AN ACT CREATING A STRONGER STATE ECONOMY AND BETTER BUSINESS CLIMATE.

Under current law, any company that creates at least 10 new full-time jobs in the state may be eligible for a jobs creation tax credit of up to 60% of the state income tax withheld from the new employees' wages for up to five successive years. This bill makes the credit $ 1,500 per new employee and allows the credits for up to three successive years. By law, total credits for all eligible companies are limited to $ 10 million per year and the credit applies against the corporation, utility company, and insurance premium taxes.

The bill revises the way in which (1) taxpayers earn, claim, and repay the credits and (2) the Department of Economic and Community Development (DECD) commissioner approves the credits.

The bill requires the DECD commissioner, by February 1, 2010, to (1) compile, and make available to the public, a list of business types and the permits and licenses they require; (2) develop recommendations to establish a one-stop office for all state business permitting; and (3) report on its recommendations to the Commerce Committee.

The bill also requires that, beginning with the 2010 session of the General Assembly, a jobs impact statement be prepared for certain bills and amendments that, if passed, could affect the state's private-sector employment. The Commerce Committee must, by February 1, 2010, recommend a joint rule on the procedure for preparing the statements, their content, and the types of bills and amendments for which they should be prepared.

EFFECTIVE DATE: Upon passage, except for the jobs creation tax credit provisions, which are effective October 1, 2009.

The bill creates a new category of businesses, a “high impact job applicant,” eligible for the program. It defines a high impact job applicant as any Connecticut company that creates at least 200 new jobs in the state. But the bill does not include any specific provisions for this new category. By law, any company that creates at least 10 new full-time jobs in the state may already be eligible.

By law, a company must apply to the DECD commissioner, who must determine whether the applicant is eligible for the credits. Under current law, the commissioner must also determine whether the proposed increase in jobs (1) is economically viable without the credits, (2) would provide a net benefit to the state's economic development and employment opportunities, and (3) conforms to the State Plan of Conservation and Development. The bill eliminates the requirement that the commissioner determine whether the job growth is economically viable only with the use of the credits and requires that she determine whether the location of the facilities where the new employees will work conforms to the state plan.

The bill also eliminates the requirement that the commissioner approve full or partial credits if she concludes that the increase in jobs is economically viable only with the tax credit. As under current law, the commissioner must determine that the revenue generated from the employment and economic development in the state exceeds the credits she approves and any other credits to be taken.

As under current law, the jobs to which the credit applies must (1) have not existed in Connecticut before the application, (2) require at least 35 hours of work per week and not be temporary or seasonal, and (3) be filled by newly hired employees. An employee who worked in Connecticut for a related party to the applicant within the preceding 12 months is not eligible.

Under current law, the company earns the tax credits on an income year basis and must claim them in the same year, or the credits expire. The bill allows a company to earn the credits on a calendar year basis and claim them (1) in the income year in which it earned them, if its income year coincides with the calendar year, or (2) in the next income after year the calendar year in which it is earned if the two do not coincide. The bill also allows a company to carry forward unused credits for three years.

By law, when the DECD commissioner approves a credit, the commissioner must issue an allocation notice. Under current law, within 30 days of the end of the taxpayer's income year, the taxpayer must give the commissioner information about the number of new jobs created during the year and the income taxes withheld from the new employees' wages for the year. The bill eliminates the requirement that the taxpayer provide the income tax information and requires that the taxpayer provide the other information within 30 days of the end of its calendar year.

Under current law, the commissioner must issue an eligibility certificate within 60 days after the close of the taxpayer's income year or 30 days after the taxpayer provides the required information, whichever comes first. The bill requires that she issue the certificate after the information is provided.

If, in the four years after the income year in which the credits were issued, the number of new employees falls below that for which a taxpayer claimed the credits and they are not replaced by other new employees (excluding employees transferred from another location or from a related party), current law requires the taxpayer to repay (“recapture”) the credit according to a repayment schedule. The bill eliminates the schedule and requires the taxpayer to repay $ 1,500 for each new employee below the number of new employees from the previous calendar year, as the commissioner determines. Although the bill allows the credits for three successive years, the recapture period continues to apply to the four years after the income year in which the credits were issued.

It prohibits the commissioner from issuing credits to a company in any year in which it repaid any credits.

Yea

Nay

(03/12/2009)