CHAPTER 228c

GIFT TAX

Table of Contents

Sec. 12-640. Imposition of gift tax.

Sec. 12-641. Tax not applicable to transfers outside the state.

Sec. 12-642. Rate of tax.

Sec. 12-643. Definition of taxable gifts and Connecticut taxable gifts.

Sec. 12-644. Returns.

Sec. 12-645. Date of filing of returns. Exception.

Sec. 12-646. Appraisal of property by commissioner. Declaration by donor.

Sec. 12-646a. Value of farm transferred by gift.

Sec. 12-647. Payment of tax. Penalty for late payment. Extensions. Changes in federal gift tax. Overpayments.

Sec. 12-648. Credit against succession tax.

Sec. 12-649. Records. Penalties. Administration. Appeals. Collection. Liens.


Sec. 12-640. Imposition of gift tax. For the calendar year 1991 and each year thereafter, a tax computed as provided in section 12-642 is hereby imposed on the transfer of property by gift during such taxable year by any individual resident or nonresident provided, for the calendar year 1991, such tax shall be imposed only on those gifts which are transferred on or after September 1, 1991.

(June Sp. Sess. P.A. 91-3, S. 136, 168.)

History: June Sp. Sess. P.A. 91-3, S. 136 effective August 22, 1991, and applicable to gifts made on or after September 1, 1991.

Sec. 12-641. Tax not applicable to transfers outside the state. The provisions of this chapter shall not apply to the transfer of tangible personal property and real property having a situs outside the state of Connecticut.

(June Sp. Sess. P.A. 91-3, S. 137, 168.)

History: June Sp. Sess. P.A. 91-3, S. 137 effective August 22, 1991, and applicable to gifts made on or after September 1, 1991.

Sec. 12-642. Rate of tax. (a)(1) With respect to calendar years commencing prior to January 1, 2001, the tax imposed by section 12-640 for the calendar year shall be at a rate of the taxable gifts made by the donor during the calendar year set forth in the following schedule:

Amount of Taxable Gifts

Rate of Tax

Not over $25,000

1%

Over $25,000

$250, plus 2% of the excess

 but not over $50,000

 over $25,000

Over $50,000

$750, plus 3% of the excess

 but not over $75,000

 over $50,000

Over $75,000

$1,500, plus 4% of the excess

 but not over $100,000

 over $75,000

Over $100,000

$2,500, plus 5% of the excess

 but not over $200,000

 over $100,000

Over $200,000

$7,500, plus 6% of the excess

 over $200,000

(2) With respect to the calendar years commencing January 1, 2001, January 1, 2002, January 1, 2003, and January 1, 2004, the tax imposed by section 12-640 for each such calendar year shall be at a rate of the taxable gifts made by the donor during the calendar year set forth in the following schedule:

Amount of Taxable Gifts

Rate of Tax

Over $25,000

$250, plus 2% of the excess

 but not over $50,000

 over $25,000

Over $50,000

$750, plus 3% of the excess

 but not over $75,000

 over $50,000

Over $75,000

$1,500, plus 4% of the excess

 but not over $100,000

 over $75,000

Over $100,000

$2,500, plus 5% of the excess

 but not over $675,000

 over $100,000

Over $675,000

$31,250, plus 6% of the excess

 over $675,000

(3) With respect to Connecticut taxable gifts, as defined in section 12-643, made by a donor during a calendar year commencing on or after January 1, 2005, but prior to January 1, 2010, including the aggregate amount of all Connecticut taxable gifts made by the donor during all calendar years commencing on or after January 1, 2005, but prior to January 1, 2010, the tax imposed by section 12-640 for the calendar year shall be at the rate set forth in the following schedule, with a credit allowed against such tax for any tax previously paid to this state pursuant to this subdivision:

Amount of Taxable Gifts

Rate of Tax

Not over $2,000,000

None

Over $2,000,000

 but not over $2,100,000

5.085% of the excess over $0

 Over $2,100,000

$106,800 plus 8% of the excess

 but not over $2,600,000

 over $2,100,000

Over $2,600,000

$146,800 plus 8.8% of the excess

 but not over $3,100,000

 over $2,600,000

Over $3,100,000

$190,800 plus 9.6% of the excess

 but not over $3,600,000

 over $3,100,000

Over $3,600,000

$238,800 plus 10.4% of the excess

 but not over $4,100,000

 over $3,600,000

Over $4,100,000

$290,800 plus 11.2% of the excess

 but not over $5,100,000

 over $4,100,000

Over $5,100,000

$402,800 plus 12% of the excess

 but not over $6,100,000

 over $5,100,000

Over $6,100,000

$522,800 plus 12.8% of the excess

 but not over $7,100,000

 over $6,100,000

Over $7,100,000

$650,800 plus 13.6% of the excess

 but not over $8,100,000

 over $7,100,000

Over $8,100,000

$786,800 plus 14.4% of the excess

 but not over $9,100,000

 over $8,100,000

Over $9,100,000

$930,800 plus 15.2% of the excess

 but not over $10,100,000

 over $9,100,000

Over $10,100,000

$1,082,800 plus 16% of the excess

 over $10,100,000

(4) With respect to Connecticut taxable gifts, as defined in section 12-643, made by a donor during a calendar year commencing on or after January 1, 2010, but prior to January 1, 2011, including the aggregate amount of all Connecticut taxable gifts made by the donor during all calendar years commencing on or after January 1, 2005, the tax imposed by section 12-640 for the calendar year shall be at the rate set forth in the following schedule, with a credit allowed against such tax for any tax previously paid to this state pursuant to this subdivision or pursuant to subdivision (3) of this subsection, provided such credit shall not exceed the amount of tax imposed by this section:

Amount of Taxable Gifts

Rate of Tax

Not over $3,500,000

None

 Over $3,500,000

7.2% of the excess

 but not over $3,600,000

 over $3,500,000

Over $3,600,000

$7,200 plus 7.8% of the excess

 but not over $4,100,000

 over $3,600,000

Over $4,100,000

$46,200 plus 8.4% of the excess

 but not over $5,100,000

 over $4,100,000

Over $5,100,000

$130,200 plus 9.0% of the excess

 but not over $6,100,000

 over $5,100,000

Over $6,100,000

$220,200 plus 9.6% of the excess

 but not over $7,100,000

 over $6,100,000

Over $7,100,000

$316,200 plus 10.2% of the excess

 but not over $8,100,000

 over $7,100,000

Over $8,100,000

$418,200 plus 10.8% of the excess

 but not over $9,100,000

 over $8,100,000

Over $9,100,000

$526,200 plus 11.4% of the excess

 but not over $10,100,000

 over $9,100,000

Over $10,100,000

$640,200 plus 12% of the excess

 over $10,100,000

(5) With respect to Connecticut taxable gifts, as defined in section 12-643, made by a donor during a calendar year commencing on or after January 1, 2011, including the aggregate amount of all Connecticut taxable gifts made by the donor during all calendar years commencing on or after January 1, 2005, the tax imposed by section 12-640 for the calendar year shall be at the rate set forth in the following schedule, with a credit allowed against such tax for any tax previously paid to this state pursuant to this subdivision or pursuant to subdivision (3) or (4) of this subsection, provided such credit shall not exceed the amount of tax imposed by this section:

Amount of Taxable Gifts

Rate of Tax

Not over $2,000,000

None

Over $2,000,000

7.2% of the excess

 but not over $3,600,000

 over $2,000,000

Over $3,600,000

$115,200 plus 7.8% of the excess

 but not over $4,100,000

 over $3,600,000

Over $4,100,000

$154,200 plus 8.4% of the excess

 but not over $5,100,000

 over $4,100,000

Over $5,100,000

$238,200 plus 9.0% of the excess

 but not over $6,100,000

 over $5,100,000

Over $6,100,000

$328,200 plus 9.6% of the excess

 but not over $7,100,000

 over $6,100,000

Over $7,100,000

$424,200 plus 10.2% of the excess

 but not over $8,100,000

 over $7,100,000

Over $8,100,000

$526,200 plus 10.8% of the excess

 but not over $9,100,000

 over $8,100,000

Over $9,100,000

$634,200 plus 11.4% of the excess

 but not over $10,100,000

 over $9,100,000

Over $10,100,000

$748,200 plus 12% of the excess

 over $10,100,000

(b) The tax imposed by section 12-640 shall be paid by the donor. If the gift tax is not paid when due the donee of any gift shall be personally liable for the tax to the extent of the value of the gift.

(June Sp. Sess. P.A. 91-3, S. 138, 168; P.A. 00-170, S. 8, 42; May 9 Sp. Sess. P.A. 02-1, S. 76; June 30 Sp. Sess. P.A. 03-1, S. 99; P.A. 05-251, S. 67; June Sp. Sess. P.A. 09-3, S. 118; Sept. Sp. Sess. P.A. 09-8, S. 12; P.A. 11-6, S. 87.)

History: June Sp. Sess. P.A. 91-3, S. 138 effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; P.A. 00-170 amended Subsec. (a) to modify the rate structure and to provide for a phase-out of the tax on gifts under $1,000,000, which phase-out will be complete after January 1, 2006, effective May 26, 2000; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (a) to delay by two years the phase-out of the tax on gifts under $1,000,000, effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002; June 30 Sp. Sess. P.A. 03-1 amended Subsec. (a) to extend by two years the phaseout of the tax on gifts under $1,000,000, effective August 16, 2003, and applicable to taxable years commencing on or after January 1, 2003; P.A. 05-251 amended Subsec. (a) by replacing rate structure in former Subdivs. (3) to (7) with rate structure in new Subdiv. (3), effective June 30, 2005, and applicable to calendar years commencing on or after January 1, 2005; June Sp. Sess. P.A. 09-3 amended Subsec. (a) by inserting “but prior to January 1, 2010,” in Subdiv. (3) and adding Subdiv. (4) re new rate structure, effective January 1, 2010; Sept. Sp. Sess. P.A. 09-8 amended Subsec. (a)(4) to change “January 1, 2010,” to “January 1, 2005,” and to add provisions re tax previously paid pursuant to Subdiv. (3) and re credit shall not exceed amount of tax imposed, effective October 5, 2009, and applicable to gifts made during calendar years commencing on or after January 1, 2010; P.A. 11-6 amended Subsec. (a) by adding Subdiv. (5) re new tax rates, effective May 4, 2011, and applicable to gifts made during calendar years commencing on or after January 1, 2011.

See Sec. 12-391 re estate tax.

Sec. 12-643. Definition of taxable gifts and Connecticut taxable gifts. (a) The term “taxable gifts” means the transfers by gift which are included in taxable gifts for federal gift tax purposes under Section 2503 and Sections 2511 to 2514, inclusive, and Sections 2516 to 2519, inclusive, of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, less the deductions allowed in Sections 2522 to 2524, inclusive, of said Internal Revenue Code, except in the event of repeal of the federal gift tax, then all references to the Internal Revenue Code in this section shall mean the Internal Revenue Code as in force on the day prior to the effective date of such repeal.

(b) In the administration of the tax under this chapter, the Commissioner of Revenue Services shall apply the provisions of Sections 2701 to 2704, inclusive, of said Internal Revenue Code. The words “secretary or his delegate” as used in the aforementioned sections of the Internal Revenue Code means the Commissioner of Revenue Services.

(c) The term “Connecticut taxable gifts” means taxable gifts made during a calendar year commencing on or after January 1, 2005, that are, (1) for residents of this state, taxable gifts, wherever located, but excepting gifts of real estate or tangible personal property located outside this state, and (2) for nonresidents of this state, gifts of real estate or tangible personal property located within this state.

(June Sp. Sess. P.A. 91-3, S. 139, 168; P.A. 97-243, S. 41, 67; P.A. 05-251, S. 68; P.A. 06-196, S. 227.)

History: June Sp. Sess. P.A. 91-3, S. 139 effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; P.A. 97-243 clarified that the commissioner is to apply Secs. 2701 to 2704 of the Internal Revenue Code, effective June 24, 1997, and applicable to calendar years commencing on or after January 1, 1997; P.A. 05-251 divided section into Subsecs. (a) and (b), amended Subsec. (a) by adding provision re repeal of federal gift tax and added Subsec. (c) re definition of “Connecticut taxable gifts”, effective June 30, 2005, and applicable to calendar years commencing on or after January 1, 2005; P.A. 06-196 made a technical change in Subsec. (a), effective June 7, 2006.

Sec. 12-644. Returns. (a) Any individual, whether resident or nonresident, liable for a return under this chapter, who in the calendar year makes any transfer by gift not excluded in this chapter shall make a return with respect to the gift tax imposed by this chapter.

(b) If the donor dies before filing his return, the executor of his will or the administrator of his estate shall file the return. If the donor becomes legally incompetent before filing his return, his guardian or conservator shall file the return.

(c) The return shall set forth:

(1) Each gift made during the calendar year which is to be included in computing the taxable gifts.

(2) The deductions claimed and allowable under section 12-643.

(3) A description of the gift, and the donee’s name, address and Social Security account number.

(4) The fair market value of gifts not made in money.

(5) Such further information as the Commissioner of Revenue Services may find necessary to administer properly the provisions of this chapter.

(d) (1) If any gift which is required to be shown on a return under this chapter is not shown on such return, or if the information set forth in such return fails to meet the requirements of subsection (c) of this section, any tax imposed by this chapter on such undisclosed gift may be assessed at any time with respect to that gift, even if the commissioner has filed a return on behalf of the taxpayer in accordance with section 12-649.

(2) In the case of any item adequately disclosed in such return in accordance with subsection (c) of this section, the provisions of subdivision (1) of this subsection shall not apply.

(June Sp. Sess. P.A. 91-3, S. 140, 168; P.A. 06-194, S. 19.)

History: June Sp. Sess. P.A. 91-3, S. 140 effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; P.A. 06-194 added Subsec. (d) re assessment of tax on undisclosed gifts, effective June 9, 2006, and applicable to gifts made during calendar years commencing on or after January 1, 2006.

Sec. 12-645. Date of filing of returns. Exception. Returns required under this chapter shall be filed on or before the fifteenth day of April following the close of the calendar year except where a gift is made during the calendar year in which the donor dies, the return with respect to such donor shall be filed on or before the last date, including extensions, for filing the estate tax return under chapter 217 with respect to such donor.

(June Sp. Sess. P.A. 91-3, S. 141, 168; P.A. 95-27, S. 2, 4; P.A. 06-194, S. 20.)

History: June Sp. Sess. P.A. 91-3, S. 141, effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; P.A. 95-27 added exception for gifts made in the calendar year in which the donor dies, effective May 8, 1995, and applicable to gifts made on or after January 1, 1995; P.A. 06-194 changed filing requirement for deceased donor from filing a gift tax return for federal gift tax purposes to filing an estate tax return under chapter 217, effective June 9, 2006, and applicable to gifts made during calendar years commencing on or after January 1, 2006.

Sec. 12-646. Appraisal of property by commissioner. Declaration by donor. The Commissioner of Revenue Services may require the donor or the donee to show the property subject to the tax, as provided in this chapter, to the commissioner upon demand and may employ a suitable person to appraise the property. The donor shall submit a declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, that the property shown by said donor on said donor’s return to the commissioner includes all of the property transferred by gift for the calendar year involved and not excluded herein.

(June Sp. Sess. P.A. 91-3, S. 142, 168; P.A. 00-174, S. 66, 83.)

History: June Sp. Sess. P.A. 91-3, S. 142, effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; P.A. 00-174 deleted requirement for an affidavit for certain information required to be submitted, added provisions re declaration and made technical changes for purposes of gender neutrality, effective July 1, 2000.

Sec. 12-646a. Value of farm transferred by gift. (a) In determining the tax due under the provisions of this chapter, the value of any farm land, as defined in section 12-107c, transferred by a donor by gift to a donee who is a lineal descendant or spouse thereof, shall be determined in accordance with the provisions of section 12-63.

(b) If, within ten years immediately following a transfer to a donee where, as provided in subsection (a) of this section, the value is determined in accordance with the provisions of section 12-63, such farm land is transferred by the donee to a party other than the donee’s lineal descendant or the spouse thereof or is no longer classified as farm land in accordance with section 12-107c, such donee or, if such land was transferred to such donee’s lineal descendant or the spouse thereof, such descendant or the spouse thereof shall be liable for the difference between the tax that was due from the donor under the provisions of subsection (a) of this section and the tax that would have been due if such land had been valued based upon its fair market value, rather than at its value as land classified as farm land pursuant to section 12-107c, at the time of such transfer by such donor. The gift tax return of the donor shall include, in such manner as required by the Commissioner of Revenue Services for purposes of this section, a declaration, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such declaration are punishable, as to the fair market value of such farm land, based on its highest and best use value, as of the time of such transfer by such donor. The tax imposed under this subsection shall be paid to the commissioner within sixty days following the date of such transfer or change in classification, and if not so paid shall bear interest at the rate of one per cent per month or fraction thereof, commencing at the expiration of such sixty days, until paid. The commissioner may, for cause shown, on written application of such donee or, if such land was transferred to the donee’s lineal descendant or the spouse thereof, such descendant or the spouse thereof, filed with said commissioner at or before the expiration of such sixty days, extend the time for payment of said tax or any part thereof.

(c) The tax imposed under subsection (b) of this section shall be a lien in favor of the state of Connecticut upon such real property so valued as farm land from the date on which the transfer described in subsection (a) of this section was made until, if there has been no transfer or change in classification resulting in the imposition of tax under subsection (b) of this section, the expiration of ten years immediately following such transfer, or in the event of a transfer or change in classification resulting in the imposition of tax under subsection (b) of this section, payment of the tax and interest, if any, imposed under subsection (b) of this section is made; provided such lien shall not be valid against any bona fide purchaser, as defined in subsection (a) of section 12-35b, or qualified encumbrancer, as defined in subsection (b) of section 12-35b.

(May Sp. Sess. P.A. 94-4, S. 44, 85; P.A. 95-27, S. 3, 4; 95-160, S. 64, 69; P.A. 00-174, S. 67, 83.)

History: May Sp. Sess. P.A. 94-4, S. 44, effective June 9, 1994; P.A. 95-27 added ten-year limit to period during which additional gift tax could be owed if farm land is sold or converted to nonfarm use, and Subsec. (c) regarding a lien in favor of the state on land valued as farm land transferred under Subsec. (a), effective May 8, 1995, and applicable to gifts made on or after July 1, 1995; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 00-174 amended Subsec. (b) to delete requirement for a sworn statement and add requirement for a declaration of certain information required to be submitted, effective July 1, 2000.

Sec. 12-647. Payment of tax. Penalty for late payment. Extensions. Changes in federal gift tax. Overpayments. (a) The tax imposed under this chapter shall be due and payable by the donor no later than April fifteenth following the close of the calendar year during which the gift was made and shall be payable to the Commissioner of Revenue Services. The return required under section 12-644 shall accompany such payment. Where a gift is made during the calendar year in which the donor dies, the last date for paying the tax required under this chapter shall be the last date, including extensions, for filing the estate tax return under chapter 217 with respect to such donor. If any person fails to pay the amount of tax reported to be due on such return within the time specified under the provisions of this section, there shall be imposed a penalty equal to ten per cent of such amount due and unpaid or fifty dollars, whichever is greater. Such amount shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such return.

(b) The commissioner for good cause may extend the time for making any return and paying any amount required to be paid under this chapter if a written request therefor is filed with the commissioner together with a tentative return which must be accompanied by a payment of the tax, which shall be estimated in such tentative return, on or before the last day for filing the return. Any person to whom an extension is granted shall pay, in addition to the tax, interest at the rate of one per cent per month or fraction thereof from the date on which the tax would have been due without the extension until the date of payment.

(c) If the amount of a taxpayer’s taxable gifts, for federal gift tax purposes, reported on such taxpayer’s federal gift tax return for any calendar year, is changed or corrected by the United States Internal Revenue Service or other competent authority, the taxpayer shall report such change or correction in federal taxable gifts within ninety days after the final determination of such change or correction, and shall concede the accuracy of such determination or state wherein it is erroneous. Any taxpayer filing an amended federal gift tax return shall also file within ninety days thereafter an amended return under this chapter and shall give such information as the commissioner may require. The time for filing such report or amended return may be extended by the commissioner upon due cause shown. Notwithstanding any limitation of time in this chapter, if, upon examination, the commissioner finds that such taxpayer is liable for the payment of an additional tax, he shall, within a reasonable time from the receipt of such report or amended return, notify such taxpayer of the amount of such additional tax, together with interest thereon computed at the rate of one per cent per month or fraction thereof from the date when the original tax became due and payable. Within thirty days of the mailing of such notice, the taxpayer shall pay the commissioner the amount of such additional tax and interest. If, upon examination of such report or amended return and related information, the commissioner finds that the taxpayer has overpaid the tax due the state, the commissioner shall certify the amount of such overpayment, together with interest as provided in subsection (d) of this section, to the Comptroller, and such amount shall be paid to the taxpayer by the State Treasurer upon order of the Comptroller.

(d) Whenever there is an overpayment of the tax imposed by this chapter, the commissioner shall return to the taxpayer the overpayment, which shall bear interest at the rate of two-thirds of one per cent per month or fraction thereof, said interest commencing from the due date of the return required under this chapter, or the date of payment, whichever is later.

(June Sp. Sess. P.A. 91-3, S. 143, 168; May Sp. Sess. P.A. 92-5, S. 34, 37; P.A. 94-5, S. 1, 2; P.A. 95-26, S. 35, 52; P.A. 06-194, S. 21.)

History: June Sp. Sess. P.A. 91-3, S. 143, effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (a) to add provisions regarding later payments and added Subsecs. (b) and (c); P.A. 94-5 amended Subsec. (a) re date of filing gift tax return when donor dies in year in which gift is made, effective April 7, 1994, and applicable to taxable years commencing or after January 1, 1994; P.A. 95-26 amended Subsecs. (a), (b) and (c) to lower interest rate from 1.25% to 1%, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 06-194 amended Subsec. (a) by requiring an estate tax return, rather than a gift tax return, from a deceased donor, added Subsec. (d) re payment of interest on overpayment of taxes, and made a conforming change in Subsec. (c), effective June 9, 2006, and applicable to taxes due for calendar years commencing on or after January 1, 2005.

Sec. 12-648. Credit against succession tax. A credit shall be allowed against the tax imposed under chapter 216 in the amount of any tax imposed and paid under sections 12-640 to 12-649, inclusive, with respect to a gift includable in the gross taxable estate of the donor under said chapter 216.

(June Sp. Sess. P.A. 91-3, S. 144, 168; May Sp. Sess. P.A. 92-5, S. 35, 37; P.A. 93-261, S. 1, 4.)

History: June Sp. Sess. P.A. 91-3, S. 144, effective August 22, 1991, and applicable to gifts made on or after September 1, 1991; May Sp. Sess. P.A. 92-5 made a technical change; P.A. 93-261 deleted existing section and established a credit against the succession tax with respect to any tax imposed and paid under the gift tax, effective July 1, 1993, and applicable to gifts made on or after July 1, 1993.

Sec. 12-649. Records. Penalties. Administration. Appeals. Collection. Liens. The provisions of sections 12-548 to 12-554, inclusive, and section 12-555a shall apply to the provisions of this section in the same manner and with the same force and effect as if the language of said sections 12-548 to 12-554, inclusive, and section 12-555a had been incorporated in full into this chapter and had expressly referred to the tax under this chapter, except to the extent that any provision is inconsistent with a provision in this chapter.

(June Sp. Sess. P.A. 91-3, S. 145, 168.)

History: June Sp. Sess. P.A. 91-3, S. 145, effective August 22, 1991, and applicable to gifts made on or after September 1, 1991.