by the Commissioner of Economic and Community Development;

(11) “Cannabis business” means a cannabis establishment (A) for which a social equity applicant has been granted a provisional license or a license, (B) in which a social equity applicant or social equity applicants have an ownership interest of at least sixty-five per cent, and (C) such social equity applicant or social equity applicants have control of such establishment;

(12) “Social equity applicant” has the same meaning as provided in section 21a-420;

(13) “Cannabis” has the same meaning as provided in section 21a-420; and

(14) “Cannabis establishment” has the same meaning as provided in section 21a-420.

(b) There shall be allowed a credit against the tax imposed under this chapter, other than the liability imposed by section 12-707, for a cash investment by an angel investor of not less than twenty-five thousand dollars in the qualified securities of a Connecticut business or a cannabis business. The credit shall be in an amount equal to (1) twenty-five per cent of such investor's cash investment in a Connecticut business, or (2) forty per cent of such investor's cash investment in a cannabis business, provided the total tax credits allowed to any angel investor shall not exceed five hundred thousand dollars. The credit shall be claimed in the taxable year in which such cash investment is made by the angel investor. The credit may be sold, assigned or otherwise transferred, in whole or in part.

(1) A Connecticut business that (A) has been approved as a qualified Connecticut business pursuant to subsection (d) of this section; (B) had annual gross revenues of less than one million dollars in the most recent income year of such business; (C) has fewer than twenty-five employees, not less than seventy-five per cent of whom reside in this state; (D) has been operating in this state for less than seven consecutive years; (E) is primarily owned by the management of the business and their families; and (F) received less than two million dollars in cash investments eligible for the tax credits provided by this section; or

(2) A cannabis business that (A) has been approved as a qualified cannabis business pursuant to subsection (d) of this section; (B) had annual gross revenues of less than one million dollars in the most recent income year of such business; (C) has fewer than twenty-five employees, not less than seventy-five per cent of whom reside in this state; (D) is primarily owned by the management of the business and their families; and (E) received less than two million dollars in cash investments eligible for the tax credits provided by this section.

(d) (1) A Connecticut business or a cannabis business may apply to Connecticut Innovations, Incorporated, for approval as a Connecticut business or cannabis business, as applicable, qualified to receive cash investments eligible for a tax credit pursuant to this section. The application shall include (A) the name of the business and a copy of the organizational documents of such business, (B) a business plan, including a description of the business and the management, product, market and financial plan of the business, (C) a description of the business's innovative technology, product or service, (D) a statement of the potential economic impact of the business, including the number, location and types of jobs expected to be created, (E) a description of the qualified securities to be issued and the amount of cash investment sought by the business, (F) a statement of the amount, timing and projected use of the proceeds to be raised from the proposed sale of qualified securities, and (G) such other information as the chief executive officer of Connecticut Innovations, Incorporated, may require.

(2) Said chief executive officer shall, on a monthly basis, compile a list of approved applications, categorized by the cash investments being sought by the qualified Connecticut business or the qualified cannabis business and type of qualified securities offered.

(e) (1) Any angel investor that intends to make a cash investment in a business on such list may apply to Connecticut Innovations, Incorporated, to reserve a tax credit in the amount indicated by such investor. Connecticut Innovations, Incorporated, shall not reserve tax credits under this section for any investments made on or after July 1, 2028.

(2) The aggregate amount of all tax credits under this section that may be reserved by Connecticut Innovations, Incorporated, shall not exceed (A) for cash investments made in Connecticut businesses, six million dollars annually for the fiscal years commencing July 1, 2010, to July 1, 2012, inclusive, and five million dollars for each fiscal year thereafter, and (B) for cash investments made in qualified cannabis businesses, fifteen million dollars annually for each fiscal year commencing on or after July 1, 2021.

(3) With respect to the tax credits available under this section for investments in Connecticut businesses, Connecticut Innovations, Incorporated, shall not reserve more than seventy-five per cent of such tax credits for investments in emerging technology businesses, except if any such credits remain available for reservation after April first in any fiscal year, such remaining credits may be reserved for investments in such businesses and may be prioritized for veteran-owned, women-owned or minority-owned businesses and businesses owned by individuals with disabilities.

(4) The amount of the credit allowed to any investor pursuant to this section shall not exceed the amount of tax due from such investor under this chapter, other than section 12-707, with respect to such taxable year. Any tax credit that is claimed by the angel investor but not applied against the tax due under this chapter, other than the liability imposed under section 12-707, may be carried forward for the five immediately succeeding taxable years until the full credit has been applied.

(f) If the angel investor is an S corporation or an entity treated as a partnership for federal income tax purposes, the tax credit may be claimed by the shareholders or partners of the angel investor. If the angel investor is a single member limited liability company that is disregarded as an entity separate from its owner, the tax credit may be claimed by such limited liability company's owner, provided such owner is a person subject to the tax imposed under this chapter.

(g) A review of the cumulative effectiveness of the credit under this section shall be conducted by Connecticut Innovations, Incorporated, by July first annually. Such review shall include, but need not be limited to, the number and type of Connecticut businesses and cannabis businesses that received angel investments, the number of angel investors and the aggregate amount of cash investments, the current status of each Connecticut business and cannabis business that received angel investments, the number of employees employed in each year following the year in which such Connecticut business or cannabis business received the angel investment and the economic impact in the state of the Connecticut business or cannabis business that received the angel investment. Such review shall be submitted to the Office of Policy and Management and to the joint standing committee of the General Assembly having cognizance of matters relating to commerce, in accordance with the provisions of section 11-4a.

(P.A. 10-75, S. 15; P.A. 11-254, S. 1; Oct. Sp. Sess. P.A. 11-1, S. 29; P.A. 14-47, S. 51; 14-79, S. 2; May Sp. Sess. P.A. 16-3, S. 183; P.A. 17-110, S. 1; P.A. 19-117, S. 347; June Sp. Sess. P.A. 21-1, S. 133.)

History: P.A. 10-75 effective July 1, 2010, and applicable to taxable years commencing on or after January 1, 2010; P.A. 11-254 amended Subsec. (d)(1)(C) to delete “and proprietary” re description of business's technology, product of service, effective July 1, 2011, and applicable to taxable years commencing on or after January 1, 2011; Oct. Sp. Sess. P.A. 11-1 amended Subsec. (b) to lower minimum investment required from $100,000 to $25,000, effective October 27, 2011; P.A. 14-47 amended Subsec. (e)(1) to change “July 1, 2014” to “July 1, 2016”, amended Subsec. (g) to add provisions re review of cumulative effectiveness of credit and submission of same to Office of Policy and Management, and made technical changes, effective May 29, 2014, and applicable to taxable years commencing on or after January 1, 2014; P.A. 14-79 amended Subsec. (d) to change “executive director” to “chief executive officer”, effective June 3, 2014; May Sp. Sess. P.A. 16-3 amended Subsec. (b) to delete provision re credit not to be transferrable and to add provision re credit may be sold, assigned or otherwise transferred, and amended Subsec. (e)(1) to replace “July 1, 2016” with “July 1, 2019”, effective July 1, 2016, and applicable to taxable years commencing on or after January 1, 2016; P.A. 17-110 amended Subsec. (a)(3) by redefining “Connecticut business”, added Subsec. (a)(10) defining “emerging technology business”, amended Subsec. (e)(1) by adding provision re reservation of tax credits for investments in emerging technology businesses and made conforming changes, effective July 1, 2017; P.A. 19-117 amended Subsec. (b) to increase total tax credits allowed to any angel investor from $250,000 to $500,000, and amended Subsec. (e)(1) to increase aggregate amount of all tax credits under section from $3,000,000 to $5,000,000, add provision re prioritization for veteran-owned, women-owned or minority-owned businesses and businesses owned by individuals with disabilities, and replace “July 1, 2019” with “July 1, 2024”, effective July 1, 2019, and applicable to taxable and income years commencing on or after January 1, 2019; June Sp. Sess. P.A. 21-1 amended Subsec. (a) to add definitions of “cannabis business”, “social equity applicant”, “cannabis” and “cannabis establishment”, substantially revised Subsecs. (b) and (c) to add provisions re tax credits for cannabis businesses, substantially revised Subsec. (e) to add provision re aggregate amount of tax credits under section for cash investments made in cannabis businesses and replace “July 1, 2024” with “July 1, 2028”, and made technical and conforming changes, effective July 1, 2021.

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Sec. 12-704e. Earned income tax credit. (a) Any resident of this state, as defined in subdivision (1) of subsection (a) of section 12-701, who is subject to the tax imposed under this chapter for any taxable year shall be allowed a credit against the tax otherwise due under this chapter in an amount equal to the applicable percentage of the earned income credit claimed and allowed for the same taxable year under Section 32 of the Internal Revenue Code, as defined in subsection (a) of section 12-701. As used in this section, “applicable percentage” means (1) twenty-three per cent for taxable years commencing prior to January 1, 2021, and (2) thirty and one-half per cent for taxable years commencing on or after January 1, 2021.

(b) If the amount of the credit allowed pursuant to this section exceeds the taxpayer's liability for the tax imposed under this chapter, the Commissioner of Revenue Services shall treat such excess as an overpayment and, except as provided under section 12-739 or 12-742, shall refund the amount of such excess, without interest, to the taxpayer.

(c) If a married individual who is otherwise eligible for the credit allowed hereunder has filed a joint federal income tax return for the taxable year, but is required to file a separate return under this chapter for such taxable year, the credit for which such individual is eligible under this section shall be an amount equal to the applicable percentage of the earned income credit claimed and allowed for such taxable year under Section 32 of the Internal Revenue Code multiplied by a fraction, the numerator of which is such individual's federal adjusted gross income, as reported on such individual's separate return under this chapter, and the denominator of which is the federal adjusted gross income, as reported on the joint federal income tax return.

(d) To the extent permitted under federal law, any state or federal earned income tax credit shall not be counted as income when received by an individual who is an applicant for, or recipient of, benefits or services under any state or federal program that provides such benefits or services based on need, nor shall any such earned income tax credit be counted as resources, for the purpose of determining the individual's or any other individual's eligibility for such benefits or services, or the amount of such benefits or services.

(P.A. 11-6, S. 110; June Sp. Sess. P.A. 11-1, S. 3, 4, 14; P.A. 13-184, S. 83; P.A. 15-244, S. 69; June Sp. Sess. P.A. 17-2, S. 645; June Sp. Sess. P.A. 21-2, S. 430.)

History: P.A. 11-6 effective May 4, 2011, and applicable to taxable years commencing on or after January 1, 2011; June Sp. Sess. P.A. 11-1, S. 3 and 4, amended Subsecs. (a) and (c) to change tax credit from 30% to 25%, effective July 1, 2011, and applicable to taxable years commencing on or after January 1, 2011; pursuant to June Sp. Sess. P.A. 11-1, S. 14, the changes made by June Sp. Sess. P.A. 11-1, S. 3 and 4, to Subsecs. (a) and (c) ceased to be effective on August 22, 2011, and the provisions of Subsecs. (a) and (c) in effect immediately prior to July 1, 2011, were reinstated; P.A. 13-184 amended Subsecs. (a) and (c) to delete “thirty per cent” and add reference to applicable percentage and added Subsec. (e) defining “applicable percentage”, effective June 18, 2013, and applicable to taxable years commencing on or after January 1, 2013; P.A. 15-244 amended Subsec. (e)(2) by redefining “applicable percentage” to apply 27.5 per cent rate to taxable years commencing on or after January 1, 2014, but prior to January 1, 2017, effective June 30, 2015, and applicable to taxable years commencing on or after January 1, 2015; June Sp. Sess. P.A. 17-2 amended Subsec. (e) by redefining “applicable percentage”, effective October 31, 2017, and applicable to taxable years commencing on or after January 1, 2017; June Sp. Sess. P.A. 21-2 redefined “applicable percentage” and made technical changes, effective June 23, 2021, and applicable to taxable years commencing on or after January 1, 2021.

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Sec. 12-704f. Credit for certain college graduates. Section 12-704f is repealed, effective June 26, 2019.

(June Sp. Sess. P.A. 17-2, S. 648; P.A. 19-117, S. 397.)

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Sec. 12-704g. Modification to Connecticut adjusted gross income for certain venture capital income. (a) As used in this section:

(1) “Bioscience investment ratio” means a ratio, the denominator of which is the total amount of capital raised by a qualified venture capital fund, and the numerator of which is the total amount of money invested by such fund in Connecticut bioscience businesses;

(2) “Connecticut bioscience business” means any business with its principal place of business in Connecticut that is engaged in (A) the manufacture of pharmaceuticals, medicines, medical equipment, medical devices and analytical laboratory instruments, (B) the operation of medical or diagnostic testing laboratories, or (C) the conducting of pure research and development in life sciences;

(3) “General partner” means a general partner, as defined in section 12-213; and

(4) “Qualified venture capital fund” means a venture capital fund, as defined in 17 CFR 275.203(l)-1, as amended from time to time, that is established on or after January 1, 2018.

(b) A general partner of a qualified venture capital fund shall be allowed a deduction from such general partner's adjusted gross income for purposes of the tax imposed under this chapter. Such deduction shall be calculated as follows:

(1) The amount of income received by a general partner of a qualified venture capital fund from the sale, transfer, exchange or other disposition of any form of such fund's equity interests in a Connecticut bioscience business obtained from investments made by such fund in such business on or after January 1, 2018; plus

(2) The amount of income received by such general partner for the management of such fund, except the income described in subdivision (1) of this subsection, multiplied by such fund's bioscience investment ratio on the last day of the taxable year.

(c) The Commissioner of Revenue Services shall adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of this section.

(P.A. 18-147, S. 1.)

History: P.A. 18-147 effective July 1, 2018, and applicable to taxable years commencing on or after January 1, 2018.

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Sec. 12-704h. State child tax credit plan. Upon any (1) decrease in the amount of the federal child tax credit in effect pursuant to the American Rescue Plan Act of 2021, P.L. 117-2, as amended from time to time, on June 23, 2021, or (2) change in eligibility criteria for said credit, which change is less favorable to a taxpayer than such criteria in effect pursuant to said act on June 23, 2021, the Secretary of the Office of Policy and Management shall, within six months after the first day of the period to which such decrease or change is applicable, whichever is earlier, create a plan to establish a state child tax credit and present such plan to the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding.

(June Sp. Sess. P.A. 21-2, S. 431.)

History: June Sp. Sess. P.A. 21-2 effective June 23, 2021.

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Sec. 12-704i. Credit for birth of stillborn child. A taxpayer shall be allowed a credit against the tax imposed under this chapter, other than the liability imposed by section 12-707, in the amount of two thousand five hundred dollars for the birth of a stillborn child, provided such child would have been a dependent on such taxpayer's federal income tax return. The credit shall be allowed for the taxable year for which a stillbirth certificate is issued by the State Vital Records Office of the Department of Public Health.

(P.A. 22-118, S. 412.)

History: P.A. 22-118 effective July 1, 2022, and applicable to taxable years commencing on or after January 1, 2022.

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Sec. 12-705. Withholding of taxes from wages and other payments. (a)(1) Each employer, as defined in section 12-707, maintaining an office or transacting business within this state and making payment of any wages taxable under this chapter to a resident or nonresident individual shall deduct and withhold from such wages for each payroll period a tax computed in such manner as to result, so far as practicable, in withholding from the employee's wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the employee under this chapter with respect to the amount of such wages during the calendar year. The method of determining the amount to be withheld shall be prescribed by regulations of the Commissioner of Revenue Services adopted in accordance with chapter 54.

(2) Each payer, as defined in section 12-707, of distributions from a profit-sharing plan, a stock bonus, a deferred compensation plan, an individual retirement arrangement, an endowment or a life insurance contract, or of pension payments or annuity distributions, that (A) maintains an office or transacts business within this state, and (B) makes payment of any amounts taxable under this chapter to a resident individual, shall deduct and withhold from the taxable portion of any such distribution a tax computed in such manner as to result, so far as practicable, in withholding from the distributions paid during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the payee, as defined in section 12-707, under this chapter with respect to such distributions during the calendar year. The method of determining the amount to be withheld from taxable payments, other than lump sum distributions, shall be determined in accordance with instructions provided by the commissioner. The amount to be withheld from a lump sum distribution shall be equal to the taxable portion of the distribution multiplied by the highest marginal rate, except that no withholding shall be required if (i) any portion of the lump sum distribution was previously subject to tax, or (ii) the lump sum distribution is a rollover that is effected as a direct trustee-to-trustee transfer or as a direct rollover in the form of a check made payable to another qualified account. For purposes of this section, “lump sum distribution” means a payment from a payer to a resident payee of such resident payee's entire account balance, exclusive of any other tax withholding and any administrative charges and fees.

(3) In no event shall the requirements of this subsection result in nonpayment of any distribution to a resident individual. For the calendar year ending December 31, 2018, no taxpayer shall be assessed interest by the commissioner pursuant to section 12-722 solely on the basis of a payer's failure to comply with the provisions of this subsection.

(b) The commissioner may, if such action is deemed necessary for the protection of the revenue and under such regulations as the commissioner may adopt in accordance with the provisions of chapter 54, require persons other than employers and payers (1) to deduct and withhold taxes from payments made by such persons to residents of this state, nonresidents and part-year residents, (2) to file a withholding return as prescribed by the commissioner, and (3) to pay over to the commissioner, or to a depositary designated by the commissioner, the taxes so required to be deducted and withheld, in accordance with a schedule established in such regulations.

(c) The commissioner may adopt regulations providing for withholding from (1) remuneration for services performed by an employee for his or her employer that does not constitute wages, (2) wages paid to an employee by an employer not maintaining an office or transacting business within this state, or (3) any other type of payment with respect to which the commissioner finds that withholding would be appropriate under the provisions of this chapter if the employer and the employee, or, in the case of any other type of payment, the person making and the person receiving such payment, agree to such withholding. Such agreement shall be made in such form and manner as the commissioner may prescribe by regulations adopted in accordance with the provisions of chapter 54. For purposes of this chapter, remuneration, wages or other payments with respect to which such an agreement is made shall be regarded as if they were wages paid to an employee by an employer maintaining an office or transacting business within this state to the extent that such remuneration or wages are paid or other payments are made during the period for which the agreement is in effect.

(June Sp. Sess. P.A. 91-3, S. 56, 168; May Sp. Sess. P.A. 92-5, S. 6, 37; P.A. 17-147, S. 6; P.A. 18-26, S. 7.)

History: June Sp. Sess. P.A. 91-3, S. 56, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 17-147 amended Subsec. (a) by designating existing provisions re employer deduction and withholding from wages as Subdiv. (1) and adding Subdiv. (2) re deduction and withholding of tax by payer of pension or annuity distributions, and made technical and conforming changes, effective January 1, 2018; P.A. 18-26 amended Subsec. (a) by substantially revising provisions re withholding in Subdiv. (2), including replacing “the same as the method used by employers with respect to the payment of wages” with “determined in accordance with instructions provided by the commissioner” re method of determining amount to be withheld, and adding “or as a direct rollover in the form of a check made payable to another qualified account” in clause (ii), and adding Subdiv. (3) re prohibition on nonpayment of distribution by payer and on assessment of interest by commissioner, effective May 29, 2018.

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Sec. 12-706. Agreements with other jurisdictions. Written statement furnished to employees and payees. Treatment of taxes withheld. (a) The Commissioner of Revenue Services may enter into agreements with the tax officers of other states, which require income tax to be withheld from the payment of wages and salaries, so as to govern the amounts to be withheld from the wages and salaries of residents of such states under this chapter. Such agreements may provide for recognition of anticipated tax credits in determining the amounts to be withheld and, under regulations prescribed in accordance with the provisions of chapter 54 by said commissioner, may relieve employers in this state from withholding income tax on wages and salaries paid to nonresident employees. The agreements authorized by this subsection are subject to the condition that the tax officers of such other states grant similar treatment to residents of this state.

(b) (1) Each employer required to deduct and withhold tax under this chapter from the wages of an employee shall furnish to each such employee with respect to the wages paid by such employer to such employee during the calendar year, on or before January thirty-first of the next succeeding year, a written statement as prescribed by the Commissioner of Revenue Services showing the amount of wages paid by the employer to the employee, the amount deducted and withheld as tax and such other information as said commissioner shall prescribe. Each such employer shall file a copy of such written statement with the Commissioner of Revenue Services on or before such January thirty-first date.

(2) Each payer and person other than a payer required to deduct and withhold tax under this chapter from nonpayroll amounts shall furnish to each payee, as defined in section 12-707, with respect to the nonpayroll amounts paid to such payee during the calendar year, on or before January thirty-first of the next succeeding year, a written statement as prescribed by said commissioner showing the amount of nonpayroll amounts paid to the payee, the amount deducted and withheld as tax and such other information as said commissioner shall prescribe. Each such payer shall file a copy of such written statement with said commissioner on or before such January thirty-first date.

(c) Amounts upon which tax is required to be withheld shall be taxable under this chapter as if no withholding were required, but any amount of tax actually deducted and withheld in any calendar year shall be deemed to have been paid to said commissioner on behalf of the employee or payee from whom withheld and such employee or payee shall be credited with having paid that amount of tax for the taxable year beginning in such calendar year.

(June Sp. Sess. P.A. 91-3, S. 57, 168; June Sp. Sess. P.A. 15-5, S. 126; P.A. 17-147, S. 7.)

History: June Sp. Sess. P.A. 91-3, S. 57, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; June Sp. Sess. P.A. 15-5 amended Subsec. (b) to make technical changes and require employers to file copy of written statement of wages and withholdings with commissioner on or before January 31st, effective June 30, 2015; P.A. 17-147 amended Subsec. (b) to designate existing provisions re employer to furnish to employee written statement as Subdiv. (1) and add Subdiv. (2) re deduction and withholding of tax from nonpayroll amounts by payer and person other than payer required to deduct and withhold tax and written statement to be furnished to payee, and made technical and conforming changes, effective January 1, 2018.

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Sec. 12-707. Payment to commissioner of taxes withheld by employers, payers or purchasers of a business. Security. (a)(1) Each employer required to deduct and withhold tax under this chapter from the wages of employees shall be liable for such tax and shall file a withholding return as prescribed by the Commissioner of Revenue Services and pay over to the commissioner, or to a depositary designated by the commissioner, the taxes so required to be deducted and withheld at the times specified in subsection (b) of this section.

(2) Each payer shall deduct and withhold tax under this chapter from the nonpayroll amounts of payees, shall be liable for such tax and shall file a withholding return as prescribed by the commissioner and pay over to the commissioner, or to a depository designated by the commissioner, the taxes so required to be deducted and withheld at the times specified in subsection (b) of this section.

(b) (1) (A) With respect to the tax required to be deducted and withheld under this chapter from wages paid during any calendar year beginning on or after January 1, 2005, and in accordance with an annual determination described in subdivision (2) of this subsection, each employer shall be either a weekly remitter, monthly remitter or quarterly remitter for the calendar year. If an employer is a weekly remitter, the employer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (3) of this subsection. If an employer is a monthly remitter, the employer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (4) of this subsection. If an employer is a quarterly remitter, the employer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (5) of this subsection. Notwithstanding any provision of this subsection, if an employer is a household employer, the employer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (6) of this subsection.

(B) With respect to the tax required to be deducted and withheld under this chapter from nonpayroll amounts paid during any calendar year beginning on or after January 1, 2005, and in accordance with an annual determination described in subdivision (2) of this subsection, each payer shall be either a weekly remitter, monthly remitter or quarterly remitter for the calendar year. If a payer is a weekly remitter, the payer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (3) of this subsection. If a payer is a monthly remitter, the payer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (4) of this subsection. If a payer is a quarterly remitter, the payer shall pay over to the commissioner the tax required to be deducted and withheld under this chapter in accordance with subdivision (5) of this subsection.

(2) (A) The annual determination for an employer required to deduct and withhold tax under this chapter shall be based on the employer's reported liability for the tax required to be deducted and withheld under this chapter during the twelve-month look-back period, provided, if any employer fails timely to file one or more required withholding tax returns for the four quarterly periods within the twelve-month look-back period, the commissioner may base the annual determination for the employer on any information available to the commissioner. If an employer's reported liability for the tax required to be deducted and withheld under this chapter during the twelve-month look-back period was more than ten thousand dollars, the employer is a weekly remitter for the calendar year next succeeding such twelve-month period. If an employer's reported liability for the tax required to be deducted and withheld under this chapter during the twelve-month look-back period was more than two thousand dollars but not more than ten thousand dollars, the employer is a monthly remitter for the calendar year next succeeding such twelve-month period. If an employer's reported liability for the tax required to be deducted and withheld under this chapter during the twelve-month look-back period was two thousand dollars or less, the employer is a quarterly remitter for the calendar year next succeeding such twelve-month period. Notwithstanding any provision of this section, if an employer is a seasonal employer, the annual determination shall be based on the seasonal employer's reported liability for the tax required to be deducted and withheld under this chapter during the twelve-month look-back period multiplied by a fraction, the numerator of which is four, and the denominator of which is the number of quarterly periods during such twelve-month period that the employer paid wages to employees.

(B) The annual determination for a payer required to deduct and withhold tax under this chapter shall be based on the payer's reported liability for the tax required to be deducted and withheld under this chapter during the look-back calendar year, provided, if any payer fails timely to file the required withholding tax return for the look-back calendar year, the commissioner may base the annual determination for the payer on any information available to the commissioner. If a payer's reported liability for the tax required to be deducted and withheld under this chapter during the look-back calendar year was more than ten thousand dollars, the payer is a weekly remitter for the calendar year for which the annual determination is being made. If a payer's reported liability for the tax required to be deducted and withheld under this chapter during the look-back calendar year was more than two thousand dollars but not more than ten thousand dollars, the payer is a monthly remitter for the calendar year for which the annual determination is being made. If a payer's reported liability for the tax required to be deducted and withheld under this chapter during the look-back calendar year was two thousand dollars or less, the payer is a quarterly remitter for the calendar year for which the annual determination is being made.

(3) (A) An employer that is a weekly remitter shall pay over to the department the tax required to be deducted and withheld from wages under this chapter on or before the Wednesday next succeeding the weekly period during which the wages from which the tax was required to be deducted and withheld were paid to employees.

(B) A payer that is a weekly remitter shall pay over to the department the tax required to be deducted and withheld from nonpayroll amounts under this chapter on or before the Wednesday next succeeding the weekly period during which the nonpayroll amounts from which the tax was required to be deducted and withheld were paid to payees.

(4) (A) An employer that is a monthly remitter shall pay over to the department the tax required to be deducted and withheld from wages under this chapter on or before the fifteenth day of the month next succeeding the month during which the wages from which the tax was required to be deducted and withheld were paid to employees.

(B) A payer that is a monthly remitter shall pay over to the department the tax required to be deducted and withheld from nonpayroll amounts under this chapter on or before the fifteenth day of the month next succeeding the month during which the nonpayroll amounts from which the tax was required to be deducted and withheld were paid to payees.

(5) (A) An employer that is a quarterly remitter shall pay over to the department the tax required to be deducted and withheld from wages under this chapter on or before the last day of the month next succeeding the quarterly period during which the wages from which the tax was required to be deducted and withheld were paid to employees.

(B) A payer that is a quarterly remitter shall pay over to the department the tax required to be deducted and withheld from nonpayroll amounts under this chapter on or before the last day of the month next succeeding the quarterly period during which the nonpayroll amounts from which the tax was required to be deducted and withheld were paid to payees.

(6) An employer that is a household employer shall pay over to the department the tax required to be deducted and withheld under this chapter on or before the April fifteenth next succeeding the calendar year during which the wages from which the tax was required to be deducted and withheld were paid to household employees.

(c) In the case of an overpayment of tax under this chapter by an employer, refund or credit shall be made to the employer only to the extent that the amount of such overpayment was not deducted and withheld by the employer.

(d) The amount of tax required to be deducted and withheld and paid over to the commissioner under this chapter, when so deducted and withheld, shall be held to be a special fund in trust for the state. No employee or other person shall have any right of action against the employer with respect to any moneys deducted and withheld from wages and paid over to the commissioner in compliance or in intended compliance with this chapter.

(e) (1) If an employer required to deduct and withhold tax under this chapter from the wages of employees and to pay over to the commissioner the taxes so required to be deducted and withheld sells out the employer's business or stock of goods or quits the employer's business, such employer's successors or assigns shall withhold a sufficient portion of the purchase price to cover the amount of such taxes, and any interest and penalties thereon, due and unpaid, as of the time of such sale or quitting of the business, until the employer produces a receipt from the commissioner showing that the taxes, interest and penalties have been paid or a certificate indicating that no such taxes are due.

(2) If the purchaser of a business or stock of goods fails to withhold a portion of the purchase price as required, the purchaser shall be personally liable for the payment of the amount required to be withheld by the purchaser, to the extent of the purchase price, valued in money. Not later than sixty days after the latest of the dates specified in subdivision (3) of this subsection, the commissioner shall either issue a certificate indicating that no taxes are due or mail notice to the purchaser in the manner provided in section 12-728 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 a portion of the purchase price as provided in this subsection. The period within which the obligation of the successor may be enforced shall begin when the employer sells out the employer's business or stock of goods or quits the employer's business or when the assessment against the employer becomes final, whichever event occurs later.

(3) For purposes of subdivision (2) of this subsection, the latest of the following dates shall apply:

(A) The date that the commissioner receives a written request from the purchaser for a certificate;

(B) The date of the sale or quitting of the business; or

(f) (1) Whenever any employer or payer required to deduct and withhold tax under this chapter (A) owes such taxes, which taxes have been finally due and payable for a period of ninety days or longer and for which any administrative or judicial remedies, or both, have been exhausted or have lapsed, or (B) has failed to file one or more withholding tax returns required under this chapter, the commissioner may require any employer or payer to deposit with the commissioner such security as the commissioner determines necessary, provided the amount of such security shall not be greater than six times the employer's or payer's estimated liability for the prior twelve-month period or the employer's or payer's liability for the next twelve-month period, determined in such manner as the commissioner deems proper. The commissioner may increase or decrease the amount of the security, subject to the limitations in this subsection.

(2) The commissioner may sell the security at public auction if it becomes necessary to do so to recover any tax or amount required to be collected or any interest or penalty due. Notice of such sale may be served personally or by mail upon the person that deposited the security. If the notice is served by mail, it shall be made in the manner prescribed for service of notice of a deficiency assessment and shall be addressed to such person at the person's address as it appears in the commissioner's records. Upon any sale, any surplus above the amounts due shall be returned to the person that deposited the security.

(g) As used in this section and sections 12-705 and 12-706:

(1) “Employer” means an employer, as defined in Section 3401 of the Internal Revenue Code;

(2) “Payer” means a person making a payment of nonpayroll amounts to one or more payees;

(3) “Payee” means a person receiving a payment of nonpayroll amounts from a payer;

(4) “Nonpayroll amounts” includes (A) gambling winnings, other than Connecticut lottery winnings, that are paid to a resident, or to a person receiving payment on behalf of a resident, and that are subject to federal income tax withholding; (B) Connecticut lottery winnings that are required to be reported by the Connecticut Lottery Corporation to the Internal Revenue Service, whether or not subject to federal income tax withholding, whether paid to a resident, nonresident or a part-year resident, and whether paid to an individual, trust or estate; (C) pension and annuity distributions, for which the payer is required to deduct and withhold tax under this chapter; (D) military retired pay, where the payee is a resident individual and has requested that tax be deducted and withheld under this chapter; (E) unemployment compensation, where the recipient has requested that tax be deducted and withheld under this chapter; and (F) payments made to an athlete or entertainer, where the payments are not wages for federal income tax withholding purposes and where the commissioner requires the payer to deduct and withhold tax under this chapter;

(5) “Reported liability” means, in the case of an employer, the liability for the tax required to be deducted and withheld under this chapter, as shown on the employer's withholding tax returns for the four quarterly periods within the twelve-month look-back period, and, in the case of a payer, the liability for the tax required to be deducted and withheld under this chapter, as shown on the payer's withholding tax return for the look-back calendar year;

(6) “Twelve-month look-back period” means the twelve-month period that ended on the June thirtieth next preceding the calendar year for which the annual determination for an employer is made by the commissioner;

(7) “Look-back calendar year” means the calendar year preceding by two years the calendar year for which the annual determination for a payer is made by the commissioner;

(8) “Seasonal employer” means an employer that regularly in the same one or more quarterly periods of each calendar year pays no wages to employees;

(9) “Household employee” means an employee whose services of a household nature in or about a private home of an employer constitute domestic service in a private home of the employer, as the phrase is used in Section 3121(a)(7) of the Internal Revenue Code or in regulations adopted thereunder;

(10) “Household employer” means an employer of a household employee;

(11) “Weekly period” means the seven-day period beginning on a Saturday and ending on the following Friday; and

(12) “Quarterly period” means the period of three full months beginning on the first day of January, April, July or October.

(June Sp. Sess. P.A. 91-3, S. 58, 168; May Sp. Sess. P.A. 92-5, S. 7, 37; P.A. 94-139, S. 1, 2; P.A. 96-221, S. 21, 25; P.A. 03-107, S. 4; P.A. 04-201, S. 5; P.A. 11-61, S. 58; P.A. 17-147, S. 5, 8.)

History: June Sp. Sess. P.A. 91-3, S. 58, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 94-139 allowed employer withholding less than $500 to file return and pay over taxes on or before the last day of the month next succeeding the calendar quarter for which the taxes were deducted and withheld, effective May 24, 1994, and applicable to taxes deducted and withheld on or after January 1, 1995; P.A. 96-221 limited provision re payment of taxes withheld of less than $500 per quarter to cases where federal law requires employer to pay withheld federal taxes on or before the last day of the month next succeeding such calendar quarter, effective June 4, 1996; P.A. 03-107 divided existing provisions into Subsecs. (a) and (b), added provision in Subsec. (a) re certain refunds to employers and made a technical change in Subsec. (b), effective for calendar years commencing on or after January 1, 2003; P.A. 04-201 divided existing provision into Subsecs. (a)(1), (c) and (d), amended Subsec. (a) to delete provision re deduction and withholding and make conforming changes in Subdiv. (1) and add Subdiv. (2) re nonpayroll amounts withheld by employers, added new Subsec. (b) re schedule for remittance of withheld amounts and added new Subsec. (e) re definitions, effective January 1, 2005, and applicable to wages and nonpayroll amounts paid on or after that date; P.A. 11-61 added new Subsec. (e) re withholding requirements upon purchase of a business or stock of goods and redesignated existing Subsec. (e) as Subsec. (f), effective July 1, 2011, and applicable to sales of a business or stock of goods occurring on or after that date; P.A. 17-147 amended Subsec. (a)(2) to delete “of nonpayroll amounts”, added new Subsec. (f) re security required from employer or payer that fails to pay taxes owed or file withholding tax returns, and redesignated existing Subsec. (f) re definitions as Subsec. (g), effective October 1, 2017, and amended redesignated Subsec. (g) to add references to Secs. 12-705 and 12-706 and redefine “nonpayroll amounts” and made technical changes, effective January 1, 2018.

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Sec. 12-708. Determination of taxable year and method of accounting changes. (a) For purposes of the tax imposed under this chapter, a taxpayer's taxable year shall be the same as such taxpayer's taxable year for federal income tax purposes and a taxpayer's method of accounting shall be the same as such taxpayer's method of accounting for federal income tax purposes.

(b) If a taxpayer's taxable year is changed for federal income tax purposes, the taxable year for purposes of the tax under this chapter shall be similarly changed. If a change in taxable year results in a taxable period of less than twelve months, the exemption allowed under section 12-702 shall be prorated under regulations adopted by the Commissioner of Revenue Services in accordance with chapter 54.

(c) If no method of accounting has been regularly used by the taxpayer, Connecticut taxable income shall be computed under such method that in the opinion of the commissioner, fairly reflects income. If a taxpayer's method of accounting is changed for federal income tax purposes, the method of accounting for purposes of this chapter shall similarly be changed.

(d) In computing a taxpayer's Connecticut taxable income for any taxable year under a method of accounting different from the method under which the taxpayer's Connecticut taxable income for the previous year was computed, there shall be taken into account those adjustments which are determined, under regulations adopted by the commissioner, to be necessary solely by reason of the change in order to prevent amounts from being duplicated or omitted.

(e) If a taxpayer's method of accounting is changed, other than from an accrual to an installment method, any additional tax which results from adjustments determined to be necessary solely by reason of the change shall not be greater than if such adjustments were ratably allocated and included for the taxable year of the change and the preceding taxable years, not in excess of two years, during which the taxpayer used the method of accounting from which the change is made. If a taxpayer's method of accounting is changed from an accrual to an installment method, any additional tax for the year of such change of method and for any subsequent year which is attributable to the receipt of installment payments properly accrued in a prior year, shall be reduced by the portion of tax for any prior taxable year attributable to the accrual of such installment payments.

(June Sp. Sess. P.A. 91-3, S. 59, 168.)

History: June Sp. Sess. P.A. 91-3, S. 59, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-709. Exemption under section 12-702 not applicable to trusts or estates. Taxes payable by fiduciary. The tax imposed under this chapter on a trust or estate shall be computed on the Connecticut taxable income of such trust or estate without allowance for any exemption under section 12-702 and shall be paid by the fiduciary.

(June Sp. Sess. P.A. 91-3, S. 60, 168.)

History: June Sp. Sess. P.A. 91-3, S. 60, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-710. Persons subject to corporation business tax not taxable under this chapter. Persons exempt from federal taxation exempt from taxation under this chapter. Any person taxable as a corporation for the purposes of chapter 208 shall not be subject to tax under this chapter. Any person which by reason of its purposes or activities is exempt from federal income tax shall be exempt from tax imposed under this chapter.

(June Sp. Sess. P.A. 91-3, S. 61, 168; May Sp. Sess. P.A. 92-5, S. 8, 37.)

History: June Sp. Sess. P.A. 91-3, S. 61, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992.

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Sec. 12-711. Determination of income, gain, loss and deduction derived from or connected with sources within this state. (a) The income of a nonresident natural person derived from or connected with sources within this state shall be the sum of the net amount of items of income, gain, loss and deduction entering into his or her Connecticut adjusted gross income for the taxable year, derived from or connected with sources within this state, including: (1) His or her distributive share of partnership income, gain, loss and deduction, determined under section 12-712; (2) his or her pro rata share of S corporation income, gain, loss and deduction, determined under section 12-712; (3) his or her share of estate or trust income, gain, loss and deduction, determined under section 12-714; and (4) his or her compensation from nonqualified deferred compensation plans attributable to services performed within this state, including, but not limited to, compensation required to be included in federal gross income under Section 457A of the Internal Revenue Code.

(b) (1) Items of income, gain, loss and deduction derived from or connected with sources within this state shall be those items attributable to: (A) The ownership or disposition of any interest in real property in this state or tangible personal property in this state, as determined pursuant to subdivision (6) of this subsection; (B) a business, trade, profession or occupation carried on in this state; (C) in the case of a shareholder of an S corporation, the ownership of shares issued by such corporation, to the extent determined under section 12-712; or (D) winnings from a wager placed in a lottery conducted by the Connecticut Lottery Corporation, if the proceeds from such wager are required, under the Internal Revenue Code or regulations adopted thereunder, to be reported by the Connecticut Lottery Corporation to the Internal Revenue Service.

(2) (A) Before, on and after December 29, 2015, income from a business, trade, profession or occupation carried on in this state includes, but is not limited to, compensation paid to a nonresident natural person for rendering personal services as an employee in this state. For taxable years commencing on or after January 1, 2016, compensation for personal services rendered in this state by such nonresident employee who is present in this state for not more than fifteen days during a taxable year shall not constitute income derived from sources within this state. If a nonresident employee is present in this state for more than fifteen days during a taxable year, all compensation the employee receives for the rendering of all personal services in this state during the taxable year shall constitute income derived from sources within this state during the taxable year.

(B) For purposes of determining whether a nonresident employee is “present in this state” under subparagraph (A) of this subdivision, presence in this state for any part of a day constitutes being present in this state for that entire day unless such presence is solely for the purpose of transit through this state. The provisions of this subparagraph shall not apply to subsection (c) of this section or to any other provision of law unless expressly provided.

(C) For purposes of determining the compensation derived from or connected with sources within this state, a nonresident natural person shall include income from days worked outside this state for such person's convenience if such person's state of domicile uses a similar test.

(D) The provisions of this subdivision shall not apply to sources of income from a business, trade, profession, or occupation carried on in this state other than compensation for personal services rendered by a nonresident employee, and shall not apply to sources of income derived by an athlete, entertainer or performing artist, including, but not limited to, a member of an athletic team.

(3) Income from intangible personal property, including annuities, dividends, interest and gains from the disposition of intangible personal property, shall constitute income derived from sources within this state only to the extent that such income is from (A) property employed in a business, trade, profession or occupation carried on in this state, or (B) winnings from a wager placed in a lottery conducted by the Connecticut Lottery Corporation, if the proceeds from such wager are required, under the Internal Revenue Code or regulations adopted thereunder, to be reported by the Connecticut Lottery Corporation to the Internal Revenue Service.

(4) Deductions with respect to capital losses and net operating losses shall be based solely on income, gain, loss and deduction derived from or connected with sources within this state, under regulations adopted by the commissioner, but otherwise shall be determined in the same manner as the corresponding federal deductions.

(5) Income directly or indirectly derived by an athlete, entertainer or performing artist, including, but not limited to, a member of an athletic team, from closed-circuit and cable television transmissions of an event, other than events occurring on a regularly scheduled basis, taking place within this state as a result of the rendition of services by such athlete, entertainer or performing artist shall constitute income derived from or connected with sources within this state only to the extent that such transmissions were received or exhibited within this state.

(6) For purposes of subparagraph (A) of subdivision (1) of this subsection, “real property in this state” includes an interest in an entity, and “entity” means a partnership, limited liability company or S corporation that owns, directly or indirectly, real property that is located within this state and has a fair market value that equals or exceeds fifty per cent of all the assets of the entity on the date of sale or disposition by a nonresident natural person of such person's interest in the entity. Only those assets that the entity owned, directly or indirectly, for at least two years prior to the date of the sale or disposition of the person's interest in the entity shall be used in determining the fair market value of all the assets of the entity on the date of such sale or disposition. The gain or loss derived from Connecticut sources from such person's sale or disposition of an interest in such entity is the total gain or loss for federal income tax purposes from such sale or disposition multiplied by a fraction, the numerator of which is the fair market value of all real property located in this state owned, directly or indirectly, by the entity on the date of such sale or disposition, and the denominator of which is the fair market value of all the assets of the entity on the date of such sale or disposition.

(c) (1) If a business, trade, profession or occupation is carried on partly within and partly without this state, as determined under rules or regulations of the commissioner, the items of income, gain, loss and deduction derived from or connected with sources within this state shall be determined by apportionment under such rules or regulations and the provisions of this subsection.

(2) The proportion of the net amount of the items of income, gain, loss and deduction attributable to the activities of the business, trade, profession or occupation carried on in this state shall be determined by multiplying the net amount of the items of income, gain, loss and deduction of the business, trade, profession or occupation by the gross income percentage. The gross income percentage shall be computed by dividing the gross receipts from sales earned within this state by the total gross receipts from sales, whether earned within or without this state. For the purposes of this subdivision:

(A) Gross receipts from sales of tangible personal property are considered to be earned within this state when the property is delivered or shipped to a purchaser within this state, regardless of the F.O.B. point or other conditions of the sale.

(B) Gross receipts from sales of services are considered to be earned within this state if the market for the services is in this state. The taxpayer's market for services is in this state if and to the extent the service is used at a location in this state.

(C) Gross receipts from the rental, lease or license of tangible personal property are considered to be earned within this state if and to the extent such property is situated in this state.

(D) Gross receipts from the rental, lease or license of intangible property are considered to be earned within this state if and to the extent such property is used in this state. Intangible property utilized in marketing a good or service to a consumer is used in this state if that good or service is purchased by a consumer in this state.

(E) Gross receipts from the sale or other disposition of tangible personal property or intangible property are excluded from the gross income percentage if such property is not held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business.

(F) Gross receipts from the sale, rental, lease or license of real property are excluded from the gross income percentage.

(G) Gross receipts, other than those receipts described in subparagraphs (A) to (F), inclusive, of this subdivision, are considered to be earned within this state to the extent the taxpayer's market for the sales is in this state.

(H) If a taxpayer concludes that it cannot reasonably determine where its gross receipts are earned in accordance with subparagraphs (A) to (G), inclusive, of this subdivision, such taxpayer may petition the commissioner for approval to use a methodology that reasonably approximates the method for determining where such receipts are earned provided for in this subdivision. Any such petition shall be submitted not later than sixty days prior to the due date of the return for the first taxable year to which the petition applies, determined with regard to any extension of time for filing such return. The commissioner shall grant or deny such petition before such due date.

(d) Compensation paid by the United States for active service in the armed forces of the United States, performed by an individual not domiciled in this state, shall not constitute income derived from sources within this state.

(e) If a husband and wife determine their federal income tax on a joint return but are required to determine their Connecticut income taxes separately, they shall determine their incomes derived from or connected with sources within this state separately as if their federal adjusted gross incomes had been determined separately.

(f) Any nonresident, other than a dealer holding property primarily for sale to customers in the ordinary course of his trade or business, shall not be deemed to carry on a trade, business, profession or occupation in this state solely by reason of the purchase or sale of intangible property or the purchase, sale or writing of stock option contracts, or both, for his own account.

(June Sp. Sess. P.A. 91-3, S. 62, 168; May Sp. Sess. P.A. 92-5, S. 9, 37; May Sp. Sess. P.A. 92-17, S. 13, 59; P.A. 98-244, S. 29, 35; June Sp. Sess. P.A. 01-6, S. 37, 85; May 9 Sp. Sess. P.A. 02-1, S. 81; May 9 Sp. Sess. P.A. 02-4, S. 17; P.A. 14-155, S. 17, 18; Dec. Sp. Sess. 15-1, S. 26; May Sp. Sess. P.A. 16-3, S. 200; P.A. 17-147, S. 36; P.A. 18-49, S. 20; 18-169, S. 43.)

History: June Sp. Sess. P.A. 91-3, S. 62, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (a) to make a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; May Sp. Sess. P.A. 92-17 added Subsec. (f), concerning the treatment of the trading of intangible property and stock option contracts, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 98-244 added Subsec. (b)(4) specifying that income derived directly or indirectly by an athlete, entertainer or performing artist from certain closed-circuit and cable television transmissions shall constitute income derived from or connected with sources within this state to the extent that such transmissions were received or exhibited within this state, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; June Sp. Sess. P.A. 01-6 amended Subsec. (b)(1) and (2) to make technical changes and apply provisions to Connecticut lottery winnings in excess of $5,000, effective July 1, 2001, and applicable to taxable years commencing on or after January 1, 2001; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (b) to include in income for nonresidents lottery winnings required to be reported to the Internal Revenue Service and winnings from any other wagering transaction or gambling activity in this state if such winnings are required to be reported to the Internal Revenue Service and to add definition of “in this state”, effective July 1, 2002, and applicable to taxable years commencing January 1, 2002; May 9 Sp. Sess. P.A. 02-4 amended Subsec. (b) to delete the inclusion of certain reportable winnings from wagers, other than state lottery wagers, placed in this state and to delete definition of “in this state”, effective July 1, 2002, and applicable to taxable years commencing on or after January 1, 2002; P.A. 14-155 amended Subsec. (a) by adding Subdiv. (4) re compensation from nonqualified deferred compensation plans and making technical changes, effective June 11, 2014, and amended Subsec. (b) by adding reference to real property in this state and reference to Subdiv. (5) determination in Subdiv. (1)(A) and by adding Subdiv. (5) re disposition of interest in an entity, and amended Subsec. (c) by designating existing provisions as Subdiv. (1) and adding “and the provisions of this subsection” therein and by adding Subdiv. (2) re determination of apportionment of items of income, gain, loss and deduction, effective June 11, 2014, and applicable to taxable years commencing on or after January 1, 2014; Dec. Sp. Sess. P.A. 15-1 amended Subsec. (b) by adding new Subdiv. (2) re compensation for personal services rendered by nonresident employee who is present in this state, redesignating existing Subdivs. (2) to (5) as Subdivs. (3) to (6), and adding “, including, but not limited to, a member of an athletic team,” in redesignated Subdiv. (5), and made technical and conforming changes, effective December 29, 2015, and applicable to taxable years commencing on or after January 1, 2016; May Sp. Sess. P.A. 16-3 amended Subsec. (c)(2) by replacing “average of the percentages of property, payroll and gross income in this state” with “gross income percentage”, deleting “of property or services”, designating existing provisions re gross receipts from sales of property as Subpara. (A) and amending same by replacing “property” with “tangible personal property”, designating existing provisions re gross receipts from sales of services as Subpara. (B) and substantially amending same, adding Subpara. (C) re gross receipts from rental, lease or license of tangible personal property, adding Subpara. (D) re gross receipts from rental, lease or license of intangible property, adding Subpara. (E) re gross receipts from sale or disposition of tangible personal property or intangible property excluded from gross income percentage, adding Subpara. (F) re gross receipts from sale, rental, lease or license of real property excluded from gross income percentage, adding Subpara. (G) re other gross receipts considered to be earned within state, adding Subpara. (H) re petitioning of commissioner when taxpayer cannot reasonably determine where gross receipts are earned, and making a conforming change, effective January 1, 2017, and applicable to income years commencing on or after January 1, 2017; P.A. 17-147 amended Subsec. (b)(6) by adding “, directly or indirectly” re ownership of real property located within this state, effective July 7, 2017; P.A. 18-49 amended Subsec. (b)(2) by redesignating existing Subpara. (C) re application of Subdiv. to certain sources of income as Subpara. (D) and adding new Subpara. (C) re inclusion of income from days worked outside this state for purposes of determining compensation derived from or connected with sources within this state, effective May 31, 2018, and applicable to taxable years commencing on or after January 1, 2019; P.A. 18-169 made identical changes as P.A. 18-49, effective June 14, 2018, and applicable to taxable years commencing on or after January 1, 2019.

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Sec. 12-711a. Repayment of income by taxpayer. (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 this chapter 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 this chapter 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 this chapter 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 this chapter 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 this chapter for the payment of tax for the taxable year, and, subject to the provisions of sections 12-35f, 12-739 and 12-742, 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 this chapter 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 this chapter for a preceding taxable year or years to the extent attributable to such loss being carried back to such year or years.

(P.A. 00-174, S. 46, 83.)

History: P.A. 00-174 effective May 26, 2000, and applicable to taxable years commencing on or after January 1, 1999, except that no interest shall be allowed or paid on any overpayment resulting from the application of this section to the taxable year commencing January 1, 1999.

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Sec. 12-712. Determination of nonresident partner's, shareholder's or beneficiary's share of income within the state. (a)(1) The portion of a nonresident partner's distributive share of partnership income that is derived from or connected with sources within this state shall be determined in accordance with the provisions of section 12-711.

(2) The portion of a nonresident shareholder's pro rata share of S corporation income that is derived from or connected with sources within this state shall be determined in accordance with the provisions of section 12-711.

(3) The portion of a nonresident beneficiary's share of trust or estate income that is derived from or connected with sources within this state shall be determined in accordance with the provisions of section 12-711.

(b) In determining the sources of a nonresident partner's income, no effect shall be given to a provision in the partnership agreement which: (1) Characterizes payments to the partner as being for services or for the use of capital; or (2) allocates to the partner, as income or gain from sources without Connecticut, a greater proportion of his distributive share of partnership income or gain than the ratio of partnership income or gain from sources without this state to partnership income or gain from all sources, except as authorized in subsection (c) of this section; or (3) allocates to the partner a greater proportion of a partnership item of loss or deduction connected with sources within this state than his proportionate share, for federal income tax purposes, of partnership loss or deduction generally, except as authorized in subsection (c) of this section.

(c) (1) The character of partnership or corporation items for a nonresident partner or S corporation shareholder shall be determined in accordance with section 12-715.

(2) The effect of a special provision in a partnership agreement, other than a provision referred to in subsection (b) of this section, having the principal purpose of avoidance or evasion of tax under this chapter shall be determined under subsection (c) of section 12-715.

(d) The commissioner may, on application, authorize the use of such other methods of determining a nonresident partner's portion of partnership items derived from or connected with sources within this state, and the modifications related thereto, as may be appropriate and equitable, on such terms and conditions as he may require.

(June Sp. Sess. P.A. 91-3, S. 63, 168; May Sp. Sess. P.A. 92-5, S. 10, 37; May Sp. Sess. P.A. 16-3, S. 201.)

History: June Sp. Sess. P.A. 91-3, S. 63, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 added Subsec. (d), effective June 19, 1992, and applicable to taxable years of taxpayers commencing January 1, 1992; May Sp. Sess. P.A. 16-3 amended Subsec. (a) by replacing references to regulations adopted by the commissioner with “in accordance”, effective January 1, 2017, and applicable to income years commencing on or after January 1, 2017.

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Sec. 12-713. Determination of income within this state of nonresident trusts and estates. (a) The income derived from or connected with sources within this state of a nonresident estate or trust shall be determined as follows:

(1) There shall be determined its share of income, gain, loss and deduction from Connecticut sources under section 12-714.

(2) There shall be added or subtracted, as the case may be, the amount derived from or connected with Connecticut sources of any income, gain, loss and deduction which would be included in the determination of federal adjusted gross income if the estate or trust were an individual and which is recognized for federal income tax purposes but excluded from the definition of federal distributable net income of the estate or trust. In the case of a trust, there shall be added the amount of any includable gain, reduced by any deductions properly allocable thereto, upon which tax is imposed for the taxable year pursuant to Section 644 of the Internal Revenue Code. The source of such income, gain, loss and deduction shall be determined in accordance with the applicable rules of section 12-711 as in the case of a nonresident individual.

(b) Deductions with respect to capital losses and net operating losses shall be based solely on income, gains, losses and deductions derived from or connected with sources within this state, under rules or regulations of the commissioner, but otherwise determined in the same manner as the corresponding federal deductions.

(June Sp. Sess. P.A. 91-3, S. 64, 168.)

History: June Sp. Sess. P.A. 91-3, S. 64, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-714. Determination of share of nonresident estate or trust and nonresident beneficiary in income within this state. (a) The share of a nonresident estate or trust under subdivision (1) of subsection (a) of section 12-713, and the share of a nonresident beneficiary of any estate or trust under subsection (a) of section 12-711, in estate or trust income, gain, loss and deduction derived from or connected with sources within this state shall be determined as follows:

(1) There shall be determined the items of income, gain, loss and deduction which are derived from or connected with sources within this state, which would be included in the determination of federal adjusted gross income if the estate or trust were an individual and which enter into the definition of federal distributable net income of the estate or trust for the taxable year, including any such items from another estate or trust of which the subject estate or trust is a beneficiary. Such determination of source shall be made in accordance with the provisions of section 12-711 in the same manner as for a nonresident individual.

(2) The amounts determined under subdivision (1) of this subsection shall be allocated among the estate or trust and its beneficiaries, including, solely for the purpose of this allocation, resident beneficiaries, in proportion to their respective shares of federal distributable net income.

(3) The amount allocated under subdivision (2) of this section shall have the same character under this chapter as for federal income tax purposes. Where an item entering into the computation of such amounts is not characterized for federal income tax purposes, it shall have the same character as if it were realized directly from the source from which it was realized by the estate or trust, or as if it were incurred in the same manner as it was incurred by the estate or trust.

(b) (1) If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary, including, solely for the purpose of this allocation, resident beneficiaries, in the net amount determined under subdivision (1) of subsection (a) of this section shall be in proportion to his share of the estate or trust income for such year, under local law or the governing instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of such net amount shall be allocated to the estate or trust.

(2) The commissioner may by regulation establish such other method or methods of determining the respective shares of the beneficiaries and of the estate or trust in its income derived from sources within this state as may be appropriate and equitable. Such method may be used by the fiduciary in his discretion whenever the allocation of such respective shares under subsection (a) of this section or subdivision (1) of this subsection would result in an inequity which is substantial in amount.

(June Sp. Sess. P.A. 91-3, S. 65, 168.)

History: June Sp. Sess. P.A. 91-3, S. 65, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-715. Determination of income of resident partner or S corporation shareholder. (a) In determining the Connecticut adjusted gross income of a resident partner of a partnership or a resident shareholder of an S corporation, any modification described in section 12-701 which relates to an item of partnership or S corporation income, gain, loss or deduction shall be made in accordance with the partner's distributive share or a shareholder's pro rata share, for federal income tax purposes, of the item to which the modification relates. Where a partner's distributive share or a shareholder's pro rata share of any such item is not required to be taken into account separately for federal income tax purposes, the partner's or shareholder's share of such item shall be determined in accordance with his share, for federal income tax purposes, of partnership or S corporation taxable income or loss generally.

(b) Each item of partnership and S corporation income, gain, loss or deduction shall have the same character for a partner or shareholder under this chapter as for federal income tax purposes. Where an item is not characterized for federal income tax purposes, it shall have the same character for a partner or shareholder as if it were realized directly from the source from which it was realized by the partnership or S corporation or as if it was incurred in the same manner as it was incurred by the partnership or S corporation.

(c) Where a partner's distributive share of an item of partnership income, gain, loss or deduction is determined for federal income tax purposes by special provision in the partnership agreement with respect to such item, and where the principal purpose of such provision is the avoidance or evasion of tax under this chapter, the partner's distributive share of such item, and any modification required with respect thereto, shall be determined as if the partnership agreement made no special provision with respect to such item.

(June Sp. Sess. P.A. 91-3, S. 66, 168; May Sp. Sess. P.A. 92-5, S. 11, 37.)

History: June Sp. Sess. P.A. 91-3, S. 66, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing January 1, 1992.

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Sec. 12-716. Attribution of Connecticut fiduciary adjustment. (a)(1) The respective shares of an estate or trust and its beneficiaries, including, solely for the purpose of this allocation nonresident beneficiaries, in the Connecticut fiduciary adjustment shall be in proportion to their respective shares of federal distributable net income of the estate or trust.

(2) If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary in the Connecticut fiduciary adjustment shall be in proportion to his share of the estate or trust income for such year, determined under local law or the governing instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of the Connecticut fiduciary adjustment shall be allocated to the estate or trust.

(b) The commissioner may, by regulation establish such other method or methods of determining to whom the items comprising the fiduciary adjustment shall be attributed as may be appropriate and equitable. Such method may be used by the fiduciary in his discretion whenever the allocation of the fiduciary adjustment pursuant to subsection (a) would result in an inequity which is substantial both in amount and in relation to the amount of the fiduciary adjustment.

(June Sp. Sess. P.A. 91-3, S. 67, 168.)

History: June Sp. Sess. P.A. 91-3, S. 67, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-717. Determination of income within this state of a part-year resident. Change of status. (a) The income derived from or connected with sources within this state of a part-year resident individual shall be the sum of the following: (1) Connecticut adjusted gross income for the period of residence, computed as if his taxable year for Connecticut income tax purposes were limited to the period of residence; (2) the income derived from or connected with sources within this state for the period of nonresidence determined in accordance with section 12-711 as if his taxable year for Connecticut income tax purposes were limited to the period of nonresidence; and (3) the special accruals required by subsection (c) of this section.

(b) The income derived from or connected with sources within this state of a part-year resident trust shall be the sum of the following: (1) The share of Connecticut adjusted gross income for the period of residence, determined as if such trust were an individual whose taxable year for federal income tax purposes were limited to the period of residence, allocated to the trust in accordance with the methods of allocation set forth in section 12-714. Such share of Connecticut adjusted gross income shall include the amount of any includable gain, reduced by any deductions properly allocable thereto, upon which tax is imposed for the taxable year pursuant to Section 644 of the Internal Revenue Code; (2) the income derived from or connected with sources within this state for the period of nonresidence determined in accordance with section 12-713 as if its taxable year for federal income tax purposes were limited to the period of nonresidence; and (3) the special accruals required by subsection (c) of this section.

(c) (1) If an individual changes his status from resident to nonresident he shall, regardless of his method of accounting, accrue to the portion of the taxable year prior to such change of status any items of income, gain, loss or deduction accruing prior to the change of status, if not otherwise properly entering into his federal adjusted gross income for such portion of the taxable year or prior taxable year under his method of accounting.

(2) If an individual changes his status from nonresident to resident he shall, regardless of his method of accounting, accrue to the portion of the taxable year prior to such change of status any items of income, gain, loss or deduction accruing prior to the change of status, other than items derived from or connected with Connecticut sources, if not otherwise properly entering into his federal adjusted gross income for such portion of the taxable year or for a prior taxable year under his method of accounting.

(3) No item of income, gain, loss or deduction which is accrued under this subsection shall be taken into account in determining Connecticut adjusted gross income or income derived from or connected with sources within this state for any subsequent taxable period.

(4) The accruals otherwise required under this subsection shall not be required if the individual files with the commissioner a bond or other security acceptable to the commissioner, conditioned upon the inclusion of amounts accruable under this subsection in Connecticut adjusted gross income or income derived from or connected with sources within this state for one or more subsequent taxable years as if the individual had not changed his resident status.

(5) If a trust changes its status from resident to nonresident or from nonresident to resident, the provisions of subdivisions (1) to (4), inclusive, of this subsection shall apply, except that the term “individual” shall be read as “trust”, reference to “items of income, gain, loss or deduction” shall mean the trust's share of such items determined in accordance with the methods of allocation set forth in section 12-714, reference to “gain” shall include any modification for includable gain under subdivision (9) of subsection (a) of section 12-701 and federal adjusted gross income shall be determined as if the trust were an individual.

(June Sp. Sess. P.A. 91-3, S. 68, 168; May Sp. Sess. P.A. 92-5, S. 12, 37; P.A. 22-110, S. 35.)

History: June Sp. Sess. P.A. 91-3, S. 68, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing January 1, 1992; P.A. 22-110 amended Subsec. (c)(5) by replacing reference to Sec. 12-701(9) with reference to Sec. 12-701(a)(9).

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Sec. 12-718. Exempt dividends. If, at the close of each quarter of its taxable year, at least fifty per cent of the value of the total assets of a regulated investment company consists of obligations with respect to which taxation by this state is prohibited by federal law, the company shall be qualified to pay exempt dividends, as defined in section 12-701, to its shareholders. The value of the total assets of a regulated investment company shall be the value as defined in Section 851(c)(4) of the Internal Revenue Code. If the aggregate amount of dividends designated as exempt dividends with respect to a taxable year of any company is greater than an amount equal to the sum of the amount of interest income derived from obligations with respect to which taxation by this state is prohibited by federal law less the amount allowed as a deduction under Section 212 of the Internal Revenue Code for the production or collection of such interest income, the portion of such distribution which shall constitute an exempt dividend shall be only that portion of the amount so designated as the amount of such excess for such taxable year bears to the amount so designated.

(June Sp. Sess. P.A. 91-3, S. 69, 168; May Sp. Sess. P.A. 92-5, S. 13, 37.)

History: June Sp. Sess. P.A. 91-3, S. 69, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992.

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Sec. 12-719. Filing of returns. Returns for partnerships, S corporations and pass-through entities; sunset. Returns for nonresident athletes of professional teams. (a) The income tax return required under this chapter shall be filed on or before the fifteenth day of the fourth month following the close of the taxpayer's taxable year. A person required to make and file a return shall, without assessment, notice or demand, pay any tax due thereon to the Commissioner of Revenue Services on or before the date fixed for filing such return, determined without regard to any extension of time for filing the return.

(b) (1) (A) The provisions of this subsection shall not apply to taxable years commencing on or after January 1, 2018.

(B) With respect to each of its nonresident partners, each partnership doing business in this state or having income derived from or connected with sources within this state shall, for each taxable year, make payment to the commissioner as provided in subdivision (2) of this subsection.

(2) (A) Any payment under this subdivision shall be in an amount equal to the highest marginal tax rate in effect under section 12-700 for the taxable year multiplied by the subject partner's distributive share of (i) such partnership's separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code, to the extent derived from or connected with sources within this state, as determined under this chapter, and (ii) any modification described in section 12-701 which relates to an item of such partnership's income, gain, loss or deduction, to the extent derived from or connected with sources within this state, as determined under this chapter. Any amount paid by a partnership to this state with respect to any taxable year pursuant to this subdivision shall be considered to be a payment by the partner on account of the income tax imposed on the partner for such taxable year pursuant to this chapter. A partnership shall not be liable to, and shall be entitled to recover a payment made pursuant to this subdivision from, the partner on whose behalf the payment was made. Any payment for a taxable year shall be made on or before the date the annual return for such taxable year is required to be filed pursuant to section 12-726. The partnership shall furnish, on a form prescribed by the commissioner, to each partner on whose behalf payment was made under this subdivision no later than the fifteenth day of the fourth month following the close of the partnership's taxable year a record of the amount of the tax paid on behalf of such partner by the partnership with respect to the taxable year.

(B) (i) If income from one or more pass-through entities, as defined in subparagraph (D) of this subdivision, is the only source of income derived from or connected with Connecticut sources of a partner, or the partner and his or her spouse if a joint federal income tax return is or shall be made, the filing by the partnership of an annual return pursuant to section 12-726 and the payment by the partnership on behalf of the partner of the tax prescribed under subparagraph (A) of this subdivision shall satisfy the filing and payment requirements otherwise separately imposed on the partner by this chapter. The commissioner may make any deficiency assessment against, at the commissioner's sole discretion, either the partnership or the partner, provided any such assessment against the partner shall be limited to the partner's share thereof. Except as otherwise provided in section 12-733, any such assessment shall be made not later than three years after the partnership's annual return pursuant to section 12-726 is filed. The commissioner may refund or credit any overpayment to either the partnership or the partner, in the commissioner's sole discretion. Except as otherwise provided in section 12-732, any such overpayment shall be refunded or credited not later than three years from the due date of the partnership's annual return pursuant to section 12-726 or, if the time for filing such return was extended, not later than three years from the date on which such return is filed or the extended due date of such return, whichever is earlier.

(ii) If income from one or more pass-through entities, as defined in subparagraph (D) of this subdivision, is not the only source of income derived from or connected with Connecticut sources of a partner, or the partner and his or her spouse if a joint federal income tax return is or shall be made, nothing in this subdivision shall be construed as excusing the partner from the obligation to file his or her own separate tax return under this chapter. In such event, the partner shall receive credit for the income tax paid under this subdivision by the partnership on his or her behalf. The commissioner may make any deficiency assessment that is related to the partner's share of partnership items against either, in the commissioner's sole discretion, the partnership or the partner. If the commissioner chooses to make any deficiency assessment against the partnership, then, except as otherwise provided in section 12-733, any such assessment shall be made not later than three years after the partnership's annual return pursuant to section 12-726 is filed. The commissioner may refund or credit any overpayment that is related to the partner's share of partnership items to either, in the commissioner's sole discretion, the partnership or the partner. If the commissioner chooses to refund or credit any overpayment to the partnership, then, except as otherwise provided in section 12-732, any such overpayment shall be refunded or credited not later than three years from the due date of the partnership's annual return pursuant to section 12-726 or, if the time for filing such return was extended, not later than three years from the date on which such return is filed or the extended due date of such return, whichever is earlier.

(C) Notwithstanding any provision of subparagraph (A) of this subdivision, a partnership shall not be required to make a payment on account of the income tax imposed on a partner for a taxable year pursuant to this chapter if (i) the partner's distributive share of partnership income, to the extent derived from or connected with sources within this state, as reflected on the partnership's annual return for the taxable year under section 12-726, is less than one thousand dollars; (ii) the department has determined by regulation, ruling or instruction that the partner's income is not subject to the provisions of this subdivision; or (iii) the partnership is a publicly traded partnership, as defined in Section 7704(b) of the Internal Revenue Code, that is treated as a partnership for federal income tax purposes and that has agreed to file the annual return pursuant to section 12-726, and to report therewith the name, address, Social Security number or federal employer identification number, and other information required by the department concerning each unitholder whose distributive share of partnership income, to the extent derived from or connected with sources within this state, as reflected on such annual return, is more than five hundred dollars.

(D) If a member of a pass-through entity, referred to in this subparagraph as an “upper-tier pass-through entity”, is itself a pass-through entity, the member, referred to in this subparagraph as a “lower-tier pass-through entity”, shall be subject to the same requirements to make payment, on behalf of its members, of the income tax imposed on those members pursuant to this chapter that apply to the upper-tier pass-through entity under this subdivision. The department shall apply the income tax paid by the upper-tier pass-through entity, on behalf of the lower-tier pass-through entity, to the income tax required to paid by the lower-tier pass-through entity, on behalf of its members. For purposes of this subdivision, “pass-through entity” means an S corporation, general partnership, limited partnership, limited liability partnership or limited liability company that is treated as a partnership for federal income tax purposes; and “member” means a shareholder of an S corporation, a partner in a general partnership, a limited partnership, or a limited liability partnership and a member of a limited liability company that is treated as a partnership for federal income tax purposes.

(E) For purposes of section 12-740, a nonresident individual who is a member of a pass-through entity, as defined in subparagraph (D) of this subdivision, shall not be required to file an income tax return under this chapter for a taxable year if, for such taxable year, the only source of income derived from or connected with Connecticut sources of such member, or the member and his or her spouse if a joint federal income tax return is or shall be made, is from one or more pass-through entities, and the sum of such income derived from or connected with Connecticut sources from such one or more pass-through entities is less than one thousand dollars.

(B) With respect to each of its nonresident shareholders, each S corporation doing business in this state or having income derived from or connected with sources within this state shall, for each taxable year, make payment to the commissioner as provided in subdivision (2) of this subsection.

(2) (A) Any payment under this subdivision shall be in an amount equal to the highest marginal tax rate in effect under section 12-700 for the taxable year multiplied by the subject shareholder's pro rata share of (i) such S corporation's separately and nonseparately computed items, as described in Section 1366 of the Internal Revenue Code, to the extent derived from or connected with sources within this state, as determined under this chapter, and (ii) any modification described in section 12-701 which relates to an item of such S corporation's income, gain, loss or deduction, to the extent derived from or connected with sources within this state, as determined under this chapter. Any amount paid by an S corporation to this state with respect to any taxable year pursuant to this subdivision shall be considered to be a payment by the shareholder on account of the income tax imposed on the shareholder for such taxable year pursuant to this chapter. An S corporation shall not be liable to, and shall be entitled to recover a payment made pursuant to this subdivision from, the shareholder on whose behalf the payment was made. Any payment for a taxable year shall be made at or before the date the annual return for such taxable year is required to be filed pursuant to section 12-726. The S corporation shall furnish, on a form prescribed by the department, to each shareholder on whose behalf payment was made under this subdivision no later than the fifteenth day of the fourth month following the close of the S corporation's taxable year a record of the amount of the tax paid on behalf of such shareholder by the S corporation with respect to the taxable year.

(B) (i) If income from one or more pass-through entities, as defined in subparagraph (D) of this subdivision, is the only source of income derived from or connected with Connecticut sources of a shareholder, or the shareholder and his or her spouse if a joint federal income tax return is or shall be made, the filing by the S corporation of an annual return pursuant to section 12-726 and the payment by the S corporation on behalf of the shareholder of the tax prescribed under subparagraph (A) of this subdivision shall satisfy the filing and payment requirements otherwise separately imposed on the shareholder by this chapter. The commissioner may make any deficiency assessment against, at the commissioner's sole discretion, either the S corporation or the shareholder, provided any such assessment against the shareholder shall be limited to the shareholder's share thereof. Except as otherwise provided in section 12-733, any such assessment shall be made not later than three years after the S corporation's annual return pursuant to section 12-726 is filed. The commissioner may refund or credit any overpayment to either the S corporation or the shareholder, in the commissioner's sole discretion. Except as otherwise provided in section 12-732, any such overpayment shall be refunded or credited not later than three years from the due date of the S corporation's annual return pursuant to section 12-726 or, if the time for filing such return was extended, not later than three years from the date on which such return is filed or the extended due date of such return, whichever is earlier.

(ii) If income from one or more pass-through entities, as defined in subparagraph (D) of subdivision (2) of subsection (b) of this section, is not the only source of income derived from or connected with Connecticut sources of a shareholder, or the shareholder and his or her spouse if a joint federal income tax return is or shall be made, nothing in this subdivision shall be construed as excusing the shareholder from the obligation to file his or her own separate tax return under this chapter. In such event, the shareholder shall receive credit for the income tax paid under this subdivision by the S corporation on his or her behalf. The commissioner may make any deficiency assessment that is related to the shareholder's share of S corporation items against either, in the commissioner's sole discretion, the S corporation or the shareholder. If the commissioner chooses to make any deficiency assessment against the S corporation, then, except as otherwise provided in section 12-733, any such assessment shall be made not later than three years after the S corporation's annual return pursuant to section 12-726 is filed. The commissioner may refund or credit any overpayment that is related to the shareholder's share of S corporation items to either, in the commissioner's sole discretion, the S corporation or the shareholder. If the commissioner chooses to refund or credit any overpayment to the S corporation, then, except as otherwise provided in section 12-732, any such overpayment shall be refunded or credited not later than three years from the due date of the S corporation's annual return pursuant to section 12-726 or, if the time for filing such return was extended, not later than three years from the date on which such return is filed or the extended due date of such return, whichever is earlier.

(C) Notwithstanding the provisions of subparagraph (A) of this subdivision, an S corporation shall not be required to make a payment on account of the income tax imposed on a shareholder for a taxable year pursuant to this chapter if (i) the shareholder's distributive share of S corporation income, to the extent derived from or connected with sources within this state, as reflected on the S corporation's annual return for the taxable year under section 12-726, is less than one thousand dollars; or (ii) the department has determined by regulation, ruling or instruction that the shareholder's income is not subject to the provisions of this subdivision.

(D) For purposes of this subdivision, the provisions of subparagraphs (D) and (E) of subdivision (2) of subsection (b) of this section apply.

(d) (1) In lieu of filing a return pursuant to this section, the commissioner may, if he determines that the enforcement of this chapter would not be adversely affected and pursuant to requirements and conditions set forth in forms and instructions, provide for the filing of a composite return for every qualifying nonresident member of a professional athletic team by such team, if such team is doing business in this state or the members of such team have compensation which is received for services rendered as members of such team and which is derived from or connected with sources within this state.

(2) If a professional athletic team is required to file a composite return pursuant to this subsection, the commissioner may, if he determines that the enforcement of this chapter would not be adversely affected, require such team, in lieu of deducting and withholding Connecticut income tax as may otherwise be required under section 12-705, to make payment to the commissioner of tax, estimated tax, additions to tax, interest and penalties otherwise required to be paid to the commissioner by such qualifying nonresident members.

(3) The commissioner may, if he determines that the enforcement of this chapter would not be adversely affected, require a professional athletic team, in lieu of deducting and withholding Connecticut income tax as may otherwise be required under section 12-705, to make payment to the commissioner of tax, estimated tax, additions to tax, interest and penalties otherwise required to be paid to the commissioner by every (A) resident member, but only with respect to compensation which is received for services rendered as a member of a professional athletic team and (B) nonresident member who is not a qualifying nonresident member, but only with respect to compensation which is received for services rendered as a member of a professional athletic team and which is derived from or connected with sources within this state.

(4) Any amount paid by a professional athletic team to this state with respect to any taxable period pursuant to this subsection shall be considered to be a payment by the member on account of the income tax imposed on the member for such taxable period pursuant to this chapter. The team shall be entitled to recover a payment made pursuant to this subsection from the member on whose behalf the payment was made.

(5) For purposes of this subsection, “qualifying nonresident member” means a member of a professional athletic team who is a nonresident individual for the entire taxable year, who does not maintain a permanent place of abode in Connecticut at any time during the taxable year, who does not have income derived from or connected with sources within this state other than compensation which is received for services rendered as a member of a professional athletic team and which is derived from or connected with sources within this state.

(June Sp. Sess. P.A. 91-3, S. 70, 168; May Sp. Sess. P.A. 92-5, S. 14, 37; P.A. 95-263, S. 1, 4; P.A. 96-175, S. 4, 5; P.A. 98-262, S. 11, 22; P.A. 04-216, S. 54; P.A. 06-159, S. 5; P.A. 17-147, S. 37; P.A. 18-49, S. 3, 4.)

History: June Sp. Sess. P.A. 91-3, S. 70, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 95-263 added Subsec. (d) to permit filing a composite return for qualifying nonresident members of professional athletic teams, effective July 6, 1995, and applicable to taxable years commencing on or after January 1, 1996; P.A. 96-175 amended Subsec. (c)(3) to add the amount of the shareholder's pro rata share of the corporations' nonseparately computed items, reduced by the amount subject to tax under chapter 208 to the calculation of payment, effective May 31, 1996, and applicable to income years commencing on or after January 1, 1997; P.A. 98-262 amended Subsec. (c)(3) to clarify language relating to how a nonresident shareholder must calculate tax for nonseparately stated income derived from or connected with sources within this state, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 04-216 deleted former Subsec. (b) and added new Subsec. (b) re group returns of partnerships with nonresident partners and amended Subsec. (c) to add provisions re group returns of S corporations with nonresident shareholders and make conforming changes, effective May 6, 2004, and applicable to taxable years commencing on or after January 1, 2004, and to estimated composite income tax payments required to be made on or after May 6, 2004; P.A. 06-159 amended Subsecs. (b) and (c) to eliminate group tax returns for partnerships, S corporations and pass-through entities, to require such businesses to pay the taxes nonresident partners owe on income from such businesses and to make conforming changes, effective June 6, 2006, and applicable to taxable years commencing on or after January 1, 2006; P.A. 17-147 amended Subsec. (a) to delete provision re commissioner to prescribe by regulation place for filing return, declaration, statement or other document and for payment of any tax, effective July 7, 2017; P.A. 18-49 amended Subsecs. (b)(1) and (c)(1) to provide that the provisions of Subsecs. (b) and (c) shall not apply to taxable years commencing on or after January 1, 2018, effective May 31, 2018.

See chapter 228z re affected business entity tax.

See Sec. 12-726 re requirement of return from each partnership doing business in this state and each S corporation doing business in this state.

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Secs. 12-720 and 12-721. Declaration of estimated tax. Filing dates for declarations of estimated tax. Sections 12-720 and 12-721 are repealed, effective July 6, 1995, and applicable to taxable years commencing on or after January 1, 1996.

(June Sp. Sess. P.A. 91-3, S. 71, 72, 168; May Sp. Sess. P.A. 92-17, S. 14, 15, 59; P.A. 95-263, S. 3, 4.)

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Sec. 12-722. Underpayment and payment of estimated tax. Interest. Credit. Payment schedule for farmers and fishermen. (a) Except as otherwise provided in this section, in the case of any underpayment of estimated tax by an individual, there shall be added to the tax an amount determined by applying interest (1) at the rate of one per cent per month or fraction thereof, (2) to the amount of the underpayment, (3) for the period of the underpayment.

(b) For purposes of subsection (a) of this section, the amount of the underpayment shall be the excess of the required installment, over the amount, if any, of the installment paid on or before the due date for the installment. For purposes of subsection (a) of this section, the period of the underpayment shall run from the due date for the installment to whichever of the following dates is earlier: The fifteenth day of the fourth month of the next succeeding taxable year, or, with respect to any portion of the underpayment, the date on which such portion is paid. For purposes of this subsection, a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid.

(c) For purposes of this section, there shall be four required installments for each taxable year. The due date for the first required installment is the fifteenth day of the fourth month of the taxable year. The due date for the second required installment is the fifteenth day of the sixth month of the taxable year. The due date for the third required installment is the fifteenth day of the ninth month of the taxable year. The due date for the fourth required installment is the fifteenth day of the first month of the next succeeding taxable year.

(d) (1) Except as provided in subdivision (2) of this subsection, the amount of any required installment shall be twenty-five per cent of the required annual payment, as defined in section 12-701.

(2) (A) In the case of any required installment, if the taxpayer establishes that the annualized income installment is less than the amount determined under subdivision (1) of this subsection, the amount of such required installment shall be the annualized income installment, and any reduction in a required installment resulting from the application of this subdivision shall be recaptured by increasing the amount of the next required installment by the amount of such reduction and by increasing subsequent required installments to the extent that the reduction has not previously been recaptured under this subdivision. (B) In the case of any required installment, the annualized income installment is the excess, if any, of (i) an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the Connecticut taxable income and the adjusted federal alternative minimum taxable income for months in the taxable year ending before the due date for the installment, over (ii) the aggregate amount of any prior required installments for the taxable year. (C) For purposes of this subdivision, the applicable percentage for the first required installment is twenty-two and one-half, the applicable percentage for the second required installment is forty-five, the applicable percentage for the third required installment is sixty-seven and one-half, and the applicable percentage for the fourth required installment is ninety.

(e) The application of this section to taxable years of less than twelve months shall be in accordance with regulations adopted by the commissioner.

(f) In applying this section to a taxable year beginning on any date other than January first, there shall be substituted, for the months specified in this section, the months which correspond thereto.

(g) At the election of the individual, any installment of the estimated tax may be paid prior to the date prescribed for its payment.

(h) Payment of the estimated income tax, or any installment thereof, shall be considered payment on account of the income tax imposed under this chapter for the taxable year.

(i) If an individual has paid as an installment of estimated tax an amount in excess of the amount determined to be the correct amount of such installment, such amount shall be credited against any unpaid installment or against the tax. If the amount already paid, whether or not on the basis of installments, exceeds the amount determined to be the correct amount of the tax, then, unless the individual has given written notice to the commissioner that such overpayment is to be refunded, such overpayment shall be credited against any installment of estimated tax due for the next succeeding taxable year.

(j) (1) No addition to tax shall be imposed under subsection (a) of this section for any taxable year if the tax shown on the return for such taxable year, or, if no return is filed, the tax, reduced by the tax withheld under this chapter, is less than one thousand dollars.

(2) No addition to tax shall be imposed under said subsection (a) for any taxable year if (A) the preceding taxable year was a taxable year of twelve months and (B) the individual did not have any liability for tax for the preceding taxable year and throughout such year the individual was (i) a resident individual or (ii) a nonresident individual or part-year resident individual with income, gain, loss or deduction derived from or connected with sources within this state.

(k) For purposes of applying this section, the tax withheld under this chapter shall be deemed a payment of estimated tax, and an equal part of such tax withheld shall be deemed paid on each due date for such taxable year, unless the taxpayer establishes the dates on which such tax was actually withheld, in which case the tax so withheld shall be deemed payments of estimated tax on the dates on which such tax was actually withheld.

(l) If, on or before January thirty-first of the following taxable year, the taxpayer files a return for the taxable year and pays in full the amount computed on the return as payable, then no addition to tax shall be imposed under subsection (a) of this section with respect to any underpayment of the fourth required installment for the taxable year.

(m) For purposes of this section, if an individual is a farmer or fisherman for any taxable year, the following provisions shall apply: (1) There shall be only one required installment for the taxable year, (2) the due date for such installment shall be January fifteenth of the following taxable year, (3) the amount of such installment shall be equal to the lesser of (A) sixty-six and two-thirds per cent of the tax shown on the return for the taxable year, or, if no return is filed, sixty-six and two-thirds per cent of the tax for such year, or (B) if the preceding taxable year was a taxable year of twelve months and the individual filed a return for the preceding taxable year, one hundred per cent of the tax shown on the return for the preceding taxable year, (4) if, on or before March first of the following taxable year, the farmer or fisherman files a return and pays in full the amount computed on the return as payable, no addition to tax shall be imposed under subsection (a) of this section with respect to any underpayment of the required installment, as provided in subdivision (3) of this subsection, for the taxable year, and (5) an individual is a farmer or fisherman for any taxable year if such individual is a farmer or fisherman, as defined in Section 6654(i)(2) of the Internal Revenue Code, for the taxable year.

(n) (1) Except as otherwise provided in this subsection, this section shall apply to any trust or estate.

(2) With respect to any taxable year ending before the date two years after the date of the decedent's death, this section shall not apply to (A) the estate of such decedent, or (B) any trust (i) all of which was treated under Sections 671 to 679, inclusive, of the Internal Revenue Code as owned by the decedent and (ii) to which the residue of the decedent's estate will pass under his will or, if no will is admitted to probate, which is the trust primarily responsible for paying debts, taxes, and expenses of administration.

(3) In the case of any trust or estate to which this section applies, for any required installment, the annualized income installment is the excess, if any, of (A) an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the Connecticut taxable income and the adjusted federal alternative minimum taxable income for months in the taxable year ending before the date one month before the due date for the installment, over (B) the aggregate amount of any prior required installments for the taxable year.

(June Sp. Sess. P.A. 91-3, S. 73, 168; May Sp. Sess. P.A. 92-5, S. 16, 17, 37; May Sp. Sess. P.A. 92-17, S. 15, 59; P.A. 93-74, S. 41, 67; 93-332, S. 16, 42; P.A. 95-26, S. 38, 52; 95-263, S. 2, 4; P.A. 97-81, S. 1, 2; 97-286, S. 5, 8; P.A. 04-201, S. 6.)

History: June Sp. Sess. P.A. 91-3, S. 73, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (h) to make a technical change and added Subsec. (i), effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; May Sp. Sess. P.A. 92-17 amended Subsec. (b) to reduce the levels of estimated payments by 10% and to remove the minimum $50 penalty for nonpayment, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 93-74 replaced existing Subsec. (b) with new provisions to conform installment and estimated payments with the federal procedure, effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1993; P.A. 93-332 amended Subsec. (b)(5) to change statutory reference from Subdiv. (4) to Subdiv. (2), effective June 25, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A. 95-26 amended Subsec. (b)(4) to lower interest rate from 1.25% to 1% and made technical changes, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date, but failed to take effect, since those provisions were deleted by subsequent act P.A. 95-263; P.A. 95-263 deleted Subsec. (a) re declaration requirement, added new Subsecs. (a) and (b) re interest on underpayment and the amount of underpayment, relettered and renumbered remaining Subsecs. and Subdivs. added reference to adjusted federal alternative minimum taxable income, and added Subsec. (j) re when no addition to tax is imposed, Subsec. (k) re tax withheld deemed payment of estimated tax, Subsec. (m) re installment payments by farmers and fishermen and Subsec. (n) re application of section to trusts and estates, effective July 6, 1995, and applicable to taxable years commencing on or after January 1, 1996; P.A. 97-81 amended Subsec. (j) to increase tax shown on return from $200 to $500, effective May 29, 1997, and applicable to taxable years commencing on or after January 1, 1997; P.A. 97-286 amended Subsec. (m) to require one installment instead of two and made conforming changes, effective June 26, 1997, and applicable to years commencing on or after January 1, 1997; P.A. 04-201 amended Subsec. (j)(1) to increase the minimum amount of tax for which additions to tax may be imposed from $500 or less to less than $1,000, effective June 3, 2004, and applicable to taxable years commencing on or after January 1, 2004.

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Sec. 12-722a. No accrual of interest on underpayment of tax created by public act 15-244*. Section 12-722 shall not apply with respect to the accrual of any interest, in the case of any underpayment of estimated tax by any individual, to the extent such underpayment was created by any provision of public act 15-244*.

(June Sp. Sess. P.A. 15-5, S. 435.)

*Note: Public act 15-244 is entitled “An Act Concerning the State Budget for the Biennium Ending June 30, 2017, and Making Appropriations Therefor, and Other Provisions Related to Revenue, Deficiency Appropriations and Tax Fairness and Economic Development”. (See Reference Table captioned “Public Acts of 2015” in Volume 16 which lists the sections amended, created or repealed by the act.)

History: June Sp. Sess. P.A. 15-5 effective June 30, 2015.

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Sec. 12-723. Extensions. 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, 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.

(June Sp. Sess. P.A. 91-3, S. 74, 168; P.A. 95-26, S. 39, 52; P.A. 98-244, S. 30, 35; P.A. 99-121, S. 22, 28; P.A. 00-174, S. 41, 83.)

History: June Sp. Sess. P.A. 91-3, S. 74, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 95-26 lowered interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 98-244 removed penalty when at least 90% of the tax shown on the return was paid by the original due date and any balance was paid on or before the extended due date of the return, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 99-121 provided that balance is to be remitted with return in order to avoid penalty, effective June 3, 1999, and applicable to taxable years commencing on or after January 1, 1999; P.A. 00-174 added requirement for payment to be received on or before the extended due date in order to avoid penalty, effective May 26, 2000, and applicable to returns for taxable years commencing January 1, 2000.

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Sec. 12-724. Special rules for members of the armed forces and specified terrorist victims. (a)(1) In the case of an individual serving in the armed forces of the United States, or serving in support of such armed forces, in an area designated by the President of the United States by executive order as a “combat zone” at any time during the period designated by the President by executive order as the period of combatant activities in such zone, or hospitalized inside or outside the state as a result of injury received while serving in such an area during such time, the period of service in such area, plus the period of continuous hospitalization inside or outside the state attributable to such injury, and the next one hundred eighty days thereafter, shall be disregarded in determining the timeliness of actions under this chapter with respect to income tax liability, including any interest, penalty or addition to the tax, related to such individual.

(2) The provisions of this subsection shall also apply in the case of an individual serving in the armed forces of the United States, or serving in support of such armed forces, in an area designated by Congress in a public law, and during a period beginning on a date designated by Congress in such public law and ending on a date designated either by the President by executive order or by Congress in a public law, or hospitalized inside or outside the state as a result of injury received while serving in such an area during such time, if such public law provides that, in such area and during such period, such services by such individual are to be treated in the same manner as services as a member of the armed forces of the United States in an area designated by the President of the United States by executive order as a “combat zone” during the period designated by the President by executive order as the period of combatant activities in such zone.

(b) (1) In the case of any person who dies while in active service as a member of the armed forces of the United States, if such death occurred while serving in a combat zone during a period of combatant activities in such zone, as described in subsection (a) of this section, or as a result of wounds, disease or injury incurred while so serving, the tax imposed by this chapter shall not apply with respect to the taxable year in which falls the date of his or her death, or with respect to any prior taxable year ending on or after the first day so served in a combat zone, and no returns shall be required on behalf of such person or his or her estate for such year; and the tax for any such taxable year which is unpaid at the date of death, including interest, additions to tax and penalties, if any, shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be refunded to the legal representative of such estate if one has been appointed and has qualified, or, if no legal representative has been appointed or has qualified, to the surviving spouse.

(2) The provisions of this subsection shall also apply in the case of an individual who dies while in active service as a member of the armed forces of the United States, if such death occurred while serving in an area designated by Congress in a public law, and during a period beginning on a date designated by Congress in such public law and ending on a date designated either by the President by executive order or by Congress in a public law, or, as a result of wounds, disease or injury incurred while so serving, if such public law provides that, in such area and during such period, the death of such individual while in active service in such area and during such period, or as a result of wounds, disease, or injury incurred while so serving, are to be treated in the same manner as the death of any individual while in active service as a member of the armed forces of the United States in an area designated by the President of the United States by executive order as a “combat zone” during the period designated by the President by executive order as the period of combatant activities in such zone.

(c) (1) (A) In the case of a specified terrorist victim, the tax imposed by this chapter shall not apply with respect to the taxable year in which falls the date of his or her death, and no returns shall be required on behalf of such individual or his or her estate for such year. The tax for any such taxable year that is unpaid at the date of death, including interest, additions to tax and penalties, if any, shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be refunded to the legal representative of such estate.

(B) Subparagraph (A) of subdivision (1) of this subsection shall not apply to the amount of any tax imposed by this chapter that would be computed by only taking into account the items of income, gain or other amounts attributable to (i) deferred compensation that would have been payable after death if the individual had died other than as a specified terrorist victim, or (ii) amounts payable in the taxable year that would not have been payable in such taxable year but for an action taken after September 11, 2001.

(2) (A) In the case of a specified terrorist victim who, pursuant to section 12-704, was allowed a credit against the tax otherwise due under this chapter for an income tax imposed on such individual for a taxable year commencing on or after January 1, 2000, but prior to January 1, 2001, by another state of the United States or a political subdivision thereof or the District of Columbia on income which was derived from sources therein and which was also subject to tax under this chapter, and whose tax liability to such other jurisdiction is abated, credited or refunded because such individual died as a specified terrorist victim, the additional tax imposed by this chapter attributable to the difference between the amount of tax of such other jurisdiction that the individual is finally required to pay and the amount of tax of such other jurisdiction used to determine the credit allowed to such individual under section 12-704 shall not apply.

(B) This subdivision shall apply to taxable years commencing on or after January 1, 2000, but prior to January 1, 2001.

(d) If an individual who is entitled to relief under subsection (b) or (c) of this section has filed a joint return under this chapter with his or her spouse for any taxable year with respect to which such individual is entitled to such relief, the tax abated, credited or refunded pursuant to this section for such year shall be an amount equal to that portion of the joint tax liability which is the same percentage of such joint liability as a tax computed upon the separate income of such individual is of the sum of the taxes computed upon the separate incomes of such individual and his or her spouse.

(June Sp. Sess. P.A. 91-3, S. 75, 168; P.A. 96-221, S. 23, 25; P.A. 02-126, S. 7; P.A. 03-225, S. 14; P.A. 10-32, S. 39.)

History: June Sp. Sess. P.A. 91-3, S. 75, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 96-221 made existing Subsecs. (a) and (b), Subsec. (a)(1) and (b)(1) and added new Subdiv. (2) to Subsecs. (a) and (b) re service in the armed forces in areas and during times designated by Congress if Congress provides that services in such areas and during such times are to be treated the same as service in presidentially designated combat zones and times, effective June 4, 1996, and applicable to income years commencing on or after January 1, 1995; P.A. 02-126 added Subsec. (c) re specified terrorist victims and Subsec. (d) re individuals entitled to relief under Subsec. (b) or (c) who filed joint returns with their spouses for taxable years in which such individuals are entitled to relief, effective June 7, 2002; P.A. 03-225 amended Subsec. (c) to redesignate existing Subdivs. (1) to (3) as Subdiv. (1)(A) to (C), making technical changes therein, and add new Subdiv. (2) to provide an exemption for any additional tax and interest due from residents who had out-of-state income for 2000 and died in the September 11, 2001, terrorist attack, effective July 9, 2003; P.A. 10-32 made a technical change in Subsec. (b)(1), effective May 10, 2010.

See Sec. 10a-104b for definition of “specified terrorist victim”.

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Sec. 12-724a. (Formerly Sec. 12-62s). Homeownership incentive program. Income tax exemption for owners of owner-occupied homes and eligible renters within homeownership incentive tract. (a) For purposes of this section:

(1) “Owner-occupied home” means a building containing three or fewer dwelling units, one of which units is occupied as a primary residence by the owner of the building or, with respect to a common interest community, as defined in section 47-202, “owner-occupied home” means a dwelling unit occupied as a primary residence by the owner of the unit, within a common interest community containing three or fewer dwelling units; and

(2) “Eligible renter” means a person leasing and occupying a dwelling unit as a primary residence who graduated from a four-year college, provided such person graduated not earlier than two years prior to the date a lease is signed.

(b) A municipality that has adopted the property tax system under section 12-62r shall institute a program to promote homeownership in certain areas of such municipality. Such program shall be applicable to two or more designated census tracts that have owner-occupied home rates of fifteen per cent or less and shall provide an exemption from personal income taxes for the owners of owner-occupied homes and for eligible renters within such designated census tracts. For purposes of this subsection, “census tract” means a census tract as determined in accordance with the most recent United States census.

(c) A municipality required to proceed under this section shall determine which of the census tracts within such municipality have a number of owner-occupied homes equaling fifteen per cent or less of the dwelling units in such census tract and shall designate two or more of such census tracts as a homeownership incentive tract.

(d) The Department of Revenue Services shall exempt each owner of an owner-occupied home and each eligible renter within a homeownership incentive tract from the taxes due under chapter 229, other than the liability imposed by section 12-707, provided such owner and eligible renter shall continue to be eligible for the credit under section 12-704e. Such tax exemption shall be available to each eligible renter who occupies a dwelling unit within a homeownership incentive tract as a primary residence. The municipality shall provide the department with any information needed by the department to allow such exemption.

(e) The tax exemption offered to owners of owner-occupied homes and eligible renters within a homeownership incentive tract pursuant to this section shall continue until the number of owner-occupied homes within such homeownership incentive tract meets or exceeds forty-nine per cent of the dwelling units in such tract. Upon reaching such percentage, the municipality shall notify such owners and eligible renters and the Department of Revenue Services, and the exemption allowed pursuant to this section shall phase out over a five-year period. Owners of an owner-occupied home and eligible renters within such homeownership incentive tract shall be liable for twenty per cent of the income tax otherwise due, as described in subsection (d) of this section, in the first taxable year commencing after the forty-nine-per-cent goal is reached, and shall be liable for an additional twenty per cent each year thereafter, until such owner and eligible renter is liable for all income taxes owed. The municipality shall provide the department with any information needed by the department to process such phase-out.

(P.A. 14-174, S. 3; P.A. 22-146, S. 8.)

History: P.A. 14-174 effective July 1, 2015; P.A. 22-146 replaced references to census blocks and homeownership incentive blocks with references to census tracts and homeownership incentive tracts, amended Subsec. (b) to add “or more” re applicability of program, delete provision re property tax abatement, replace definition of “census block” with definition of “census tract” and make a technical change, amended Subsec. (c) to add “or more” re designation of census tracts as homeownership incentive tract and delete provision re property tax abatement, and amended Subsec. (e) to add reference to Department of Revenue Services, delete provisions re charging owner of owner-occupied home a percentage of property taxes and make conforming changes; Sec. 12-62s transferred to Sec. 12-724a in 2023.

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Sec. 12-725. Documents to be signed. Certification. (a) Any return, declaration, statement or other document required to be made pursuant to this chapter shall be signed in accordance with regulations adopted or instructions prescribed by the commissioner. The fact that an individual's name is signed to a return, declaration, statement or other document shall be prima facie evidence for all purposes that the return, declaration, statement or other document was actually signed by such individual.

(b) Any return, statement or other document required of a partnership shall be signed by one or more partners. The fact that a partner's name is signed to a return, statement or other document shall be prima facie evidence for all purposes that such partner is authorized to sign on behalf of the partnership.

(c) Any return, statement or other document required of an S corporation shall be signed by one or more officers. The fact that an officer's name is signed to a return, statement or other document shall be prima facie evidence for all purposes that such officer is authorized to sign on behalf of the S corporation.

(d) The making or filing of any return, declaration, statement or other document or copy thereof required to be made or filed pursuant to this chapter, including a copy of a federal income tax return, shall constitute a certification by the person making or filing such return, declaration, statement or other document or copy thereof that the statements contained therein are true and that any copy filed is a true copy.

(June Sp. Sess. P.A. 91-3, S. 76, 168; May Sp. Sess. P.A. 92-5, S. 18, 37.)

History: June Sp. Sess. P.A. 91-3, S. 76, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (d) to make a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992.

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Sec. 12-726. Information required in returns of partnerships and S corporations doing business in this state. (a) Each partnership doing business in this state or having any income derived from or connected with sources within this state, determined in accordance with the provisions of this chapter, shall make a return for the taxable year setting forth all items of income, gain, loss and deduction, and the name, address and Social Security or federal employer identification number of each partner, whether or not a resident of this state, the amount of each partner's distributive share of (1) such partnership's separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code, (2) any modification described in section 12-701 which relates to an item of such partnership's income, gain, loss or deduction, (3) such partnership's separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code, to the extent derived from or connected with sources within this state, as determined under this chapter, (4) any modification described in section 12-701 which relates to an item of such partnership's income, gain, loss or deduction, to the extent derived from or connected with sources within this state, as determined under this chapter, and (5) the direct pro rata share of the tax imposed on the partnership under section 12-699 and the indirect pro rata share of the tax imposed on any upper-tier entity under section 12-699, and such other pertinent information as the Commissioner of Revenue Services may prescribe by regulations and instructions. Such return shall be filed on or before the fifteenth day of the third month following the close of each taxable year. The partnership shall, on or before the day on which such return is filed, furnish to each person who was a partner during the taxable year a copy of such information as shown on the return. By way of example and not of limitation, and for purposes of this section, a partnership that has a substantial economic presence within this state, as evidenced by a purposeful direction of business toward this state, examined in light of the frequency, quantity and systematic nature of the partnership's economic contacts with this state, without regard to physical presence, shall, to the extent permitted by the Constitution of the United States, be considered to be doing business in this state.

(b) Each S corporation doing business in this state or having any income derived from or connected with sources within this state, determined in accordance with the provisions of this chapter, shall make a return for the taxable year setting forth all items of income, gain, loss and deduction, and the name, address and Social Security or federal employer identification number of each shareholder, whether or not a resident of this state, the amount of each shareholder's pro rata share of (1) such S corporation's separately and nonseparately computed items, as described in Section 1366 of the Internal Revenue Code, (2) any modification described in section 12-701 which relates to an item of such S corporation's income, gain, loss or deduction, (3) such S corporation's separately and nonseparately computed items, as described in Section 1366 of the Internal Revenue Code, to the extent derived from or connected with sources within this state, as determined under this chapter, (4) any modification described in section 12-701 which relates to an item of such S corporation's income, gain, loss or deduction, to the extent derived from or connected with sources within this state, as determined under this chapter, and (5) the direct pro rata share of the tax imposed on the S corporation under section 12-699 and the indirect pro rata share of the tax imposed on any upper-tier entity under section 12-699, and such other pertinent information as the Commissioner of Revenue Services may prescribe by regulations and instructions. Such return shall be filed on or before the fifteenth day of the third month following the close of each taxable year. The S corporation shall, on or before the day on which such return is filed, furnish to each person who was a shareholder during the taxable year a copy of such information as shown on the return. By way of example and not of limitation, and for purposes of this section, an S corporation that has a substantial economic presence within this state, as evidenced by a purposeful direction of business toward this state, examined in light of the frequency, quantity and systematic nature of the S corporation's economic contacts with this state, without regard to physical presence, shall, to the extent permitted by the Constitution of the United States, be considered to be doing business in this state.

(June Sp. Sess. P.A. 91-3, S. 77, 168; May Sp. Sess. P.A. 92-5, S. 19, 37; P.A. 04-216, S. 55; P.A. 06-159, S. 6; June Sp. Sess. P.A. 09-3, S. 91; P.A. 18-49, S. 5.)

History: June Sp. Sess. P.A. 91-3, S. 77, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 04-216 added requirements re information to be included with returns filed by partnerships and S corporations, made conforming changes and deleted provision re applicability of section to trusts and estates, effective May 6, 2004, and applicable to taxable years commencing on or after January 1, 2004; P.A. 06-159 removed references to group return and requirements to list the name and Social Security number of each partner or shareholder, effective June 6, 2006, and applicable to taxable years commencing on or after January 1, 2006; June Sp. Sess. P.A. 09-3 added “doing business in this state” re “Each partnership” in Subsec. (a) and re “Each S corporation” in Subsec. (b), and added language in Subsecs. (a) and (b) re example of what is considered to be doing business in this state, effective September 9, 2009, and applicable to taxable years commencing on or after January 1, 2010; P.A. 18-49 amended Subsecs. (a) and (b) to add Subdiv. (5) re inclusion in return of direct pro rata share and indirect pro rata share of tax imposed under Sec. 12-699, change due date of return from “fourth month” to “third month”, delete references to Sec. 12-719, and make technical changes, effective May 31, 2018, and applicable to taxable years commencing on or after January 1, 2018.

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Sec. 12-727. Informational returns from persons making payments. Notice of changes in federal tax return. Filing amended returns. (a) Returns of information shall be made and filed on or before the last day of January each year by any person making payment or crediting in the previous calendar year amounts of six hundred dollars or more, or ten dollars or more in the case of interest or dividends, to any person who may be subject to the tax imposed under this chapter. Such returns may be required of any person, including lessees or mortgagors of real or personal property, fiduciaries, employers and all officers and employees of this state, or of any municipal corporation or political subdivision of this state, having the control, receipt, custody, disposal or payment of dividends, interest, rents, salaries, wages, premiums, annuities, compensations, remunerations, pensions, gambling winnings, emoluments or other fixed or determinable gains, profits or income, except interest coupons payable to bearer. A duplicate of the statement as to tax withheld on wages, required to be furnished by an employer to an employee, shall constitute the return of information required to be made under this section with respect to such wages.

(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.

(2) Any taxpayer filing an amended federal income tax return with the United States Internal Revenue Service or other competent authority shall also file, on or before the date that is ninety days after the final determination is made on such amended return by the Internal Revenue Service or other competent authority, an amended return under this chapter and shall give such information as the commissioner may require. The commissioner shall treat any such amended return under this chapter reporting a tax overpayment as containing sufficient required information after proof of such final determination on such amended federal income tax return by the Internal Revenue Service or other competent authority is submitted to the commissioner. 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.

(3) The commissioner may by regulation prescribe such exceptions to the requirements of this subsection as he deems appropriate.

(June Sp. Sess. P.A. 91-3, S. 78, 168; May Sp. Sess. P.A. 92-5, S. 20, 37; P.A. 98-244, S. 31, 35; P.A. 00-174, S. 42, 83; P.A. 10-188, S. 13; P.A. 17-147, S. 38.)

History: June Sp. Sess. P.A. 91-3, S. 78, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (a) to make a minor change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 98-244 amended Subsec. (b) to allow commissioner to redetermine and to require the taxpayer to pay the tax for any affected tax year regardless of other statute of limitation provisions and required that the taxpayer file an amended return, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 00-174 amended Subdiv. (b)(1) to modify the requirement for notice of a change in a taxpayer's federal adjusted gross income or computation of tax, effective May 26, 2000, and applicable to returns for taxable years commencing on or after January 1, 1999; P.A. 10-188 amended Subsec. (b)(2) to change date for filing amended return from 90 days after filing with Internal Revenue Service to 90 days after final determination on amended return is made by Internal Revenue Service or other authority, and to add provision re amended return treated as containing sufficient information after submission of proof of such final determination, effective June 7, 2010, and applicable to taxable years commencing on or after January 1, 2010; P.A. 17-147 amended Subsec. (a) to replace provision allowing commissioner to adopt regulations requiring returns to be made and filed on or before the last day of February each year with provision requiring returns of information to be made and filed on or before the last day of January each year, replaced “any calendar year” with “the previous calendar year”, deleted provision re regulations providing standards for filing on magnetic media or other machine-readable form, and made a technical change, effective July 7, 2017, and applicable to taxable years commencing on or after January 1, 2017.

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Sec. 12-728. Deficiency assessments. Notice. Penalty. (a)(1) After a final return pursuant to the provisions of this chapter is filed, the commissioner shall cause the same to be examined and may make such further audit or investigation or reaudit as the commissioner deems necessary, and if the commissioner determines that there is a deficiency with respect to the payment of any tax due under this chapter, the commissioner shall assess or reassess the additional taxes, penalties and interest due to this state, give notice of such assessment or reassessment to the taxpayer and make demand upon the taxpayer for payment. Not later than sixty days after the mailing of such notice, the taxpayer shall pay to the commissioner, in cash or by check, draft or money order drawn to the order of the commissioner, the amount of the deficiency. Such amount shall bear interest at the rate of one per cent per month or fraction thereof from the date when the original tax became due and payable.

(2) (A) When it appears that any part of the deficiency for which a deficiency assessment is made is due to negligence or intentional disregard of the provisions of this chapter or regulations adopted thereunder, there shall be imposed a penalty equal to ten per cent of the amount of such deficiency assessment. When it appears that any part of the deficiency for which a deficiency assessment is made is due to fraud or intent to evade the provisions of this chapter or regulations adopted thereunder, there shall be imposed a penalty equal to twenty-five per cent of the amount of such deficiency assessment.

(B) (i) For audits of returns commencing on or after January 1, 2006, and prior to January 1, 2018, when it appears that any part of the deficiency for which a deficiency assessment is made is due to failure to disclose a listed transaction, as defined in Section 6707A of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, on the taxpayer's federal tax return, there shall be imposed a penalty equal to seventy-five per cent of the amount of such deficiency assessment.

(ii) For audits of returns commencing on or after January 1, 2018, when it appears that any part of the deficiency for which a deficiency assessment is made is due to failure to disclose a reportable transaction, as defined in said Section 6707A, on the taxpayer's federal tax return, there shall be imposed a penalty equal to seventy-five per cent of the amount of such deficiency assessment.

(3) No taxpayer shall be subject to more than one penalty under this section in relation to the same tax period.

(4) Any decision rendered by any federal court holding that a taxpayer has filed a fraudulent return with the Director of Internal Revenue shall subject the taxpayer to the twenty-five per cent penalty imposed by this subsection without the necessity of further proof thereof, except when it can be shown that the return to the state so differed from the return to the federal government as to afford a reasonable presumption that the attempt to defraud did not extend to the state.

(b) A notice of deficiency shall set forth the reason for the proposed assessment. The notice shall be mailed to the taxpayer at his last-known address. In the case of a joint return, the notice of deficiency may be a single joint notice except that if the commissioner is notified by either spouse that separate residences have been established he shall mail joint notices to each spouse. If the taxpayer is deceased or under a legal disability, a notice of deficiency may be mailed to his last-known address unless the commissioner has received notice of the existence of a fiduciary relationship with respect to such taxpayer.

(June Sp. Sess. P.A. 91-3, S. 79, 168; P.A. 95-26, S. 40, 52; P.A. 99-121, S. 23, 28; P.A. 05-116, S. 3; 05-260, S. 8; P.A. 18-26, S. 5.)

History: June Sp. Sess. P.A. 91-3, S. 79, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 95-26 amended Subsec. (a) to lower interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 99-121 amended Subsec. (a) to make technical changes and to provide that 25% penalty applies where federal court held taxpayer filed a fraudulent federal income tax return, effective June 3, 1999; P.A. 05-116 amended Subsec. (a) by dividing it into Subdivs. (1) to (4), made technical changes in Subdiv. (1) and amended Subdiv. (2) to add a penalty for failure to disclose a listed transaction, effective June 24, 2005, and applicable to taxable years commencing on or after January 1, 2005; P.A. 05-260 amended Subsec. (a)(2) to allow the 75% penalty for failure to report listed transactions to apply to returns audited on or after January 1, 2006, effective July 13, 2005; P.A. 18-26 amended Subsec. (a)(2) to designate existing provisions re deficiency due to negligence or intentional disregard as Subpara. (A) and designate existing provision re audits or returns commencing on or after January 1, 2001, as Subpara. (B)(i) and amending same to add “and prior to January 1, 2018,” and make a technical change, and add Subpara. (B)(ii) re audits or returns commencing on or after January 1, 2018, effective May 29, 2018.

See Sec. 12-30c re penalty on promoter of abusive tax shelters.

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Sec. 12-729. Final assessment of deficiency. Protest. Notice of determination. (a) Sixty days after the date on which it is mailed, a notice of proposed assessment of a deficiency shall constitute a final assessment of the amount of tax specified together with interest, additions to tax and penalties except only for such amounts as to which the taxpayer has filed a protest with the Commissioner of Revenue Services.

(b) Within sixty days after the mailing of a deficiency notice, the taxpayer may file with the commissioner a written protest against the proposed assessment in which he shall set forth the grounds on which the protest is based. If a protest is filed, the commissioner shall reconsider the assessment of the deficiency and, if the taxpayer has so requested, may grant or deny the taxpayer or the taxpayer's authorized representatives an oral hearing.

(c) Notice of the commissioner's determination shall be mailed to the taxpayer and such notice shall set forth briefly the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to the taxpayer.

(d) The action of the commissioner on the taxpayer's protest shall be final upon the expiration of one month from the date on which he mails notice of his action to the taxpayer unless within such period the taxpayer seeks judicial review of the commissioner's determination.

(June Sp. Sess. P.A. 91-3, S. 80, 168.)

History: June Sp. Sess. P.A. 91-3, S. 80, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-729a. Jeopardy assessment. (a) If the commissioner believes that the collection of any tax imposed under this chapter, including any amount of tax required to be deducted and withheld and paid over to the commissioner, will be jeopardized by delay, the commissioner shall make a jeopardy assessment of the tax, noting that fact upon the assessment and serving written notice thereof, personally or by mail, in the manner prescribed for service of notice of proposed assessment, on the person against whom the jeopardy assessment is made. Ten days after the date on which it is served, such notice shall constitute a final assessment except only for such amounts as to which such person has filed a written protest with the commissioner as provided in subsection (c) of this section.

(b) The amount assessed is due and payable no later than the tenth day after service of the notice of assessment, unless on or before such tenth day the person against whom such assessment is made has obtained a stay of collection as provided in subsection (c) of this section. To the extent that collection has not been stayed, the commissioner may enforce collection of such tax by using the method provided in section 12-35 or by using any other method provided for in the general statutes relating to the enforced collection of taxes provided, if the amount of such tax has been definitely fixed, the amount so fixed shall be assessed and collected and if the amount of such tax has not been definitely fixed, the commissioner shall assess and collect such amount as, in the commissioner's opinion, from the facts available to the commissioner, is sufficient. If the amount specified in the notice of jeopardy assessment is not paid on or before the tenth day after service of notice upon the person against whom such jeopardy assessment is made, the penalty and the interest provided in section 12-735 shall attach to the amount of the tax.

(c) The person against whom the jeopardy assessment is made may file a written protest with the commissioner on or before the tenth day after the service upon such person of notice of the jeopardy assessment. If a written protest is filed, the commissioner shall reconsider the jeopardy assessment and, if such person has so requested, may grant or deny such person or such person's authorized representatives an oral hearing. Such person may obtain a stay of collection of the whole or any part of the amount of such jeopardy assessment by filing with the commissioner, on or before such tenth day, a bond of a surety company authorized to do business in this state or other security acceptable to the commissioner in such an amount, not exceeding double the amount as to which the stay is desired, as the commissioner deems necessary to ensure compliance with this chapter, conditioned upon payment of as much of the amount, the collection of which is stayed by the bond, as is found to be due from such person. At any time thereafter in respect to the whole or any part of the amount covered by such bond, the person against whom a jeopardy assessment has been made may waive such stay, and if, as the result of such waiver, any part of the amount covered by the bond is paid, the bond shall, at the request of such person, be proportionately reduced.

(d) Notice of the commissioner's determination, following reconsideration of the jeopardy assessment, shall be served, personally or by mail, on the person against whom the jeopardy assessment was made, and such notice shall set forth the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to such person.

(e) The determination of the commissioner following reconsideration of the jeopardy assessment, shall be final upon the expiration of one month from the date on which notice thereof is served, personally or by mail, on the person against whom the jeopardy assessment was made unless within such period the taxpayer seeks judicial review of the commissioner's determination under section 12-730.

(P.A. 96-221, S. 19, 25; P.A. 99-121, S. 24, 28.)

History: P.A. 96-221 effective June 4, 1996; P.A. 99-121 made technical changes, added provisions re service of notice, when jeopardy assessment is payable and surety company, and deleted former Subsec. (f), effective June 3, 1999.

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Sec. 12-730. Appeals. Notwithstanding the provisions of chapter 54 to the contrary, any taxpayer aggrieved because of any determination or disallowance by the commissioner under section 12-729, 12-729a or 12-732 may, not later than thirty days after notice of the commissioner's determination or disallowance is mailed to the taxpayer, take an appeal therefrom to the superior court for the judicial district of New Britain, which shall be accompanied by a citation to the commissioner to appear before said court. Such citation shall be signed by the same authority, and such appeal shall be returnable at the same time and served and returned in the same manner, as is required in case of a summons in a civil action. The authority issuing the citation shall take from the appellant a bond or recognizance to the state of Connecticut, with surety to prosecute the appeal to effect and to comply with the orders and decrees of the court in the premises. Such appeals shall be preferred cases, to be heard unless cause appears to the contrary, at the first session by the court or by a committee appointed by it. Said court may grant such relief as may be equitable and, if such tax has been paid prior to the granting of such relief, may order the Treasurer to pay the amount of such relief, with interest at the rate of two-thirds of one per cent per month or fraction thereof, to the aggrieved taxpayer. If the appeal has been taken without probable cause, the court may charge double or triple costs, as the case demands, and upon all such appeals which may be denied, costs may be taxed against the appellant at the discretion of the court but no costs shall be taxed against the state.

(P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; June Sp. Sess. P.A. 91-3, S. 81, 168; P.A. 93-142, S. 4, 7, 8; P.A. 95-26, S. 41, 52; 95-220, S. 4–6; P.A. 99-215, S. 24, 29; P.A. 03-107, S. 5; P.A. 19-186, S. 27.)

History: P.A. 88-230 mandated replacement of “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993, and expanded applicability to 1991 public and special acts; June Sp. Sess. P.A. 91-3, S. 81, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 95-26 lowered interest rate from 9% per annum to 0.66% per month, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 95-220 changed the effective date of P.A. 88-230 from September 1, 1996, to September 1, 1998, effective July 1, 1995; P.A. 99-215 replaced “judicial district of Hartford” with “judicial district of New Britain”, effective June 29, 1999; P.A. 03-107 added reference to Sec. 12-729a to include jeopardy assessment appeals under this section, effective June 18, 2003; P.A. 19-186 replaced “within one month” with “not later than thirty days”, effective July 8, 2019.

Equitable relief granted to taxpayer to permit recoupment of tax credit under Sec. 12-700a(d)(2) when wording of statute created a mathematical impossibility that a taxpayer could recoup such credit and to avoid inequitable result of being double taxed on the same income. 98 CA 439.

Cited. 45 CS 368. It is plaintiff's burden to show that he has no income tax liability or was exempt from payment of the tax. 49 CS 38.

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Sec. 12-731. Understatement of tax due to mathematical error. In the event that the amount of tax is understated on the taxpayer's return due to a mathematical error, the Commissioner of Revenue Services shall notify the taxpayer that an amount of tax in excess of that shown on the return, plus interest at the rate of one per cent per month or fraction thereof from the due date of such tax, is due and has been assessed. Such a notice of additional tax due shall not be considered a notice of a deficiency assessment nor shall the taxpayer have any right of protest or appeal as in the case of a deficiency assessment based on such notice, and the assessment and collection of the amount of tax erroneously omitted in the return shall not be prohibited by any provision of this chapter.

(June Sp. Sess. P.A. 91-3, S. 82, 168; May Sp. Sess. P.A. 92-5, S. 21, 37; P.A. 95-26, S. 42, 52.)

History: June Sp. Sess. P.A. 91-3, S. 82, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 95-26 lowered interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date.

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Sec. 12-732. Refunds. (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, 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 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, 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.

(2) On or before the sixtieth day after the mailing of the proposed disallowance, the claimant may file with the commissioner a written protest against the proposed disallowance in which the claimant sets forth the grounds on which the protest is based. If a protest is filed, the commissioner shall reconsider the proposed disallowance and, if the claimant has so requested, may grant or deny the claimant or the claimant's authorized representatives an oral hearing.

(3) The commissioner shall mail notice of his determination to the claimant, which notice shall set forth briefly the commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to the claimant.

(4) The action of the commissioner on the claimant's protest shall be final upon the expiration of one month from the date on which he mails notice of his action to the claimant unless within such period the claimant seeks judicial review of the commissioner's determination pursuant to section 12-730.

(b) (1) Notwithstanding the three-year limitation provided by subsection (a) of this section, if a taxpayer has timely complied with the requirements of subsection (b) of section 12-727, and, as a direct result of the change to or correction of the taxpayer's federal income tax return by the United States Internal Revenue Service or other competent authority, or as a direct result of a renegotiation of a contract or subcontract with the United States, the tax that has previously been reported to be due on a tax return under this chapter has been overpaid, or as a direct result of an amendment by the taxpayer of the taxpayer's federal income tax return, the tax that has previously been reported to be due on a tax return under this chapter has been overpaid, any claim for refund subsequently filed by such taxpayer will be deemed to be timely filed.

(2) Notwithstanding the three-year limitation provided by subsection (a) of this section, if a taxpayer has timely complied with the requirements of subsection (b) of section 12-704 and as a direct result of (A) the change to or correction of taxpayer's income tax return by the tax officers or other competent authority of another state of the United States or a political subdivision thereof or the District of Columbia, the tax that has previously been reported to be due on a tax return under this chapter has been overpaid, (B) an amendment by the taxpayer of the taxpayer's income tax return to another state of the United States or a political subdivision thereof or the District of Columbia, the tax that has previously been reported to be due on a tax return under this chapter has been overpaid, or (C) a taxpayer paying an assessment issued against the taxpayer by the tax officers or other competent authority of another state of the United States or a political subdivision thereof or the District of Columbia for any taxable year for which the taxpayer has not filed an income tax return with such jurisdiction, the tax that has previously been reported to be due on a tax return under this chapter has been overpaid, any claim for refund subsequently filed by such taxpayer will be deemed to be timely filed.

(June Sp. Sess. P.A. 91-3, S. 83, 168; May Sp. Sess. P.A. 92-5, S. 22, 37; P.A. 95-26, S. 43, 52; P.A. 97-243, S. 63, 67; P.A. 98-244, S. 32, 35; P.A. 00-174, S. 43, 83; P.A. 22-117, S. 3.)

History: June Sp. Sess. P.A. 91-3, S. 83, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes and added Subsec. (b), effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 95-26 amended Subsec. (a) to lower interest rate from 0.75% to 0.66% and to provide that a return filed before the last day prescribed by law or regulation is deemed as filed on the last day, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 97-243 amended Subsec. (a) to require claim for refund on a form containing name, address, Social Security number or federal employer identification number, signature and sufficient information to verify tax liability, to provide for an administrative hearing with the department before taking an appeal to the Superior Court, establish the time for filing a claim and made technical changes, effective July 1, 1997, and applicable to claims for refund filed years commencing on or after said date; P.A. 98-244 added Subsec. (b)(2) providing that a claim for refund is timely filed if requirements of Sec. 12-704 are met, numbered existing text as Subdiv. (1) and made technical changes, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 00-174 amended Subdiv. (a)(1) to add provisions re filing a claim for refund in the case of an extension of filing and made a technical change for purposes of gender neutrality, effective May 26, 2000, and applicable to returns for taxable years commencing on or after January 1, 2000; P.A. 22-117 amended Subsec. (b)(2) to redesignate existing provisions re change to or correction of income tax return by other jurisdiction and amendment by taxpayer of income tax return to other jurisdiction as Subparas. (A) and (B) and make a technical change, and add Subpara. (C) re taxpayer paying assessment issued by other jurisdiction, effective May 27, 2022, and applicable to taxable years commencing on or after January 1, 2022.

Cited. 44 CS 126.

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Sec. 12-733. Limits on time for making of deficiency assessments. (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 not later than six years after the date on which the return is filed. For purposes of this subdivision, 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 not later than six years after the date on which the return is filed. For purposes of this subdivision, 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 the nature and the amount of such item.

(3) If an employer, as defined in section 12-707, omits from Connecticut wages an amount properly includable that is in excess of twenty-five per cent of the amount of Connecticut wages stated in the Connecticut withholding tax return required under section 12-707, a notice of a proposed deficiency assessment may be mailed to the employer not later than six years after the date on which the return is filed. For purposes of this subdivision, 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 the nature and the amount of such item.

(4) If an affected business entity, as defined in section 12-699, omits from the Connecticut adjusted gross income derived from or connected with sources within Connecticut of any member of such affected business entity an amount properly includable therein that is in excess of twenty-five per cent of the amount of Connecticut adjusted gross income derived from or connected with sources within Connecticut stated in the return required under section 12-699, a notice of a proposed deficiency assessment may be mailed to the taxpayer not later than six years after the date on which the return is filed. For purposes of this subdivision, there shall not be taken into account any amount that 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 the nature and the amount of such item.

(c) (1) If no return is filed or if a taxpayer makes, wilfully or otherwise, a false or fraudulent return, a notice of deficiency assessment may be mailed to the taxpayer at any time.

(2) If a taxpayer wilfully attempts in any manner to defeat or evade a tax imposed by this chapter, a notice of deficiency assessment may be mailed to the taxpayer at any time.

(3) If a taxpayer fails to disclose a reportable transaction, as defined in Section 6707A of the Internal Revenue Code, on the taxpayer's federal tax return, a notice of deficiency assessment may be mailed to the taxpayer at any time not later than six years after the return required under this chapter for the same taxable year was filed.

(d) (1) If a taxpayer fails to comply with the requirements of section 12-727 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 this subdivision 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.

(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, 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 this subdivision 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, 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.

(June Sp. Sess. P.A. 91-3, S. 84, 168; May Sp. Sess. P.A. 92-5, S. 23, 37; P.A. 95-5, S. 5, 6; P.A. 97-243, S. 43, 67; P.A. 98-244, S. 33, 35; P.A. 99-121, S. 25, 28; P.A. 00-174, S. 44, 83; P.A. 02-103, S. 38, 39; P.A. 05-116, S. 4; P.A. 11-61, S. 59; P.A. 18-26, S. 6; 18-49, S. 6.)

History: June Sp. Sess. P.A. 91-3, S. 84, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (f) to make a technical change, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; P.A. 95-5 amended Subsec. (a) to allow 60 days for mailing a deficiency assessment notice after an amended tax return is filed, effective April 13, 1995, and applicable to taxable years commencing on or after January 1, 1995; P.A. 97-243 amended Subsec. (b) to add “Connecticut adjusted” before “gross income” and “Connecticut taxable income in the case of a trust or estate”, effective June 24, 1997, and applicable to taxable years commencing on or after January 1, 1997; P.A. 98-244 amended Subsec. (b) to number existing text as Subdiv. (1) and added Subdiv. (2) re nonresident and part-year resident individuals, effective June 8, 1998, and applicable to taxable years commencing on or after January 1, 1998; P.A. 99-121 amended Subsecs. (d) and (e) to allow commissioner to make an assessment at any time where a taxpayer's federal adjusted gross income is changed or corrected by the IRS, whether or not the taxpayer's federal taxable income increases, if the taxpayer does not file an amended Connecticut income tax return, and to make technical changes, effective June 3, 1999; P.A. 00-174 amended Subsec. (c) to allow an assessment to be mailed at any time in the case of a false or fraudulent return, without regard to taxpayer's intent, amended Subsecs. (d) and (e) to allow a proposed assessment to be sent where computation of tax is changed or corrected by the Internal Revenue Service and amended Subsec. (g) to provide that determination of when return is deemed filed for purposes of section is without regard to any extension of time for filing, effective May 26, 2000, and applicable to returns for taxable years commencing on or after January 1, 1999; P.A. 02-103 made technical changes in Subsecs. (d)(1) and (e)(1); P.A. 05-116 amended Subsec. (c) by designating existing provisions as Subdiv. (1), inserting “assessment” therein, and adding Subdivs. (2) and (3) re limits on time for deficiency assessments where taxpayer attempted to defeat or evade tax or failed to disclose a listed transaction, effective June 24, 2005, and applicable to taxable years commencing on or after January 1, 2005; P.A. 11-61 amended Subsec. (b) to add Subdiv. (3) re time limit for deficiency assessment on an employer, add Subdiv. (4) re time limit for deficiency assessment on a pass-through entity, and make technical changes, effective June 21, 2011, and applicable to taxable years commencing on or after January 1, 2011; P.A. 18-26 amended Subsec. (c)(3) to replace “listed” with “reportable”, effective May 29, 2018; P.A. 18-49 amended Subsec. (b)(4) to replace references to pass-through entity with references to affected business entity, delete “nonresident individual who is a” re member of pass-through entity, add “required under section 12-699” re return and make technical changes, effective May 31, 2018, and applicable to taxable years commencing on or after January 1, 2018.

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Sec. 12-734. Collection. Warrants. Liens. Foreclosure. The amount of any tax, penalty or interest due and unpaid under the provisions of this chapter may be collected under the provisions of section 12-35. The warrant therein provided for shall be signed by the commissioner or his authorized representative. The amount of any such tax, penalty and interest shall be a lien, from the last day of the taxable year until discharged by payment, against all real estate of the taxpayer within the state, and a certificate of such lien signed by the commissioner may be filed for record in the office of the clerk of any town in which such real estate is situated, provided no such lien shall be effective as against any bona fide purchaser or qualified encumbrancer of any interest in any such property. When any tax with respect to which a lien has been recorded under the provisions of this section has been satisfied, the commissioner, upon request of any interested party, shall issue a certificate discharging such lien, which certificate shall be recorded in the same office in which the lien was recorded. Any action for the foreclosure of such lien shall be brought by the Attorney General in the name of the state in the superior court for the judicial district in which the property subject to such lien is situated, or, if such property is located in two or more judicial districts, in the superior court for any one such judicial district, and the court may limit the time for redemption or order the sale of such property or pass such other further decree as it judges equitable.

(June Sp. Sess. P.A. 91-3, S. 85, 168.)

History: June Sp. Sess. P.A. 91-3, S. 85, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-735. Failure to pay tax or make return. Penalty. Waiver of penalties. Penalty for failure to file statement of payment to another person. (a) If any person fails to pay the amount of tax reported to be due on his return within the time specified under the provisions of this chapter there shall be imposed a penalty equal to ten per cent of such amount due and unpaid. Such amount shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax until the date of payment.

(b) If any person has not made 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 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.

(c) Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalties provided under this chapter when it is proven to his satisfaction that the failure to pay any tax was due to reasonable cause and was not intentional or due to neglect.

(d) In case of each failure to file a statement of payment to another person required under the authority of this chapter, including the duplicate statement of tax withheld on wages on the date prescribed therefor, determined with regard to any extension of time for filing, unless it is shown that such failure is due to a reasonable cause and not to wilful neglect, there shall be paid upon notice and demand by the commissioner by the person so failing to file the statement, a penalty of five dollars for each statement not so filed, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed two thousand dollars.

(June Sp. Sess. P.A. 91-3, S. 86, 168; May Sp. Sess. P.A. 92-17, S. 16, 59; May Sp. Sess. P.A. 94-4, S. 66, 85; P.A. 95-26, S. 44, 52; 95-160, S. 64, 69; P.A. 00-174, S. 45, 83.)

History: June Sp. Sess. P.A. 91-3, S. 86, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-17 amended Subsec. (b) to impose a $50 minimum penalty, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992; May Sp. Sess. P.A. 94-4 amended Subsec. (b) to reduce interest rate from 1.25% to 1% and to provide that interest may only be applied on the tax rather than on tax and penalty, effective July 1, 1995, and applicable to taxes due and owing on or after said date; P.A. 95-26 amended Subsec. (a) to lower interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 00-174 amended Subsec. (b) to provide that commissioner's making of a return under this section shall not constitute a filing under Sec. 12-733(c) or 12-737(a), effective May 26, 2000, and applicable to returns for taxable years commencing on or after January 1, 1999.

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Sec. 12-736. Penalty for failure to collect, account for and pay over tax or evasion or defeat of tax. Penalty for fraud. (a) Any person required to collect, truthfully account for and pay over the tax imposed under this chapter who wilfully fails to collect such tax or truthfully account for and pay over such tax or who wilfully attempts in any manner to evade or defeat the tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over, including any penalty or interest attributable to such wilful failure to collect or truthfully account for and pay over such tax or such wilful attempt to evade or defeat such tax. The amount of a penalty for which a person may be personally liable under this section shall be collected in accordance with the provisions of section 12-734.

(b) Any person who with fraudulent intent shall fail to pay, to deduct or to withhold and pay any tax, to make, render, sign or certify any return or to supply any information within the time required by or under this chapter shall be subject to a penalty of not more than one thousand dollars, in addition to any other amounts required under this chapter to be imposed, assessed and collected by the commissioner.

(June Sp. Sess. P.A. 91-3, S. 87, 168; P.A. 97-243, S. 44, 67; P.A. 22-117, S. 1.)

History: June Sp. Sess. P.A. 91-3, S. 87, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 97-243 amended Subsec. (b) to delete reference to declaration of estimated tax, effective June 24, 1997, and applicable to taxable years commencing on or after January 1, 1997; P.A. 22-117 amended Subsec. (a) to add reference to inclusion of penalty or interest attributable to failure to collect, account for and pay over tax or evasion or defeat of tax and add provision re collection of penalty in accordance with Sec. 12-734, effective May 27, 2022.

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Sec. 12-737. Penalties for wilful violations. (a) Any person required under this chapter to pay any tax, or required under this chapter or by regulations adopted in accordance with the provisions of this chapter to make a return, keep any records or supply any information, who wilfully fails to pay such tax, make such return, keep such records or supply such information, at the time required by law or regulations, shall, in addition to any other penalty provided by law, be fined not more than one thousand dollars or imprisoned not more than one year or both. Notwithstanding the provisions of section 54-193, no person shall be prosecuted for a violation of the provisions of this subsection committed on or after July 1, 1997, except within three years next after such violation has been committed.

(b) Any person who wilfully delivers or discloses to the commissioner or his authorized agent any list, return, account, statement or other document known by him to be fraudulent or false in any material matter, shall, in addition to any other penalty provided by law, be guilty of a class D felony. No person shall be charged with an offense under both subsection (a) and (b) of this section in relation to the same tax period but such person may be charged and prosecuted for both such offenses upon the same information.

(June Sp. Sess. P.A. 91-3, S. 88, 168; P.A. 97-203, S. 13, 20; P.A. 13-258, S. 58.)

History: June Sp. Sess. P.A. 91-3, S. 88, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 97-203 amended Subsec. (a) to extend to three years the time within which persons wilfully failing to file tax returns or pay taxes may be criminally prosecuted, effective July 1, 1997; P.A. 13-258 amended Subsec. (b) to change penalty from fine of not more than $5,000 or imprisonment of not more than 5 years or less than 1 year to a class D felony.

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Sec. 12-738. Penalty for false statement relating to withholding allowance. In addition to any other penalty provided by law, if any individual, in claiming a withholding allowance, makes a statement which results in a decrease in the amounts deducted and withheld under this chapter and, as of the time such statement was made, there was no reasonable basis for such statement, he shall pay a penalty of fifty dollars for such statement, unless:

(1) Such statement did not result in a decrease in the amount deducted and withheld, or

(2) The taxes imposed with respect to the individual under this chapter for the next succeeding taxable year do not exceed the sum of: (i) The credits against such taxes and (ii) the payments of estimated tax which are considered payments on account of such taxes. The provisions of section 12-728 relating to deficiency procedure shall not apply in respect to the assessment or collection of any penalty imposed by this section.

(June Sp. Sess. P.A. 91-3, S. 89, 168; May Sp. Sess. P.A. 92-5, S. 24, 37.)

History: June Sp. Sess. P.A. 91-3, S. 89, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 made various technical and minor changes, effective June 19, 1992, and applicable to taxable years of taxpayers commencing on or after January 1, 1992.

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Sec. 12-739. Credit of overpayments. (a)(1) The commissioner, within the applicable period of limitations may credit an overpayment of income tax and interest on such overpayment against any liability in respect of any tax imposed by this state on the person who made the overpayment, and the balance shall be refunded by the Treasurer out of the proceeds of the tax retained by him for such general purposes.

(2) For purposes of subsection (a) of this section, any taxes for general or special purposes levied by a municipality, any taxes imposed under chapter 223 and payable to such municipality, any fines, penalties, costs or fees payable to such municipality for the violation of any lawful regulation or ordinance in furtherance of any general powers as enumerated in section 7-148, or any charge payable to such municipality for connection with or for the use of a waterworks or sewerage system shall be treated as if they were taxes due to the state, where, pursuant to section 12-2, an agreement exists between the commissioner and the governing authority of such municipality providing for the collection by the commissioner, on behalf of such municipality, of such taxes, fines, penalties, costs or fees, or charges, provided such taxes, fines, penalties, costs or fees, or charges are (A) unpaid and a period in excess of thirty days has elapsed following the date on which they were due and (B) not the subject of a timely filed administrative appeal or of a timely filed appeal pending before any court of competent jurisdiction.

(b) If the amount allowable as a credit for tax withheld from the taxpayer exceeds the tax to which the credit relates, the excess shall be considered as overpayment.

(c) If there has been an overpayment of tax required to be deducted and withheld under section 12-705, refund shall be made to the employer only to the extent that the amount of the overpayment was not deducted and withheld by the employer.

(d) The commissioner may prescribe regulations providing for the crediting against the estimated income tax for any taxable year of the amount determined to be an overpayment of the income tax for a preceding taxable year.

(June Sp. Sess. P.A. 91-3, S. 90, 168; P.A. 97-309, S. 17, 23; 97-322, S. 7, 9.)

History: June Sp. Sess. P.A. 91-3, S. 90, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 97-309 amended Subsec. (a) to designate existing Subsec. as Subdiv. (1) and added new Subdiv. (2) re treatment of municipal taxes as taxes due state if agreement entered into under Sec. 12-2, effective July 1, 1997; P.A. 97-322 revised effective date of P.A. 97-309 to specify applicability to income years commencing on and after July 1, 1997.

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Sec. 12-740. Administration and enforcement. Keeping of records. Examination of records. Hearings. Testimony. (a) The Commissioner of Revenue Services shall administer and enforce the tax imposed under this chapter and is authorized to adopt regulations and to require such facts and information to be reported as may be necessary to enforce the provisions of this chapter.

(b) The commissioner may prescribe the form and contents of any return or other document required to be filed under this chapter.

(c) The commissioner may adopt regulations as to the keeping of records, the content and form of returns and statements and the filing of copies of federal income tax returns and determinations. The commissioner may require any person, by regulation or notice served on such person, to make such returns, render such statements or keep such records as the commissioner may deem sufficient to show whether or not such person is liable under this chapter for tax or for the collection of tax.

(d) The commissioner or any person authorized by him may examine the books, papers, records and equipment of any person liable under the provisions of this chapter and may investigate the activities of the person in order to verify the accuracy of any return made, or, if no return is made by the person, to ascertain and determine the amount required to be paid.

(e) The commissioner and any representative of the commissioner authorized to conduct any inquiry, investigation or hearing under this chapter may administer oaths and take testimony under oath relative to the matter of inquiry or investigation. At any hearing ordered by the commissioner, the commissioner or his representative authorized to conduct such hearing and to issue such process may subpoena witnesses and require the production of books, papers and documents pertinent to such inquiry. No witness under subpoena authorized to be issued by the provisions of this chapter shall be excused from testifying or from producing books or other documentary evidence on the grounds that the production of such books or other documentary evidence would tend to incriminate him, but such evidence or the books or documentary evidence so produced shall not be used in any criminal proceeding against him. If any person disobeys such process or, having appeared in obedience thereto, refuses to answer any pertinent question put to him by the commissioner or his authorized representative, or to produce any books and other documentary evidence pursuant thereto, the commissioner or such representative may apply to the superior court for the judicial district wherein the taxpayer resides or to any judge of said court if the same is not in session, setting forth such disobedience to process or refusal to answer, and said court or such judge shall cite such person to appear before said court or such judge to answer such question or to produce such books and other documentary evidence and, upon his refusal so to do, shall commit such person to a community correctional center until he testifies, but not for a longer period than sixty days. Notwithstanding the serving of the term of such commitment by any person, the commissioner may proceed in all respects with such inquiry and examination as if the witness had not previously been called upon to testify. Officers who serve subpoenas issued by the commissioner or under his authority and witnesses attending hearings conducted by him hereunder shall receive fees and compensation at the same rates as officers and witnesses in the courts of this state, to be paid on vouchers of the commissioner on order of the Comptroller from the appropriation for the administration of this chapter.

(June Sp. Sess. P.A. 91-3, S. 91, 168.)

History: June Sp. Sess. P.A. 91-3, S. 91, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.

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Sec. 12-741. Rules and rulings in lieu of regulations. Notwithstanding the provisions of chapter 54 and this chapter, the Commissioner of Revenue Services may, in any instance in which, in accordance with said chapter 54 or this chapter, he may or is required to adopt regulations, adopt rules and issue rulings in lieu of such regulations for the purposes of this chapter on a temporary basis, which shall have the force and effect of regulations, until such regulations are adopted and approved. On or before January 1, 1994, the commissioner shall submit such regulations to the legislative regulation review committee in accordance with the provisions of chapter 54 to implement the provisions of this chapter.

(June Sp. Sess. P.A. 91-3, S. 92, 168; P.A. 93-361, S. 9; May 25 Sp. Sess. P.A. 94-1, S. 111, 130.)

History: June Sp. Sess. P.A. 91-3, S. 92, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 93-361 amended section by requiring commissioner to submit regulations implementing the income tax by January 1, 1994 (Revisor's note: The word “regulations” was inserted editorially by the Revisors to correct an obvious clerical error); May 25 Sp. Sess. P.A. 94-2 made technical change, effective July 1, 1994.

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Sec. 12-742. Withholding of refund from persons owing debts or obligations to the state or in default of certain student loans. (a) In cases where any person or entity is due a refund of state income taxes, and that same person owes a debt or obligation for which the Commissioner of Administrative Services is seeking reimbursement, the Commissioner of Revenue Services, upon notification by the Commissioner of Administrative Services, shall withhold the payment of said refund to such person or entity to the extent of such debt or obligation, provided the Commissioner of Revenue Services shall notify such debtor that he or she has the right to a hearing before an officer designated by the Commissioner of Administrative Services if he or she contests the validity or amount of the Commissioner of Administrative Services' claim, except that where the debt or obligation is a debt resulting from failure to pay an order for child support, the administrative review process will be held in accordance with subsection (e) of section 52-362e. If the debtor fails to apply in writing to the Commissioner of Administrative Services for a hearing within sixty days of the issuance of notice of withholding, the Commissioner of Revenue Services shall remit the amount of the withheld refund to the Commissioner of Administrative Services. If the debtor elects an administrative hearing within this time, the Commissioner of Revenue Services shall remit the amount of the withheld refund in accordance with any decisions of the hearing officer or the court upon an appeal of the hearing officer's decision.

(b) (1) In cases where any person or entity is due a refund of state income taxes, and that same person is in default of a student loan made or guaranteed by the Connecticut Student Loan Foundation or the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Student Loan Foundation or the Connecticut Higher Education Supplemental Loan Authority, as appropriate, shall notify the Commissioner of Administrative Services of such default. The Commissioner of Revenue Services, upon notification by the Commissioner of Administrative Services, shall withhold the payment of said refund to such person to the extent of such default, provided the Commissioner of Revenue Services shall notify such person in default that he or she has the right to a hearing before an officer designated by the Commissioner of Administrative Services if he or she contests the validity or amount of the Commissioner of Administrative Services' claim. If the person in default fails to apply in writing to the Commissioner of Administrative Services for a hearing within sixty days of the issuance of notice of withholding, the Commissioner of Revenue Services shall remit the amount of the withheld refund to the Commissioner of Administrative Services, who in turn shall remit the amount of such withheld refund to the Connecticut Student Loan Foundation or the Connecticut Higher Education Supplemental Loan Authority, as appropriate. If the person in default elects an administrative hearing within this time, the Commissioner of Revenue Services shall remit the amount of the withheld refund in accordance with any decisions of the hearing officer or the court upon an appeal of the hearing officer's decision. If a person in default also owes a debt or obligation described in subsection (a) of this section, the refund shall be applied against such debt or obligation before being credited against the amount of the default.

(2) The Commissioner of Revenue Services, the Commissioner of Administrative Services, the president of the Connecticut Student Loan Foundation or the executive director of the Connecticut Higher Education Supplemental Loan Authority, as appropriate, on behalf of such corporation, shall enter into an agreement for the crediting of income tax refunds against the amount a taxpayer is in default of a loan pursuant to subdivision (1) of this subsection. The agreement shall include procedures for the Connecticut Student Loan Foundation or the Connecticut Higher Education Supplemental Loan Authority, as appropriate, to (A) notify the Commissioner of Administrative Services of a default, and the amount of the default, and (B) reimburse the Department of Administrative Services and the Department of Revenue Services for any costs incurred by the departments in carrying out the provisions of this subsection.

(June Sp. Sess. P.A. 91-3, S. 93, 168; P.A. 92-253, S. 7; P.A. 01-102, S. 6, 7; P.A. 07-108, S. 4; 07-247, S. 65.)

History: June Sp. Sess. P.A. 91-3, S. 93, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; P.A. 92-253 added phrase “except that where the debt or obligation is a debt resulting from failure to pay an order for child support, the administrative review process will be held in accordance with subsection (c) of section 52-362e”; P.A. 01-102 designated existing provisions as Subsec. (a), made technical changes in Subsec. (a) and added Subsec. (b) re person or entity in default of a student loan; P.A. 07-108 amended Subsec. (b) to add provisions re Connecticut Higher Education Supplemental Loan Authority, effective July 1, 2007; P.A. 07-247 amended Subsec. (a) by replacing reference to Sec. 52-362e(c) with reference to Sec. 52-362e(e).

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Sec. 12-743. Contributions from refunds to special accounts. (a) Any taxpayer filing a return under this chapter may contribute any part of a refund under this chapter to (1) the organ transplant account established pursuant to section 17b-288, (2) the AIDS research education account established pursuant to section 19a-32a, (3) the endangered species, natural area preserves and watchable wildlife account established pursuant to section 22a-27l, (4) the breast cancer research and education account established pursuant to section 19a-32b, (5) the safety net services account established pursuant to section 17b-112f, (6) an individual savings plan established under the Connecticut Higher Education Trust established pursuant to sections 3-22f to 3-22p, inclusive, or to the CHET Baby Scholars fund established pursuant to section 3-22u, or (7) the mental health community investment account established pursuant to section 17a-451g. Such contribution shall be made by indicating on the tax return, in a manner provided for by the Commissioner of Revenue Services pursuant to subsection (b) of this section, the amount to be contributed to the account.

(b) (1) The Commissioner of Revenue Services shall revise the tax return form to implement the provisions of subsection (a) of this section, which form shall include spaces on the return in which taxpayers may indicate their intention to make a contribution, in a whole dollar amount, in accordance with this section. The commissioner shall include in the instructions accompanying the tax return a description of the purposes for which the accounts and funds set forth in subsection (a) of this section were created.

(2) For purposes of facilitating the registration of a taxpayer as an organ donor, the commissioner shall include information in the instructions accompanying the tax return that (A) indicates the manner by which a taxpayer may contact an organ donor registry organization, or (B) provides electronic links to appropriate organ donor registry organizations for such purpose.

(3) For purposes of facilitating the participation of a taxpayer in the Connecticut Higher Education Trust and the CHET Baby Scholars fund, the commissioner shall include spaces on the return, as provided in subdivision (1) of this subsection as follows: (A) There shall be a space indicating a taxpayer's intention to contribute any part of a refund to someone known to the taxpayer who is a designated beneficiary, as defined in section 3-22f, including a space for the taxpayer to provide the name and Social Security number of such designated beneficiary; and (B) there shall be a space indicating a taxpayer's intention to contribute any part of a refund to the CHET Baby Scholars fund, including a description of such fund and a statement that such contribution shall not benefit a specific child. The commissioner shall include information in the instructions accompanying the tax return that indicates the manner by which the taxpayer may contact the administrator of the Connecticut Higher Education Trust and the CHET Baby Scholars fund, or provides electronic links to such administrator for such purpose.

(c) A designated contribution of all or part of any refund shall be irrevocable upon the filing of the return and shall be made in the full amount designated if the refund found due the taxpayer upon the initial processing of the return, and after any deductions required by this chapter, is greater than or equal to the designated contribution. If the refund due, as determined upon initial processing, and after any deductions required by this chapter, is less than the designated contribution, the contribution shall be made in the full amount of the refund. The Commissioner of Revenue Services shall subtract the amount of any contribution of all or part of any refund from the amount of the refund initially found due the taxpayer and shall certify the difference to the Secretary of the Office of Policy and Management and the Treasurer for payment to the taxpayer in accordance with this chapter. For the purposes of any subsequent determination of the taxpayer's net tax payment, such contribution shall be considered a part of the refund paid to the taxpayer.

(d) Except for any funds collected for purposes of subdivision (6) of subsection (a) of this section, the Commissioner of Revenue Services, after notification of and approval by the Secretary of the Office of Policy and Management, may deduct and retain from the remaining funds so collected an amount equal to the costs of implementing this section and sections 17b-288, 19a-32a, 22a-27l, 19a-32b and 17b-112f but not to exceed seven and one-half per cent of the funds contributed in any fiscal year and in no event shall exceed the total cost of implementation of said sections.

(P.A. 93-233, S. 1, 3, 5; P.A. 94-175, S. 14, 16, 32; May Sp. Sess. P.A. 94-4, S. 80, 85; P.A. 95-160, S. 64, 69; P.A. 97-286, S. 7, 8; June 18 Sp. Sess. P.A. 97-2, S. 4, 165; P.A. 04-201, S. 7; P.A. 10-117, S. 81; P.A. 14-217, S. 28; P.A. 17-147, S. 43.)

History: (Revisor's note: P.A. 93-233 S. 1, 3 and 5 regarding contributions from tax refunds to (1) the organ transplant fund account, (2) the endangered species, natural area preserves and watchable wildlife account, and (3) the AIDS research education fund account were combined editorially into one section by the Revisors who made necessary technical adjustments to the wording to permit this); P.A. 94-175, in Subsec. (a) changed account names from “organ transplant fund account” to “organ transplant account” and from “AIDS research education fund account” to “AIDS research education account”, effective June 2, 1994; May Sp. Sess. P.A. 94-4 revised effective date of P.A. 94-175 but without affecting this section; (Revisor's note: In 1997 the Revisors editorially changed the reference in Subsec. (d) to “sections 19a-32a, 19a-32b and 22a-271”, to “sections 17b-288, 19a-32a and 22a-271”, thereby correcting a clerical codification error); P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 97-286 added breast cancer research and education account and made technical changes, effective June 26, 1997, and applicable to taxable years commencing on or after January 1, 1997; June 18 Sp. Sess. P.A. 97-2 added the safety net services account, effective July 1, 1997; P.A. 04-201 amended Subsec. (b) to add provision re indication of contribution in whole dollar amount and delete former provisions re suggested amounts, effective June 3, 2004, and applicable to taxable years commencing on or after January 1, 2004; P.A. 10-117 amended Subsec. (b) by adding provision re commissioner's responsibility to include information facilitating registration of taxpayer as organ donor with instructions accompanying tax return, effective July 1, 2010; P.A. 14-217 amended Subsec. (a) by adding Subdiv. (6) re Connecticut Higher Education Trust and CHET Baby Scholars fund, amended Subsec. (b) by designating existing provisions re contributions utilizing tax return form as new Subdiv. (1), designating existing provisions re registration as organ donor as new Subdiv. (2) and adding Subdiv. (3) re Connecticut Higher Education Trust and CHET Baby Scholars fund, amended Subsec. (d) by adding reference to exception in Subsec. (a)(6), and made technical and conforming changes, effective July 1, 2014; P.A. 17-147 amended Subsec. (a) to add Subdiv. (7) re mental health community investment account and make a technical change, and amended Subsec. (b) to make a conforming change, effective July 1, 2017.

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Sec. 12-743a. Contributions from refunds to the Military Relief Fund. (a) Any taxpayer filing a return under this chapter for taxable years commencing on or after January 1, 2005, may contribute all or part of a refund under this chapter to the Military Relief Fund established in section 27-100a, by indicating on the tax return the amount to be contributed to the fund.

(b) A contribution or designation made pursuant to this section shall be irrevocable upon the filing of the return. A taxpayer making a contribution or designation pursuant to this subsection shall so indicate on the tax return in a manner provided for by the Commissioner of Revenue Services.

(c) A contribution of all or part of a refund shall be made in the full amount indicated if the refund found due the taxpayer upon the initial processing of the return, and after any deductions required by this chapter, is greater than or equal to the indicated contribution. If the refund due, as determined upon initial processing, and after any deductions required by this chapter, is less than the indicated contribution, the contribution shall be made in the full amount of the refund. The Commissioner of Revenue Services shall subtract the amount of any contribution of all or part of a refund from the amount of the refund initially found due the taxpayer and shall certify (1) the amount of the refund initially found due the taxpayer, (2) the amount of any such contribution, and (3) the amount of the difference to the Secretary of the Office of Policy and Management and the State Treasurer for payment to the taxpayer in accordance with this chapter. For the purposes of any subsequent determination of the taxpayer's net tax payment, such contribution shall be considered a part of the refund paid to the taxpayer.

(d) The Commissioner of Revenue Services, after notification of and approval by the Secretary of the Office of Policy and Management, may deduct and retain from the moneys collected under subsections (a) to (c), inclusive, of this section an amount equal to the costs of administering this section, but in any fiscal year beginning on or after July 1, 2006, not to exceed four per cent of such moneys collected in such fiscal year. The Commissioner of Revenue Services shall deposit the remaining moneys collected in the Military Relief Fund.

(June Sp. Sess. P.A. 05-3, S. 11; P.A. 13-107, S. 2.)

History: June Sp. Sess. P.A. 05-3 effective July 1, 2005, and applicable to taxable years commencing on or after January 1, 2005; P.A. 13-107 amended Subsecs. (a) and (d) to change “Military Family Relief Fund” to “Military Relief Fund”, effective July 1, 2013.

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Sec. 12-744. Amount required to be shown on a form when item is other than a whole-dollar amount. (a) The commissioner shall allow any taxpayer, at his option, to provide with respect to any amount required to be shown on a form prescribed for any return, statement or other document required under the provisions of this chapter that if such amount of such item is other than a whole-dollar amount, either (1) the fractional part of a dollar shall be disregarded; or (2) the fractional part of a dollar shall be disregarded unless it amounts to one-half dollar or more, in which case the amount shall be increased by one dollar.

(b) The provisions of subsection (a) of this section shall not be applicable to items which must be taken into account in making the computations necessary to determine the amount required to be shown on a form, but shall be applicable only to such final amount.

(P.A. 93-74, S. 49, 67.)

History: P.A. 93-74 effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1993.

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Sec. 12-745. Order of credits. (a) Whenever a taxpayer is eligible to claim more than one income tax credit under this chapter, the credits shall be claimed for the taxable year in the following order: (1) Any credit under section 12-703; (2) any credit under section 12-704; (3) any credit under subsection (e) of section 12-700a; (4) any other credit that may not be carried forward to a succeeding taxable year or years, in the order in which the taxpayer may receive the maximum benefit; (5) any credit that may be carried forward to a succeeding taxable year or years with any credit carry-forward that will expire first being claimed before any credit carry-forward that will expire later or will not expire at all or if the credit carry-forwards will expire at the same time, in the order in which the taxpayer may receive the maximum benefit.

(b) In no event shall any credit be claimed more than once.

(P.A. 96-221, S. 18, 25.)

History: P.A. 96-221 effective July 1, 1996.

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Sec. 12-746. Rebate. (a) Any taxpayer subject to tax pursuant to this chapter who files a Connecticut income tax return for the taxable year commencing January 1, 1997, on or before May 1, 1998, or, for a taxpayer who has been granted an extension to file such return, October 16, 1998, and has paid property tax, which first became due and was paid in such income year, to a Connecticut political subdivision on the taxpayer's primary residence or motor vehicle, shall be entitled to a rebate in accordance with the following schedule:

(1) For any person who files a return under the federal income tax for such taxable year as an unmarried individual or as a married individual filing separately, an amount equal to the lesser of the taxpayer's income tax liability as shown on such return or seventy-five dollars, but in no case less than fifty dollars;

(2) For any person who files a return under the federal income tax for such taxable year as a head of household, an amount equal to the lesser of the taxpayer's income tax liability as shown on such return or one hundred twenty dollars, but in no case less than fifty dollars;

(3) For any husband and wife who file a return under the federal income tax for such taxable year as married individuals filing jointly or a person who files a return under the federal income tax as a surviving spouse, an amount equal to the lesser of the taxpayer's income tax liability as shown on such return or one hundred fifty dollars, but in no case less than fifty dollars.

(b) This section shall not apply to trusts and estates.

(c) Amounts rebated pursuant to this section shall be subject to the provisions for set-off as provided in sections 12-739 and 12-742.

(d) As used in this section, “income tax liability as shown on such return” means the liability after application of the credit for property taxes allowed and taken on such return pursuant to section 12-704c, as corrected for mathematical error by the Commissioner of Revenue Services on the original return filed by such taxpayer.

(e) Amounts rebated pursuant to this section shall not be considered income for purposes of sections 8-119l, 8-345, 12-170d, 12-170aa, 17b-550, 47-88d and 47-287.

(f) The Commissioner of Revenue Services shall notify the State Comptroller of the amount of the rebates pursuant to this section, and the State Comptroller shall draw an order on the State Treasurer in the amount thereof for payment to the taxpayer. For taxpayers who have filed a Connecticut income tax return for the taxable year commencing January 1, 1997, on or before May 1, 1998, such rebates shall be issued no later than July 31, 1998. All remaining rebates shall be issued no later than December 15, 1998.

(P.A. 98-110, S. 2, 3, 27; P.A. 13-234, S. 89.)

History: P.A. 98-110 effective May 19, 1998; P.A. 13-234 amended Subsec. (e) to delete reference to Sec. 17b-490, effective January 1, 2014.

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Secs. 12-747 to 12-789. Reserved for future use.

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Sec. 12-790. Persons providing tax preparation services and facilitators. Definitions. Prohibited activities. Penalty. (a) As used in this section:

(1) “Attorney” means an attorney admitted to practice law in this state or one or more of the other states or jurisdictions of the United States;

(2) “Certified public accountant” means a certified public accountant licensed pursuant to chapter 389 or a similar law of one or more of the other states or jurisdictions of the United States;

(3) “Commissioner” means the Commissioner of Revenue Services or the commissioner's designee;

(4) “Creditor” means any person who makes a refund anticipation loan or who takes an assignment of a refund anticipation loan;

(5) “Facilitator” means a person that individually or in conjunction or cooperation with another person: (A) Solicits the execution of, processes, receives or accepts an application or agreement for a refund anticipation loan or refund anticipation check; (B) serves or collects upon a refund anticipation loan or refund anticipation check; or (C) in any other manner, facilitates the making of a refund anticipation loan or refund anticipation check. “Facilitator” does not include any employee of a facilitator who provides only clerical or other comparable support services to such facilitator;

(6) “Person” has the same meaning as provided in section 12-1;

(7) “Refund anticipation check” means a check, debit card, stored value card or other payment mechanism that: (A) Represents the proceeds of a federal or state personal income tax refund; (B) is issued by a bank or other person that received a direct deposit of the tax refund or tax credits; and (C) is paid for by a fee or other consideration;

(8) “Refund anticipation loan” means a loan that is secured by or that the creditor arranges to be repaid directly or indirectly from the proceeds of a federal or state personal income tax refund. “Refund anticipation loan” includes any sale, assignment or purchase of such tax refund at a discount or for a fee, whether or not the amount is required to be repaid to the buyer or assignee if the Internal Revenue Service or the Department of Revenue Services denies or reduces the amount of the tax refund;

(9) “Return” means a tax return or report relating to the federal or state personal income tax administered by the Internal Revenue Service or the Department of Revenue Services;

(10) “Tax preparation services” means the preparation of or assistance in the preparation of another person's federal or state personal income tax return, for a fee or other consideration; and

(11) “Tax preparer” means an individual who provides federal or state personal income tax preparation services for a fee or other consideration.

(b) (1) No person that provides tax preparation services or acts as a facilitator shall:

(A) Impose any fee or other consideration in the making or facilitating of a refund anticipation loan or refund anticipation check other than the fee charged by the creditor or bank that originated such loan or check;

(B) Engage in unfair or deceptive acts or practices in the making or facilitating of a refund anticipation loan or refund anticipation check, including making any written or oral statement that contradicts any information required to be disclosed under the Taxpayer Bill of Rights, as set forth in the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, or the Connecticut Taxpayer's Bill of Rights, as set forth in section 12-39n;

(C) Directly or indirectly arrange for a third party, other than the originating creditor or bank, to impose any interest, fee or charge related to a refund anticipation loan or refund anticipation check;

(D) Include any of the following provisions in any documents provided with respect to a refund anticipation loan or refund anticipation check, including in the loan application or agreement: (i) A hold harmless clause; (ii) a confession of judgment clause; (iii) any assignment of or order for payment of wages or other compensation for services; (iv) a waiver of any provision of the Taxpayer Bill of Rights or the Connecticut Taxpayer's Bill of Rights; or (v) a waiver of the right to injunctive, declaratory or other equitable relief or relief on a class-wide basis;

(E) Take or arrange for a creditor to take a security interest in any property interest of the taxpayer other than the proceeds of the tax refund to secure payment of a refund anticipation loan;

(F) Engage in the collection of an outstanding or delinquent refund anticipation loan for any creditor or assignee;

(G) Make a material misrepresentation of fact in obtaining or attempting to obtain a permit under section 12-790a;

(H) Fail or refuse to return to a taxpayer, within a reasonable period of time, any documents or copies of such documents provided by the taxpayer;

(I) Fail or refuse to provide to a taxpayer, for the taxpayer's own records, a copy of any document requiring the taxpayer's signature, within a reasonable time after the taxpayer signs the document;

(J) Fail to maintain a copy of any return prepared for a taxpayer for a period of four years from the date of completion or the due date of the return, whichever is later;

(K) Require or allow a taxpayer to sign blank or incomplete tax forms;

(L) Require a taxpayer to designate the tax preparer or facilitator as the payee for a federal or state personal income tax refund; or

(M) Require a taxpayer to designate and use a specific depository institution or debit card or stored value card provider for the purposes of receiving a federal or state personal income tax refund.

(2) Each tax preparer preparing any return shall sign the return and include his or her preparer tax identification number issued by the Internal Revenue Service.

(3) The commissioner may impose on any person providing tax preparation services or acting as a facilitator that violates any provision of subdivision (1) or (2) of this subsection a civil penalty of not more than five hundred dollars for each violation. Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalty provided under this subdivision when it is proven to the commissioner's satisfaction that the violation was due to reasonable cause and not intentional or due to neglect.

(P.A. 17-147, S. 15.)

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Sec. 12-790a. Tax preparers and facilitators. Permits. Penalties. Inactive permit status. Exemptions. Confidentiality of personal financial information gathered pursuant to an investigation. (a) As used in sections 12-790a to 12-790c, inclusive, “attorney”, “certified public accountant”, “commissioner”, “creditor”, “facilitator”, “refund anticipation check”, “refund anticipation loan”, “return”, “tax preparation services” and “tax preparer” have the same meanings as provided in section 12-790, and “commercial tax return preparation business” means a person that employs tax preparers.

(b) (1) On and after January 1, 2019, no person, except as provided in subsection (e) of this section, shall engage in the business of, solicit business as or advertise as furnishing tax preparation services or acting as a facilitator or make representations to be a tax preparer or facilitator, without a tax preparer permit or a facilitator permit, as applicable, issued by the commissioner. Each applicant for such permit and renewal of such permit shall apply by electronic means in the form and manner prescribed by the commissioner.

(2) Each individual applying for a permit shall (A) be eighteen years of age or older, (B) have obtained a high school diploma, (C) possess a preparer tax identification number issued by the Internal Revenue Service that shall be used by the tax preparer or facilitator for each return such tax preparer is required to sign and each refund anticipation loan or refund anticipation check such facilitator is required to sign, and (D) for a tax preparer, present evidence satisfactory to the commissioner that the applicant has experience, education or training in tax preparation services, which evidence shall include, on and after January 1, 2022, a certificate of completion of an annual filing season program administered by the Internal Revenue Service.

(3) The commissioner may issue a permit under this subsection to an applicant that presents evidence satisfactory to the commissioner that the applicant is authorized to act as a tax preparer or facilitator in a state that has professional requirements substantially similar to the requirements for tax preparers or facilitators in this state. The commissioner shall provide written notice of the commissioner's decision approving or denying an application for issuance or renewal of a permit not later than sixty days after receipt of the application.

(4) The fee for an initial application shall be one hundred dollars. A permit issued pursuant to this subsection shall expire after two years and a tax preparer or facilitator seeking renewal shall submit a renewal application and renewal fee of fifty dollars.

(5) If an individual acts as both a tax preparer and a facilitator, the commissioner shall issue a single permit covering both activities.

(c) (1) If, at any time following the issuance or renewal of a permit issued pursuant to subsection (b) of this section, any information provided to the commissioner by the tax preparer or facilitator is no longer accurate, such tax preparer or facilitator shall promptly provide updated information to the commissioner.

(2) The issuance of a tax preparer permit or a facilitator permit shall not be advertised as an endorsement by the commissioner of the tax preparer's or facilitator's services.

(d) (1) On and after January 1, 2019, the commissioner may impose on any tax preparer or facilitator that has not been issued a permit pursuant to this section a civil penalty of one hundred dollars for each day that the commissioner finds such tax preparer or facilitator to have provided tax preparation services or acted as a facilitator.

(2) On and after January 1, 2019, if a tax preparer, facilitator or commercial tax return preparation business employs an individual to provide tax preparation services or a person to act as a facilitator that is not exempt under subsection (e) of this section and has not been issued a permit pursuant to this section, the commissioner may impose on such employing tax preparer, facilitator or business a civil penalty of five hundred dollars per violation.

(3) On and after January 1, 2019, whenever a tax preparer ceases to engage in the preparation of or in advising or assisting in the preparation of personal income tax returns or a facilitator ceases to engage in the activities of a facilitator, such tax preparer or facilitator may apply to the commissioner for inactive permit status. A permit that is granted inactive status shall not require renewal, except that such permit may be reactivated before its expiration upon application to the commissioner with a payment of the renewal fee.

(4) A tax preparer or facilitator whose permit is inactive shall neither act as a tax preparer or facilitator nor advertise such tax preparer's or facilitator's status as being permitted to act as a tax preparer or facilitator.

(e) The following persons shall be exempt from the provisions of sections 12-790a to 12-790c, inclusive:

(1) An accountant holding (A) an active license issued by the State Board of Accountancy, or (B) a valid and active permit, license or equivalent professional credential issued by another state or jurisdiction of the United States;

(2) An attorney and any person engaged in providing tax preparation services under the supervision of such attorney;

(3) An individual enrolled to practice before the Internal Revenue Service under Circular 230;

(4) An individual employed by a local, state or federal governmental agency while engaged in the performance of such person's official duties;

(5) An individual serving as an employee of or assistant to a tax preparer or a person exempted under this subsection, in the performance of official duties for such tax preparer or exempt person;

(6) An individual employed, full-time or part-time, to act as a tax preparer solely for the business purposes of such individual's employer;

(7) A person acting as a fiduciary on behalf of an estate; and

(8) An Internal Revenue Services qualified volunteer tax preparer, including, but not limited to, a tax preparer sponsored by the Tax Counseling for the Elderly program or the Volunteer Income Tax Assistance program.

(f) The commissioner shall maintain a public registry containing the names and principal business address of each person holding a permit pursuant to this section.

(g) The commissioner shall keep confidential any personal financial information gathered pursuant to an investigation of any alleged violation of sections 12-790a to 12-790c, inclusive, unless disclosure is (1) considered necessary for the investigation or prosecution of an alleged violation of this section or any regulation or order adopted thereunder, or (2) otherwise expressly authorized under the provisions of federal or state law. For purposes of this subsection, “personal financial information” includes, but is not limited to, returns and return information, as defined under federal and state law.

(P.A. 17-147, S. 16; P.A. 19-186, S. 7.)

History: P.A. 17-147 effective October 1, 2018; P.A. 19-186 amended Subsec. (b)(2) by adding “for a tax preparer,” and replacing “2020” with “2022” in Subpara. (D), amended Subsec. (d)(3) by adding “before its expiration” re reactivation of inactive permit, and amended Subsec. (e)(8) by adding “volunteer” re qualified tax preparer, effective July 8, 2019.

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Sec. 12-790b. Written disclosure by tax preparer prior to providing tax preparation services. Prior to providing tax preparation services, a tax preparer shall provide to any person requesting such services a written disclosure that includes:

(1) The tax preparer's name, principal business address and primary business telephone number;

(2) An estimate of the total charge for completion of all requested tax preparation services; and

(3) A warranty that the tax preparer shall, by encryption or other means, provide for the secure storage and transmission of a taxpayer's personal and tax record information.

(P.A. 17-147, S. 17.)

History: P.A. 17-147 effective October 1, 2018.

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Sec. 12-790c. Denial, suspension or revocation of permit. Hearing. (a)(1) No tax preparer or facilitator shall do or commit any of the following acts or omissions, and the commissioner may deny the issuance of an initial or a renewal permit and may suspend or revoke any such permit for the following acts or omissions or for a violation of any provision of section 12-790a or 12-790b:

(A) Engage in a criminal act resulting in conviction of the tax preparer or facilitator or in unprofessional conduct resulting in final disciplinary action by the federal government, any state or jurisdiction of the United States, any other governmental agency or a professional licensing board or similar entity, provided such act or conduct is substantially related to qualification as a tax preparer or facilitator;

(B) Procure or attempt to procure a permit under section 12-790a by material misrepresentation or fraud; or

(2) The commissioner may discipline a tax preparer or facilitator by (A) issuing a written warning, (B) suspending the tax preparer's or facilitator's permit for a period not to exceed one year, or (C) revoking such permit.

(b) (1) The commissioner may issue a written order notifying a tax preparer or facilitator of the suspension or revocation of such tax preparer's or facilitator's permit for good cause shown. Such notice shall include the right of the tax preparer or facilitator to request, in writing, a hearing before the commissioner, provided such request is received by the commissioner not later than thirty days after the date of such notice.

(2) If a hearing is timely requested, the commissioner shall, not later than thirty days after the receipt of the request, convene such hearing as a contested case in accordance with the provisions of chapter 54. Not later than sixty days after the receipt of the request, the commissioner shall issue a final decision vacating, modifying or affirming the commissioner's order. Any person aggrieved by such final decision may appeal such decision in accordance with the provisions of section 4-183.

(c) Nothing in sections 12-790 to 12-790c, inclusive, shall be construed to prevent the state from pursuing any other remedy available under law for actions taken by a tax preparer or facilitator.

(P.A. 17-147, S. 18; P.A. 18-26, S. 28.)

History: P.A. 17-147 effective October 1, 2018; P.A. 18-26 amended Subsec. (a)(1) to replace “sections 12-790a and 12-790b” with “section 12-790a or 12-790b”.

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Secs. 12-791 to 12-799. Reserved for future use.

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