AN ACT CONCERNING THE BONDING PROCESS.

Explanation

Sec. 501 of the amendment may result in a minimal cost (less than $5, 000) to DRS to provide data to OFA.

Sec. 502 directs Connecticut Housing Finance Financing Authority (CHFA) to provide loans of not less than $2 million for the purchase of mobile manufactured homes to be located in a manufacturing housing community.

CHFA issues bonds under its own authority that are backed by a special capital reserve fund (SCRF) . A SCRF extends the state's credit for bonds issued by various quasi-public state bond-issuing authorities such as CHFA. SCRF-backed bonds are a contingent liability or potential financial responsibility of the state that may become a real financial responsibility at some point if the quasi-public agency fails to pay the debt service for SCRF-backed bonds it has issued.

§ 503 – DRS COMMISSIONER'S ELECTRONIC SIGNATURE ON TAX LIEN CERTIFICATES

This section has no fiscal impact.

This section of the amendment allows the DRS commissioner to use an electronic signature on certificates filing or discharging tax liens on real property and requires town clerks to accept the signatures and record the certificates. It validates, as of the date originally filed, otherwise valid certificates with the commissioner's electronic signature that are filed with town clerks before the amendment's effective date.

The amendment also makes technical changes to update and remove redundant references in the list of taxes to which property lien definitions apply.

§§ 504 -510 – TOBACCO PRODUCTS RETAILER LICENSES

This section has no fiscal impact because it codifies the statute to current practice.

This section of the amendment eliminates the requirement that a retailer who sells taxed tobacco products, which includes all types of chewing and smoking tobacco other than cigarettes, have a tobacco products distributor license. Instead, it requires such retailers to have a cigarette dealers' license. Thus, retailers who sell both cigarettes and tobacco products will no longer be legally required to have two licenses. In practice, DRS does not enforce the two-license requirement. Under the amendment, those dealing with untaxed tobacco products will still have to obtain a tobacco products distributor or unclassified importer license.

Under current law, anyone (1) who manufactures tobacco products as a business; (2) who buys them at wholesale from a manufacturer or distributor for sale; or (3) who imports them into the state, of which at least 75% are to be sold, must have a tobacco products distributor license. Cigarette dealer licenses are currently required only for cigarette retailers, including those operating fewer than 25 cigarette vending machines. The annual fee for a cigarette dealer license is $25. The fee for a tobacco products distributor license is $100 per year.

The amendment makes various changes to conform to the licensure change, including eliminating a requirement that tobacco products retailers file reports with DRS by July 25th annually. It continues current requirements that retailers maintain records of the people from whom they acquire tobacco products, including quantities and acquisition dates and any other information DRS considers necessary. It eliminates a requirement that retailers keep records of the people to whom they sell tobacco products, including quantities and sale dates.

The amendment applies tobacco products license display requirements only to distributor licenses and requires the display to be “conspicuous” rather than “proper. ” It restricts the unclassified importer license to those who acquire untaxed products outside the state and bring them here only for their personal use. It requires DRS to publish a list of licensed distributors on its website.

§ 511 – ESTATE TAX PENALTY

This section is anticipated to result in a revenue gain to the extent that penalties are due resulting from failure to pay the estate tax by the due date.

The amendment imposes a minimum penalty of $50 for failure to pay estate tax by the due date. Current law imposes a penalty of 10% of the unpaid tax but does not specify any minimum amount. Estate taxes are due and payable nine months after the death date. Unpaid taxes are also subject to interest of 1% per month from the due date to the payment date.

§ 512 – ESTATE AND GIFT TAX APPEALS

This section is not anticipated to result in any fiscal impact.

By extending the admissions, cabaret, and dues tax appeals process to most DRS estate and gift tax orders, decisions, determinations, and disallowances, the amendment allows an aggrieved party to appeal these decisions to Superior Court instead of to the probate court. Under current law, aggrieved parties must appeal DRS estate tax decisions to the probate court for the district where the deceased lived or, if the person was a not a Connecticut resident, to the district where the taxable property is located. Under the amendment, probate courts will handle only appeals of DRS determinations concerning the decedent's domicile.

§ 513 – TIME LIMIT FOR ASSESSING TAX ON UNDISCLOSED GIFTS

The provisions will result in a revenue gain to the state to the extent that it enhances DRS's ability to collect revenue.

When a taxpayer fails to file a required gift tax return, the law allows the DRS commissioner to file the return based on the best information available. Except when a taxpayer has filed a fraudulent or willfully false return in an attempt evade the tax, the time limit for the commissioner to assess additional gift tax is three years from the due date of the original return or the date the return is actually filed, whichever is later. The amendment makes an exception to the three-year time limit to allow the commissioner to impose gift tax at any time if a gift is inadequately disclosed or not disclosed.

By law, gift tax returns must show:

1. each gift made during the calendar year that is included in determining taxable gifts;

2. allowable deductions claimed;

3. a description of each gift with the recipient's name, address, and social security number;

4. the fair market value of each nonmonetary gift; and

5. any other information DRS needs to administer the tax.

§§ 514 & 515 – GIFT TAX RETURN DUE DATE AND INTEREST ON GIFT TAX OVERPAYMENTS

This section is not anticipated to result in any fiscal impact.

In general, gift tax returns and payments are due by April 15th of the year after the calendar year in which the donor made the gift. But when the donor dies in the calendar year when he makes the gift, the amendment makes the due date the same as the due date for estate tax returns and payments, i. e. , nine months after the death date.

The amendment also requires DRS to pay interest on gift tax overpayments at the rate of 0. 66% for each month or part of a month beginning on the payment date or gift tax return due date, whichever is later. The law already requires DRS to pay interest at this rate on estate tax overpayments (CGS § 12-392 (a) (3) ) .

Sec. 516 of the amendment is not anticipated to have any fiscal impact.

Sec. 517 of the amendment enables the City of Derby to establish a special taxing district for revitalizing its downtown area. The City of Derby will be able to accommodate any additional administrative functions resulting from passage of this amendment within its anticipated budgetary resources.

Sec. 518 of the amendment allows municipalities under certain conditions to enter into agreements to exempt property taxes or fix property taxes on a parcel. It is assumed that a town would not enter into an agreement that would not be in the town's best interest. Therefore, the amendment is anticipated to have positive long term fiscal impact to a town.

Sec. 519 of the amendment requires the Department of Transportation to allow the city of Shelton to construct an at grade pedestrian crossing on the Housatonic Railroad's Maybrook Line between Canal Street and Bridge Street. The project shall first be approved by the legislative body of the city of Shelton and the Housatonic Railroad Company and constructed in accordance with the Department of Transportation's recommendations. There is a one-time cost to the town of Shelton for construction of such crossing and an ongoing cost to the town for perpetual maintenance cost and liability for said crossing. It is unknown at this time what the overall cost to construct an at-grade pedestrian crossing would be.

The Department of Transportation will be able to accommodate any additional administrative functions resulting from passage of this amendment within its anticipated budgetary resources.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either House thereof for any purpose.

Agency Affected	Fund-Effect
Department of Revenue Services	GF - See Below

Municipalities	Effect
Various Municipalities	See Below