Connecticut Seal

Substitute House Bill No. 6624

Public Act No. 03-225

AN ACT CONCERNING VARIOUS TAXES ADMINISTERED BY THE DEPARTMENT OF REVENUE SERVICES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (b) of section 12-39t of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003):

(b) In any case under Title 11 of the United States Code, commencing on or after [October 1, 1999] July 1, 2003, the running of any period of time specified in this title for the Commissioner of Revenue Services to make an assessment shall be suspended for the time period during which [the commissioner is prohibited by reason of such case from making such assessment] such case is pending under said Title 11 and for [sixty] one hundred twenty days thereafter.

Sec. 2. Section 12-217j of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) There shall be allowed as a credit against the tax imposed on any corporation under this chapter, [(1)] with respect to income years of such corporation commencing on or after [January 1, 1993, and prior to] January 1, 1994, an amount equal to [ten] twenty per cent of the amount spent by such corporation directly on research and experimental expenditures, as defined in Section 174 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, which are conducted in this state and which exceeds the amount spent by such corporation during the preceding [taxable] income year of such corporation for such expenditures. [and (2) with respect to any taxable year of such corporation commencing on or after January 1, 1994, an amount equal to twenty per cent of the amount spent by such corporation on such expenditures which exceeds the amount spent by such corporation during the preceding taxable year of such corporation for such expenditures. A]

(b) (1) With respect to any income year commencing on or after January 1, 2000, a credit or any portion of a credit that is allowed under this section [, with respect to any taxable year commencing on or after January 1, 2000,] but that is not used by a taxpayer because the amount of the credit exceeds the tax due and owing by the taxpayer shall be carried forward to each of the successive income years until such credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any portion of a credit, that is not used by a taxpayer be carried forward for a period of more than fifteen years.

(2) (A) With respect to any income year commencing on or after January 1, 1997, and prior to January 1, 2000, a credit or any portion of a credit that is allowed under this section but that is not used by a biotechnology company because the amount of the credit exceeds the tax due and owing by the taxpayer shall be carried forward to each of the successive income years until such credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any portion of a credit, that is not used by a biotechnology company be carried forward for a period of more than fifteen years.

(B) For purposes of this subsection, "biotechnology company" means a company engaged in the business of applying technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, or to transform biological systems into useful processes and products.

Sec. 3. Subsection (b) of section 12-285 of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2002):

(b) For the purposes of part I and part II only of this chapter:

(1) "Cigarette" means and includes [(A)] any roll for smoking made wholly or in part of tobacco, irrespective of size or shape and irrespective of whether the tobacco is flavored, adulterated or mixed with any other ingredient, where such roll has a wrapper or cover made of paper or any other material, except where such wrapper is wholly or in the greater part made of tobacco and such roll weighs over three pounds per thousand, provided, if any roll for smoking has a wrapper made of homogenized tobacco or natural leaf tobacco, and the roll is a cigarette size so that it weighs three pounds or less per thousand, such roll is a cigarette and subject to the tax imposed by part I and part II of this chapter; and [(B) each nine one-hundredths of an ounce of roll-your-own tobacco; ]

(2) "Unstamped cigarette" means any package of cigarettes to which the proper amount of Connecticut cigarette tax stamps have not been affixed. [; and

(3) "Roll-your-own tobacco" means any tobacco which, because of its appearance, type, packaging or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes. ]

Sec. 4. Section 12-292 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003):

Any written advertisement in this state for the sale of untaxed cigarettes for use and consumption in this state shall contain the following words [,] in not less than fourteen point reverse type in block form: "These cigarettes are subject to the payment of the Connecticut cigarette use tax and the Connecticut use tax and may be subject to seizure as contraband goods. " In the case of any such advertisement being announced verbally, such announcement shall be immediately followed by the words above enclosed in quotation marks. Any person engaged in the business of selling cigarettes, whether or not issued a license by the commissioner under the provisions of this part, violating the provisions of this section shall be fined five hundred dollars for each offense.

Sec. 5. Section 12-294 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003):

(a) If a distributor or dealer removes his or her business from one location to another during the period in which the license is in force, the commissioner shall transfer the license to the new location without an additional fee.

(b) (1) If any distributor liable for any amount due under this chapter sells out his or her business or stock of goods or quits the business, such distributor's successors or assigns shall withhold a sufficient amount of the purchase price to pay the amount due under this chapter from the distributor until the distributor provides to such successor or assignee a receipt from the commissioner showing that such amount has been paid or a certificate stating that no amount is due.

(2) If any such successor or assignee fails to withhold the purchase price as required, such successor or assignee shall be personally liable for the payment of the amount required to be withheld by such successor or assignee to the extent of the purchase price, valued in money.

(c) (1) No later than the sixtieth day after the latest of the dates specified in subdivision (2) of this subsection, the commissioner shall either issue the certificate stating that no amount is due or mail notice of the amount that must be paid as a condition of issuing the certificate. Such notice shall be mailed to such successor or assignee at such successor's or assignee's address as it appears on the records of the commissioner.

(2) For purposes of subdivision (1) of this subsection, the latest of the following dates shall apply: (A) The date the commissioner receives a written request from the successor or assignee for a certificate; (B) the date of the sale of the business or stock of goods; or (C) the date the former owner's records are made available for audit.

(d) Failure of the commissioner to mail the notice referred to in subsection (c) of this section shall release the successor or assignee from any further obligation to withhold the purchase price as provided in subsection (b) of this section. The period within which the obligation of the successor or assignee may be enforced shall commence on the date the person sells out his or her business or stock of goods or quits the business or on the date that the assessment against such person becomes final, whichever event occurs later, and shall end three years after such date.

(e) The certificate provided for in subsection (c) of this section may be issued after the payment of all amounts due under this chapter, according to the records of the department as of the date of the certificate, or after the payment of the amounts is secured to the satisfaction of the commissioner.

(f) The obligation of the successor or assignee shall be enforced by serving a notice of successor liability on the successor or assignee. The notice shall be served in the manner prescribed under section 12-309 for service of a notice of assessment, not later than three years after the date the commissioner is notified by the successor or assignee of the purchase of the business or stock of goods. The successor or assignee may protest the assessment in the manner provided in section 12-311. Sixty days after the date on which a notice of assessment is mailed, an assessment shall become final except for any amount as to which the successor or assignee has filed a written protest with the commissioner, as provided in section 12-311.

Sec. 6. Section 12-330a of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2002):

As used in this chapter: (1) "Commissioner" means the Commissioner of Revenue Services; (2) "tobacco products" means cigars, cheroots, stogies, periques, granulated, plug cut, crimp cut, ready rubbed and other smoking tobacco, snuff tobacco products, cavendish, plug and twist tobacco, fine cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco and all other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise or for both chewing and smoking, but shall not include any cigarette, as defined in section 12-285, as amended by this act; [or any roll-your-own tobacco, as defined in section 12-285; ] (3) "distributor" means (A) any person in this state engaged in the business of manufacturing tobacco products, (B) any person who purchases tobacco products at wholesale from manufacturers or other distributors for sale, or (C) any person who imports into this state tobacco products, at least seventy-five per cent of which are to be sold; (4) "unclassified importer" means any person, other than a distributor, who imports, receives or acquires tobacco products from outside this state for use or consumption in this state; (5) "sale" or "sell" includes or applies to gifts, exchanges and barter; (6) "wholesale sales price" means, in the case of a manufacturer of tobacco products, the price set for such products or, if no price has been set, the wholesale value of such products, and, in the case of a distributor who is not a manufacturer of tobacco products, the price at which the distributor purchased such products, and, in the case of an unclassified importer of tobacco products, the price at which the unclassified importer purchased such products; and (7) "snuff tobacco products" means only those snuff tobacco products that have imprinted on the packages the designation "snuff" or "snuff flour", or the federal tax designation "Tax Class M", or both.

Sec. 7. Subdivision (5) of section 12-410 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003, and applicable to sales occurring on or after said date):

(5) (A) For the purpose of the proper administration of this chapter and to prevent evasion of the sales tax, a sale of any service described in subparagraph (I) of subdivision (2) of subsection (a) of section 12-407 shall be considered a sale for resale only if the service to be resold is an integral, inseparable component part of a service described in said subparagraph (I) which is to be subsequently sold by the purchaser to an ultimate consumer. The purchaser of the service for resale shall maintain, in such form as the commissioner requires, records which substantiate: [(A)] (i) From whom the service was purchased and to whom the service was sold, [(B)] (ii) the purchase price of the service, and [(C)] (iii) the nature of the service to demonstrate that the services were an integral, inseparable component part of a service described in subparagraph (I) of subdivision (2) of subsection (a) of section 12-407 which was subsequently sold to a consumer.

(B) Notwithstanding the provisions of subparagraph (A) of this subdivision, no sale of a service described in subparagraph (I) of subdivision (2) of subsection (a) of section 12-407 by a seller shall be considered a sale for resale if such service is to be subsequently sold by the purchaser to an ultimate consumer that is affiliated with the purchaser in the manner described in subparagraph (A) of subdivision (62) of subsection (a) of section 12-412.

(6) For the purpose of the proper administration of this chapter and to prevent evasion of the sales tax, no sale of any service by a seller shall be considered a sale for resale if such service is to be subsequently sold by the purchaser, without change, to an ultimate consumer that is affiliated with the purchaser in the manner described in subparagraph (A) of subdivision (62) of subsection (a) of section 12-412.

Sec. 8. Subdivision (14) of section 12-411 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003, and applicable to purchases occurring on or after said date):

(14) (A) For the purpose of the proper administration of this chapter and to prevent evasion of the use tax, a purchase of any service described in subparagraph (I) of subdivision (2) of subsection (a) of section 12-407 shall be considered a [sale] purchase for resale only if the service to be resold is an integral, inseparable component part of a service described in said subparagraph (I) which is to be subsequently sold by the purchaser to an ultimate consumer. The purchaser of the service for resale shall maintain, in such form as the commissioner requires, records which substantiate: [(A)] (i) From whom the service was purchased and to whom the service was sold; [(B)] (ii) the purchase price of the service; and [(C)] (iii) the nature of the service to demonstrate that the service was an integral, inseparable component part of a service described in subparagraph (I) of subdivision (2) of subsection (a) of section 12-407 which was subsequently sold to a consumer.

(B) Notwithstanding the provisions of subparagraph (A) of this subdivision, no purchase of a service described in subparagraph (I) of subdivision (2) of subsection (a) of section 12-407 by a purchaser shall be considered a purchase for resale if such service is to be subsequently sold by the purchaser to an ultimate consumer that is affiliated with the purchaser in the manner described in subparagraph (A) of subdivision (62) of subsection (a) of section 12-412.

(15) For the purpose of the proper administration of this chapter and to prevent evasion of the use tax, no purchase of any service by a purchaser shall be considered a purchase for resale if such service is to be subsequently sold by the purchaser, without change, to an ultimate consumer that is affiliated with the purchaser in the manner described in subparagraph (A) of subdivision (62) of subsection (a) of section 12-412.

Sec. 9. Subdivision (40) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003, and applicable to sales occurring on or after said date):

(40) (A) Sales of and the storage, use or other consumption of any vessel [, as defined in section 15-127, used] exclusively for use in commercial fishing and any machinery or equipment exclusively for use on a commercial fishing vessel by a fisherman engaged in commercial fishing as a trade or business and to whom the Department of Revenue Services has issued a fisherman tax exemption permit, provided [in the purchaser's taxable year ending immediately preceding the taxable year during which any such sale, storage, use or other consumption occurred] (i) for the immediately preceding taxable year, or (ii) on average, for the two immediately preceding taxable years, not less than fifty per cent of the gross income of the purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing, subject to proof satisfactory to the Commissioner of Revenue Services.

[(B) (i) Sales of and the storage, use or other consumption of any vessel used exclusively in commercial fishing and any machinery or equipment for use on a commercial fishing vessel, where in the purchaser's taxable year ending immediately preceding the taxable year during which any such sale, storage, use or other consumption occurred, less than fifty per cent of gross income of the purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing, provided such purchaser has satisfied the commissioner that the purchaser intends to carry on commercial fishing as a trade or business for at least two years after the date of such purchase. ]

(B) The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, requiring periodic registration for purposes of the issuance of fisherman tax exemption permits, including (i) a procedure related to the application for such permit, which application shall include a declaration, in a form prescribed by the commissioner and bearing notice to the effect that false statements made in such declaration are punishable, to be signed by the applicant, and (ii) a form of notice concerning the penalty for misuse of such permit.

(C) (i) The Commissioner of Revenue Services may issue a fisherman tax exemption permit to an applicant, provided such applicant has satisfied the commissioner that the applicant intends to carry on commercial fishing as a trade or business for at least two years, notwithstanding the fact that the applicant was not engaged in commercial fishing as a trade or business in the immediately preceding taxable year or, if the applicant was engaged in commercial fishing as a trade or business in such immediately preceding taxable year, notwithstanding the fact that, for such immediately preceding taxable year, or, on average, for the two immediately preceding taxable years, less than fifty per cent of the gross income of the applicant, as reported for federal income tax purposes, was derived from commercial fishing.

(ii) Such [purchaser] applicant shall be liable for the tax otherwise imposed, during the period commencing upon the [purchase of such vessel, machinery or equipment] issuance of the permit and ending two years after the date of [such purchase] issuance of the permit, if commercial fishing is not carried on as a trade or business by such applicant during such entire period.

(iii) Such [purchaser] applicant shall also be liable for the tax otherwise imposed, during the period commencing upon the [purchase of such vessel, machinery or equipment] issuance of the permit and ending two years after the date of [such purchase] issuance of the permit, if less than fifty per cent of the gross income of such [purchaser] applicant, as reported for federal income tax purposes, shall have been derived from such commercial fishing for the immediately preceding taxable year, [immediately preceding the taxable year during which such two-year period ends or if,] or, on average, [less than fifty per cent of the gross income of such purchaser, as reported for federal income tax purposes, shall have been derived from commercial fishing for the two taxable years immediately preceding the taxable year during which such two-year period ends] for the two immediately preceding taxable years.

(iv) Any [purchaser] applicant liable for tax under clause (ii) or (iii) of this subparagraph shall not be eligible to [make another purchase] be issued another permit under clause (i) of this subparagraph.

(D) The Commissioner of Revenue Services may issue a fisherman tax exemption permit to an applicant, notwithstanding the fact that, in the applicant's immediately preceding taxable year, less than fifty per cent of the gross income of the applicant, as reported for federal income tax purposes, was derived from commercial fishing, provided (i) such applicant purchased, during the applicant's current or immediately preceding taxable year, a commercial fishing trade or business from a seller who was issued a fisherman tax exemption permit by said commissioner at the time of such purchase, and (ii) such commercial fishing shall be carried on as a trade or business by such applicant during the period commencing upon the purchase and ending two years after the date of purchase. Such applicant shall be liable for the tax otherwise imposed, during the period commencing upon such purchase and ending two years after the date of purchase, if such applicant does not carry on such commercial fishing as a trade or business during the period commencing upon such purchase and ending two years after the date of purchase.

[(C)] (E) For purposes of this [subsection, commercial fishing vessels] subdivision, "commercial fishing vessel" shall include any vessel with a certificate of documentation issued by the United States Coast Guard for coastwise fishery.

Sec. 10. Subdivision (89) of section 12-412 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(89) Sales of and the storage, use or other consumption of machinery, equipment, tools, materials, supplies and fuel used directly in the biotechnology industry. For the purposes of this [subsection] subdivision, "biotechnology" means the application of technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, [to develop microorganisms for specific uses,] to identify targets for small molecule pharmaceutical development, to transform biological systems into useful processes and products or to develop microorganisms for specific uses.

Sec. 11. Subsection (a) of section 12-459 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The payment of the tax provided for by section 12-458 shall be subject to refund as provided herein when such fuel has been sold for use of any of the following: (1) Any person, other than one engaged in the business of farming, when such fuel is used other than in motor vehicles licensed or required to be licensed to operate upon the public highways of this state, except that no tax paid on fuel which is taken out of this state in a fuel tank connected with the engine of a motor vehicle and which is consumed without this state shall be refunded; (2) any person engaged in the business of farming, when such fuel is used other than in motor vehicles licensed or required to be licensed to operate upon the public highways of this state or such fuel is used in motor vehicles registered exclusively for farming purposes, except that no tax paid on fuel which is taken out of this state in a fuel tank connected with the engine of a motor vehicle and which is consumed without this state shall be refunded; (3) the United States; (4) a Connecticut motor bus company, as defined in subsection (e) of section 12-455a, engaged in the business of carrying passengers for hire in this state in common carrier motor vehicles, or any person, association or corporation engaged in the business of operating taxicabs in this state pursuant to a certificate under chapter 244a, when such fuel is used in such common carrier motor vehicle or taxicab on roads in this state, except that with respect to such fuel used in a taxicab only fifty per cent of the tax paid on any purchase of fuel applicable to mileage on any roads in this state shall be refunded; (5) any person, association or corporation engaged in the business of operating a motor vehicle in livery service pursuant to a permit issued under chapter 244b, or a motor bus over highways within this state and between points within and without this state pursuant to a permit issued under chapter 244, when such fuel is used in such motor bus on roads in this state for the exclusive purpose of transporting passengers for hire to or from airport facilities, except that with respect to any such motor vehicle in livery service pursuant to a permit issued under chapter 244b only fifty per cent of the tax paid on any purchase of fuel applicable to mileage on any roads in this state shall be refunded; (6) this state or a municipality of this state, when such fuel is used in vehicles owned and operated, or leased and operated, by this state or municipality for governmental purposes; (7) any school bus, as defined in section 14-275; (8) a hospital, when such fuel is used in an ambulance owned by such hospital; (9) a nonprofit civic organization approved by the commissioner, when such fuel is used in an ambulance owned by such organization; (10) a transit district formed under chapter 103a or any special act, when such fuel is used in vehicles owned and operated, or leased and operated, by such transit district for the purposes of such transit district; (11) a corporation or an employee of a corporation or of the United States, this state or a municipality of this state, when such fuel is used in a high-occupancy commuter vehicle on roads in this state, which vehicle is owned or leased by such corporation or such employee, [which] seats at least ten but not more than fifteen passengers and [which] has a minimum average daily passenger usage of nine persons to and from work, for the purpose of transporting such passengers to and from work daily; (12) a person, corporation or association operating a motor vehicle in livery service which is registered in accordance with the provisions of section 13b-83, when such fuel is used in such motor vehicle in livery service on roads in this state; and (13) a federally funded nutrition program approved by the commissioner, when such fuel is used in a delivery vehicle [that is used exclusively for the delivery of] on roads in this state for the exclusive purpose of delivering meals to senior citizens.

Sec. 12. Section 12-587a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) (1) Any company, as such term is used in section 12-587, liable for the tax imposed under subsection (b) of said section 12-587 on gross earnings from the first sale of petroleum products within this state, which products the purchaser thereof subsequently sells for exportation and sale [of] or use outside this state, shall be allowed a credit against any tax for which such company is liable in accordance with subsection (b) of said section 12-587, in the amount of tax paid to the state with respect to the sale of such products, provided [(1)] (A) such purchaser has submitted certification to such company, in such form as prescribed by the Commissioner of Revenue Services, that such products were sold or used outside this state, [(2)] (B) such certification and any additional information related to such sale or use by such purchaser, which said commissioner may request, have been submitted to said commissioner, and [(3)] (C) such company makes a payment to such purchaser, related to such products sold or used outside this state, in the amount equal to the tax imposed under said section 12-587 on gross earnings from the first sale to such purchaser within the state.

(2) In addition, such company shall be allowed such credit when there has been any sale of such products subsequent to the sale by such company but prior to sale or use outside this state, provided [(1)] (A) each purchaser receives payment, related to such products sold or used outside this state, equal to the tax imposed under said section 12-587, on gross earnings from the first sale of such products within this state, and [(2)] (B) the purchaser selling or using such products outside this state complies with the requirements in this section related to a purchaser of such products from the company liable for such tax.

(b) Any company liable for the tax imposed under subsection (c) of section 12-587 on the consideration given or contracted to be given for petroleum products which it imports or causes to be imported [petroleum products] into this state for [its own] sale, use or consumption in this state, shall be allowed a credit against tax under subsection (c) of section 12-587 [on the consideration given or contracted to be given for all deliveries] if the company subsequently exports such petroleum products for sale or use outside this state, in the amount of tax paid to the state with respect to the sale, use or consumption in this state of such products.

Sec. 13. Subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage and applicable to taxable years commencing on or after January 1, 2003):

(B) There shall be subtracted therefrom (i) to the extent properly includable in gross income for federal income tax purposes, any income with respect to which taxation by any state is prohibited by federal law, (ii) to the extent allowable under section 12-718, exempt dividends paid by a regulated investment company, (iii) the amount of any refund or credit for overpayment of income taxes imposed by this state, or any other state of the United States or a political subdivision thereof, or the District of Columbia, to the extent properly includable in gross income for federal income tax purposes, (iv) to the extent properly includable in gross income for federal income tax purposes and not otherwise subtracted from federal adjusted gross income pursuant to clause (x) of this subparagraph in computing Connecticut adjusted gross income, any tier 1 railroad retirement benefits, (v) [with respect to any natural person who is a shareholder of an S corporation which is carrying on, or which has the right to carry on, business in this state, as said term is used in section 12-214, the amount of such shareholder's pro rata share of such corporation's nonseparately computed items, as defined in Section 1366 of the Internal Revenue Code, that is subject to tax under chapter 208, in accordance with subsection (c) of section 12-217, multiplied by such corporation's apportionment fraction, if any, as determined in accordance with section 12-218] to the extent any additional allowance for depreciation under Section 168(k) of the Internal Revenue Code, as provided by Section 101 of the Job Creation and Worker Assistance Act of 2002, for property placed in service after December 31, 2001, but prior to September 10, 2004, was added to federal adjusted gross income pursuant to subparagraph (A) (ix) of this subdivision in computing Connecticut adjusted gross income for a taxable year ending after December 31, 2001, twenty-five per cent of such additional allowance for depreciation in each of the four succeeding taxable years, (vi) to the extent properly includable in gross income for federal income tax purposes, any interest income from obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, (vii) to the extent properly includable in determining the net gain or loss from the sale or other disposition of capital assets for federal income tax purposes, any gain from the sale or exchange of obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, in the income year such gain was recognized, (viii) any interest on indebtedness incurred or continued to purchase or carry obligations or securities the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such interest on indebtedness is not deductible in determining federal adjusted gross income and is attributable to a trade or business carried on by such individual, (ix) ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income which is subject to taxation under this chapter but exempt from federal income tax, or the management, conservation or maintenance of property held for the production of such income, and the amortizable bond premium for the taxable year on any bond the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such expenses and premiums are not deductible in determining federal adjusted gross income and are attributable to a trade or business carried on by such individual, (x) (I) for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is less than fifty thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than fifty thousand dollars, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income for such taxable year is less than sixty thousand dollars or a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is less than sixty thousand dollars, an amount equal to the Social Security benefits includable for federal income tax purposes; and (II) for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is sixty thousand dollars or more or for a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is sixty thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty-five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code, (xi) to the extent properly includable in gross income for federal income tax purposes, any amount rebated to a taxpayer pursuant to section 12-746, (xii) to the extent properly includable in the gross income for federal income tax purposes of a designated beneficiary, any distribution to such beneficiary from any qualified state tuition program, as defined in Section 529(b) of the Internal Revenue Code, established and maintained by this state or any official, agency or instrumentality of the state, (xiii) to the extent properly includable in gross income for federal income tax purposes, the amount of any Holocaust victims' settlement payment received in the taxable year by a Holocaust victim, and (xiv) to the extent properly includable in gross income for federal income tax purposes of an account holder, as defined in section 31-51ww, interest earned on funds deposited in the individual development account, as defined in section 31-51ww, of such account holder.

Sec. 14. Subsection (c) of section 12-724 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(c) (1) (A) In the case of a specified terrorist victim, the tax imposed by this chapter shall not apply with respect to the taxable year in which falls the date of his or her death, and no returns shall be required on behalf of such individual or his or her estate for such year. The tax for any such taxable year that is unpaid at the date of death, including interest, additions to tax and penalties, if any, shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be refunded to the legal representative of such estate.

[(2) Subdivision] (B) Subparagraph (A) of subdivision (1) of this subsection shall not apply to the amount of any tax imposed by this chapter that would be computed by only taking into account the items of income, gain or other amounts attributable to [(A)] (i) deferred compensation that would have been payable after death if the individual had died other than as a specified terrorist victim, or [(B)] (ii) amounts payable in the taxable year that would not have been payable in such taxable year but for an action taken after September 11, 2001.

[(3)] (C) This [subsection] subdivision shall apply to taxable years commencing on or after January 1, 2001, but prior to January 1, 2002.

(2) (A) In the case of a specified terrorist victim who, pursuant to section 12-704, was allowed a credit against the tax otherwise due under this chapter for an income tax imposed on such individual for a taxable year commencing on or after January 1, 2000, but prior to January 1, 2001, by another state of the United States or a political subdivision thereof or the District of Columbia on income which was derived from sources therein and which was also subject to tax under this chapter, and whose tax liability to such other jurisdiction is abated, credited or refunded because such individual died as a specified terrorist victim, the additional tax imposed by this chapter attributable to the difference between the amount of tax of such other jurisdiction that the individual is finally required to pay and the amount of tax of such other jurisdiction used to determine the credit allowed to such individual under section 12-704 shall not apply.

(B) This subdivision shall apply to taxable years commencing on or after January 1, 2000, but prior to January 1, 2001.

Sec. 15. Subsection (h) of section 38a-866 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage and applicable to calendar years commencing on or after January 1, 2001):

(h) (1) Each insurer paying an assessment under sections 38a-858 to 38a-875, inclusive, may offset one hundred per cent of the amount of such assessment against its premium tax liability to this state under chapter 207. Such offset shall be taken over a period of the five successive tax years following the year of payment of the assessment, at the rate of twenty per cent per year of the assessment paid to the association. Each insurer to which has been refunded by the association, pursuant to subsection (f) of this section, all or a portion of an assessment previously paid to the association by the insurer shall be required to pay to the Department of Revenue Services an amount equal to the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns, as the case may be, filed by such insurer and that is attributable to such refunded assessment, provided the amount required to be paid to said department shall not exceed the amount of the refunded assessment. If the amount of the refunded assessment exceeds the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such insurer and that is attributable to such refunded assessment, such excess may not be claimed as an offset against the premiums tax liability on a premiums tax return or returns filed by such insurer or, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, by such other person. For purposes of [the] this subdivision, if the offset has been transferred to another person pursuant to subdivision (2) of this subsection, the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such insurer includes the total amount that has been claimed as an offset against the premiums tax liability on the premiums tax return or returns filed by such other person. The association shall promptly notify the Commissioner of Revenue Services of the name and address of the insurers to which such refunds have been made, the amount of such refunds, and the date on which such refunds were mailed to each such insurer. If the amount that an insurer is required to pay to the Department of Revenue Services has not been so paid on or before the forty-fifth day after the date of mailing of such refunds, the insurer shall be liable for interest on such amount at the rate of one per cent per month, or [portion] fraction thereof, from such forty-fifth day to the date of payment.

(2) An insurer, in this subdivision called "the transferor", may transfer any offset provided under subdivision (1) of this subsection to an affiliate, as defined in section 38a-1, of the transferor. Any such transfer of the offset by the transferor, and any subsequent transfer or transfers of the same offset, shall not affect the obligation of the transferor to pay to the Department of Revenue Services any sums which are acquired by refund from the association pursuant to subsection (f) of this section and which are required to be paid to the Department of Revenue Services pursuant to subdivision (1) of this subsection. Such offset may be taken by any transferee only against the transferee's premium tax liability to this state under chapter 207. The Commissioner of Revenue Services shall not allow such offset to a transferee against its premium tax liability unless the transferor, the affiliate to which the offset was originally transferred, each subsequent transferor and each subsequent transferee have filed such information as may be required on forms provided by said commissioner with respect to any such transfer or transfers on or before the due date of the premium tax return on which such offset would have been taken by the transferor, if no transfer had been made by the transferor.

Sec. 16. Subsection (b) of section 12-690 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003, and applicable to payments required to be made on or after said date):

(b) The Commissioner of Revenue Services may require the filing, by computer transmission or by employing new technology as it is developed, of any return, statement or other document that is required by law or regulation to be filed with said commissioner by any person who is required under the provisions of this chapter to pay the tax, to which such return, statement or other document pertains, by electronic funds transfer, or by any other person who is described in regulations adopted under this subsection by said commissioner in accordance with the provisions of chapter 54.

Sec. 17. Subsection (a) of section 12-686 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003, and applicable to payments required to be made on or after said date):

(a) (1) Except as otherwise provided in subsection (b) of this section, the commissioner may require every person who files a tax return for any tax on a monthly or quarterly basis to pay such tax during the twelve-month period following a determination of liability under this subdivision by one of the means of electronic funds transfer approved by the department if the commissioner determines that such person's liability for such tax was more than [one hundred] fifty thousand dollars for the twelve-month period ending on the June thirtieth immediately preceding the monthly or quarterly period with respect to which the requirement to pay tax by electronic funds transfer is established. The commissioner, in determining whether tax liability is more than [one hundred] fifty thousand dollars, shall base such determination on the taxes reported to be due on the tax returns of such person related to the period under examination. If any tax return or returns of such person for such period have not been filed, the commissioner may base such determination on any information available to him.

(2) Except as otherwise provided in subsection (b) of this section, the commissioner may require every person, other than a person described in subdivision (3) of this subsection, who files a tax return for any tax on an annual basis to pay such tax, or any installment thereof, during the twelve-month period following a determination of liability under this subdivision by one of the means of electronic funds transfer approved by the department if the commissioner determines that such person's liability for such tax was more than [one hundred] fifty thousand dollars for the year immediately preceding the year with respect to which the requirement to pay tax by electronic funds transfer is established. The commissioner, in determining whether tax liability is more than [one hundred] fifty thousand dollars, may base the determination on the estimated tax, if any, paid for the immediately preceding year, provided, if the tax return for such immediately preceding year has been filed, the commissioner shall base the determination on the taxes reported to be due on such tax return. If any tax return of such person for such period has not been filed or estimated tax has not been paid by such person for such period, the commissioner may base such determination on any information available to him.

(3) Except as otherwise provided in subsection (b) of this section, the commissioner may require every employer who is deducting and withholding Connecticut income tax from employee wages to pay such tax during the twelve-month period following a determination of liability under this subdivision, by one of the means of electronic funds transfer approved by the department if the commissioner determines that the amount of Connecticut income tax deducted and withheld from employee wages by such employer was more than [one hundred] fifty thousand dollars for the twelve-month period ending on the June thirtieth immediately preceding the quarterly period with respect to which the requirement to pay over tax by electronic funds transfer is established. The commissioner, in determining whether tax liability is more than [one hundred] fifty thousand dollars, shall base such determination on the taxes reported to be due on the quarterly withholding tax returns of such employer related to the period under examination. If any such tax return of such person for such period has not been filed, the commissioner may base such determination on any information available to him.

Sec. 18. Subsection (a) of section 12-686 of the general statutes, as amended by section 17 of this act, is repealed and the following is substituted in lieu thereof (Effective July 1, 2004, and applicable to payments required to be made on or after said date):

(a) (1) Except as otherwise provided in subsection (b) of this section, the commissioner may require every person who files a tax return for any tax on a monthly or quarterly basis to pay such tax during the twelve-month period following a determination of liability under this subdivision by one of the means of electronic funds transfer approved by the department if the commissioner determines that such person's liability for such tax was more than [fifty] ten thousand dollars for the twelve-month period ending on the June thirtieth immediately preceding the monthly or quarterly period with respect to which the requirement to pay tax by electronic funds transfer is established. The commissioner, in determining whether tax liability is more than [fifty] ten thousand dollars, shall base such determination on the taxes reported to be due on the tax returns of such person related to the period under examination. If any tax return or returns of such person for such period have not been filed, the commissioner may base such determination on any information available to him.

(2) Except as otherwise provided in subsection (b) of this section, the commissioner may require every person, other than a person described in subdivision (3) of this subsection, who files a tax return for any tax on an annual basis to pay such tax, or any installment thereof, during the twelve-month period following a determination of liability under this subdivision by one of the means of electronic funds transfer approved by the department if the commissioner determines that such person's liability for such tax was more than [fifty] ten thousand dollars for the year immediately preceding the year with respect to which the requirement to pay tax by electronic funds transfer is established. The commissioner, in determining whether tax liability is more than [fifty] ten thousand dollars, may base the determination on the estimated tax, if any, paid for the immediately preceding year, provided, if the tax return for such immediately preceding year has been filed, the commissioner shall base the determination on the taxes reported to be due on such tax return. If any tax return of such person for such period has not been filed or estimated tax has not been paid by such person for such period, the commissioner may base such determination on any information available to him.

(3) Except as otherwise provided in subsection (b) of this section, the commissioner may require every employer who is deducting and withholding Connecticut income tax from employee wages to pay such tax during the twelve-month period following a determination of liability under this subdivision, by one of the means of electronic funds transfer approved by the department if the commissioner determines that the amount of Connecticut income tax deducted and withheld from employee wages by such employer was more than [fifty] ten thousand dollars for the twelve-month period ending on the June thirtieth immediately preceding the quarterly period with respect to which the requirement to pay over tax by electronic funds transfer is established. The commissioner, in determining whether tax liability is more than [fifty] ten thousand dollars, shall base such determination on the taxes reported to be due on the quarterly withholding tax returns of such employer related to the period under examination. If any such tax return of such person for such period has not been filed, the commissioner may base such determination on any information available to him.

Sec. 19. Section 12-389 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The commissioner shall appoint a First Assistant Commissioner of Revenue Services, who shall be an attorney at law, and shall be the attorney in charge of succession and transfer taxes and shall have authority to act as attorney for the commissioner in all matters relating thereto.

(b) The Attorney General may delegate to the Commissioner of Revenue Services the authority to appoint an attorney to represent the commissioner in matters relating to certain appeals to the Superior Court from an order, decision or determination or disallowance of the Commissioner of Revenue Services. The Attorney General may enter into a memorandum of understanding with the Commissioner of Revenue Services which shall list the types of appeals which are the subject of such delegation.

Sec. 20. (NEW) (Effective from passage) Notwithstanding any provision of any chapter of title 12 of the general statutes authorizing the superior court to grant such relief as may be equitable and, if tax has been paid prior to the granting of such relief, to order the Treasurer to pay interest on the amount of such relief, the equitable powers of the superior court shall not include: (1) The power to order the Treasurer to pay interest on the amount of such relief, if the provisions of the chapter pursuant to which the appeal was taken to the superior court do not authorize the Commissioner of Revenue Services to pay interest on tax overpayments under said chapter, or (2) the power to order the Treasurer to pay interest in an amount exceeding the amount of interest that the Commissioner of Revenue Services would be authorized to pay, if the provisions of the chapter pursuant to which the appeal was taken to the superior court authorize the Commissioner of Revenue Services to pay interest on tax overpayments under said chapter.

Sec. 21. Section 12-633 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003, and applicable to income years commencing on or after January 1, 2003):

The Commissioner of Revenue Services shall grant a credit against any tax due under the provisions of chapter 207, 208, 209, 210, 211 or 212 in an amount not to exceed [forty] sixty per cent of the total cash amount invested during the taxable year by the business firm in programs operated or created pursuant to proposals approved pursuant to section 12-632, provided a tax credit not to exceed sixty per cent may be allowed for investment in certain energy conservation and employment and training projects as provided in section 12-635.

Sec. 22. Section 12-634 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2003, and applicable to income years commencing on or after January 1, 2003):

The Commissioner of Revenue Services shall grant a credit against any tax due under the provisions of chapter 207, 208, 209, 210, 211 or 212 in an amount not to exceed [forty] sixty per cent of the total cash amount invested during the taxable year by the business firm in programs operated or created pursuant to proposals approved pursuant to section 12-632 for planning, site preparation, construction, renovation or acquisition of facilities for purposes of establishing a child day care facility to be used primarily by the children of such business firm's employees and equipment installed for such facility, including kitchen appliances, to the extent that such equipment or appliances are necessary in the use of such facility for purposes of child day care, provided: (1) Such facility is operated under the authority of a license issued by the Commissioner of Public Health in accordance with sections 19a-77 to 19a-87, inclusive, (2) such facility is operated without profit by such business firm related to any charges imposed for the use of such facility for purposes of child day care, and (3) the amount of tax credit allowed any business firm under the provisions of this section for any income year may not exceed fifty thousand dollars. If two or more business firms share in the cost of establishing such a facility for the children of their employees, each such taxpayer shall be allowed such credit in relation to the respective share, paid or incurred by such taxpayer, of the total expenditures for the facility in such income year. The commissioner shall not grant a credit pursuant to this section to any taxpayer claiming a credit for the same year pursuant to section 12-217x.

Approved July 9, 2003