Connecticut Seal

nsSmallSeal

House of Representatives

File No. 817

General Assembly

 

January Session, 2017

(Reprint of File No. 765)

Substitute House Bill No. 7263

 

As Amended by House Amendment

Schedule "A"

Approved by the Legislative Commissioner

May 31, 2017

AN ACT CONCERNING REVISIONS AND TECHNICAL CHANGES TO THE TAX AND RELATED STATUTES, AND CERTAIN EXEMPTIONS FROM THE PROPERTY TAX.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (1) of subsection (e) of section 4-28n of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(e) (1) [At least ten days prior to the first day of each calendar quarter,] In conjunction with the certification required under section 4-28l and as a condition precedent to having its brand families listed or retained in the directory, each nonparticipating manufacturer shall [file] post annually with the commissioner [a surety bond, the form of which shall be approved by the Attorney General,] either a good and valid bond that is issued by a [bonding company or insurance] surety company authorized to do business in this state [. The bond shall be in favor of the commissioner and be in the principal sum of] or other security acceptable to the commissioner. Any bond or other security shall be in favor of the state of Connecticut and shall be equal in amount to the greater of (A) twenty-five thousand dollars, or (B) the greatest amount of the total escrow [payments] owed for a calendar year in any of the five calendar years preceding the [filing] posting of such bond or other security. The commissioner may, in consultation with the Attorney General, authorize the release of such bond or other security once it has been established that the nonparticipating manufacturer has met the requirements of section 4-28i.

Sec. 2. Subdivision (3) of subsection (a) of section 4-28m of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(3) The commissioner shall not include or retain in the directory any brand family of a nonparticipating manufacturer if the commissioner concludes: (A) All escrow payments required pursuant to the provisions of sections 4-28h to 4-28j, inclusive, for any period for any brand family, whether or not listed by such nonparticipating manufacturer, have not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the Attorney General; (B) any outstanding final judgment, including interest thereon, for a violation of sections 4-28h to 4-28j, inclusive, has not been fully satisfied for such brand family and such manufacturer; or (C) a nonparticipating manufacturer's total nation-wide reported sales of cigarettes on which federal excise tax is paid exceeds the sum of (i) its [nation-wide reports] total interstate sales, as reported under 15 USC 375 et seq., as from time to time amended, or those made by its importer, and (ii) [any intrastate sales reports under 15 USC 375 et seq., as from time to time amended] its total intrastate sales, by more than [five] two and one-half per cent of its total nation-wide sales [or one million cigarettes, whichever is less,] during any calendar year, unless the nonparticipating manufacturer cures or satisfactorily explains the discrepancy not later than ten days after receiving notice of the discrepancy.

Sec. 3. Subdivision (3) of subsection (b) of section 4-28o of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(3) Notwithstanding the provisions of section 12-15, the commissioner may disclose to the Attorney General any returns or return information, as defined in section 12-15, received pursuant to this chapter or chapter 214 or 214a, when such returns or return information is directly related to the state's implementation of the Master Settlement Agreement or the Nonparticipating Manufacturer Adjustment Settlement Agreement. The Attorney General may further disclose (A) such returns or return information [pursuant to an agreement with an entity designated to serve as a data clearinghouse] in accordance with the terms of the Nonparticipating Manufacturer Adjustment Settlement Agreement, or (B) returns or return information of [a distributor licensed] any person purchasing or selling cigarettes or tobacco products taxable under the provisions of chapter 214 or [chapter] 214a, to a participating manufacturer or a nonparticipating manufacturer subject to the provisions of subsection (a) of section 4-28i, provided the information disclosed is limited to information relating to such manufacturer's sales to consumers within this state, whether directly or through a distributor, dealer or similar intermediary or intermediaries, of cigarettes, as defined in section 4-28h.

Sec. 4. Subsection (b) of section 2-124 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) The commission shall consist of the following members:

(1) Three appointed by the speaker of the House of Representatives, one of whom shall be an executive at a publicly traded corporation;

(2) Three appointed by the president pro tempore of the Senate, one of whom shall be an attorney;

(3) One appointed by the majority leader of the House of Representatives, who shall be a member of an employee advocacy group;

(4) One appointed by the majority leader of the Senate, who shall be an economist;

(5) One appointed by the minority leader of the House of Representatives, who shall be a representative of a major corporation that has its headquarters in the state;

(6) One appointed by the minority leader of the Senate, who shall be the owner of a small business based in the state;

(7) The Commissioner of Revenue Services, or the commissioner's designee;

(8) The Commissioner of Economic and Community Development, or the commissioner's designee;

(9) A representative of the Connecticut Business and Industry Association, who shall be appointed by the president of said association;

(10) The chairpersons and ranking members of the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding or the chairpersons' or ranking members' designees;

(11) The chairpersons and ranking members of the joint standing committee of the General Assembly having cognizance of matters relating to commerce or the chairpersons' or ranking members' designees;

(12) One appointed by the Governor; and

(13) The chairperson of CTNext, or the chairperson's designee.

Sec. 5. Section 12-18d of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

During the fiscal year ending June 30, 2017, an amount equal to the appropriation from the Municipal Revenue Sharing Fund to the Office of Policy and Management shall be transferred from the General Fund to the Municipal Revenue Sharing Fund and shall be distributed by said office, during [each] such fiscal year, in accordance with the provisions of sections 4-66l, 4-66p and 12-18b.

Sec. 6. Subdivision (2) of subsection (a) of section 12-35f of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(2) "Claimant state" means any other state or the District of Columbia [which] that extends a like comity for the collection of taxes [owned] owed to this state;

Sec. 7. Subdivision (1) of subsection (e) of section 12-414 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(1) The commissioner, if he or she deems it necessary in order to [insure] ensure payment to or facilitate the collection by the state of the amount of taxes, may permit or require returns and payment of the amount of taxes for other than monthly or quarterly periods.

Sec. 8. Section 12-649 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

The provisions of sections 12-548 to 12-554, inclusive, and section 12-555a shall apply to the provisions of this [section] chapter 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.

Sec. 9. Subsection (b) of section 51-56a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):

(b) (1) The state shall remit to the municipalities in which the violations occurred all amounts received in respect to the violation of subdivision (2) of subsection (a) of section 14-12, sections 14-251, 14-252, 14-253a and 14-305 to 14-308, inclusive, or any regulation adopted thereunder or ordinance enacted in accordance therewith, and (2) in the case of the municipalities ranked one to eight, inclusive, when all municipalities are ranked from highest to lowest in population, based on the most recent federal decennial census, the state shall remit to the municipality in which the violations occurred [,] fifty per cent of the fine amounts received in respect to the violation of section 14-250b, or any ordinance enacted in accordance therewith. Each clerk of the Superior Court or the Chief Court Administrator, or any other official of the Superior Court designated by the Chief Court Administrator, shall, on or before the thirtieth day of January, April, July and October in each year, certify to the Comptroller the amount due for the previous quarter under this subsection to each municipality served by the office of the clerk or official, provided prior to the institution of court proceedings, a city, town or borough shall have the authority to collect and retain all proceeds from parking violations committed within the jurisdiction of such city, town or borough.

Sec. 10. Subdivision (33) of section 12-81 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017, and applicable to assessment years commencing on or after October 1, 2017):

(33) Musical instruments, [inclusive of] radios, [and] television sets, cellular mobile telephones, computers and mobile electronic devices, as defined in section 10-222d, used by and belonging to any family;

Sec. 11. Section 12-81 of the general statutes is amended by adding subdivision (78) as follows (Effective October 1, 2017, and applicable to assessment years commencing on or after October 1, 2017):

(NEW) (78) Machinery and equipment (A) used in the process of coloring or mixing paint, including, but not limited to, spectrographic color matching machines, automatic colorant dispensers, paint shakers, and computer equipment related to such machinery and equipment, and (B) used by retailers that offer paint for sale at retail in this state.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2017

4-28n(e)(1)

Sec. 2

October 1, 2017

4-28m(a)(3)

Sec. 3

October 1, 2017

4-28o(b)(3)

Sec. 4

from passage

2-124(b)

Sec. 5

October 1, 2017

12-18d

Sec. 6

October 1, 2017

12-35f(a)(2)

Sec. 7

October 1, 2017

12-414(e)(1)

Sec. 8

October 1, 2017

12-649

Sec. 9

October 1, 2017

51-56a(b)

Sec. 10

October 1, 2017, and applicable to assessment years commencing on or after October 1, 2017

12-81(33)

Sec. 11

October 1, 2017, and applicable to assessment years commencing on or after October 1, 2017

12-81

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: None

Municipal Impact:

Municipalities

Effect

FY 18 $

FY 19 $

Various Municipalities

Grand List Loss

Potential

Potential

Explanation

The bill makes a number of technical and conforming changes, as well as adjustments related to the state's tobacco settlement law, that do not result in any fiscal impact to the state.

Sections 10 and 11 exempt from property taxes: 1) certain equipment used for mixing paint sold at retail, and 2) cell phones used by and belonging to any family. This results in a grand list reduction, which would result in a revenue loss, given a constant mill rate. Information about the assessed value of this equipment, how much of this equipment is owned by retail establishments, and the municipalities this equipment is located in, is not readily available.

House “A” eliminates the provisions pertaining to the destruction of certain confiscated vehicles, which does not result in any fiscal impact.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

OLR Bill Analysis

sHB 7263 (as amended by House "A")*

AN ACT CONCERNING REVISIONS AND CHANGES TO THE TAX AND RELATED STATUTES, CERTAIN EXEMPTIONS FROM THE PROPERTY TAX, AND DIRT BIKES AND SIMILAR VEHICLES.

SUMMARY

This bill makes the following unrelated changes in state laws:

*House Amendment “A” eliminates provisions allowing municipalities to destroy certain confiscated vehicles.

EFFECTIVE DATE: October 1, 2017, except the change to the Commission on Economic Competitiveness 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.

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 on federally required sales reports. Under current law, the maximum allowable discrepancy is the lesser of 5% of the NPM's total annual sales or one million cigarettes.  The bill 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)

Current law requires NPMs to quarterly file a surety bond with the DRS commissioner to have their brand families listed in the directory. The bill authorizes them to provide an alternative form of security that is acceptable to the DRS commissioner (e.g., cash) and requires them to post the bond or 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 is currently required for the quarterly surety bond.

The bill 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 bill broadens the tax return and return information the attorney general may disclose under the tobacco settlement law and the entities to whom he may disclose this information.

Current law authorizes him to disclose a licensed cigarette or tobacco product distributor's tax information to an NPM. The bill instead allows him to disclose tax information for any person purchasing or selling taxable cigarettes or tobacco products, not just distributors, to both participating and nonparticipating manufacturers. As under existing law, the attorney general may only disclose such tax information if it relates to the manufacturer's Connecticut sales.

The bill 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 limited to an entity the agreement designates to serve as a data clearinghouse.

PROPERTY TAX EXEMPTIONS

The bill exempts the following items from property tax:

COMMITTEE ACTION

Finance, Revenue and Bonding Committee

Joint Favorable Substitute

Yea

51

Nay

0

(04/27/2017)

TOP