Raised Bill No. 5437
February Session, 2018
LCO No. 2224
Referred to Committee on COMMERCE
AN ACT ESTABLISHING A JOB CREATION INCENTIVE TAX CREDIT PROGRAM FOR THE HIRING AND RETENTION OF NEW FULL-TIME EMPLOYEES.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) (Effective July 1, 2018, and applicable to income and taxable years commencing on or after January 1, 2018):
(a) As used in this section:
(1) "Commissioner" means the Commissioner of Economic and Community Development;
(2) "Control", with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote. "Control", with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than paragraph (3) of said Section 267(c);
(3) "Full-time job" means a job in which an employee is required to work at least thirty-five hours per week for not less than forty-eight weeks in a calendar year. "Full-time job" does not include a temporary or seasonal job;
(4) "Income year" means, with respect to entities subject to the insurance premiums tax under chapter 207 of the general statutes, the corporation business tax under this chapter, the utility companies tax under chapter 212 of the general statutes or the income tax under chapter 229 of the general statutes, the income or taxable year as determined under each of said chapters, as the case may be;
(5) "New employee" means a person who resides in this state and is hired by a taxpayer on or after July 1, 2018, to fill a new job. "New employee" does not include a person who was employed in this state by a related person with respect to a taxpayer during the prior twelve months;
(6) "New job" means a full-time job that did not exist in this state prior to a taxpayer's application to the commissioner for certification under this section for a job creation and retention tax credit, is filled by a new, qualifying or veteran employee;
(7) "Qualifying employee" means a new employee who, at the time of hiring by the taxpayer: (A) Is receiving unemployment compensation, or (B) has exhausted unemployment compensation benefits and has not had an intervening full-time job;
(8) "Related person" means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer;
(9) "Taxpayer" means a person that (A) has been in business for at least twelve consecutive months prior to the date of the taxpayer's application to the commissioner for certification under this section for a job expansion tax credit, and (B) is subject to tax under this chapter or chapter 207, 212 or 229 of the general statutes; and
(10) "Veteran employee" means a new employee who, at the time of hiring by the taxpayer, is a member of, was honorably discharged from or released under honorable conditions from active service in the armed forces, as defined in section 27-103 of the general statutes.
(b) There is established a job creation incentive tax credit program whereby a taxpayer may be allowed a credit against the tax imposed under this chapter or chapter 207, 212 or 229 of the general statutes, other than the liability imposed by section 12-707 of the general statutes, for each new, qualifying or veteran employee hired on or after July 1, 2018. A taxpayer may earn such credit after a new, qualifying or veteran employee completes twelve months of employment with such taxpayer.
(c) The amount of the credit shall be equal to (1) ten per cent of the wages paid by the taxpayer to a new employee in the first twelve months of employment with such taxpayer; or (2) twelve and one-half per cent of the wages paid by the taxpayer to each qualifying or veteran employee in the first twelve months of employment with such taxpayer.
(d) (1) The taxpayer shall claim the credit in the income year in which it is earned. Any credit not claimed by the taxpayer in the income year in which it is earned shall expire and shall not be refundable.
(2) If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, the shareholders or partners of such taxpayer may claim the credit. If the taxpayer is a single member limited liability company that is disregarded as an entity separate from its owner, the limited liability company's owner may claim the credit.
(3) No taxpayer shall claim a credit for any new, qualifying or veteran employee who is an owner, member or partner in the business.
(4) No taxpayer claiming the credit under this section with respect to a new, qualifying or veteran employee shall claim any credit against any tax under any other provision of the general statutes with respect to the same new, qualifying or veteran employee.
(e) (1) To be eligible to claim the credit, a taxpayer shall apply to the commissioner, in accordance with the provisions of this section, prior to the close of the income year in which the credit may be earned under subsection (b) of this section. The application shall be on a form provided by the commissioner and shall contain sufficient information as required by the commissioner, including, but not limited to, the activities that the taxpayer primarily engages in, the North American Industrial Classification System code of the taxpayer, and if applicable, the name and position or job title of the new, qualifying or veteran employee. The commissioner shall consult with the Labor Commissioner or the Commissioner of Veterans Affairs, as applicable, for any verification the commissioner deems necessary of unemployment compensation or of service in the armed forces of the United States by a veteran employee. The commissioner may impose a fee for such application as the commissioner deems appropriate.
(2) Upon receipt of an application, the commissioner shall render a decision, in writing, on each completed application not later than thirty days after the date of its receipt by the commissioner. If the commissioner approves such application, the commissioner shall issue a certification letter to the taxpayer indicating that the credit will be available to be claimed by the taxpayer if the requirements of this section are otherwise met.
(f) No credit allowed under this section shall exceed the amount of tax imposed on a taxpayer under this chapter or chapter 207, 212 or 229 of the general statutes. The commissioner shall annually provide to the Commissioner of Revenue Services a list detailing all credits that have been approved and all taxpayers that have been issued a certification letter under this section.
This act shall take effect as follows and shall amend the following sections:
July 1, 2018, and applicable to income and taxable years commencing on or after January 1, 2018
Statement of Purpose:
To establish a job creation incentive tax credit program for the hiring and retention of new, full-time employees in order to encourage businesses to grow and maintain jobs.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]