SN 96(7)

1996 Legislative Changes Affecting the Utility Companies Gross Earnings Tax

This publication has been modified and superseded in part by AN 96(10)

PURPOSE: The purpose of this Special Notice is to describe the changes that were made to the utility companies gross earnings tax during the 1996 session of the Connecticut General Assembly.

STATUTORY AUTHORITY: Conn. Gen. Stat. §12-264, as amended by 1996 Conn. Pub. Acts 205, §1, as amended by 1995 Conn. Pub. Acts 114, §§2 and 3, 1995 Conn. Pub. Acts 172, §§1 and 2, and 1995 Conn. Pub. Acts 359, §§14 and 15; Conn. Gen. Stat. §12-265, as amended by 1996 Conn. Pub. Acts 205, §2, 1995 Conn. Pub. Acts 114, §4 and 1995 Conn. Pub. Acts 359, §16.

EFFECTIVE DATE: Effective as noted herein.

REPEAL OF THE GROSS EARNINGS TAX ON COMPANIES OPERATING A SYSTEM OF WATER WORKS FOR SELLING AND DISTRIBUTING WATER FOR DOMESTIC OR POWER PURPOSES: 1994 Conn. Pub. Acts 4, §12 (May Spec. Sess.) provides for the repeal of the tax that is imposed by Conn. Gen. Stat. §12-264 on the gross earnings, from the sale and distribution of water, of companies operating a system of water works for selling and distributing water for domestic or power purposes. The repeal is effective with respect to gross earnings from the sale and distribution of water on or after July 1, 1996.

PHASE-OUT OF THE GROSS EARNINGS TAX ON COMPANIES, THE PRINCIPAL BUSINESS OF WHICH IS THE SALE, FURNISHING OR DISTRIBUTION OF STEAM: 1996 Conn. Pub. Acts 205, §2 provides for the elimination of the gross earnings tax imposed by Conn. Gen. Stat. §12-265 on the "sale, furnishing or distribution of steam" by the year 2000.

Under the terms of 1996 Conn. Pub. Acts 205, §2, the tax imposed on the "sale, furnishing or distribution of steam" shall be reduced as follows: 4% for calendar quarters commencing on or after July 1, 1996, and prior to July 1, 1997; 3% for calendar quarters commencing on or after July 1, 1997, and prior to July 1, 1998; 2% for calendar quarters commencing on or after July 1, 1998, and prior to July 1, 1999; and 1% for calendar quarters commencing on or after July 1, 1999, and prior to July 1, 2000. The tax shall not apply for calendar quarters commencing on or after July 1, 2000.

Schedule of Rate Reduction

Date               Rate

July 1, 1996      4%

July 1, 1997      3%

July 1, 1998      2%

July 1, 1999      1%

July 1, 2000      0%

EFFECT OF THIS DOCUMENT: A Special Notice is a document that announces a new policy or practice in response to changes in State or federal laws or regulations or to judicial decisions. A Special Notice indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.

EFFECT ON OTHER DOCUMENTS: None affected. 

SN 96(7)
Utility companies gross earnings tax
Issued: 7/5/96