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Publications

Recent Connecticut Tax Law Developments

Connecticut Bar Journal

2016 Vol. 89.3

Authors: Louis B. Schatz, Alan E. Lieberman

Coming off what was a relatively quiet year in 2014, the year 2015 was a tumultuous year for Connecticut tax law changes. The changes enacted during 2015 will impact virtually all taxpayers in the state (both individuals and businesses). Corporations will be facing an extension of the 20% corporate surcharge, a limit on the use of net operating losses, a further limitation on the use of tax credits and, effective in 2016, a new combined unitary reporting requirement and single-factor apportionment factor. High income individuals will face two higher marginal tax rates, middle income taxpayers may realize a reduction in, or loss of the property tax credit, and lower income individuals will suffer a delay in the planned increase in the earned income tax credit. Changes to the sales tax include the repeal of the exemption for clothing and footwear costing less than $50, a new tax on website creation and hosting services, an increase in the luxury sales tax rate and a limitation on the clothing and footwear that can be purchased tax free during the third week of August. The ability of hospitals to claim tax credits against the hospital’s tax has been limited and a new gross receipts tax is imposed on ambulatory surgical centers.

The year 2015 was unique in that there were three major pieces of tax legislation. In addition to the Budget Bill and the Budget Implementation Legislation in June, in late December the Legislature adopted further measures in a December Special Session which were intended to address both additional projected deficits for the current fiscal year and concerns from the business community regarding certain provisions that were adopted earlier in the year. To address the business concerns, the General Assembly in the  December Special Session adopted a new cap on the additional tax that a combined group would have to pay under the new combined unitary reporting regime (when compared to the current separate return regime), increased flexibility in the use of certain tax credits, and an exclusion form the Connecticut personal income tax for nonresident employees who render personal services in Connecticut, but are in the state no more than 15 days during the calendar year.

Read the full article here.

Originally published in the Connecticut Bar Journal and reprinted with permission.

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