PA 17-105—sHB 7263
Finance, Revenue and Bonding Committee
AN ACT CONCERNING REVISIONS AND TECHNICAL CHANGES TO THE TAX AND RELATED STATUTES, AND CERTAIN EXEMPTIONS FROM THE PROPERTY TAX
SUMMARY: This act makes the following unrelated changes in state laws, including:
1. making several minor changes to the state's tobacco settlement law;
2. allowing the ranking members of the Commerce and Finance, Revenue and Bonding committees to appoint designees to serve in their place on the Commission on Economic Competitiveness (§ 4);
3. making various technical corrections and changes to statutes on taxes and motor vehicle fines (§§ 5-9); and
4. exempting from property tax certain (a) household electronic devices and (b) paint coloring and mixing machinery and equipment.
EFFECTIVE DATE: October 1, 2017, except the change to the Commission is effective upon passage and the property tax exemptions are effective October 1, 2017 and applicable to assessment years beginning on or after that date.
§§ 1-3 — TOBACCO SETTLEMENT LAW CHANGES
The state's tobacco settlement law requires tobacco product manufacturers to either (1) enter into the master settlement agreement between Connecticut and four leading tobacco companies and comply with its terms and conditions (i.e., participating manufacturers) or (2) pay into a qualified escrow account a specified amount for each cigarette they sell in the state (i.e., nonparticipating manufacturers (NPM)). All manufacturers must annually certify to the Department of Revenue Services (DRS) commissioner and attorney general that they are complying with these requirements in order to have their “brand families” listed in the Connecticut Tobacco Directory and sell their products in the state.
NPM Sales Reports (§ 2)
The tobacco settlement law requires NPMs to demonstrate through their sales reports and invoices that their products are being sold legally throughout the country. It prohibits the DRS commissioner from listing an NPM's brand families in the directory if there are discrepancies between the NPM's nationwide sales on which federal excise tax has been paid and its sales documented in federally required sales reports. Under prior law, the maximum allowable discrepancy was the lesser of 5% of the NPM's total annual sales or one million cigarettes. The act instead sets the maximum allowable discrepancy at 2.5% of the NPM's total annual sales. It also makes technical changes to the sales reports used to assess the discrepancy.
Surety Bonds (§ 1)
Prior law required NPMs to file surety bonds with the DRS commissioner each quarter to have their brand families listed in the directory. The act authorizes them to provide an alternative form of security acceptable to the DRS commissioner (e.g., cash) and requires them to post either the bond or alternative security annually. The amount of the bond or security must be the greater of (1) $25,000 or (2) the greatest amount of total escrow owed in any of the five calendar years before the bond's or security's posting, as prior law required for the quarterly surety bond.
The act also allows the DRS commissioner, in consultation with the attorney general, to release the bond or security once the NPM has met its escrow obligation.
Information Disclosures (§ 3)
The act broadens the information that the attorney general may disclose under the tobacco settlement law and adds to the entities to which he may disclose this information.
Prior law authorized him to disclose a licensed cigarette or tobacco product distributor's tax return or return information to an NPM. The act instead allows him to disclose this tax information about any person purchasing or selling taxable cigarettes or tobacco products, not just distributors, to both participating and nonparticipating manufacturers. By law, the attorney general may only disclose the tax information if it relates to the manufacturer's Connecticut sales.
The act also eliminates a requirement that disclosures pursuant to the NPM Adjustment Settlement Agreement (i.e., the May 24, 2013 settlement between the state and certain tobacco product manufacturers) be made only to an entity the agreement designates to serve as a data clearinghouse.
§§ 10 & 11 — PROPERTY TAX EXEMPTIONS
The act exempts the following items from property tax:
1. cellular mobile telephones, computers, and mobile electronic devices (e.g., text messaging and paging devices, personal digital assistants, video gaming devices, digital video disk players, and digital cameras) used by and belonging to a family and
2. machinery and equipment used to color or mix paint used by paint retailers, including spectrographic color matching machines, automatic colorant dispensers, paint shakers, and related computer equipment.