AN ACT CONCERNING CHANGES TO VARIOUS TAX STATUTES.

This bill makes adjustments in how the Department of Revenue Services (DRS) administers various state tax laws. It:

1. extends cigarette tax assessment, interest, and penalty provisions to people who are not licensed dealers or distributors when they fail to pay excise tax on unstamped cigarettes in their possession;

2. allows DRS to publish the identities of cigarette dealers and distributors by category in order to enforce the cigarette minimum mark-up law;

3. shifts, from the DRS commissioner to the comptroller, responsibility for depositing motor fuel tax revenue in the Conservation Fund;

4. standardizes motor carrier road tax report filing deadlines and requires motor carriers to purchase trip permits to operate temporarily in the state without registering for the tax; and

5. allows the insurance commissioner to disclose the contents of captive insurance company examination reports to other state agencies, if the agencies agree to keep the information confidential, and extends to captive insurance companies the same insurance premium tax administrative requirements as apply to other insurance companies.

The bill corrects a reference in the statutory confidentiality requirements applicable to tax return data obtained by the Office of Fiscal Analysis.

By law, anyone other than a licensed cigarette dealer or distributor who has unstamped cigarettes in his or her possession must file a return and pay cigarette tax within 24 hours after obtaining the unstamped cigarettes. This bill extends to violators the same tax deficiency assessment, interest, and penalty provisions as apply to cigarette dealers and distributors, except that, under this bill, a cigarette use tax violator is not subject to a $ 50 minimum penalty.

Connecticut prohibits cigarette distributors and dealers from selling below cost. Unless they file proof otherwise with the DRS commissioner, the law presumes that their cost includes a percentage mark-up (known as the “minimum mark-up”) that varies depending on the type of seller and transaction. For purposes of determining the minimum mark-up, distributors are divided into three categories: stamping agents, subjobbers, and chain stores.

This bill allows the DRS commissioner to publish the identities of these distributors (apparently, by category) in order to enforce the minimum mark- up law. By law, the DRS commissioner must already publish, on its website, a list of cigarette distributors and dealers for purposes of enforcing restrictions on shipping cigarettes to state residents (CGS § 12-285c).

Starting with FY 10, the bill transfers, from the DRS commissioner to the comptroller, the responsibility for making deposits of motor fuel tax revenue into the Conservation Fund. By law, $ 3 million of annual state revenue from motor fuel taxes on sales by boat yards, marinas, dry docks, and similar entities must be deposited in the fund.

The bill eliminates the DRS commissioner's authority to adopt alternate motor carrier road tax report filing deadlines by regulation. It thus requires all carriers filing quarterly operating reports to file them annually on the last days of January, April, July, and October.

Under current law, the commissioner may exempt carriers that either (1) operate only in Connecticut or (2) buy all their fuel in the state from quarterly reporting and instead require them to file annual reports. The bill requires the commissioner to exempt motor carriers that both operate and buy all their fuel only in Connecticut from all reporting. It requires all other carriers to file quarterly reports and eliminates the annual reports

By law, intrastate motor carriers and interstate motor carriers based in Connecticut must register with DRS for purposes of the motor carrier road tax and display state-issued identification markers whenever they operate in Connecticut.

Under current law, the DRS commissioner can, by letter or telegram, authorize a carrier to operate here without the markers for up to 10 days if tax enforcement will not be adversely affected and enforcing the registration requirement would cause undue delay and hardship. The bill modifies this authority in two ways. It continues the commissioner's authority to allow a carrier to operate without markers if tax enforcement will not be adversely affected, but only in an emergency. It also allows the commissioner to permit emergency operation for an unlimited time, instead of only for 10 days.

For carriers seeking temporary operating authority in nonemergency situations, the bill authorizes the commissioner to issue a trip permit for each vehicle, good for 72 hours of operation without markers. The 72-hour period begins either from the time the permit is issued or a time the permittee specifies, whichever is later. A carrier operating under a trip permit is exempt from the requirement to file quarterly operating reports and from paying the motor carrier road tax.

1. the applicant files a permit application on a DRS form and pays a $ 50 fee for each vehicle seeking a permit,

2. she determines issuance will not adversely affect motor carrier road tax enforcement, and

3. she finds that enforcement of the regular registration requirement will cause undue hardship and delay for the operating vehicle.

A person operating a motor vehicle under a trip permit must keep the permit in the vehicle at all times and show it for inspection to DRS employees or agents or law enforcement officers. Permits are not transferrable. By applying for the permit and paying the fee, the motor carrier agrees to waive any claim for a refund otherwise allowable if the permit fee exceeds the motor carrier road tax that would otherwise be paid for the vehicle operating in the state.

The bill allows the commissioner to authorize third parties to issue the trip permits. Authorized third parties must remit $ 50 per permit to the DRS commissioner and issue a receipt to each permittee.

The Neighborhood Assistance Act provides business tax credits to companies that invest in certain municipally approved community activities and programs.

The bill increases the credit for business investments in community-based alcoholism prevention or treatment programs from 40% to 60% of the investment, thus making it match the 60% credit generally applicable to most other Neighborhood Assistance Act activities. It also makes a technical change.

EFFECTIVE DATE: July 1, 2009 and applicable to income years starting on or after that date.

The bill allows the insurance commissioner to disclose the contents of an examination report on a captive insurance company to any state agency in Connecticut or elsewhere, if the agency receiving the information agrees to keep it confidential. Under current law, the commissioner's disclosure authority is limited to (1) insurance departments in other states or countries, (2) Connecticut or other states' law enforcement officials, and (3) federal agencies.

By law, captive insurance companies are subject to the insurance premium tax. This bill imposes the same tax assessment, collection, payment, and annual return requirements and procedures on captive insurers as other insurance companies. It also subjects them to the same DRS regulations as all insurance companies subject to the insurance premium tax. These laws and regulations apply unless they are inconsistent with the statutes governing captive insurance companies.

Finally, the bill requires captive insurance companies to pay taxes by March 1 annually, instead of during February each year and makes technical changes and corrections.

EFFECTIVE DATE: Upon passage. The tax procedures and filing requirements apply to calendar years starting on or after January 1, 2009.

The bill eliminates the State Tax Review Commission. The commission was established in 1991 and has been inactive since 1994. Its original charge was to evaluate the state's tax system and make a report by December 15, 1992. In 1993, the legislature expanded its charge and required it to make reports every year by December 15. The commission filed reports in December 1992 and January 1994, but then fell into inactivity. The legislature repealed the statutory authorization for the commission in 1997, but the governor vetoed the bill on other grounds.

The bill eliminates a requirement that the DRS commissioner report annually on the department's cigarette sales enforcement activities to the Public Health and Children's committees and the state agency the governor designates as responsible for reducing smoking by minors. The first report was due January 1, 1998. The Legislative Library has no record of any reports being submitted.

Yea

Nay

(04/16/2009)