| 11 | 23 | | |
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| 12 | 24 | | AN ACT CONCERNING STATE TAX POLICY. |
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| 13 | 25 | | |
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| 14 | 26 | | Be it enacted by the Senate and House of Representatives in General Assembly convened: |
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| 15 | 27 | | |
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| 16 | 28 | | Section 1. Subparagraph (A) of subdivision (28) of subsection (a) of section 12-213 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage and applicable to income years commencing on or after January 1, 2016): |
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| 17 | 29 | | |
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| 18 | 30 | | (28) (A) "Captive real estate investment trust" means, except as provided in subparagraph (B) of this subdivision, a corporation, a trust or an association (i) that is considered a real estate investment trust for the taxable year under Section 856 of the Internal Revenue Code; (ii) that is not regularly traded on an established securities market; (iii) in which more than fifty per cent of the voting power, beneficial interests or shares are owned or controlled, directly or constructively, by a single entity that is subject to Subchapter C of Chapter 1 of the Internal Revenue Code; and (iv) that is not a qualified real estate investment trust, as defined in subdivision (3) of subsection (a) of section 12-217. Any voting power, beneficial interests or shares in a real estate investment trust that are directly owned or controlled by a segregated asset account of a life insurance company, as described in Section 817 of the Internal Revenue Code, shall not be taken into account for purposes of determining whether a real estate investment trust is a captive real estate investment trust. |
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| 19 | 31 | | |
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| 20 | 32 | | Sec. 2. Subsection (b) of section 12-218 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage and applicable to income years commencing on or after January 1, 2016): |
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| 21 | 33 | | |
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| 22 | 34 | | (b) Except as otherwise provided in this chapter, on and after January 1, 2016, the net income of the taxpayer shall be apportioned within and without the state by means of an apportionment fraction. The apportionment fraction shall represent the part of the taxpayer's gross receipts from sales or other sources during the income year, computed according to the method of accounting used in the computation of its entire net income, which is assignable to the state, and excluding any gross receipts attributable to an international banking facility as defined in section 12-217. [, but including] For the purposes of this subsection: |
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| 23 | 35 | | |
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| 24 | 36 | | (1) Gross receipts from sales of tangible personal property are assignable to this state if the property is delivered or shipped to a purchaser within this state, other than a company which qualifies as a Domestic International Sales Corporation (DISC) as defined in Section 992 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and as to which a valid election under Subsection (b) of said Section 992 to be treated as a DISC is effective, regardless of the F.O.B. point or other conditions of the sale. [,] |
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| 25 | 37 | | |
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| 26 | 38 | | (2) Gross receipts from services [performed within the state, rentals and royalties from properties situated within the state, royalties from the use of patents or copyrights within the state,] are assignable to this state if the market for services is in this state. The taxpayer's market for the services is in this state if and to the extent the service is used at a location in this state. |
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| 27 | 39 | | |
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| 28 | 40 | | (3) Gross receipts from the rental, lease or license of real or tangible personal property are assignable to this state to the extent such property is situated within the state. |
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| 29 | 41 | | |
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| 30 | 42 | | (4) Gross receipts from the rental, lease or license of intangible property are assignable to this state if and to the extent the property is used in this state. Intangible property utilized in marketing a good or service to a consumer is used in this state if that good or service is purchased by a consumer in this state. |
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| 31 | 43 | | |
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| 32 | 44 | | (5) Gross receipts from interest managed or controlled within the state [, net gains from the sale or other disposition of intangible assets managed or controlled within the state, net gains from the sale or other disposition of tangible assets situated within the state and all other receipts earned within the state] are assignable to this state. |
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| 33 | 45 | | |
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| 34 | 46 | | (6) Gross receipts from the sale or other disposition of real property, tangible personal property or intangible property are excluded from the calculation of the apportionment fraction if such property is not held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business. |
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| 35 | 47 | | |
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| 36 | 48 | | (7) Gross receipts, other than those receipts described in subdivisions (1) to (6), inclusive, of this subsection, are assignable to this state to the extent the taxpayer's market for the sales is in this state. |
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| 37 | 49 | | |
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| 40 | 50 | | Sec. 3. Subsection (b) of section 12-222 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage and applicable to income years commencing on or after January 1, 2016): |
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| 41 | 51 | | |
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| 42 | 52 | | (b) Such return shall be due on or before the first day of the month next succeeding the due date of the company's corresponding federal income tax return for the income year, determined without regard to any extension of time for filing, or, in the case of any company that is not required to file a federal income tax return for the income year, on or before the first day of the [fourth] fifth month next succeeding the end of the income year. |
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| 43 | 53 | | |
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| 44 | 54 | | Sec. 4. Subdivision (12) of subsection (a) of section 12-407 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016): |
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| 45 | 55 | | |
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| 46 | 56 | | (12) "Retailer" includes: (A) Every person engaged in the business of making sales at retail or in the business of making retail sales at auction of tangible personal property owned by the person or others; (B) every person engaged in the business of making sales for storage, use or other consumption or in the business of making sales at auction of tangible personal property owned by the person or others for storage, use or other consumption; (C) every operator, as defined in subdivision (18) of this subsection; (D) every seller rendering any service described in subdivision (2) of this subsection; (E) every person under whom any salesman, representative, peddler or canvasser operates in this state, or from whom such salesman, representative, peddler or canvasser obtains the tangible personal property that is sold; (F) every person with whose assistance any seller is enabled to solicit orders within this state; (G) every person making retail sales from outside this state to a destination within this state and not maintaining a place of business in this state who engages in regular or systematic solicitation of sales of tangible personal property in this state (i) by the display of advertisements on billboards or other outdoor advertising in this state, (ii) by the distribution of catalogs, periodicals, advertising flyers or other advertising by means of print, radio or television media, or (iii) by mail, telegraphy, telephone, computer data base, cable, optic, microwave or other communication system, for the purpose of effecting retail sales of tangible personal property, provided such person has made one hundred or more retail sales from outside this state to destinations within this state during the twelve-month period ended on the September thirtieth immediately preceding the monthly or quarterly period with respect to which such person's liability for tax under this chapter is determined; (H) any person owned or controlled, either directly or indirectly, by a retailer engaged in business in this state which is the same as or similar to the line of business in which such person so owned or controlled is engaged; (I) any person owned or controlled, either directly or indirectly, by the same interests that own or control, either directly or indirectly, a retailer engaged in business in this state which is the same as or similar to the line of business in which such person so owned or controlled is engaged; (J) any assignee of a person engaged in the business of leasing tangible personal property to others, where leased property of such person which is subject to taxation under this chapter is situated within this state and such assignee has a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, in such property; (K) every person making retail sales of items of tangible personal property from outside this state to a destination within this state and not maintaining a place of business in this state who repairs or services such items, under a warranty, in this state, either directly or indirectly through an agent, independent contractor or subsidiary; [and] (L) every person making sales of tangible personal property or services through an agreement with another person located in this state under which such person located in this state, for a commission or other consideration that is based upon the sale of tangible personal property or services by the retailer, directly or indirectly refers potential customers, whether by a link on an Internet web site or otherwise, to the retailer, provided the cumulative gross receipts from sales by the retailer to customers in the state who are referred to the retailer by all such persons with this type of an agreement with the retailer, is in excess of two thousand dollars during the preceding four quarterly periods ending on the last day of March, June, September and December; and (M) every person who has a substantial economic presence within this state, evidenced by a purposeful direction of business toward this state, examined in light of the frequency, quantity and systematic nature of the retailer's economic contacts with this state, without regard to physical presence, and to the extent permitted under the Constitution of the United States. |
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| 47 | 57 | | |
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| 48 | 58 | | Sec. 5. Subparagraph (A) of subdivision (15) of subsection (a) of section 12-407 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016): |
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| 49 | 59 | | |
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| 50 | 60 | | (15) (A) "Engaged in business in the state" means and includes but shall not be limited to the following acts or methods of transacting business: (i) Selling in this state, or any activity in this state in connection with selling in this state, tangible personal property for use, storage or consumption within the state; (ii) engaging in the transfer for a consideration of the occupancy of any room or rooms in a hotel or lodging house for a period of thirty consecutive calendar days or less; (iii) rendering in this state any service described in any of the subparagraphs of subdivision (2) of this subsection; (iv) maintaining, occupying or using, permanently or temporarily, directly or indirectly, through a subsidiary or agent, by whatever name called, any office, place of distribution, sales or sample room or place, warehouse or storage point or other place of business or having any representative, agent, salesman, canvasser or solicitor operating in this state for the purpose of selling, delivering or taking orders; (v) notwithstanding the fact that retail sales are made from outside this state to a destination within this state and that a place of business is not maintained in this state, engaging in regular or systematic solicitation of sales of tangible personal property in this state by the display of advertisements on billboards or other outdoor advertising in this state, by the distribution of catalogs, periodicals, advertising flyers or other advertising by means of print, radio or television media, or by mail, telegraphy, telephone, computer data base, cable, optic, microwave or other communication system, for the purpose of effecting retail sales of tangible personal property, provided one hundred or more retail sales from outside this state to destinations within this state are made during the twelve-month period ended on the September thirtieth immediately preceding the monthly or quarterly period with respect to which liability for tax under this chapter is determined; (vi) being owned or controlled, either directly or indirectly, by a retailer engaged in business in this state which is the same as or similar to the line of business in which the retailer so owned or controlled is engaged; (vii) being owned or controlled, either directly or indirectly, by the same interests that own or control, either directly or indirectly, a retailer engaged in business in this state which is the same as or similar to the line of business in which the retailer so owned or controlled is engaged; (viii) being the assignee of a person engaged in the business of leasing tangible personal property to others, where leased property of such person is situated within this state and such assignee has a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, in such property; (ix) notwithstanding the fact that retail sales of items of tangible personal property are made from outside this state to a destination within this state and that a place of business is not maintained in this state, repairing or servicing such items, under a warranty, in this state, either directly or indirectly through an agent, independent contractor or subsidiary; [and] (x) selling tangible personal property or services through an agreement with a person located in this state, under which such person located in this state, for a commission or other consideration that is based upon the sale of tangible personal property or services by the retailer, directly or indirectly refers potential customers, whether by a link on an Internet web site or otherwise, to the retailer, provided the cumulative gross receipts from sales by the retailer to customers in the state who are referred to the retailer by all such persons with this type of agreement with the retailer is in excess of two thousand dollars during the four preceding four quarterly periods ending on the last day of March, June, September and December; and (xi) having a substantial economic presence within this state, evidenced by a purposeful direction of business toward this state, examined in light of the frequency, quantity and systematic nature of the retailer's economic contacts with this state, without regard to physical presence, and to the extent permitted under the Constitution of the United States. |
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| 51 | 61 | | |
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| 52 | | - | Sec. 6. Subsection (c) of section 12-711 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2017, and applicable to income years commencing on or after January 1, 2017): |
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| 62 | + | Sec. 6. (NEW) (Effective from passage and applicable to calendar years commencing on or after January 1, 2016) (a) (1) Each retailer that is not registered to collect Connecticut sales tax shall notify its Connecticut purchasers that sales or use tax is due on certain purchases made from the retailer. Such notification shall be sent to all Connecticut purchasers by January thirty-first of each year and shall include the total amount paid by the purchaser for Connecticut purchases made from the retailer in the previous calendar year. Such notification shall also include, if available, the dates of purchases, the amounts of each purchase, and the category of the purchase, including, if known by the retailer, whether the purchase is exempt or not exempt from taxation. The notification shall state that the state of Connecticut requires a sales or use tax return to be filed and sales or use tax paid on certain Connecticut purchases made by the purchaser from the retailer. Failure to provide the notice required under this subdivision shall subject the retailer to a penalty of five dollars for each such failure, unless the retailer shows reasonable cause for such failure. |
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| 63 | + | |
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| 64 | + | (2) The notification specified in this subsection shall be sent separately to all Connecticut purchasers by first-class mail and shall not be included with any other shipments. The notification shall include the words "Important Tax Document Enclosed" on the exterior of the mailing. The notification shall include the name of the retailer. |
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| 65 | + | |
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| 66 | + | (b) (1) Each retailer that is not registered to collect Connecticut sales tax shall file an annual statement for each purchaser with the commissioner on such forms as the commissioner may prescribe showing the total amount paid for Connecticut purchases of such purchasers during the preceding calendar year or any portion thereof and such other information as the commissioner may require, and such annual statement shall be filed on or before March first of each year. |
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| 67 | + | |
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| 68 | + | (2) The commissioner may require any retailer that is not registered to collect Connecticut sales tax that makes total Connecticut sales in this state of more than one hundred thousand dollars in a year to file the annual statement described in subdivision (1) of this subsection electronically or by other means as determined by the commissioner. Failure to file the annual statement shall subject the retailer to a penalty of ten dollars for each purchaser that should have been included in such annual statement, unless the retailer shows reasonable cause for such failure. |
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| 69 | + | |
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| 70 | + | Sec. 7. Subsection (c) of section 12-711 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2017, and applicable to income years commencing on or after January 1, 2017): |
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| 53 | 71 | | |
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| 54 | 72 | | (c) (1) If a business, trade, profession or occupation is carried on partly within and partly without this state, as determined under rules or regulations of the commissioner, the items of income, gain, loss and deduction derived from or connected with sources within this state shall be determined by apportionment under such rules or regulations and the provisions of this subsection. |
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| 55 | 73 | | |
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| 56 | 74 | | (2) The proportion of the net amount of the items of income, gain, loss and deduction attributable to the activities of the business, trade, profession or occupation carried on in this state shall be determined by multiplying the net amount of the items of income, gain, loss and deduction of the business, trade, profession or occupation by the [average of the percentages of property, payroll and gross income in this state] gross income percentage. The gross income percentage shall be computed by dividing the gross receipts from sales [of property or services] earned within this state by the total gross receipts from sales, [of property or services,] whether earned within or without this state. For the purposes of this subdivision: |
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| 57 | 75 | | |
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| 58 | 76 | | (A) Gross receipts from sales of tangible personal property are considered to be earned within this state when the property is delivered or shipped to a purchaser within this state, regardless of the F.O.B. point or other conditions of the sale. |
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| 59 | 77 | | |
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| 60 | 78 | | (B) Gross receipts from sales of services are considered to be earned within this state [when the services are performed by an employee, agent, agency or independent contractor chiefly situated at, connected by contract or otherwise, with or sent out from, offices or branches of the business, trade, profession or occupation or other agencies or locations situated within this state.] if the market for the services is in this state. The taxpayer's market for services is in this state if and to the extent the service is used at a location in this state. |
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| 61 | 79 | | |
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| 62 | 80 | | (C) Gross receipts from the rental, lease or license of tangible personal property are considered to be earned within this state if and to the extent such property is situated in this state. |
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| 63 | 81 | | |
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| 64 | 82 | | (D) Gross receipts from the rental, lease or license of intangible property are considered to be earned within this state if and to the extent such property is used in this state. Intangible property utilized in marketing a good or service to a consumer is used in this state if that good or service is purchased by a consumer in this state. |
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| 65 | 83 | | |
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| 66 | 84 | | (E) Gross receipts from the sale or other disposition of tangible personal property or intangible property are excluded from the gross income percentage if such property is not held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business. |
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| 67 | 85 | | |
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| 68 | 86 | | (F) Gross receipts from the sale, rental, lease or license of real property are excluded from the gross income percentage. |
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| 69 | 87 | | |
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| 70 | 88 | | (G) Gross receipts, other than those receipts described in subparagraphs (A) to (F), inclusive, of this subdivision, are considered to be earned within this state to the extent the taxpayer's market for the sales is in this state. |
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| 71 | 89 | | |
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| 75 | 91 | | |
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| 76 | 92 | | (a) (1) The portion of a nonresident partner's distributive share of partnership income that is derived from or connected with sources within this state shall be determined [pursuant to regulations adopted by the commissioner, which regulations shall be consistent] in accordance with the provisions of section 12-711, as amended by this act. |
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| 77 | 93 | | |
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| 78 | 94 | | (2) The portion of a nonresident shareholder's pro rata share of S corporation income that is derived from or connected with sources within this state shall be determined [pursuant to regulations adopted by the commissioner, which regulations shall be consistent] in accordance with the provisions of section 12-711, as amended by this act. |
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| 79 | 95 | | |
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| 80 | 96 | | (3) The portion of a nonresident beneficiary's share of trust or estate income that is derived from or connected with sources within this state shall be determined [under regulations adopted by the commissioner, which regulations shall be consistent] in accordance with the provisions of section 12-711, as amended by this act. |
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| 81 | 97 | | |
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| 82 | 98 | | |
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| 83 | 99 | | |
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| 84 | 100 | | |
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| 85 | 101 | | This act shall take effect as follows and shall amend the following sections: |
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| 86 | 102 | | Section 1 from passage and applicable to income years commencing on or after January 1, 2016 12-213(a)(28)(A) |
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| 87 | 103 | | Sec. 2 from passage and applicable to income years commencing on or after January 1, 2016 12-218(b) |
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| 88 | 104 | | Sec. 3 from passage and applicable to income years commencing on or after January 1, 2016 12-222(b) |
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| 89 | 105 | | Sec. 4 October 1, 2016 12-407(a)(12) |
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| 90 | 106 | | Sec. 5 October 1, 2016 12-407(a)(15)(A) |
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| 91 | | - | Sec. 6 January 1, 2017, and applicable to income years commencing on or after January 1, 2017 12-711(c) |
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| 92 | | - | Sec. 7 January 1, 2017, and applicable to income years commencing on or after January 1, 2017 12-712(a) |
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| 107 | + | Sec. 6 from passage and applicable to calendar years commencing on or after January 1, 2016 New section |
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| 108 | + | Sec. 7 January 1, 2017, and applicable to income years commencing on or after January 1, 2017 12-711(c) |
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| 109 | + | Sec. 8 January 1, 2017, and applicable to income years commencing on or after January 1, 2017 12-712(a) |
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