State of Connecticut News

Connecticut to Issue Tax Refunds as Debit Cards

In an effort to reduce costs, the Department of Revenue Services may issue Debit Cards for individual income tax refunds not designated for direct deposit. In addition to reducing cost, the Department of Revenue Services believes this is a safer way than mailing checks which can be stolen or altered. See the Department of Revenue Services website for a complete discussion on this topic.

2014 Connecticut Tax Update-Selected Items

Teacher Retirement System Income-Commencing in 2015, when calculating Connecticut adjusted gross income, an individual will be able to deduct from federal adjusted gross income a portion of the income received from the state teacher's retirement system. for 2015, the deduction is 10% of such income; for 20146, the deduction is 25% of such income; and for 2017 and each year thereafter, the dedcution id 50% of such income.

New legislation allows a taxpayer to contribute andy part of his or her income tax refund to an individual savings plan established under the Connecticut Higher Education Trust (CHET) or to the new CHET Baby Scholars Fund.

The CHET Baby Scholars program provides up to $250 toward a newborn's future college costs. Every baby born who resides in Connecticut, who is less than a year old, and every adopted child, not later than the first anniversary of the adoption, is eligible for a CHET Baby Scholars grant in the amount of $100. Then, if an additional $150 is saves in the account by the time the child is four (or in the case of an adoption, by the fourth anniversaryof the adoption), the account may be eligible for a second grant of $150. Go the CHET website for details and application.

Sales and Use Taxes-Partial Listing

The general sales and use tax increases from 6% to 6.35%

A 7% rate applies to the following:the sale of more than $50,000 of most motor vehicles,the sale of more than $100,000 of a vessel, the sale of more than $5,000 of jewelry, and the sale of more than $1,000 of an article of clothing or footwear, a handbag, luggage, umbrella, wallet or watch.

The following sales or services are now subject to sales tax: (partial listing) Yoga instruction provided at a yoga studio, Motor vehicle towing and road services, Pet grooming, pet boarding services, pet obedience services, Services in connection with a cosmetic medical procedure, Manicure services, pedicure services and all other nail services, and Spa services.

Effective for sales occurring on or after April 1, 2015, new sales tax legislation reinstates a sales and use tax exemption for sales of certain nonprescription drugs and medicines for use in or on the body including vitamin or mineral concentrates, dietary supplements, natural herbal drugs or medicines, products intended to be taken for coughs, cold, asthma or allergies, or antihistamines, laxatives, medication prepared for use in the eyes, ears or nose. The exemption does not include cosmetics, dentifrices, mouthwash, shaving and hair products, soaps or deodorants.

Remote Affiliates-Expands Connecticut law to provide that an out-of-state retailer will have nexus with Connecticut based upon arrangements with remote affiliates located in Connecticut.

Corporation Business Tax:

A 20% surtax will apply for income years beginning after January 1, 2012 and before January 1, 2014

Corporations will be able to use tax credits to offset more than 70 percent of its corporation business tax liability if the business meets certain job creation criteria.

Miscellaneous Taxes:

Real Estate Conveyance Tax-Rate increases: For deeds, instruments, or writings that are currently subject to state real estate conveyance tax at a rate of 0.5%, the rate is increased to 0.75% effective July 1, 2011. For deeds, instruments or writings that are currently subject to state real estate conveyance tax at a rate of 1.0%, the new rate is increased to 1.25% effective July 1, 2011.

Estate Tax: For estate of decedents dying on or after January 1, 2011, an estate is subject to the Connecticut estate tax if the amount of the Connecticut taxable estate exceeds $2 million.

Gift Tax: For Connecticut taxable gifts made by a donor during the calendar year commencing on or after January 1, 2011, including the aggregate amount of Connecticut taxable gifts made by the donor during all calendar years commencing on or after January 1, 2005, the Connecticut gift tax will be imposed if the amount of Connecticut taxable gifts exceeds $2 million (with a credit allowed against such tax for Connecticut gift tax previously paid for Connecticut taxable gifts made on or after January 1, 2005, but prior to January 1, 2011).

Go to Links on this website and to Research, and then to the CT Dept of Revenue website under 2011 Legislative Update for full Summary of Tax Provisions. Also from CT Dept of Revenue Website, see discussion on Common Sales Tax Questions Concerning New Legislation.

Successor Liability for Connecticut Income Tax Withholding:

Public Act 11-61, Section 58, expands successor liability to include withholding tax.

For sales of businesses or sales of stock of goods occurring on or after July 1, 2011, the purchaser is required to withhold from the purchase price a sufficient portion of the purchase price to cover the amount of Connecticut income tax withholding, plus any interest and penalties on such taxes, due by the seller as of the time of the sale.

Failure to withhold will result in the purchaser being personally liable for the payment of the required amounts to the extent of the purchase price.To avoid successor liability, the purchaser must request a clearance certificate before purchasing the existing business or stock of goods. This request can be made in conjunction with the request for a clearance for sales and use taxes or admissions and dues tax.

Homemaker Services and Homemaker-Companion Agencies:

Effective January 1, 2012, any registry in the business of supplying or referring an individual or placing an individual with a consumer to provide homemaker or companion services, and that individual is either (1) directly compensated, in whole or part by the consumer or (2) treated, referred to or considered by the registry as an independent contractor, must provide written notice to the consumer within 7 days of the placement of that individual. The notice must indicate whether the registry is an employer, joint employer, leasing employer or nonemployer of the individual, and include a statement advising the consumer that he or she may be considered an employer under law and, if so, that the consumer may be responsible for the payment of Social Security taxes, overtime, and minimum wage, unemployment, workers' compensation insurance, and other federal and state payments. Conn. Stat. Sec. 20-670 and 20-675, as amended and supplemented by Conn. Pub. Act No. 11-230, Sect. 1-3.

Learn Here, Live Here Program:

The Department of Economic and Community Development (DECD) is directed to establish the Lear Here, Live Here Program to assist in the purchase of a first home in Connecticut by a person who graduates on or after January 1, 2014 from either a regional vocational-technical school or a person qualified as an in-state student and paid the in-state tuition rate at a Connecticut public institution of higher education. A qualifying person can apply to the DECD to have up to an annual maximum amount of $2,500 of their Connecticut income tax liability segregated into a Connectciut first-time homebuyers account. The total annual segregated amount for all participants is capped at $1 million. For a period of up to ten years after graduation, the person can apply to the DECD for a payment to be issued, up to the segregated amount, and used for a down payment on a Connectciut house if the house is the first home purchased by the person. If the person ceases to live in Connecticut within five years after the purchase , the person will be required to repay a percentage of the payment. Conn. Pub. Act No. 11-140, Sect. 30-31 (effective July 1, 2011).

Information on Treasury Offset Program

This program allows state agencies to submit past due, legally enforceable state obligations to a bureau of the U.S. Department of the Treasury for offset of the debtor's individual federal income tax refund. For detail information click on the link to the Department of Revenue Services. There is a detail explanation and frequently asked questions.