Source: https://portal.ct.gov/DRS/DRS-Reports/Annual-Reports/2001-2002-Annual-Report-Section-5
Timestamp: 2020-02-19 10:53:39
Document Index: 636228773

Matched Legal Cases: ['§12', '§12', '§10', '§12', '§12', '§12', '§10', '§8', '§38', '§12', '§12', '§12', '§12', '§32']

2001-2002 Annual Report Section 5
Current: 2001-2002 Annual Report Section 5
FY 1999-00 $585,261,737
2000-01 546,662,053
2001-02 371,783,975
2002 Conn. Pub. Acts 1 (May 9 Spec. Sess.) requires corporations to compute depreciation on their property without the bonus depreciation deduction recently allowed for federal tax purposes. For property placed in service after September 10, 2001 and before September 11, 2004, an additional 30% first-year deduction is allowed for federal purposes but not for the Connecticut Corporation Business Tax.
Connecticut uses an apportionment method to determine the portion of income taxable in the state. This method isolates what percentage of a corporation's economic activity takes place in Connecticut. Three factors: sales, payroll and property compare Connecticut to the nation to arrive at this percentage. The sales factor is double weighted.
Special single-factor apportionment rules are currently provided for financial service companies. For income years beginning on or after January 1, 2001, manufacturers also apportion income using a single-factor formula. Broadcasters are allowed a single factor formula for income years beginning on or after October 1, 2001.
The second and alternate method corporations must compute their tax under is the Capital Base. The capital base is the total value of the average capital stock, surplus and undivided profits, and surplus reserves, less the average values of deficits and stockholdings in private corporations. Multi-state corporations multiply their capital base by an apportionment fraction.
The capital base is taxed at a rate of 3.1 mils ($0.0031) per dollar. Under the capital base method, a corporation is limited to a maximum tax of $1,000,000. Financial service companies are excluded from the capital base and minimum tax.
The total amount due for income year 2000 combined filers had they filed separate single returns would have been $381.1M. The preference tax due by these filers was $8.0M. The total tax due by combined filers was $186.6M, including the $8.0M in preference tax.
Conn. Gen. Stat. §12-214(2)(J) exempts Subchapter S corporations from the Corporation Business Tax beginning with the 2001 income year.
Connecticut passive investment companies formed by financial service companies to hold and manage loans secured by real property;
Number of Taxpayers Tax Due Before Credits Tax Due After Credits
Net Income 11,271
$ 163,651,069
$142,232,519
Capital Base 5,063 28,085,422
17,371,053
7,491,062
Net Income 8,269 35,591,252
31,412,495
Capital Base 3,664 8,692,654
6,165,766
Minimum Tax 20,645 5,104,766
186,607,274
92,248,091
Total 83,316 $ 435,223,499
$ 301,408,514
The State of Connecticut offers many Corporation Business Tax credits which a corporation may take advantage of to reduce its liability to the state. Effective for income years beginning on or after January 1, 2002, the amount of tax credits allowable cannot exceed 70% of the amount of tax due or reduce the amount of tax to less than $250.
Reference: Conn. Gen. Stat. §12-217i as amended by P.A. 02-4 (May 9 Spec. Sess.)
The Clean Alternative Fuels credit enables a business to claim credits of 10% or 50% of its expenditures on vehicles, equipment and filling stations which enable use of clean alternative fuel. This credit is not available for income years commencing on or after January 1, 2004. Unused credit may be carried forward for three years.
Reference: Conn. Gen. Stat. §10-228b
A corporation business tax credit is available for the donation of new or used computers to a local or regional board of education or a public school. The amount of the credit shall not exceed 50% of the fair market value at the time of donation.
Reference: Conn. Gen. Stat. §12-217bb
Electric suppliers who hire workers displaced by the restructuring of the electric industry may claim a credit of $1,500 for each displaced worker employed at least 6 months.
Reference: Conn. Gen. Stat. §12-217dd
This credit is available in an amount equal to 50% of the use value of the donation of land to be permanently preserved as protected open space. Donations of land must be made to the state, a political subdivision of the state, or a nonprofit land conservation organization and may include any discount in the sales price.
For income years beginning on or after January 1, 2000, unused credit may be carried forward for ten succeeding income years.
This credit is available for monies paid to a revolving loan fund for employer assisted housing. This fund must be established and maintained by the corporation for 5 years and provide revolving loans for housing to its low and moderate income employees. The program is administered by the Connecticut Housing Finance Authority and is capped at $1 million per year. The credit is limited to $100,000 annually per business firm and may be carried back or forward for five years.
The Enterprise Zone or Entertainment District Credit allows a business credit of 50% of its allocable tax for operating a manufacturing facility which meets certain employment criteria and is located within a designated enterprise zone or other area designated as having enterprise zone level benefits. Certification is required from the Department of Economic and Community Development. Corporations may claim this credit for 10 years beginning with the first year following the year of certification.
A credit is allowed to any qualifying corporation created on or after January 1, 1997 which hires at least 150 local employees qualifying under the Job Training Partnership Act to work within a designated Enterprise Zone. This credit is 100% of the corporation's tax liability for it's first three years and 50% of its liability for the next seven.
This credit is available to financial institutions that construct a new facility and create a minimum of 1,200 new jobs. Each company must obtain an eligibility certificate from the Department of Economic and Community Development in order to claim this credit. Credit levels of 30%, 40% or 50% for years one through ten and 25% for years eleven through fifteen are based on the number of qualified employees. This credit may be taken for up to fifteen years.
This credit is based on the amounts paid or incurred for any new tangible personal property that has a class life of more than four years, is not sold or leased within 12 months, and will be held and used in Connecticut for at least five years. Inventory, land, buildings and mobile transportation equipment are not included. The percentage of credit is 5% for income years beginning on or after January 1, 2000. Unused credits may be carried forward for five succeeding income years.
Reference: Conn. Gen. Stat. §12-217y
Reference: Conn. Gen. Stat. §10-320j
The Connecticut Historical Commission may allocate up to $3 million in vouchers for this credit during any fiscal year. Owners of historic homes must incur qualified rehabilitation expenditures that exceed $25,000 in order to qualify. After the work is performed and verified, a tax credit is allowed for 30% of the qualified rehabilitation expenditures. The credit is limited to $30,000 per dwelling. Unused credits may be carried forward for four succeeding income years.
Reference: Conn. Gen. Stat. §8-395 as amended by P.A. 01-8 (June Spec. Sess.)
This tax credit program enables corporations to contribute to housing programs that benefit low and moderate income individuals and families. These programs are sponsored, developed or managed by nonprofit corporations and must be approved by the Connecticut Housing Finance Authority. The credit is the amount of the contribution, not to exceed $75,000 per business. Unused credits may be carried back to the five preceding income years and forward for five succeeding income years.
The Human Capital Investments credit is based on the amounts paid or incurred for various job training and work education programs, child care subsidies to Connecticut employees, day care facility establishment costs and donations to institutions of higher education for improvements to technology. The percentage of credit is 5% of the expenditures in income years beginning on or after January 1, 2000. Unused credits may be carried forward for five succeeding income years.
Reference: Conn. Gen. Stat. §38a-88a as amended by P.A. 01-6 (June Spec. Sess.)
Managers of eligible funds must have registered with the Commissioner of Economic and Community Development by July 1 2000 in order for their investors to be able to claim this credit. No further credits will be allowed for investments in funds created on or after July 1, 2000.
Reference: Conn. Gen. Stat. §12-217o
This credit is based upon the incremental increase in expenditures for machinery and equipment acquired for and installed in Connecticut. The rate of credit is either 5% or 10% depending on the number of full time employees in Connecticut.
Reference: Chapter 228a of the Conn. Gen. Stat.
The program has several statutory limits that must be followed. A business is limited to receiving $75,000 in tax credit annually. A non-profit organization is limited to receiving $150,000 in contributions in the aggregate. Also, businesses' total charitable contributions must equal or exceed its prior year amount. The minimum contribution on which credit can be granted is $250. The program has a $5M cap which if exceeded, results in pro-ration of approved donations.
Reference: Conn. Gen. Stat. §12-217n
The amount allowed as credit increases ratably from 1% of the annual research and development expenses paid or incurred, where such expenses equal $50 million or less, to 6% where expenses exceed $200 million. The 6% credit is extended to qualified small businesses with a gross income that does not exceed $100 million for income years beginning on or after January 1, 2000.
For income years beginning on or after January 1, 2000, qualified small businesses may exchange unused amounts of this credit with the state for a cash payment of 65% of the value of the credit or carry these amounts forward at full value. For income years beginning on and after January 1, 2002, credit refunds are limited to $1.5 million in any one income year. Unused credits may be carried forward until fully taken.
Reference: Conn. Gen. Stat. §12-217j
This is a tax credit based on the incremental increase in expenditures for research and experiments conducted in Connecticut. The amount of the credit equals 20% of the amount spent by the corporation directly on research and experimental expenditures that exceeds the amount spent in the preceding income year. Unused credits may be carried forward for fifteen succeeding income years.
For income years beginning on or after January 1, 2000, qualified small businesses may exchange unused amounts of this credit with the state for a cash payment of 65% of the value of the credit or carry these amounts forward at full value. For income years beginning on and after January 1, 2002, credit refunds are limited to $1.5 million in any one income year.
Reference: Conn. Gen. Stat. §12-217cc
Small businesses with less than $5 million in gross receipts may claim this credit equal to the amount paid to the federal Small Business Administration as a guaranty fee to obtain guaranteed financing during the income year. Unused credits may be carried forward for four succeeding income years.
This is a 50% credit for traffic reduction program expenses related to the attainment of federal Clean Air Act standards. This credit is available for corporations employing 100 or more people located in a severe non-attainment area. The credit cannot exceed $250 per participating employee.
Reference: Conn. Gen. Stat. §32-9t
The table below shows the number of corporation tax credits claimed and the amounts taken for each of the corporation credit programs utilized by businesses. The figures represent credit claimed on 2000 returns and reflect any credits carried forward from prior years and used in 2000.
Credit Claimed on 2000 Corporation Returns
Apprenticeship Training 65 435,903
Child Day Care 14 23,540
Clean Alternative Fuels 9
Electronic Data Processing 6,777 26,488,367
Fixed Capital 7,114 50,790,548
Hiring Incentive 25 40,492
Housing Program Contribution 42
2,538,751
Industrial Waste Treatment 1 11,937
Insurance Reinvestment 6 6,210
Machinery and Equipment 1,040 6,538,797
Manufacturing Facility in Targeted Investment Community or Enterprise Zone 139 1,079,806
Neighborhood Assistance 269 2,137,474
Research & Development 274 23,720,780
15,797,584
SBA Guaranty Fee 21
Traffic Reduction 6 222,103
Total 16,374 $133,814,985
FY 1999-00 $4,238,128,647
2000-01 4,743,440,250
2001-02 4,266,291,049
1.64 million taxpayers/ Annually
Single/ Not over $10,000 3%
Joint Not over $20,000 3%
$12,500 for unmarried individuals, for taxable years commencing on or after January 1, 2001, but prior to January 1, 2002. For taxpayers with Connecticut AGI in excess of $25,000, the exemption decreases by $1,000 for each $1,000 increase in Connecticut AGI. The exemption is phased out at $36,000.
Social Security benefits for single filers and married individuals filing separately whose federal adjusted gross income for the taxable year is less than $50,000. Social Security benefits for married individuals filing jointly and head of household filers whose federal adjusted gross income for the taxable year is less than $60,000.
Connecticut residents are eligible for an income tax credit for property taxes paid to a Connecticut political subdivision on a primary residence and/or privately owned or leased motor vehicle. The maximum credit for taxable years commencing on or after January 1, 2000 is $500 per return. The credit cannot exceed the amount of qualifying property taxes paid or income tax liability. If an individual paid more than $100 in property tax, a limitation based on filing status and Connecticut Adjusted Gross Income may apply.
FY 1999-00 $3,106,764,984
2000-01 3,184,327,113
2001-02 3,064,794,682
6% on the gross receipts from the sale, rental or leasing of tangible personal property, and the rendering of certain business services (general rate);
on computer and data processing services;
The tax on these services is completely phased out on July 1, 2004;
on the rental of rooms in a hotel or lodging house.
The table that follows provides a summary of the major exemptions claimed by businesses during Fiscal Year 2001-02, and the amount of revenue forgone for each exemption monitored. Note that the revenue forgone for each item is computed at the 6% rate.
2001-02 SALES TAX EXEMPTIONS
Sale for Resale – Goods $61,657.6
$3,699.5
Sale for Resale – Leases and Rentals 1,462.8
Sale for Resale – Labor and Services 1,444.1
Newspapers/Magazines by Subscription 1,163.5
Trucks with Gross Vehicle Weight Over 26,000 Pounds or Used for Carriage of Interstate Freight 136.5 8.2
Food Products for Human Consumption 4,458.4 267.5
Sales of Tangible Personal Property to Farmers 102.5 6.2
Machinery/Materials/Tools/Fuel – Mfg. Product 1,561.5 93.7
Machinery/Materials/Equip. – Printing 75.9 4.6
Machinery/Materials/Tools/Fuel – Comm. Fishing 114.1
Out-of-State - Sale of Goods 31,845.8 1,910.7
Out-of-State - Leases/Rentals 470.5
Out-of-State – Labor and Services 5,584.6 335.1
Sales of Motor Vehicles, Vessels to Nonresidents 463.4 27.8
Prescription Medicines - Sale of Goods 2,728.1 163.7
Non-Prescription Medicines and Diabetic Equipment - Sale of Goods 175.8 10.6
Charitable/Government/Religious – Sale of Goods 6,154.8 369.3
Charitable/Government/Religious – Leases and Rentals 173.7 10.4
Charitable/Government/Religious – Labor and Services 3,384.9 203.1
Pollution Abatement 70.2 4.2
Non-Taxable Labor and Services 9,991.7 599.5
Business Services/Parent Owned Subs. 300.5
Trade-ins of Like-Kind Personal Property 739.8 44.4
Taxed Goods returned within 90 days 135.8 8.1
Oxygen, Plasma, Prostheses, etc. 140.5 8.4
Printed Material for Future Delivery Out of State 31.5
Clothing/Footwear under $75 2,317.2 139.0
Material for Non-commercial Production of Clothing 9.9 0.6
Funeral Expenses up to $2,500 59.3
Certain Machinery - Manufacturing Recovery Act of 1992 (Difference between the 6% and 3% Rates) 41.6
Sales of Machinery, Equipment, Tools, Supplies and Fuel used in the Biotechnology Industry 56.9 3.4
Sales of Repair and Maintenance Service to Vessels 54.0 3.2
Computer and Data Processing Services (Difference between the 6% and 1% Rates)
811.8 48.7
Sales to Direct Payment Permit Holders 220.8 13.2
Sales of College Textbooks 18.1 1.1
Clothing Under $300 for One Week in August 30.2 1.8
12,080.5
TOTAL $ 154,435.0 $9,266.1
168,125 Taxpayers
24,490 Taxpayers / Monthly
64,100 Taxpayers / Quarterly
79,535 Taxpayers / Annually
Gross Receipts Attributable to: FY 1999-00 FY 2000-01 FY 2001-02
Sales of Tangible Personal Property $157,838.5 $167,286.3 $164,754.9
35,174.6
29,576.5
Business Use Purchases 2,996.3 2,846.7 2,804.5
Room Occupancy 573.1 607.2
Table II, on the following page, provides a summary of retail sales of goods for the state of Connecticut for the past three fiscal years. The figures reflect fluctuations in sales of durable and non-durable goods. Durable goods are usually more expensive items expected to last more than three years, such as automobiles and large household appliances. These sales are provided by selected major groups within the Standard Industrial Classification (SIC) system.Approximately half of all the sales and use tax revenue is generated by the retail trade sector.
TABLE II: Retail Sales Volume - Fiscal Years 2000-2002
$ 2,376 $ 2,751
General Merchandise (SIC 53) 3,744 3,024 4,002
Food Products (SIC 54) 7,139
Apparel & Accessory Stores (SIC 56) 2,195 2,237
Home Furniture, Furnishings, & Appliances (SIC 57) 4,299 3,971 3,629
Establishments (SIC 58) 3,148 3,327 3,374
Misc. Retail Stores (SIC 59) 10,975 11,247 11,162
TOTAL (SIC 52-59) $42,630 $42,234 $43,924
Table III provides total sales and use taxes revenues of the Standard Industrial Classification (SIC) major industrial categories for fiscal years 2000 through 2002. The revenues are from regular payments and represent 93% of the total sales and use taxes collected in FY 2001-02. The figures do not include any audit or late return payments.
TABLE III: Sales & Use Tax - From Regular Payments
Hardware 52 $ 127.2 $ 126.0 $ 148.8
General Merchandise 53 136.6
Food Products 54 95.2 106.4 117.6
354.1 370.4 384.2
Apparel & Accessory Stores 56 52.4 45.2 42.1
Home Furniture, Furnishings, & Appliances 57 133.9 131.3 128.2
Eating & Drinking Establishments 58 175.0 185.1
Misc. Retail Stores 59 312.6 348.2
Subtotal RETAIL Sales & Use Tax Revenue 52-59 $ 1,387.0 $ 1,419.7 $ 1,472.7
CONSTRUCTION 1500-1799 114.3 127.6 104.6
MANUFACTURING 2000-3999 169.7 186.7 178.8
WHOLESALE 5010-5199 151.8 169.8 155.6
626.8 445.3
ALL OTHER BUSINESSES 493.9 520.3 500.9
TOTAL SALES & USE TAX REVENUE $ 2,933.3
$ 3,050.9
$ 2,857.9