Connecticut ~ Multiple Taxes: Legislature Passes Changes to “Amazon” Law and Economic Nexus

The Connecticut Legislature has passed and sent to the governor a bill that, if enacted, would amend corporation business tax, personal income tax, and sales and use tax provisions. If enacted, the bill would:

— require a company to meet both, rather than one, of the existing criteria to have economic nexus in Connecticut and exempt certain foreign corporations from the economic nexus rules;

— give a company that overpays its estimated corporation tax for the year the option to apply the overpayment to its estimated tax payments in the following year;

— extend the exemption from the film tax credit transfer restrictions to entities that are not subject to the corporation or insurance premium tax if they own at least 50% of another entity subject to the business entity tax;

— limit the availability of credits for a business facility in a municipality impacted by an aerospace or defense plant closure to facilities that employed at least 800 people;

— allow the Department of Revenue Services (DRS) to require payers that withhold from non-payroll amounts to pay the withholding tax electronically;

— require a successor who buys a business or its entire stock from an employer to withhold enough funds from the purchase price to cover any withholding tax due until the employer produces either a DRS receipt for the tax payment or a DRS certificate that no taxes are due;

— extend from three to six years the deadline for the DRS to send a tax deficiency assessment notice to any employer or pass-through entity that omits from its withholding tax return more than 25% of includible adjusted gross income withheld from employee wages or payments to nonresident members;

— establish maximum penalties on taxpayers who, for the first or second time, fail to make tax payments electronically when required to do so;

— make changes to the recently enacted and so-called “click-through nexus” law, including the elimination of the rebuttable presumption;

— restore recently repealed sales and use tax exemptions for services provided by a person selling clothing and footwear on consignment and property or services used in operating solid waste-to-energy facilities;

— enact a sales and use tax exemption for any part of the sale price of a vehicle that has special equipment for the exclusive use of a person with physical disabilities already installed, if the vehicle is sold to such a person; and

— revamp sales and use tax security requirements applicable to nonresident contractors.

Subscribers can view the text of the bill.

H.B. 6652, passed by the Connecticut House of Representatives on June 6, 2011, and the Connecticut Senate on June 7, 2011

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