STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES
2000-01
ANNUAL REPORT
| John G. Rowland Governor |
Gene Gavin Commissioner |
Table of Contents
A Message from the Commissioner
Table of Contents
Directory
Overview of the Department
Division Functions and Activities
Locations
The Year In Review
2000-01 Highlights
Legislative Summary - 2001 General Assembly Regular and June Special Sessions
Connecticut Superior Court (Tax Session) Cases
Connecticut’s Taxes
State Revenue Sources
Income Tax
Sales and Use Taxes
Corporation Business Tax and Credits
Admissions, Dues & Cabaret Tax
Alcoholic Beverages Tax
Cigarette Tax
Controlled Substances Tax
Controlling Interest Transfer Tax
Dry Cleaning Surcharge
Gift Tax
Insurance Premiums Tax
Motor Carrier Road Tax
Motor Vehicle Fuels Tax
Motor Vehicle Rental Surcharge
Occupational Tax
Petroleum Companies Gross Earnings Tax
Public Service Companies Tax
Real Estate Conveyance Tax
Repealed Taxes
Seed Oyster Tax
Solid Waste Tax
Succession Tax
Tobacco Products Tax
Tourism Account Surcharge
Unrelated Business Taxable Income Tax
Tables, Charts & Graphs
Tourism Districts
Penalty and Interest Receipts
Tax Refunds
Real Estate Conveyance Tax By Town
Comparative Summary of Retail Sales and Tax Receipts by Town
Nationwide Comparison of Tax Rates
A Message from the Commissioner
T he Department of Revenue Services (DRS) plays a critical role in supporting the dynamic economic success of the State of Connecticut by diligently upholding tax laws fairly and equitably for all taxpayers. DRS earned an outstanding reputation within our own state government, among our peers in other states, and with tax practitioners across the country for our thoughtful development of tax policy, our focus on increasing voluntary compliance, and our commitment to maintaining user-friendly reporting procedures. DRS embraced electronic technologies like the Internet and computer integrated telephony to advance all aspects of tax administration for Connecticut. DRS employees used their talents and expertise to conceptualize, develop, and implement new technology-based programs at minimal cost to the state, resulting in benefits for taxpayers and efficient, cost-effective internal work processes. Two of these programs are:
- Fast-File. Business taxpayers are praising DRS for launching this new electronic program. Conceived and developed by the Operations Division, Fast-File enables Connecticut business taxpayers to file and pay certain taxes by Internet or telephone. Taxpayers appreciate the ease and efficiency of the program, its accuracy, and its security features.
- The Business Users Group. Ad-hoc committees of representatives from business, professional organizations, and DRS have been a vital component of the Department’s ability to improve state business tax policy for the past seven years. In that same philosophy, the Business Users Group was formed this year to address the Carpenter Technology case and its potential impact on state revenues. Providing a forum to discuss the effect of tax policy on business and the state is a proven tool for reaching compromises acceptable to all parties involved.
DRS employees take exceptional pride in embracing the best practices in all aspects of our business. Together, we reaffirm our commitment to provide Connecticut taxpayers with the highest level of customer service possible.
Sincerely,
Gene Gavin
Commissioner of Revenue Services
Commissioner
Gene Gavin
(860) 297-4900
Executive Secretary
Patricia A. Hicks
|
Chief of Staff |
DEPUTY COMMISSIONER |
General Counsel |
|
Administration Division |
|
Legal Division |
|
Appellate Division |
|
Operations Division |
|
Audit Division |
|
Research Unit |
|
Communications Office |
|
Systems & Internal Control |
|
Diversity & Equity |
|
Taxpayer Advocate Office |
|
Information Services Division |
|
Taxpayer Services Division |
Overview of the Department
The Mission of the
Connecticut Department of Revenue Services
is to administer the tax laws of the State of Connecticut
and collect the tax revenues
in the most cost effective manner;
achieve the highest level of voluntary compliance
through accurate, efficient and courteous customer service;
and perform in a manner
which instills public confidence in the
integrity and fairness of the state’s tax programs.
Divisional Activities and Functions
Administration Division
The Administrative Services staff prepares and administers the Agency budget, controls and monitors expenses, and assists top management in strategic planning. It oversees all procurement, printing, budgetary, accounting, and facilities management for the Department. The Education Unit establishes, implements and evaluates personnel training and educational programs in support of management effectiveness, technical expertise and personal development of DRS employees. The Human Resource and Payroll Units administer the rules, regulations, contracts and directives of state employment and recruit staff for the Department.
Appellate Division
The Appellate Division receives, acknowledges and reviews all taxpayer appeals. The Division's tax appellate officers and specialists conduct informal hearings, render final determinations, and negotiate settlement of tax controversies. Appellate Division personnel also provide litigation support to the Office of the Attorney General on cases appealed from the Department to Superior Court.
During Fiscal Year 2000-2001, the Appellate Division resolved 1,039 cases with settled tax values of $52 million. Additionally, another 34 determinations were issued by the Appellate Division from which taxpayers took appeals to the Superior Court. This equates to an appeal ratio of 3 percent.
Audit Division
The Audit Division ensures that tax returns filed with DRS are reported accurately and are in compliance with Connecticut tax laws and regulations. Using various audit selection review tools, suspected noncompliant tax returns are selected for examination. Audit Division staff perform field and office audit examinations of selected tax returns to determine the extent of inaccuracies, assess underreported amounts, verify the extent of credits or refunds, and educate those taxpayers about improvements in their levels of voluntary compliance.
During this fiscal year, the Audit Division conducted 106,729 field and office audits and generated $353.3 million in assessments, a 15 percent increase from the prior year. This increase can be attributed, in part, to our continuing quality improvement endeavors such as the adoption of the Malcolm Baldrige Quality Management Principles to maintain and continuously improve customer service excellence throughout the Division.
The Division enhances voluntary compliance by its use of the federally-funded ExSTARS/ExTOLE initiative. This program is designed to track the movement of motor fuels from one terminal to another throughout the United States. Electronic data capture of critical information about the shipment, shipper, carrier, and destination allow tracking of fuels from terminal to terminal across the United States.
The Audit Division was awarded the coveted Innovation Award from the Office of Policy and Management for developing and implementing the Mobile Audit Referral System (MARS). The system gives field revenue examiners quick access to information on the registration status of a business from any location. This innovation saves time for examiners, and enhances the Department compliance programs.
Collections & Enforcement
The Collection & Enforcement (C&E) Division is responsible for collecting overdue taxes and enforcing state tax statutes and regulations for those who fail to voluntarily comply. Through some innovative collection, compliance, and enforcement processes, C&E Division employees resolve and secure payment of taxes from taxpayers who unintentionally fail to file or pay, and those who refuse to voluntarily comply.
For Fiscal Year 2000-2001, the C&E Division closed 106,729 cases and collected $124.4 million in overdue tax revenue. The collection portfolio turnover rate was 66 percent.
Achievements throughout the year include the C&E Division’s Special Investigations Section increasing the number of cases cleared through criminal arrest, and the amount of restitution recovered through these investigations. New records were set in both areas. Arrests increased 8.4 percent during the last year, to 142. Revenue recovered increased 45.1 percent, to a record $2 million.
To increase efficiency and enhance compliance, the C&E Division’s Bankruptcy Section is now receiving bankruptcy notices by email from 43 Bankruptcy District Courts. These include new bankruptcy petitions, discharges, dismissals and recovery of assets. Notices are received within one to two days from the date the court uploads the notices to the Bankruptcy Noticing Center. This expedites both receipt of the notice and assignment to Bankruptcy Unit staff for processing.
To help enhance our public service initiatives, the C&E Division mailed customer service surveys to randomly selected taxpayers who had experienced our compliance activities. Of those taxpayers who responded, the comments were overwhelmingly positive.
Communications Office
The DRS Communications Office supports the Department’s mission to enhance voluntary compliance by supplying timely and accurate information to taxpayers, tax professionals, state agencies, and others. A key responsibility is conveying the Agency’s commitment to excellent customer service and to fairness and equity for all taxpayers.
The comprehensive communications program includes the development, coordination, production and distribution of a wide range of media. Among these are executive communications, media releases, reports, newsletters, brochures, and promotions for the filing season and special programs that occur throughout the year. The office also coordinates seminar presentations, interviews, and public appearances by the commissioner and executive staff, providing audiovisual support and collateral materials.
Diversity & Equity
The mission of the Office of Diversity and Equity is to encourage the full and fair utilization of its human resources by supporting the ongoing improvement of affirmative action, equal employment, diversity, and employee development programs to ensure all employees’ talents and differences are valued.
During Fiscal Year 2000-2001, DRS reached significant milestones in its diversity and equity goals. Eight graduates of our Upward Mobility program were promoted to their target classes. Eighty-two percent of new DRS hires met our affirmative action goal criteria. Seventy percent of our promotions met our hiring goal criteria.
In addition, the Diversity Training mandated by statute was completed earlier than the December 31, 2001, deadline.
Information Services Division
The Information Services Division is responsible for the analysis, design, development, maintenance, and integrity of all DRS tax information systems. The Division provides development support for all applications in response to legislative mandates and other Agency initiatives. The Division also provides technical support for all computer operations and desktop users within DRS.
The Division continues to support expansion of Telefile, Electronic Filing, including the expansion for certain business taxpayers who now use Fast-File, and payment programs for individual income tax filers. In addition, the Division began moving its email capabilities from the state's Internet system to an internal one (Microsoft Exchange) for improved performance and security. A new digital printing system was also installed to enhance the efficiency and flexibility of the Department’s high volume printing needs.
The Integrated Tax Administration System project was renewed in earnest this year. A Request For Proposal was issued in October 2000, and vendor evaluation and selection was completed in May 2001.
Legal Division
The Legal Division provides legal interpretations of Connecticut tax statutes and court rulings to the Commissioner, other divisions within DRS, taxpayers, and practitioners.
Additionally, the Legal Division is responsible for coordinating the litigation of tax cases with the Office of the Attorney General. With respect to contested succession tax matters, the Division’s legal staff represents the Commissioner before the Probate Court and litigates appeals from the Probate Court to the Superior Court and Appellate Court levels.
The Legal Division drafts proposed legislation and regulations for submission to the legislature. It also reviews tax documents generated by DRS to ensure their compliance with relevant tax statutes.
Operations
The Operations Division is responsible for processing all state tax returns and corresponding documents, maintaining the internal accounting system and depositing all state tax revenue collected in a timely manner. In addition, the Operations Division administers programs designed to ensure accuracy and validity of all taxpayer information.
During Fiscal Year 2000-2001, the Operations Division processed 5.24 million returns; 450,336 electronic fund transfers and deposited nearly $10 billion. The Division also played an important role in implementing the Fast-File Program.
DRS continues to reduce the number of taxpayers filing paper returns by encouraging alternative filing methods like the Electronic Filing Program (ELF), and Telefile. Participation in ELF increased by 36 percent to include nearly 284,000 taxpayers. In addition, the Telefile program increased by 16 percent with nearly 173,000 taxpayers participating. The use of direct deposit and direct tax payments also increased. Lastly, an increasing number of taxpayers chose to pay their taxes by credit card, resulting in $2.8 million in tax revenues collected by credit card transactions.
The Operations Division continues to issue income tax refund checks at record speed. Nearly one million refunds were issued this year, one third of which were mailed less than five days from receipt of the return.
Research Unit
The Research Unit analyzes and prepares reports of statistics generated from data DRS collected during taxpayer registration and filing. The Unit prepares and publishes the Annual Report and other special reports resulting from studies of topics pertinent to state tax policies. It also prepares and distributes statistical overviews of income tax and sales tax revenues collected.
The Unit acts as a liaison to the Connecticut General Assembly and is responsible for attaining passage of the Agency’s legislative package, as well as working with various committees of cognizance to facilitate other legislative initiatives. The Unit coordinates disbursement of funds to the Connecticut Tourism districts, oversees the Neighborhood Assistance Act Tax Credit Program, and responds to information requests from other states, as well as Connecticut’s legislative and executive branches of government.
Systems & Internal Control
The Systems and Internal Control Unit provides management with an independent view of operational examinations and serves as the DRS liaison to the state’s Auditors of Public Accounts, the Internal Revenue Service, and other external agencies. Additionally, the Unit helps all Agency levels monitor, evaluate, and improve systems, internal controls, and policies and procedures. This includes recommending standards for maintaining confidentiality and security, and reviewing provisions to safeguard DRS assets.
Taxpayer Advocate Office
DRS has an established Taxpayer Advocacy program available to all taxpayers. The Taxpayer Advocate assists those taxpayers not in litigation or under enforcement action who have been unable to resolve their problems with DRS through normal channels.
Taxpayer Services Division
The Taxpayer Services Division delivers Connecticut tax information to taxpayers through educational programs and direct assistance activities. During the 2000-2001 fiscal year, the Division responded to 207,162 telephone inquiries; provided 1,824 replies to taxpayer letters; 7,661 replies to taxpayer email inquiries; and assisted 20,686 walk-in taxpayers at its Hartford and regional offices. To meet the needs of a growing number of state taxpayers, Spanish language phone assistance was provided to 1,000 taxpayers during the income tax filing season. A Spanish version of answers to income tax questions also was posted on the DRS Web Site.
DRS expanded free electronic filing services to all its walk-in locations. Taxpayers could electronically file both federal and state tax returns at the walk-in offices. The program supports DRS goals to increase accuracy of tax reporting and reduce the cost of processing and storing paper tax returns. A total of 2,082 federal and state returns were filed electronically at DRS offices during 2001, an increase of 61.6 percent.
Tax publications, information, and forms are available electronically on the DRS Web Site. More than 400,000 people visited the DRS Web Site in fiscal year 2001. DRS-E-NEWS, our electronic newsletter, delivered timely notification about new tax forms, publications, and DRS news at no cost to subscribers in state and throughout the United States.
In addition, DRS presented its Fourth Annual Connecticut Tax Seminar, co-sponsored by the Institute for Professionals in Taxation. The seminar provides updates on new legislation, changes in DRS policies and procedures, and discussion of current tax issues. DRS also offered 20 evening workshops statewide to educate new business owners on state tax laws and filing requirements.
DRS provides automated tax information 24 hours-a-day by telephone at 1-800-382-9463 (toll-free in-state) or 860-297-5962. Services for the hearing impaired are available through the Telecommunications Device for the Deaf at 860-297-4911. TAX-FAX, at 860-297-5698, allows callers to select any form and have it faxed to them. The DRS Web Site on the Internet, www.drs.state.ct.us, has up to the minute tax information. Forms and instructions can be downloaded, previewed, and printed at no cost.
Tax Products Group
The Tax Products Group (TPG) coordinates the development, production, testing and distribution of written forms, publications and other informational and technical documents for DRS. The Group seeks to create clear, simple, and accurate tax products that facilitate voluntary compliance. Tax products include special notices, informational publications, policy statements, announcements, tax returns and instructions.
The TPG has developed style standards to maintain consistency of documents, and strives to put tax law into plain language whenever possible. A distribution plan is developed for each tax product to ensure the right information reaches the right audience at the right time, and that the information is concise and easy to understand.
Department of Revenue Services Locations
Main Office
25 Sigourney Street
Hartford, Connecticut 06106
Phone: (860) 297-5962
1-800-382-9463 (In-state only)
TDD/TT (860) 297-4911
www.drs.state.ct.us
Field Offices
| Bridgeport Regional Office 10 Middle Street Bridgeport, CT 06601 Phone: (860) 579-6251 |
New Haven Regional Office 3074 Whitney Avenue, Bldg. #2 Hamden, Connecticut 06517 Phone: (203) 287-8243 |
| Norwich Regional Office 2 Cliff Street Norwich, Connecticut 06360 Phone: (860) 889-2669 |
Waterbury Regional Office 55 West Main Street, Suite 100 Waterbury, Connecticut 06702 Phone: (203) 805-6789 |
The Year in Review
CONNECTICUT DEPARTMENT OF REVENUE SERVICES
Office of Policy and Management
2000-2001 Innovation Award
presented to the
Audit Division
for developing and implementing
The Mobile Audit Retrieval System
2000-2001 HIGHLIGHTS
During the 2000-2001 fiscal year, DRS continued to develop new ways to streamline tax reporting, payment, and refunds, while increasing voluntary compliance and establishing more cost-effective work processes. The Agency implemented significant new programs to make paying Connecticut taxes more user-friendly, while increasing accuracy and contributing to overall savings for taxpayers.
Managing more than 40 tax categories, DRS was responsible for collection and deposit of nearly $10 billion in tax revenues. More than 5.4 million returns were created, distributed and processed. DRS employees continued to fulfill their mandate to provide excellent customer service by responding promptly and accurately to taxpayer inquiries, and developing and distributing information to enhance understanding of state tax laws.
OPM INNOVATION AWARD
The Audit Division was awarded the coveted Innovation Award from the state Office of Policy and Management for development and implementation of the Mobile Audit Referral System (MARS). This system allows field revenue examiners quick access to information about a business taxpayer’s registration status from any location. MARS has saved time for Audit Division examiners, while enhancing compliance with DRS programs. The Department anticipates extending the MARS program to other compliance activities in the future.
2001 DIGITAL SURVEY OF THE STATES: Revenue and Taxation
The third installment of the 2001 Digital Survey of the States was released in August. In the Revenue and Training category, Connecticut received the highest possible scores in three of four survey focus areas. DRS electronic filing program, which allows taxpayers to electronically file both federal and Connecticut income tax returns, was selected as a “Best Breed” Practice.
LEADERSHIP IN TAX ADMINISTRATION
Commissioner Gene Gavin became president of the North Eastern States Tax Officials Association (NESTOA) for a one-year term. Members are tax officials from the six New England states, Delaware, Maryland, New Jersey, New York, New York City, Pennsylvania, Philadelphia and the District of Columbia. During the year, several meetings with top officials from these jurisdictions were conducted to discuss and attempt to resolve certain tax policy issues. Among the topics given priority during this term were: information sharing on suspicious corporate taxpayers and disparities between affiliate states’ telecommuting tax policies. Progress was made toward establishing consistent tax policy and better cooperation between jurisdictions to ensure taxpayers of fair tax treatment, while protecting tax revenues due each jurisdiction.
The Agency’s established reputation for successful innovations in tax administration, and an outstanding record of top performance in tax compliance initiatives continued to spread throughout the world. This year, DRS shared its expertise with delegations from China and Russia. DRS also gave presentations at meetings of the Federation of Tax Administrators (FTA) on a wide spectrum of successful processes and compliance programs the Department has developed.
DRS continues to be the key source of expertise for other states considering using the Internet for both compliance and taxpayer assistance. Connecticut’s successful “Internet Top 100 Tax Delinquents” is the model many states have followed in anticipation of similar revenue benefits. Since January 1996, the “Top 100 List” has generated $156 million dollars in revenue due, but not collected from delinquent taxpayers.
STUDIES IN TAX POLICY
Commissioner Gene Gavin initiated an in-depth study of the tax treatment of income earned while telecommuting. The disparities in adjacent states’ tax policies regarding how telecommuters’ earned income is sourced for income tax purposes are of great concern to tax administrators and taxpayers alike. Establishing fair and equitable tax treatment is a priority in light of today’s increased emphasis on reducing business costs for physical office space, reducing traffic congestion and pollution, addressing quality of life concerns, and increasing the pool of qualified job candidates. DRS expects to publish the results of its findings at the end of 2001.
FAST-FILE PROGRAM
Business taxpayers applauded the launch of the Connecticut Fast-File program, which enables them to report and pay certain taxes by telephone or Internet. The taxes currently included in the program are sales and use taxes (including business use tax), room occupancy tax, Connecticut income tax withholding, and the quarterly reconciliation of income tax withheld. Using either telephone or Internet to file is fast, easy and secure; but above all, it is accurate. The data provided by the taxpayer is automatically checked and corrected by the Fast-File system. The taxpayer can authorize tax payments from a bank account at any time, and specify any future date for fund transfers, up to the statutory due date. DRS anticipates expanding Fast-File to other tax types.
NEW COMPLIANCE INITIATIVES
The Audit Division implemented several new programs aimed at improving voluntary compliance while educating the taxpaying public and businesses responsible for collecting and remitting taxes. One program implemented involved increasing compliance in the retail liquor industry by restaurants, bars and package stores. All Connecticut wholesale liquor distributors are now required to submit their Connecticut customer sales data to DRS in an approved digital format. This new computerized audit program allows examiners to quickly compare distributor sales to a retail business with the reported gross receipts on the sales tax return of that business. This is expected to result in more effective selection of accounts to examine, with improved audit assessment accuracy, and increased overall compliance.
The ExSTARS/ExTOLE program is a federally funded initiative to improve compliance in the motor fuel transport industry. The movement of motor fuel shipments from terminal to terminal can now be tracked effectively. Electronic data capture of critical information about a shipment, the shipper, the destination and the carrier will ensure that appropriate taxes are reported and remitted to the proper tax jurisdictions.
SPANISH LANGUAGE ASSISTANCE
Recognizing Connecticut’s growing Spanish-speaking population, the Taxpayer Services Division formalized its Spanish phone assistance program for the income tax filing season. Piloted in the previous two filing seasons, nearly 1,000 callers used the Spanish language service in 2001. Employees throughout DRS who are fluent in Spanish and have income tax expertise make the program possible by volunteering their time. The Taxpayer Services Division also posted a Spanish language “Frequently Asked Questions” page on the DRS Web Site. As with the telephone assistance, this was developed at no cost to DRS by staff proficient in the language.
INTERAGENCY PROGRAMS
The partnership between DRS and the Connecticut Department of Mental Health and Addictive Services (DMHAS) to curb underage smoking continues. DMHAS refers violators of the Connecticut statutes prohibiting the sale of cigarettes to minors to the DRS Collection & Enforcement (C & E) Division. C & E personnel established a compliance protocol that includes sending warning letters to violators of the laws, conducting hearings on compliance, assessing and collecting fines, and revoking sales permits for repeat offenders. This year they held 307 hearings and collected $69,000 in fines related to violations of the cigarette sales to minors laws.
TECHNOLOGY ADVANCES
DRS continues to embrace new technology to fulfill the performance and organizational goals of its business strategic plan. DRS worked with the Department of Information Technology (DOIT), the Office of Policy and Management (OPM), and other expert consultants, to develop a Request for Proposal for outside vendors to begin a key phase of the Integrated Tax Administration System (ITAS) project. By the end of the fiscal year, the proposals received were reviewed and a potential vendor was selected.
When the multi-phase ITAS project is complete, it will provide the technological backbone for multi-directional interaction between internal and external data. In addition to hardware and software acquisitions, the project includes extensive training for employees. DRS will be able to use a case management approach to tax administration to benefit customers and provide streamlined internal processes.
DIVERSITY AND EQUITY
DRS outpaced other state agencies in its progress toward increasing respect and understanding among our diverse workforce, and creating opportunities for employees to reach their career goals. The accomplishments during this fiscal year include:
· Eight graduates of our Upward Mobility program were promoted to their target classes.
· Eighty-two percent of new hires met our affirmative action goal criteria.
· Seventy percent of promotions met our goal criteria.
· The Diversity Training mandated by Connecticut statute was completed before the December 31, 2001 deadline.
LEGISLATIVE SUMMARY - 2001 GENERAL ASSEMBLY
REGULAR AND JUNE SPECIAL SESSIONS
Alcoholic Beverages Tax
Public Act 01-6, June Special Session (J.S.S.)
States that an individual need not be physically present at the point of purchase of alcoholic beverages to import such beverages so long as they comply with the provisions of Conn. Gen. Stat. §12-436(b)(2). Effective June 6, 2001.
Cigarette Tax
Public Act 01-2
Permits the Department to disclose the name of each licensed cigarette dealer and the location of the premises covered by the dealer’s license.
Public Act 01-6, J.S.S.
Makes various changes to cigarette tax statutes including:
-
Clarifies the definition of "stamp" to include heat-applied decals;
-
Reorganizes and reletters definitional statutes;
-
Amends the definition of “cigarette” to include “roll-your-own tobacco”. Effective January 1, 2002;
-
Allows Commissioner to fine dealers or distributors in the amounts of $50, $250 and $500 for first, second and third violations, respectively, of the law prohibiting the sale of cigarettes other than in unopened packages of twenty or more cigarettes; and
-
Provides for the possible suspension or revocation of licenses. Effective July 1, 2001.
Corporation Business Tax
Public Act 01-6, J.S.S.
Makes various changes to the corporation business tax, including:
-
Amends the exchange of Research & Development tax credits to change certain references contained in the statute from “cash payment” and “exchange” to “credit refund” for budgetary purposes. Also, provides that this credit shall not be subject to interest on refunds under Conn. Gen. Stat. §12-227. Effective July 1, 2001;
-
Establishes a time frame for petitions under Conn. Gen. Stat. §12-218b for alternate methods of apportionment. Effective for income years commencing on or after January 1, 2001, with respect to petitions filed on or after October 1, 2001;
-
Changes the due date of the corporation business tax return to the first day of the month following the federal due date. Effective for income years commencing on or after January 1, 2001;
-
Amends Conn. Gen. Stat. §38a-88a to provide that no corporation business tax credit shall be granted for investments made in an insurance business through an insurance reinvestment fund after December 31, 2015;
-
Amends insurance reinvestment fund statutes to clarify that bankruptcy proceedings can include reorganization and liquidation, as well as dissolution, and that the credit will be allowed under both circumstances. Effective July 1, 2001; and
-
Modifies language in the insurance reinvestment fund statutes to clarify that the recapture of the credit would occur only when there is a reduction in Connecticut employment levels and not when there is a decrease in the percentage of total workforce in Connecticut due to an increase in out-of-state workforce levels. Effective July 1, 2001.
Public Act 01-9, J.S.S.
Modifies the Urban and Industrial Site Investment Fund credit to allow taxpayers investing any amount in eligible environmental remediation and urban site reinvestment projects through a Community Development Entity (CDE) to qualify for state business tax credits. Effective July 2, 2001.
Income Tax
Public Act 01-6, J.S.S.
Makes various changes to the personal income tax:
-
Amends the definition of Connecticut adjusted gross income to reaffirm that the starting point for determining a taxpayer’s Connecticut adjusted gross income is the federal adjusted gross income reported on a taxpayer’s federal return;
-
Makes clear that an individual’s federal adjusted gross income is not to be further modified in determining his or her Connecticut adjusted gross income except as expressly provided in Conn. Gen. Stat. §12-701(a)(20). Effective upon passage and applicable to all open tax periods;
-
Subjects a nonresident’s lottery winnings to the income tax if the proceeds are more than $5,000 in a lottery conducted by the Connecticut Lottery Corporation. In addition, a Connecticut resident is able to claim a Connecticut income tax credit for any income taxes the resident must pay to another state on his out-of-state lottery winnings if the proceeds of another state’s lottery exceed $5,000. Applicable to taxable years commencing on or after January 1, 2001;
-
Amends Conn. Gen. Stat. §38a-88a to provide that no personal income tax credit shall be granted for investments made in an insurance business through an insurance reinvestment fund after December 31, 2015;
-
Clarifies that a resident trust or estate and a part-year resident trust are eligible to claim a credit for income tax paid to a qualifying jurisdiction. Effective July 2, 2001;
-
Amends insurance reinvestment fund statutes to clarify that bankruptcy proceedings can mean reorganization and liquidation as well as dissolution, and that the credit will be allowed under both circumstances. Effective July 1, 2001; and
-
Modifies language in the insurance reinvestment fund statutes to clarify that the recapture of the credit would occur only when there is a reduction in Connecticut employment levels and not when there is a decrease in the percentage of total workforce in Connecticut due to an increase in out-of-state workforce levels. Effective July 1, 2001.
Public Act 01-102
Provides for an offset of any potential personal income tax refunds due a taxpayer in default of a student loan. Effective October 1, 2001.
Insurance Premiums Tax
Public Act 01-30
Exempts new or renewal contracts or policies written to provide health care coverage to employees of a Connecticut municipality under a plan procured pursuant to Conn. Gen. Stat. §5-259(i), from net direct subscriber charges of health care centers. Effective July 1, 2001.
Public Act 01-6, J.S.S.
This act makes various changes to the insurance premiums tax:
-
Increases the HUSKY credit against the health care center tax from $55.00 to $73.50 per person based upon a monthly average of persons that are provided health care coverage by a health care center under the HUSKY Plan. Effective for calendar years commencing on or after January 1, 2001;
-
Amends the Connecticut Insurance Guaranty Association (CIGA) credit, and Connecticut Health and Life Insurance Guaranty Association (CHLIGA) credit, to require the Association to promptly notify the DRS of the name and address of the insurers to which refunds of guaranty assessments have been refunded;
-
Allows insurance companies 45 days, instead of 30, to pay the Department for any refunds of guaranty association assessments;
-
Modifies the CIGA & CHLIGA credits to require companies to report to the Department each time an assignment of a credit is made;
-
Provides that no insurance premiums tax credit shall be granted for investments made in an insurance business through an insurance reinvestment fund after December 31, 2015;
-
Amends insurance reinvestment fund statutes to clarify that bankruptcy proceedings can mean reorganization and liquidation, as well as dissolution, and that the credit will be allowed under either circumstance. Effective July 1, 2001; and
-
Modifies language in the insurance reinvestment fund statutes to clarify that the recapture of the credit would occur only when there is a reduction in Connecticut employment levels and not when there is a decrease in the percentage of total workforce in Connecticut due to an increase in out-of-state workforce levels. Effective July 1, 2001.
Miscellaneous
Public Act 01-6, J.S.S.
Enables the Commissioner of Revenue Services to make public the names and municipality or postal district of people whose refund checks had been unclaimed. Effective July 1, 2001.
Petroleum Companies Gross Earnings Tax
Public Act 01-6
Lowers the threshold for the imposition of the gross earnings tax on importation of petroleum products for sale, use or consumption in this state from $100,000 to $3,000 worth of product per calendar quarter. Effective October 1, 2001.
Sales and Use Taxes
Public Act 01-6, J.S.S.
This act makes various changes to the sales & use taxes:
-
Excludes from the tax on parking services, space in a railroad parking facility located in a severe non-attainment zone;
-
Temporarily suspends the 5.75% tax imposed on patient care services from July 1, 2001 until July 1, 2003;
-
Caps disbursements to the State’s tourism districts at fiscal year 2000-2001 levels and segregates a portion of room occupancy tax collections to fund tourism-related entities;
-
Exempts materials, tools, fuel, machinery and equipment used, or consumed, by a fuel cell manufacturing facility located within Connecticut. Effective July 1, 2001;
-
Increases the total amount of the use tax credit from $2 million to $4 million for a direct payment permit holder selected by the Commissioner of Higher Education;
-
Adds federally recognized Indian tribes to the sales and use taxes exemption for services rendered between business entities where either entity owns a controlling interest in the other. Effective October 1, 2001;
-
Extends the period during which the hiring contractor can obtain the required guarantee bond certificate from 30 days to 90 days, or in the case of a contract which is to be completed in less than 90 days, the period is extended to 45 days;
-
Expands the sales tax exemption for caskets for burial to include caskets for cremation;
-
Clarifies Connecticut’s mobile telecommunications sourcing rules to conform with recently adopted federal changes; and
-
Allows telecommunications companies that elect to bundle services to only apply sales tax to the portion of the charges that are subject to the tax. Effective for customer bills issued after August 1, 2002.
Succession Tax
Public Act 01-9, J.S.S.
Eliminates the requirement of obtaining the Department’s prior written consent to the transfer, payment or delivery of any property, the transfer of which is subject to the succession tax. Effective July 1, 2001.
Tobacco Products Tax
Public Act 01-6, J.S.S.
-
Adds “snuff tobacco products” to the definition of tobacco products; and
-
Removes “roll-your-own” tobacco from the definition of tobacco products and defines it as tobacco used for making cigarettes, thereby subjecting the tobacco to the cigarette tax