Controlling Interest Transfer Tax Information
- Who Must File a Controlling Interest Transfer Tax Return
- Tax Rate
- Exempt Transfers
- When to File
- How to File
- Definitions
- Interest and Penalties
Who Must File a Controlling Interest Transfer Tax Return
A taxpayer must file Form AU-330, Connecticut Controlling Interest Transfer Tax Return, to report the controlling interest transfer tax. The controlling interest transfer tax is a tax imposed on the sale or transfer for consideration of a controlling interest in an entity, whether it is a corporation, partnership, association, trust, limited liability company, or other organization, where the entity owns, directly or indirectly, an interest in Connecticut real property which has a present and true value not less than $2,000. For more information regarding the tax, see Special Notice 2003(11), 2003 Legislation Affecting the Controlling Interest Transfer Taxes.
The controlling interest transfer tax is imposed on the person selling or transferring the controlling interest at the rate of 1.11% of the present true and actual value of the interest in real property possessed, directly or indirectly, by the entity. An additional controlling interest transfer tax is imposed under Conn. Gen. Stat. § 12-638l if a controlling interest in an entity which possesses an interest in land that has been classified as farm land, forest land, maritime heritage land, or open space land is transferred within a period of ten years.
The additional tax rate varies between 10% and 1% of the present true and actual value of the land depending on the year in which the controlling interest was transferred.
- In the case of farm land and forest land, the additional tax is applied if a controlling interest in the entity which possesses an interest in the land is sold within a period of ten years from the time the owner acquired title to the land or from the time the owner first caused the land to be so classified, whichever is earlier.
- In the case of land which has been classified as open space land or maritime heritage land, the additional tax is applied if a controlling interest in the entity which possesses an interest in the land is sold within a period of ten years from the time the owner first caused the land to be so classified.
Land is considered classified as farm land, forest land, open space land, or maritime heritage land on the first day of the initial assessment year in which the land was so classified by the entity.
The tax does not apply to the transfer of a controlling interest in any entity:
- To the extent the entity owns directly or indirectly, an interest in real property located in an enterprise zone (attach a letter from the economic development officer of the relevant municipality stating that the property is located within the enterprise zone); or
- Where the transfer effectuates a mere change of identity or form of ownership or organization; not a change in beneficial ownership.
Form AU-330 must be filed to claim the exemption.
Form AU-330 must be filed by the transferor on or before the last day of the month following the month during which a controlling interest in an entity was transferred. Where the transfer is made in a series of transactions, Form AU-330 must be filed on or before the last day of the month following the month during which the interest sold or transferred, in the aggregate, first exceeds 50%. Where a group of transferors acting in concert transfers a controlling interest, the group must file one Form AU-330.
File and pay Form AU-330 electronically using myconneCT. For more information visit Filing and Paying Connecticut Taxes Electronically.
Click here to File and Pay Now on myconneCT!
Controlling interest means, in the case of a corporation, more than 50% of the total combined voting power of all classes of stock in the corporation, or in the case of a noncorporate entity (such as a partnership, limited liability company, or trust), more than 50% of the capital, profits, or beneficial interest in the noncorporate entity. A transfer of a controlling interest may be made all at once or in a series of transfers. Where transfers would constitute a transfer of a controlling interest had they occurred all at one time, they will be treated as a transfer of a controlling interest. Transactions occurring within six months of each other are presumed, unless shown to the contrary (to the satisfaction of DRS), to be acting in concert.
Real property means any interest, legal or equitable, present or future, vested or contingent, in real property, which interest endures for a period of time, the termination of which is not fixed or ascertained by a specific number of years, such as an estate in fee simple or a life estate, provided a conveyance of the interest would be considered a conveyance of real property for purposes of the real estate conveyance taxes imposed under Chapter 223 of the Connecticut General Statutes.
Present true and actual value of real property is its fair market value, unreduced by the amount of any mortgage, lien, or other encumbrance, as of the time of the transfer of a controlling interest. The present true and actual value of Connecticut real property directly owned by the entity is 100% of the property’s fair market value. The present true and actual value of Connecticut real property indirectly owned by the entity is the entity’s applicable ownership percentage of the corporate or noncorporate organization that directly owns the real property multiplied by the property’s fair market value.
Farm land means land classified as such under Conn. Gen. Stat. § 12-107c.
Forest land means land classified as such under Conn. Gen. Stat. § 12-107d.
Maritime heritage land means land classified as such under Conn. Gen. Stat. § 12-107g.
Open space land means land classified as such under Conn. Gen. Stat. § 12-107e.
Partnership includes a limited partnership or a limited liability partnership.
Corporation means a C corporation, an S corporation, or any association taxable as a corporation for federal income tax purposes.
To be considered timely, an electronic funds transfer (EFT) payment must be initiated on or before the original due date of the return.
Interest
Interest is computed at 1% per month or fraction of a month on the underpayment of tax from the original due date of the return through the date of payment.
Penalty
If a taxpayer fails to remit payment electronically, DRS will impose a non-compliance penalty of 10% of the amount you were required to pay electronically.
Page Last Reviewed or Updated: 16-Dec-2024