CHAPTER 211a
HOSPITALS TAX

Table of Contents

Sec. 12-263a. Definitions.
Sec. 12-263b. Tax on gross earnings. Rate. Tax not applicable after April 1, 2000.
Sec. 12-263c. Failure to pay tax when due. Penalty provisions. Waiver.
Sec. 12-263d. Examination of records. Penalties related to deficiency assessments.
Sec. 12-263e. Claims for refunds. Hearings and appeals. State lien against real estate as security for tax.
Secs. 12-263f to 12-263l.

      Sec. 12-263a. Definitions. As used in sections 12-263a to 12-263e, inclusive:

      (1) "Hospital" means any health care facility or institution, as defined in section 19a-630, which is licensed as a short-term general hospital by the Department of Public Health but does not include (A) any hospital which, on October 1, 1997, is within the class of hospitals licensed by the department as children's general hospitals, or (B) a short-term acute hospital operated exclusively by the state other than a short-term acute hospital operated by the state as a receiver pursuant to chapter 920;

      (2) "Gross revenue" means the amount of a hospital's total charges for all patient care services minus any refunds resulting from errors or overcharges;

      (3) "Contractual allowance" means the percentage amount of discounts that are provided to nongovernmental payers pursuant to subsections (c), (d) and (e) of section 19a-646;

      (4) "Uncompensated care" means the cost of care that is written off as a bad debt or provided free under a free care policy that has been approved by the Office of Health Care Access division of the Department of Public Health;

      (5) "Other allowances" means any financial requirements, as authorized by the Office of Health Care Access division of the Department of Public Health, of a hospital resulting from circumstances including, but not limited to, an insurance settlement of a liability case or satisfaction of a lien or encumbrance, any difference between charges for employee self-insurance and related expenses. For fiscal years commencing on and after October 1, 1994, "other allowances" means the amount of any difference between charges for employee self-insurance and related expenses determined using the hospital's overall relationship of costs to charges as determined by the Office of Health Care Access division of the Department of Public Health;

      (6) "Net revenue" means the amount of a hospital's gross revenue minus the hospital's (A) contractual allowances, (B) the difference between government charges and government payments, (C) uncompensated care and (D) other allowances;

      (7) "Hospital gross earnings" means the amount of a hospital's net revenue minus (A) the amount that is projected to be received by the hospital from the federal government for Medicare patients, based on the hospital's budget authorization, and (B) the amount that is projected to be received by the hospital from the Department of Social Services, based on the hospital's budget authorization;

      (8) "Patient care services" means therapeutic and diagnostic medical services provided by the hospital to inpatients and outpatients, including tangible personal property transferred in connection with such services.

      (P.A. 94-9, S. 21, 41; P.A. 95-257, S. 12, 21, 39, 58; P.A. 97-2, S. 2, 8; P.A. 99-173, S. 31, 65; P.A. 00-174, S. 68, 83; P.A. 10-179, S. 95.)

      History: P.A. 94-9 effective April 1, 1994; P.A. 95-257 replaced Commissioner and Department of Public Health and Addiction Services with Commissioner and Department of Public Health and replaced Commission on Hospitals and Health Care with Office of Health Care Access, effective July 1, 1995; P.A. 97-2 amended definition of hospital in Subdiv. (1) to exclude children's general hospitals, effective the later of October 1, 1997, or upon the date of federal approval or federal determination that no approval is required pursuant to Sec. 19a-670a (actual effective date was October 1, 1997); P.A. 99-173 amended Subdiv. (1) to exclude short-term acute care hospitals run by the state, effective June 23, 1999, and applicable to calendar quarters commencing on or after July 1, 1999; P.A. 00-174 added Subdiv. (8) defining "patient care services", effective May 26, 2000, and applicable to all tax periods open on said date; P.A. 10-179 amended Subdivs. (4) and (5) by replacing "Office of Health Care Access" with "Office of Health Care Access division of the Department of Public Health".

      Subdiv. (2):

      P.A. 00-174, enacted after plaintiff's appeal was filed, clarified Subdiv. (2) to provide that term "patient care services" included tangible personal property transferred in connection with rendering of such services; legislative history indicated that relevant provisions of the act were intended to be clarifying and nonsubstantive, therefore court affirmed applicability of such clarification to pending case determining that tax on hospital's gross earnings applied to charges for tangible personal property used in the course of providing patient care services. 265 C. 511.


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      Sec. 12-263b. Tax on gross earnings. Rate. Tax not applicable after April 1, 2000. There is hereby imposed on the hospital gross earnings of each hospital in this state a tax (1) at the rate of eleven per cent of its hospital gross earnings in each taxable quarter for taxable quarters commencing prior to October 1, 1996; (2) at the rate of nine and one-fourth per cent of its hospital gross earnings in each taxable quarter commencing on or after October 1, 1996, and prior to October 1, 1997; (3) at the rate of eight and one-fourth per cent of its hospital gross earnings in each taxable quarter commencing on or after October 1, 1997, and prior to October 1, 1998; (4) at the rate of seven and one-fourth per cent of its hospital gross earnings in each taxable quarter commencing on or after October 1, 1998, and prior to October 1, 1999; and (5) at the rate of four and one-half per cent of its hospital gross earnings in each taxable quarter commencing on or after October 1, 1999, and prior to April 1, 2000. The hospital gross earnings of each hospital in this state shall not be subject to the provisions of this chapter with respect to calendar quarters commencing on or after April 1, 2000. Each hospital shall, on or before the last day of January, April, July and October of each year, render to the Commissioner of Revenue Services a return, on forms prescribed or furnished by the Commissioner of Revenue Services and signed by one of its principal officers, stating specifically the name and location of such hospital, and the amounts of its hospital gross earnings, its net revenue and its gross revenue for the calendar quarter ending the last day of the preceding month. Payment shall be made with such return.

      (P.A. 94-9, S. 22, 41; P.A. 96-144, S. 2, 5; P.A. 98-244, S. 12, 35; P.A. 99-173, S. 32, 65; P.A. 00-170, S. 9, 42.)

      History: P.A. 94-9 effective April 1, 1994; P.A. 96-144 reduced tax from 11% to 9.25% on October 1, 1996, to 8.25% on October 1, 1997, to 7.25% on October 1, 1998, and to 6.25% on and after October 1, 1999, effective May 29, 1996; P.A. 98-244 eliminated notarization requirement, effective June 8, 1998, and applicable to calendar quarters commencing on or after October 1, 1998; P.A. 99-173 reduced rate from 6.25% to 4.5% in Subdiv. (5), effective June 23, 1999, and applicable to calendar quarters commencing on or after October 1, 1999; P.A. 00-170 discontinued to the tax for calendar quarters commencing on or after April 1, 2000, effective May 26, 2000.

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      Sec. 12-263c. Failure to pay tax when due. Penalty provisions. Waiver. (a) If any hospital fails to pay the amount of tax reported to be due on its return within the time specified under the provisions of section 12-263b, there shall be imposed a penalty equal to ten per cent of such amount due and unpaid, or fifty dollars, whichever is greater. The tax shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax until the date of payment.

      (b) If any hospital has not made its return within one month after the time specified in section 12-263b, the Commissioner of Revenue Services may make such return at any time thereafter, according to the best information obtainable and according to the form prescribed. To the tax imposed upon the basis of such return, there shall be added an amount equal to ten per cent of such tax, or fifty dollars, whichever is greater. The tax shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax until the date of payment.

      (c) Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalties provided under this section when it is proven to his satisfaction that the failure to pay any tax on time was due to reasonable cause and was not intentional or due to neglect.

      (P.A. 94-9, S. 23, 41; P.A. 95-359, S. 11, 19.)

      History: P.A. 94-9 effective April 1, 1994; P.A. 95-359 amended Subsecs. (a) and (b) to change interest rate from 1.66% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after that date.

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      Sec. 12-263d. Examination of records. Penalties related to deficiency assessments. (a) The Commissioner of Revenue Services may examine the records of any hospital subject to a tax imposed under the provisions of sections 12-263a to 12-263e, inclusive, as he may deem necessary. If he shall determine therefrom that there is a deficiency with respect to the payment of any such tax due under the provisions of said sections 12-263a to 12-263e, inclusive, he shall assess the deficiency in tax, give notice of such deficiency assessment to the hospital and make demand thereupon for payment. Such amount shall bear interest at the rate of one per cent per month or fraction thereof from the date when the original tax was due and payable. When it appears that any part of the deficiency for which a deficiency assessment is made is due to negligence or intentional disregard of the provisions of said sections 12-263a to 12-263e, inclusive, or regulations adopted thereunder, there shall be imposed a penalty equal to ten per cent of the amount of such deficiency assessment, or fifty dollars, whichever is greater. When it appears that any part of the deficiency for which a deficiency assessment is made is due to fraud or intent to evade the provisions of sections 12-263a to 12-263e, inclusive, or regulations adopted thereunder, there shall be imposed a penalty equal to twenty-five per cent of the amount of such deficiency assessment. No hospital shall be subject to more than one penalty under this subsection in relation to the same tax period. Within thirty days of the mailing of such notice, the hospital shall pay to the commissioner, in cash, or by check, draft or money order drawn to the order of the Commissioner of Revenue Services, any additional amount of tax, penalty and interest shown to be due.

      (b) Except in the case of a wilfully false or fraudulent return with intent to evade the tax, no assessment of additional tax shall be made after the expiration of more than three years from the date of the filing of a return or from the original due date of a return, whichever is later. If no return has been filed as provided under the provisions of section 12-263b, the commissioner may make such return at any time thereafter, according to the best information obtainable and according to the form prescribed. Where, before the expiration of the period prescribed herein for the assessment of an additional tax, a hospital has consented in writing that such period may be extended, the amount of such additional tax due may be determined at any time within such extended period. The period so extended may be further extended by subsequent consents in writing before the expiration of the extended period.

      (P.A. 94-9, S. 24, 41; P.A. 95-359, S. 12, 19.)

      History: P.A. 94-9 effective April 1, 1994; P.A. 95-359 amended Subsec. (a) to reduce interest rate from 1.66 to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after that date.

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      Sec. 12-263e. Claims for refunds. Hearings and appeals. State lien against real estate as security for tax. The provisions of sections 12-550 to 12-554, inclusive, and section 12-555a shall apply to the provisions of sections 12-263a to 12-263e, inclusive, in the same manner and with the same force and effect as if the language of said sections 12-550 to 12-554, inclusive, and said section 12-555a had been incorporated in full into sections 12-263a to 12-263e, inclusive, and had expressly referred to the tax under said sections, except to the extent that any provision is inconsistent with a provision in said sections 12-263a to 12-263e, inclusive.

      (P.A. 94-9, S. 25, 41.)

      History: P.A. 94-9 effective April 1, 1994.

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      Secs. 12-263f to 12-263l. Reserved for future use.

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