Source: https://www.cga.ct.gov/2013/BA/2013HB-06704-R01-BA.htm
Timestamp: 2019-09-15 10:23:12
Document Index: 298853508

Matched Legal Cases: ['§ 1', '§ 70', '§ 1', '§ 71', '§ 75', '§ 77', '§ 77', '§ 80', '§ 89', '§ 90', '§ 94', '§ 97']

HB 6704 (as amended by House “A”)*
A full summary of the bill's budget provisions (§§ 1-69) may be found in the Office of Fiscal Analysis fiscal note. An analysis of the bill's revenue provisions (§§ 70-113) appears below.
§§ 1-69 — BUDGET PROVISIONS
The bill requires the Department of Revenue Services (DRS) commissioner to establish a tax amnesty program for individuals, businesses, or other taxpayers that owe Connecticut state taxes (other than motor carrier road taxes) to DRS. The amnesty runs from September 16, 2013 to November 15, 2013 and covers any taxable period ending on or before November 30, 2012.
The DRS commissioner must prepare an amnesty application that requires applicants to specify the taxes and taxable periods for which they seek amnesty. The bill allows the commissioner to require that taxpayers file amnesty applications electronically.
If a taxpayer files the application during the amnesty period and pays all the taxes owed for the applicable tax periods, plus interest, the commissioner must waive applicable civil penalties and refrain from seeking criminal prosecution for those periods. The commissioner may only grant amnesty to affected taxpayers (i.e., those who owe taxes for the applicable tax periods) who pay the taxes and interest that the commissioner determines they owe when they file their applications.
If the commissioner grants amnesty, the affected taxpayer relinquishes all unexpired administrative and judicial appeal rights as of the payment date. The bill bars taxpayers from receiving any refund or credit of amnesty tax payments. Failure to pay all amounts due invalidates the amnesty. A taxpayer is not entitled, by virtue of penalty waivers and interest reductions under the amnesty, to any refund or credit of previously paid amounts. The commissioner may not consider any request to cancel the unpaid portion of any erroneously or illegally assessed tax, penalty, or interest in connection with any amnesty application.
If a taxpayer pays the taxes due by November 15, 2013, the bill reduces the interest rate on those taxes to one-fourth of the interest that the department's records show to be due and payable as of the application's filing. (The interest rate on overdue taxes is generally 1% per month.) Any tax due for the applicable tax periods paid after the filing deadline is subject to interest of 1% per month or part of a month from the date it was originally due until the payment date.
The bill bars any amnesty for those who:
The bill imposes a penalty on any taxpayer who (1) owes any tax for the applicable tax periods for which a tax return was required, but not previously filed and (2) fails to file a timely amnesty application. The penalty (1) is equal to 25% of the tax owed and (2) may not be waived. It applies in addition to any other applicable interest and penalties under existing law.
§ 71 — STEM CELL RESEARCH AND TOBACCO AND HEALTH TRUST FUND
For FY 14 and FY 15, the bill (1) reduces, from $12 million to $6 million, the annual disbursement from the Tobacco Settlement Fund to the Tobacco and Health Trust Fund and (2) eliminates the transfer of $10 million from the Tobacco Settlement Fund to the Stem Cell Research Fund (see BACKGROUND).
PA 12-1, December Special Session, eliminated the FY 13 transfer to the Stem Cell Research Fund and authorized up to $ 10 million in state general obligation bonds for the same purpose.
The bill extends, to 2013 and 2014, the temporary cap on the maximum insurance premium tax liability that an insurer may offset through tax credits. In doing so, it reimposes the lower cap on the film production and entertainment infrastructure credits that applied under existing law in 2011.
Table 1: Affected Tax Credit Programs
The bill extends the temporary 20% corporation income tax surcharge for two additional years, to the 2014 and 2015 income years. Companies must calculate their surcharges based on their tax liability, excluding any credits. As under current law, the surcharge for 2014 and 2015 applies to companies that have more than $250 in corporation tax liability and either (1) have at least $100 million in annual gross income in those years or (2) file combined or unitary returns, regardless of the amount of annual gross income.
§ 75 — FILM PRODUCTION TAX CREDIT MORATORIUM
With one exception, the bill establishes a two-year moratorium on film production tax credits for motion pictures for FYs 14 and 15. It does so by (1) barring the issuance of tax credit vouchers for motion pictures and (2) excluding motion pictures from the types of qualified productions that are eligible for the credits for those years. It creates an exception for the FY 15 for a motion picture that conducts at least 25% of its principal photography days in a Connecticut facility that (1) receives at least $25 million in private investment and (2) opens for business on or after July 1, 2013.
By law, the tax is 1/4 of one cent per net kilowatt hour (kwh) of electricity generated and uploaded into the regional bulk power grid at Connecticut facilities. It applies to all electricity except that generated (1) exclusively through use of a fuel cell or alternative energy system, such as a solar or wind system; (2) by a resources recovery facility; or (3) by a customer-side distributed energy facility (e.g., cogeneration systems) with a generating capacity of up to 65 megawatts.
The bill also extends to FY 14 the comptroller's authority to count as revenue any generation tax revenue DRS receives within five business days after the July 31 following the end of the fiscal year. Currently, he may do so for FY 12 and FY 13.
§§ 77-78 — SALES AND USE TAX ON BOATS
§§ 77-78 & 113 — MUNICIPAL REVENUE SHARING ACCOUNT
The bill eliminates laws requiring the DRS commissioner to deposit the following amounts into the Municipal Revenue Sharing Account, thus requiring these funds to go to the General Fund:
1. 1.57% of the revenue from the 6.35% sales and use tax on most taxable goods and services;
2. 1.43% of the revenue from the 7% sales and use tax on specified luxury items; and
3. 33% and 20%, respectively of the revenue from the state real estate conveyance tax on (a) sales of unimproved land and certain bank foreclosures and on the first $800,000 of the sale price of residential property and (b) sales of nonresidential property and any amount of the sale price of a residential property that exceeds $800,000.
Starting June 1, 2015, the bill exempts from the 6.35% sales and use tax clothing and footwear costing less than $50. It excludes the following from the exemption:
§§ 80-81 — SALES AND USE TAX COLLECTION
Taxpayer Requirements. Notified taxpayers must remit sales taxes through a DRS-approved processor by the end of the second business day after each applicable sale. Taxpayers that fail to comply are subject to penalties under the sales and use tax law, including the revocation of their sales tax seller's permits. Existing law authorizes the commissioner, after a hearing, to suspend or revoke a taxpayer's sales tax seller's permit if he or she fails to comply with the sales tax law. In addition, by law, taxpayers that fail to remit sales taxes on time are subject to interest and penalties (1% for each month or part of a month the payment is overdue, plus a penalty of 15% of the deficiency or $50, whichever is greater, for negligent or intentional nonpayment and 25% of the deficiency for nonpayment due to fraud).
Under current law, licensed cigarette dealers collect sales tax on cigarettes from customers at the point of purchase and remit the tax to the state. The bill instead requires “stampers” (i.e., anyone allowed to buy unstamped cigarettes and put cigarette tax stamps on them) and non-stamping licensed cigarette distributors to (1) collect sales tax on cigarettes they sell to licensed dealers and (2) remit the tax the same as other sellers (i. e. , retailers). It requires licensed dealers to similarly collect the tax when selling cigarettes to a customer, but allows them to claim a credit against the sales tax equal to the amount of taxes they paid to the distributor or stamper.
The bill applies to two transaction chains, both initiated by stampers. Under the first transaction chain, when a stamper sells stamped packages of cigarettes to a licensed dealer, the sale must be treated as a retail sale and not a “sale for resale” (i.e., wholesale). The stamper must (1) collect sales tax from the dealer, even if the licensed dealer presents a valid resale certificate; (2) separately state the tax on its invoice; and (3) file sales tax returns and remit the tax to the state the same way as retailers.
The bill requires licensed dealers to similarly collect the tax when they sell a stamped package of cigarettes to a customer, but when calculating the sales price, dealers cannot include the tax amount paid to the stamper. The bill allows the dealer to claim a credit against the sales tax due during a reporting period on its retail cigarette sales equal to the amount of tax it paid to the stamper during the same reporting period.
The bill allows the Connecticut Lottery Corporation to offer Keno games, in addition to the state lottery. In Keno, players win prizes by correctly guessing some of the numbers generated by a central computer system using a random number generator, rabbit ear, or a wheel system device using numbered balls. The system draws 20 numbers from a field of 80.
In establishing Keno, the corporation must comply with any revenue agreement the state, through OPM, makes with the Mashantucket Pequot and Mohegan tribes to share Keno revenue. The bill authorizes OPM to enter into such agreements requiring each tribe to receive up to 12.5% of the gross Keno revenues (i.e., the total amount waged minus prize payouts).
§§ 89, 100-109, & 111 — TRANSFERS TO THE GENERAL FUND
As Table 4 shows, the bill transfers funds from various sources to the General Fund. (See Table 3 above for FY 14 transfer from the STF to the General Fund.)
Table 4: Transfers to the General Fund
§§ 90-91 — ECONOMIC RECOVERY NOTES (ERNS)
§§ 94-95 — LOCAL CAPITAL IMPROVEMENT PROGRAM (LOCIP) EXPANSION AND MUNICIPAL GRANTS
The bill expands the list of projects eligible for LoCIP funding to include:
Under current law, LoCIP applications must include a certification that the project for which the municipality is requesting reimbursement is consistent with its local capital improvement plan. The bill allows the OPM secretary, for any fiscal year, to (1) authorize reimbursement for any of the additional projects before the municipality has added the project to its local capital improvement plan and (2) require the municipality to certify that it is taking steps to amend its plan to include the project.
The bill (1) allows the economic and community development commissioner to pay taxpayers holding urban and industrial sites reinvestment tax credits for their credit eligibility certificates and (2) authorizes up to $40 million in bonds for this purpose, $20 million of which is available on July 1, 2014.
By law, the eligibility certificates allow taxpayers to claim credits for investing in real estate projects significantly affecting the economy. The credits equals 100% of the invested amount, but must be claimed over 10 years according to a statutory schedule. The credits may be assigned to other taxpayers or carried forward for up to five years.
The bill requires Hartford to assess all apartments with four or more units that the Capital Region Development Authority constructs or converts in the statutorily designated Capital City Economic Development District the same way it assesses residential property with three or fewer units throughout the city. Under current law, Hartford must adjust assessment increases for such residential property after a revaluation and further adjust them in the subsequent years to reflect growth in property tax revenue. The bill requires Hartford to make the same adjustments for apartment property in the district that receive a certificate of occupancy on or after July 1, 2013.
§§ 97-98 — RECORDING FEES
The bill (1) increases the fees a “nominee of a mortgagee” must pay to town clerks when recording documents, including warranty deeds, quitclaim deeds, mortgage deeds, or mortgage assignments, and (2) specifies how the fee revenue must be allocated. Under current law, anyone recording these documents pays $10 for recording the first page and $5 for each additional page. They also pay $2 for each mortgage assignment after the first two assignments. The recording party must also pay separate $3 and $40 recording surcharges, a portion of which is remitted to the state and used to capitalize various accounts.
Table 5: Bill's Fee Schedule for Documents Recorded by a Nominee
Any document except mortgage assignments in which nominee appears as assignor
1st page: $116
$159 for entire assignment
In the case of a mortgage assignment in which the nominee appears as the assignor, the bill specifies that no other fees can be collected from the nominee. Presumably, this provision exempts the nominee from paying the additional recording surcharges.
Table 6: Nominee Fee Revenue Allocation Requirements
The bill specifies how litigation settlement funds received under the 1998 Master Settlement Agreement must be spent. Specifically, it (1) reserves up to $40 million of the funds to reduce the bill's FY 14 aggregate appropriation for Nonfunctional-Change to Accruals and (2) directs up to (a) $10 million to the General Fund for FY 14 and (b) $13 million to a nonlapsing fund to fund enforcement activity related to the agreement.
The bill adopts revenue estimates for FY 14 and FY 15 for appropriated state funds as shown in Table 7.
Table 7: Revenue Estimates for FY 14 and FY 15