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General Assembly Raised Bill No. 435
February Session, 2020
LCO No. 2363
Referred to Committee on FINANCE, REVENUE AND
BONDING
Introduced by:
(FIN)
AN ACT CONCERNING IN VEST CT FUNDS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 38a-88a of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective July 1, 2020): 2
(a) As used in this section: 3
(1) "Facility" means an insurance business facility; 4
(2) "Insurance business" means a business with a North American 5
Industry Classification System code of 524113 to 524298, inclusive, that 6
is engaged in the business of insuring risks or of providing services 7
necessary to the business of insuring risks; 8
(3) "New job" means a job that did not exist in the business of a subject 9
insurance business in this state prior to the subject insurance business's 10
application to the commissioner for an eligibility certificate under this 11
section for a new facility and that is filled by a new employee, but does 12
not include a job created when an employee is shifted from an existing 13 Raised Bill No. 435
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location of the subject insurance business in this state to a new facility; 14
(4) "New employee" means a person who resides in Connecticut and 15
is hired by a subject insurance business to fill a position for a new job or 16
a person shifted from an existing location of the subject insurance 17
business outside this state to a new facility in this state, provided (A) in 18
no case shall the total number of new employees allowed for purposes 19
of this credit exceed the total increase in the taxpayer's employment in 20
this state, which increase shall be the difference between (i) the number 21
of employees employed by the subject insurance business in this state at 22
the time of application for an eligibility certificate to the commissioner 23
plus the number of new employees who would be eligible for inclusion 24
under the credit allowed under this section without regard to this 25
calculation, and (ii) the highest number of employees employed by the 26
subject insurance business in this state in the year preceding the subject 27
insurance business's application for an eligibility certificate to the 28
commissioner, and (B) a person shall be deemed to be a "new employee" 29
only if such person's duties in connection with the operation of the 30
facility are on a regular, full-time, or equivalent thereof, and permanent 31
basis; 32
(5) "New facility" means a facility [which] that (A) is acquired by, 33
leased to, or constructed by, a subject insurance business on or after the 34
date of the subject insurance business's application to the commissioner 35
for an eligibility certificate under this section, unless, upon application 36
of the subject insurance business and upon good and sufficient cause 37
shown, the commissioner waives the requirement that such activity take 38
place after the application, and (B) was not in service or use during the 39
one-year period immediately prior to the date of the subject insurance 40
business's application to [said] the commissioner for an eligibility 41
certificate under this section, unless upon application of the subject 42
insurance business and upon good and sufficient cause shown, the 43
commissioner consents to waiving the one-year period; 44
(6) "Related person" means (A) a corporation, limited liability 45
company, partnership, association or trust controlled by the taxpayer or 46 Raised Bill No. 435
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subject insurance business, as the case may be, (B) an individual, 47
corporation, limited liability company, partnership, association or trust 48
that is in control of the taxpayer or subject insurance business, as the 49
case may be, (C) a corporation, limited liability company, partnership, 50
association or trust controlled by an individual, corporation, limited 51
liability company, partnership, association or trust that is in control of 52
the taxpayer or subject insurance business, as the case may be, or (D) a 53
member of the same controlled group as the taxpayer or subject 54
insurance business, as the case may be. For purposes of this section, 55
"control", with respect to a corporation, means ownership, directly or 56
indirectly, of stock possessing fifty per cent or more of the total 57
combined voting power of all classes of the stock of such corporation 58
entitled to vote. "Control", with respect to a trust, means ownership, 59
directly or indirectly, of fifty per cent or more of the beneficial interest 60
in the principal or income of such trust. The ownership of stock in a 61
corporation, of a capital or profits interest in a partnership or association 62
or of a beneficial interest in a trust shall be determined in accordance 63
with the rules for constructive ownership of stock provided in Section 64
267(c) of the Internal Revenue Code of 1986, or any subsequent 65
corresponding internal revenue code of the United States, as from time 66
to time amended, other than paragraph (3) of Section 267(c) of said 67
[internal revenue] code; 68
(7) "Moneys of the taxpayer" means all amounts invested in a fund, 69
directly or indirectly, on behalf of a taxpayer, including, but not limited 70
to, (A) direct investments made by the taxpayer, and (B) loans made to 71
the fund for the benefit of the taxpayer which loans are guaranteed by 72
the taxpayer, provided no amounts represented by any such loan shall 73
be used for the purpose of obtaining any tax credit by any person 74
making such loan against any tax levied by this state; 75
(8) "Income year" means (A) with respect to corporations subject to 76
taxation under chapter 208, the income year as determined under said 77
chapter, (B) with respect to insurance companies, hospital service 78
corporations and medical service corporations subject to taxation under 79
chapter 207, the income year as determined under said chapter, and (C) 80 Raised Bill No. 435
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with respect to taxpayers subject to taxation under chapter 229, the 81
taxable year determined under chapter 229; 82
(9) "Taxpayer" means any person as defined in section 12-1, whether 83
or not subject to any taxes levied by this state; and 84
(10) "Commissioner" means the Commissioner of Economic and 85
Community Development. 86
(b) (1) On or before July 1, 2000, the commissioner shall register 87
managers of funds created for the purpose of investing in insurance 88
businesses. Any manager registered under this subsection shall have its 89
primary place of business in this state. Each applicant shall submit an 90
application under oath to the commissioner to be registered and shall 91
furnish evidence satisfactory to the commissioner of its financial 92
responsibility, integrity, and professional competence to manage 93
investments. Failure to maintain adequate fiduciary standards shall 94
constitute cause for the commissioner to revoke, after hearing, any 95
registration granted under this section. The fund manager shall make a 96
report on or before the first day of March in each year, under oath, to 97
the Commissioner of Revenue Services specifying the name, address 98
and Social Security number or employer identification number of each 99
investor, the year during which each investment was made by each 100
investor, the amount of each investment and a description of the fund's 101
investment objectives and relative performance. 102
(2) There shall be allowed as a credit against the tax imposed under 103
chapter 207, 208 or 229 or section 38a-743 an amount equal to the 104
following percentage of the moneys of the taxpayer invested through a 105
fund manager in an insurance business with respect to the following 106
income years of the taxpayer: (A) With respect to the income year in 107
which the investment in the subject insurance business was made and 108
the two next succeeding income years, zero per cent; (B) with respect to 109
the third full income year succeeding the year in which the investment 110
in the subject insurance business was made and the three next 111
succeeding income years, ten per cent; (C) with respect to the seventh 112 Raised Bill No. 435
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full income year succeeding the year in which the investment in the 113
subject insurance business was made and the two next succeeding 114
income years, twenty per cent. The sum of all tax [credit] credits granted 115
pursuant to the provisions of this subsection shall not exceed fifteen 116
million dollars with respect to investments made by a fund or funds in 117
any single insurance business, and with respect to all investments made 118
by a fund shall not exceed the total amount originally invested in such 119
fund. Any fund manager may apply to the Commissioner of Economic 120
and Community Development for a credit that exceeds the limitations 121
established by this subdivision. The commissioner shall evaluate the 122
benefits of such application and make recommendations to the General 123
Assembly if [he] the commissioner determines that the proposal would 124
be of economic benefit to the state. 125
(3) The credit allowed by this subsection may be claimed only by a 126
taxpayer who has invested in an insurance business through a fund that 127
(A) [which] has a total asset value of not less than thirty million dollars 128
for the income year for which the initial credit is taken; (B) has not less 129
than three investors who are not related persons with respect to each 130
other or to any insurance business in which any investment is made 131
other than through the fund at the date the investment is made; and (C) 132
[which] invests only in insurance businesses that are not related persons 133
with respect to each other. 134
(4) The credit allowed by this subsection may be claimed only with 135
respect to a subject insurance business [which] that (A) occupies the new 136
facility for which an eligibility certificate has been issued by the 137
commissioner and with respect to which the certification required under 138
subdivision (6) of this subsection has been issued as its home office, and 139
(B) employs not less than twenty-five per cent of its total work force in 140
new jobs. 141
(5) The credit allowed by this subsection may be claimed only with 142
respect to an income year for which a certification of continued 143
eligibility required under subdivision (6) of this subsection has been 144
issued. If, with respect to any year for which a tax credit is claimed, any 145 Raised Bill No. 435
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subject insurance business ceases at any time to employ at least twenty-146
five per cent of its total work force in new jobs, then, except as provided 147
in subdivision (6) of this subsection, the entitlement to the credit allowed 148
by this subsection shall not be allowed for the taxable year in which such 149
employment ceases, and there shall not be a pro rata application of the 150
credit to such taxable year, [; provided,] except that if the reason for such 151
cessation is the dissolution, liquidation or reorganization of such 152
insurance business in a bankruptcy or delinquency proceeding, as 153
defined in section 38a-905, the credit shall be allowed. 154
(6) The commissioner, upon application, shall issue an eligibility 155
certificate for an insurance business occupying a new facility in this state 156
and employing new employees, after it has been established [,] to [his] 157
the commissioner's satisfaction [,] that subject insurance business has 158
complied with the provisions of this subsection. If the commissioner 159
determines that such requirements have been met as a result of 160
transactions with a related person for other than bona fide business 161
purposes, [he] the commissioner shall deny such application. The 162
commissioner shall require the subject insurance business to submit 163
annually such information as may be necessary to determine whether 164
the appropriate occupancy and employment requirements have been 165
met at all times during an income year. If the commissioner determines 166
that such requirements have been so met, [he] the commissioner shall 167
issue a certification of continued eligibility to that effect to the subject 168
insurance business on or before the first day of the third month 169
following the close of the subject insurance business's income year. 170
(7) The commissioner shall, upon request, provide a copy of the 171
eligibility certificate and the certification required under subdivision (6) 172
of this subsection to the Commissioner of Revenue Services. 173
(8) (A) If (i) the number of new employees on account of which a 174
taxpayer claimed the credit allowed by this subsection decreases to less 175
than twenty-five per cent of its total work force for more than sixty days 176
during any of the taxable years for which a credit is claimed, (ii) those 177
employees are not replaced by other employees who have not been 178 Raised Bill No. 435
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shifted from an existing location of the subject insurance business in this 179
state, and (iii) the subject insurance business has relocated operations 180
conducted in the new facility to a location outside this state, the taxpayer 181
shall be required to recapture a percentage, as determined under the 182
provisions of subparagraph (B) of this subdivision, of the credit allowed 183
under this subsection on its tax return and no subsequent credit shall be 184
allowed. If the credit claimed by the taxpayer under this subsection is 185
attributable to investments made in more than one insurance business, 186
the credit recaptured and disallowed under this subdivision shall be 187
that portion of the credit attributable to the investment in the insurance 188
business as described in subparagraphs (A)(i) to (A)(iii), inclusive, of 189
this subdivision. 190
(B) If the taxpayer is required under the provisions of subparagraph 191
(A) of this subdivision to recapture a portion of the credit during (i) the 192
first year such credit was claimed, then ninety per cent of the credit 193
allowed shall be recaptured on the tax return required to be filed for 194
such year, (ii) the second of such years, then sixty-five per cent of the 195
credit allowed for the entire period of eligibility shall be recaptured on 196
the tax return required to be filed for such year, (iii) the third of such 197
years, then fifty per cent of the credit allowed for the entire period of 198
eligibility shall be recaptured on the tax return required to be filed for 199
such year, (iv) the fourth of such years, then thirty per cent of the credit 200
allowed for the entire period of eligibility shall be recaptured on the tax 201
return required to be filed for such year, (v) the fifth of such years, then 202
twenty per cent of the credit allowed for the entire period of eligibility 203
shall be recaptured on the tax return required to be filed for such year, 204
and (vi) the sixth or subsequent of such years, then ten per cent of the 205
credit allowed for the entire period of eligibility shall be recaptured on 206
the tax return required to be filed for such year. Any credit recaptured 207
pursuant to this subdivision shall not be in excess of the credit that 208
would be allowed for the applicable investment. The Commissioner of 209
Revenue Services may recapture such credits from the taxpayer who has 210
claimed such credits. If the commissioner is unable to recapture all or 211
part of such credits from such taxpayer, the commissioner may seek to 212 Raised Bill No. 435
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recapture such credits from any taxpayer who has assigned such credits 213
to another taxpayer. If the commissioner is unable to recapture all or 214
part of such credits from any such taxpayer, the commissioner may 215
recapture such credits from the fund. 216
(C) The recapture provisions of this subdivision shall not apply and 217
tax credits may continue to be claimed under this subsection if, for the 218
entire period that the credit is applicable, such decrease in the 219
percentage of total work force employed in this state does not result in 220
an actual decrease in the number of persons employed by the subject 221
insurance business in this state on a regular, full-time, or equivalent 222
thereof, and permanent basis as compared to the number of new 223
employees on account of which the taxpayer claimed the credit allowed 224
by this subsection. 225
(c) (1) As used in this subsection: 226
(A) "Allocation date" means the date an invest CT fund receives an 227
investment of eligible capital equaling the amount of credits against the 228
tax imposed under chapter 207 and section 38a-743 allocated to 229
taxpayers who invest in such invest CT fund; 230
(B) "Cybersecurity business" means an eligible business primarily 231
engaged in providing information technology products, goods or 232
services intended to detect, prevent or respond to activity intended to 233
result in unauthorized access to, exfiltration of, manipulation of, or 234
impairment to the integrity, confidentiality or availability of an 235
information technology system or information stored on, or transiting, 236
an information technology system; 237
(C) "Eligible business" means a business that has its principal 238
business operations in Connecticut, has fewer than two hundred fifty 239
employees at the time of investment and not more than ten million 240
dollars in net income in the previous year; 241
(D) "Eligible capital" means an investment of cash by a taxpayer in an 242
invest CT fund that fully funds the purchase price of an equity interest 243 Raised Bill No. 435
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in the invest CT fund or an eligible debt instrument issued by an invest 244
CT fund, at par value or a premium, that (i) has an original maturity 245
date of at least five years after the date of issuance, (ii) has a repayment 246
schedule that is not faster than a level principal amortization over five 247
years, and (iii) has no interest, distribution or payment features tied to 248
the invest CT fund's profitability or the success of the investments; 249
(E) "Green technology business" means an eligible business with not 250
less than twenty-five per cent of its employment positions being 251
positions in which green technology is employed or developed and may 252
include the occupation codes identified as green jobs by the Department 253
of Economic and Community Development and the Labor Department 254
for such purposes; 255
(F) "Income year" means the income year as determined [in] under 256
chapter 207 for the taxpayer; 257
(G) "Invest CT fund" means a Connecticut partnership, corporation, 258
trust or limited liability company, whether organized on a profit or not-259
for-profit basis, that (i) is managed by at least two principals or persons 260
that have at least four years of experience each in managing venture 261
capital or private equity funds, with at least fifty million dollars of such 262
funds from people unaffiliated with the manager, (ii) has received an 263
equity investment of capital other than eligible capital equal to no less 264
than five per cent of the total amount of the eligible capital to be invested 265
in such invest CT fund on or before June 30, 2015, and equal to not less 266
than ten per cent of the total amount of eligible capital to be invested in 267
such invest CT fund on or after September 1, 2015, and (iii) is not, or will 268
not be after the receipt of eligible capital, controlled by or under 269
common control with, one or more insurance companies. An investment 270
of eligible capital shall not result in insurance company control unless 271
such investment exceeds forty million dollars per taxpayer and results 272
in insurance companies having the right to vote more than fifty per cent 273
of the equity interests of the invest CT fund cash invested in such invest 274
CT fund, provided this provision shall not prohibit the interim control 275
of an invest CT fund by one or more insurance companies upon a breach 276 Raised Bill No. 435
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of any payment obligation of the invest CT fund or contractual or other 277
agreement by the invest CT fund that is designed to ensure compliance 278
with this section; and 279
(H) "Principal business operations" means at least eighty per cent of 280
the business organization's employees reside in the state or eighty per 281
cent of the business payroll is paid to individuals living in this state. 282
(2) A taxpayer that makes an investment of eligible capital shall, in 283
the year of investment, earn a vested credit against the premium tax 284
imposed pursuant to chapter 207 and section 38a-743. Such credit shall 285
be available as follows: 286
(A) With respect to investments of eligible capital made on or before 287
June 30, 2015, (i) commencing with the tax return due for the first to 288
third, inclusive, tax years, zero per cent; (ii) commencing with the tax 289
return due for the fourth to seventh, inclusive, tax years, not more than 290
ten per cent; and (iii) commencing with the tax return due for the eighth 291
to tenth, inclusive, tax years, not more than twenty per cent; and (B) with 292
respect to investments of eligible capital made on or after September 1, 293
2015, (i) commencing with the tax return due for the first to fifth, 294
inclusive, tax years, zero per cent; and (ii) commencing with the tax 295
return due for the sixth to tenth, inclusive, tax years, not more than 296
twenty per cent. The maximum amount of eligible capital for which 297
credits may be allowed under this subsection shall not result in more 298
than forty million dollars of tax credits being used in any one year 299
exclusive of any carried forward credits and no fund shall apply for 300
more than the total amount of credits available under this section. 301
(3) (A) (i) On or before July 1, 2010, the Commissioner of Economic 302
and Community Development shall begin to accept applications for 303
certification as an invest CT fund and for allocations of tax credits under 304
this subsection with allocation dates of June 30, 2015, or earlier. 305
(ii) On and after September 1, 2015, the commissioner shall accept 306
applications for certification as an invest CT fund and for allocations of 307
tax credits under this subsection with allocation dates of September 1, 308 Raised Bill No. 435
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2015, or later. 309
(B) Applications shall include: 310
[(A)] (i) The amount of eligible capital the applicant will raise; 311
[(B) a] (ii) A nonrefundable application fee of seven thousand five 312
hundred dollars; 313
[(C) evidence] (iii) Evidence of satisfaction of the requirements of the 314
definition of "invest CT fund" pursuant to subparagraph (G) of 315
subdivision (1) of this subsection; 316
[(D) an] (iv) An affidavit by each taxpayer committing an investment 317
of eligible capital; 318
[(E) a] (v) A business plan detailing [(i)] (I) the approximate 319
percentage of eligible capital the applicant will invest in eligible 320
businesses by the third, fifth, seventh and ninth anniversaries of its 321
allocation date, [(ii)] (II) the industry segments listed by the North 322
American Industrial Classification System code and percentage of 323
eligible capital in which the applicant will invest, [(iii)] (III) the number 324
of jobs that will be created or retained as a result of the applicant's 325
investments once all eligible capital has been invested, [(iv)] (IV) the 326
percentage of eligible capital to be invested in eligible businesses 327
primarily engaged in conducting research and development or 328
manufacturing, processing or assembling technology–based products, 329
and [(v)] (V) a revenue impact assessment demonstrating that the 330
applicant's business plan has a revenue neutral or positive impact on the 331
state; 332
[(F) a] (vi) A commitment to invest at least twenty-five per cent of its 333
eligible capital in green technology businesses; 334
[(G) with] (vii) With respect to applications submitted on or before 335
June 30, 2015, a commitment to invest, by the third anniversary of its 336
allocation date, three per cent of its eligible capital in preseed 337
investments, and with respect to applications submitted on or after 338 Raised Bill No. 435
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September 1, 2015, a commitment to invest, by the fourth anniversary of 339
the allocation date, seven per cent of its eligible capital in preseed 340
investments, in consultation with Connecticut Innovations, 341
Incorporated, pursuant to the corporation's program for preseed 342
financing established pursuant to section 32-41x; [and] 343
[(H) with] (viii) With respect to applications submitted on or after 344
September 1, 2015, and before September 1, 2020, a commitment to 345
invest at least three per cent of its eligible capital in cybersecurity 346
businesses and at least twenty-five per cent of its eligible capital in 347
eligible businesses located in municipalities with a population greater 348
than eighty thousand. The commissioner may require the applicant to 349
obtain a revenue impact assessment conducted by an independent third 350
party; and 351
(ix) With respect to applications submitted on or after September 1, 352
2020, a commitment to invest at least twenty-five per cent of its eligible 353
capital in eligible businesses located in municipalities with a population 354
greater than eighty thousand. 355
(4) Applications for tax credits pursuant to this subsection shall be 356
accepted and approved on a first-come, first-served basis with all 357
applications received on the same date deemed to be received 358
simultaneously and approvals being made on a pro rata basis if such 359
applications exceed the amount of remaining credits. 360
(5) The commissioner shall issue an allocation of credits subject to 361
confirmation by the fund on a form prescribed by the commissioner that 362
an investment of eligible capital was received within five business days. 363
If an invest CT fund does not receive an investment of eligible capital 364
equaling the amount of credits against the tax imposed under chapter 365
207 and section 38a-743 allocated to a taxpayer, for which it filed an 366
affidavit with its application prior to the fifth business day after receipt 367
of certification, the invest CT fund shall notify the commissioner by 368
overnight common carrier delivery service and that portion of eligible 369
capital allocated to the insurance company shall be forfeited. Such invest 370 Raised Bill No. 435
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CT fund and forfeiting taxpayer shall each be assessed a twenty-five-371
thousand-dollar administrative penalty. The commissioner shall 372
reallocate the forfeited eligible capital among all other remaining 373
taxpayers that invested eligible capital. 374
(6) (A) To continue to be certified, an invest CT fund shall: 375
[(A) be] (i) Be in compliance with the investment parameters set forth 376
in its business plan, provided an invest CT fund may apply to the 377
commissioner to amend its business plan based on unavoidable or 378
reasonably unanticipated changes to various conditions, including, but 379
not limited to, the general economic climate of the state or particular 380
sectors of the economy, technological advances and high employment 381
and revenue growth opportunities, with approval for such changes not 382
to be unreasonably withheld by the commissioner; 383
[(B) be] (ii) Be in compliance with the revenue impact assessment 384
provided in the application demonstrating that the fund's business plan 385
continues to have a revenue neutral or positive impact on the state; 386
[(C) have] (iii) Have invested one hundred per cent of its eligible 387
capital in eligible businesses by the tenth anniversary of its allocation 388
date, with a minimum of twenty-five per cent of eligible capital invested 389
in green technology businesses; 390
[(D) for] (iv) For allocation dates of June 30, 2015, or earlier: [(i)] (I) 391
Have invested sixty per cent of its eligible capital in eligible businesses 392
by the fourth anniversary of such allocation date, and [(ii)] (II) have 393
invested a minimum of three per cent of such eligible capital in preseed 394
investments, as described in subdivision (3) of this subsection, by the 395
third anniversary of such allocation date; [and] 396
[(E) for] (v) For allocation dates of September 1, 2015, or later and 397
before September 1, 2020: [(i)] (I) Have invested sixty per cent of its 398
eligible capital in eligible businesses by the sixth anniversary of such 399
allocation date, [(ii)] (II) have invested a minimum of seven per cent of 400
its eligible capital in preseed investments, as described in subdivision 401 Raised Bill No. 435
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(3) of this subsection, by the fourth anniversary of such allocation date, 402
[(iii)] (III) have invested a minimum of three per cent of its eligible 403
capital in cybersecurity businesses, and [(iv)] (IV) have invested a 404
minimum of twenty-five per cent of its eligible capital in eligible 405
businesses located in municipalities with a population greater than 406
eighty thousand; and 407
(vi) For allocation dates of September 1, 2020, or later: (I) Have 408
invested sixty per cent of its eligible capital in eligible businesses by the 409
sixth anniversary of such allocation date, (II) have invested a minimum 410
of seven per cent of its eligible capital in preseed investments, as 411
described in subdivision (3) of this subsection, by the fourth anniversary 412
of such allocation date, and (III) have invested a minimum of twenty-413
five per cent of its eligible capital in eligible businesses located in 414
municipalities with a population greater than eighty thousand. 415
(B) An invest CT fund shall only invest eligible capital in eligible 416
businesses, bank deposits, certificates of deposit or other fixed income 417
securities and may not invest more than fifteen per cent of its eligible 418
capital in any one eligible business without prior approval of the 419
commissioner. The commissioner may approve a request to consider a 420
business as eligible that does not meet eligibility requirements in order 421
to achieve significant job creation or other substantial economic impact 422
to the state, as both are determined by the commissioner. 423
(7) Not later than January thirty-first annually, each invest CT fund 424
shall report to the commissioner: (A) The amount of eligible capital 425
remaining at the end of the preceding year; (B) each investment in an 426
eligible business during the preceding year and, with respect to each 427
eligible business, its location and North American Industrial 428
Classification System code; (C) the percentage of eligible capital 429
invested in green technology businesses, preseed investments, 430
cybersecurity businesses and eligible businesses located in 431
municipalities with a population greater than eighty thousand; and (D) 432
distributions made by the invest CT fund in the preceding year. In the 433
annual report due in the third, fifth, seventh and ninth years after its 434 Raised Bill No. 435
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allocation date, each invest CT fund shall also report to the 435
commissioner its compliance with the investment parameters set forth 436
in its business plan and the revenue impact assessment provided in the 437
application demonstrating that the fund's business plan continues to 438
have a revenue neutral or positive impact on the state. Each invest CT 439
fund shall provide to the commissioner annual audited financial 440
statements. 441
(8) (A) To make a distribution or payment, an invest CT fund certified 442
by the commissioner on or before June 30, 2015, must have invested one 443
hundred per cent of its eligible capital in eligible businesses, with a 444
minimum of twenty-five per cent of eligible capital invested in green 445
technology businesses and a minimum of three per cent of eligible 446
capital invested in preseed investment, as described in subdivision (3) 447
of this subsection, with principal business operations in this state at the 448
time of such determination, except: 449
[(A)] (i) Distributions related to the payment of any projected increase 450
in federal or state taxes, including penalties and interest related to state 451
and federal income taxes, of the equity owners of the invest CT fund 452
resulting from the earnings or other tax liability of the invest CT fund to 453
the extent that the increase is related to the ownership, management or 454
operation of the invest CT fund; 455
[(B) payments] (ii) Payments of interest and principal on the debt of 456
the invest CT fund, provided after such payment, the invest CT fund 457
still has cash and other marketable securities in an amount that, when 458
added to the cumulative investments it has made in eligible recipients, 459
equals not less than sixty per cent of the eligible capital invested in such 460
reinvestment fund; or 461
[(C) payments] (iii) Payments related to the reasonable costs and 462
expenses of forming, syndicating, managing and operating the fund, 463
provided the distribution or payment is not made directly or indirectly 464
to an insurance company that has invested eligible capital in the invest 465
CT fund, including: [(i)] (I) Reasonable and necessary fees paid for 466 Raised Bill No. 435
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professional services, including legal and accounting services, related to 467
the formation and operation of the invest CT fund, [;] and [(ii)] (II) an 468
annual management fee in an amount that does not exceed two and one-469
half per cent of the eligible capital of the invest CT fund. 470
(B) The state shall receive a share of any distribution, except as set 471
forth in [subparagraphs (A), (B) and (C)] subparagraph (A)(i), (A)(ii) 472
and (A)(iii) of this subdivision and distributions made to return any 473
equity capital invested in the invest CT fund that is not eligible capital, 474
in the following percentages: [(I)] (i) Ten per cent when less than eighty 475
per cent but more than sixty per cent of the jobs set forth in the invest 476
CT fund's business plan are created or retained, and [(II)] (ii) twenty per 477
cent when sixty per cent or less of the jobs set forth in the invest CT 478
fund's business plan are created or retained. 479
(9) (A) To make a distribution or payment, an invest CT fund certified 480
by the commissioner on or after September 1, 2015, and before 481
September 1, 2020, must have invested one hundred per cent of its 482
eligible capital in eligible businesses, with a minimum of twenty-five 483
per cent of eligible capital invested in green technology businesses, a 484
minimum of seven per cent of eligible capital invested in preseed 485
investments, as described in subdivision (3) of this subsection, a 486
minimum of three per cent of eligible capital invested in cybersecurity 487
businesses, and a minimum of twenty-five per cent of eligible capital 488
invested in businesses located in municipalities with a population 489
greater than eighty thousand, with principal business operations in this 490
state at the time of such determination, except: 491
[(A)] (i) Distributions related to the payment of any projected increase 492
in federal or state taxes, including penalties and interest related to state 493
and federal income taxes, of the equity owners of the invest CT fund 494
resulting from the earnings or other tax liability of the invest CT fund to 495
the extent that the increase is related to the ownership, management or 496
operation of the invest CT fund; 497
[(B) payments] (ii) Payments of interest and principal on the debt of 498 Raised Bill No. 435
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the invest CT fund, provided after such payment, the invest CT fund 499
still has cash and other marketable securities in an amount that, when 500
added to the cumulative investments it has made in eligible recipients, 501
equals not less than sixty per cent of the eligible capital invested in such 502
reinvestment fund; or 503
[(C) payments] (iii) Payments related to the reasonable costs and 504
expenses of forming, syndicating, managing and operating the fund, 505
provided the distribution or payment is not made directly or indirectly 506
to an insurance company that has invested eligible capital in the invest 507
CT fund, including: [(i)] (I) Reasonable and necessary fees paid for 508
professional services, including legal and accounting services, related to 509
the formation and operation of the invest CT fund, [;] and [(ii)] (II) an 510
annual management fee in an amount that does not exceed two and one-511
half per cent of the eligible capital of the invest CT fund. 512
(B) The state shall receive a share of any distribution, except as set 513
forth in [subparagraphs (A), (B) and (C)] subparagraph (A)(i), (A)(ii) 514
and (A)(iii) of this subdivision and distributions made to return any 515
equity capital invested in the invest CT fund that is not eligible capital, 516
in the following percentages: [(I)] (i) Ten per cent when less than eighty 517
per cent but more than sixty per cent of the jobs set forth in the invest 518
CT fund's business plan are created or retained, and [(II)] (ii) twenty per 519
cent when sixty per cent or less of the jobs set forth in the invest CT 520
fund's business plan are created or retained. 521
(10) (A) To make a distribution or payment, an invest CT fund 522
certified by the commissioner on or after September 1, 2020, must have 523
invested one hundred per cent of its eligible capital in eligible 524
businesses, with a minimum of twenty-five per cent of eligible capital 525
invested in green technology businesses, a minimum of seven per cent 526
of eligible capital invested in preseed investments, as described in 527
subdivision (3) of this subsection and a minimum of twenty-five per cent 528
of eligible capital invested in businesses located in municipalities with 529
a population greater than eighty thousand, with principal business 530
operations in this state at the time of such determination, except: 531 Raised Bill No. 435
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(i) Distributions related to the payment of any projected increase in 532
federal or state taxes, including penalties and interest related to state 533
and federal income taxes, of the equity owners of the invest CT fund 534
resulting from the earnings or other tax liability of the invest CT fund to 535
the extent that the increase is related to the ownership, management or 536
operation of the invest CT fund; 537
(ii) Payments of interest and principal on the debt of the invest CT 538
fund, provided after such payment, the invest CT fund still has cash and 539
other marketable securities in an amount that, when added to the 540
cumulative investments it has made in eligible recipients, equals not less 541
than sixty per cent of the eligible capital invested in such reinvestment 542
fund; or 543
(iii) Payments related to the reasonable costs and expenses of 544
forming, syndicating, managing and operating the fund, provided the 545
distribution or payment is not made directly or indirectly to an 546
insurance company that has invested eligible capital in the invest CT 547
fund, including: (I) Reasonable and necessary fees paid for professional 548
services, including legal and accounting services, related to the 549
formation and operation of the invest CT fund, and (II) an annual 550
management fee in an amount that does not exceed two and one-half 551
per cent of the eligible capital of the invest CT fund. 552
(B) The state shall receive a share of any distribution, except as set 553
forth in subparagraph (A)(i), (A)(ii) and (A)(iii) of this subdivision and 554
distributions made to return any equity capital invested in the invest CT 555
fund that is not eligible capital, in the following percentages: (i) Ten per 556
cent when less than eighty per cent but more than sixty per cent of the 557
jobs set forth in the invest CT fund's business plan are created or 558
retained, and (ii) twenty per cent when sixty per cent or less of the jobs 559
set forth in the invest CT fund's business plan are created or retained. 560
[(10)] (11) The commissioner shall review each annual report to 561
ensure compliance with subdivisions (6), (7), (8), [and] (9) and (10) of 562
this subsection. A material variation from subdivision (6), (7), (8), [or] 563 Raised Bill No. 435
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(9) or (10) of this subsection is grounds for decertification of the invest 564
CT fund. If the commissioner determines that an invest CT fund is not 565
in compliance with subdivision (6), (7), (8), [or] (9) or (10) of this 566
subsection or the investment parameters of its business plan, the 567
commissioner shall notify the officers of the invest CT fund, in writing, 568
that the invest CT fund may be subject to decertification after the one 569
hundred twentieth day after the date of mailing the notice, unless the 570
deficiencies are waived by the commissioner or are corrected and the 571
invest CT fund returns to compliance with subdivisions (6), (7), (8), 572
[and] (9) and (10) of this subsection. 573
[(11)] (12) Decertification of an invest CT fund shall cause the 574
forfeiture of future credits against the tax imposed by chapter 207 and 575
section 38a-743 to be claimed with respect to an invest CT fund when 576
(A) such decertification occurs on or before the fourth anniversary of an 577
allocation date of June 30, 2015, or earlier, or on or before the sixth 578
anniversary of an allocation date of September 1, 2015, or later, and (B) 579
such fund has invested less than sixty per cent of its eligible capital in 580
eligible businesses by said anniversary. The commissioner shall send 581
written notice to the last-known address of each taxpayer whose credit 582
against the tax imposed by chapter 207 is subject to recapture or 583
forfeiture. 584
(d) (1) The tax [credit] credits allowed by this section shall only be 585
available for investments [(1)] (A) in funds that are not open to 586
additional investments or investors beyond the amount subscribed at 587
the formation of the fund, or [(2)] (B) under subsection (c) of this section, 588
in invest CT funds that are not open to additional investments or 589
investors after submission of the invest CT fund's application to the 590
commissioner pursuant to subsection (c) of this section. 591
(2) On and after June 30, 2010, no eligibility certificate shall be 592
provided under subdivision (6) of subsection (b) of this section for 593
investments made in an insurance business. 594
(3) On or after July 1, 2011, no credit shall be allowed under 595 Raised Bill No. 435
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subdivision (2) or (6) of subsection (b) of this section for an investment 596
of less than one million dollars for which the commissioner has issued 597
an eligibility certificate. A fund manager who has received an eligibility 598
certificate but is not yet eligible to receive a certificate of continued 599
eligibility shall provide documentation satisfactory to the commissioner 600
not later than June 30, 2011, of its investment of one million dollars or 601
more. Such documentation shall include, but is not limited to, cancelled 602
checks, wire transfers, investment agreements or other documentation 603
as the commissioner may request. On and after July 1, 2011, the 604
commissioner shall revoke the certificate of eligibility for any insurance 605
business for which its fund manager failed to provide sufficient 606
documentation of [said] such investment of not less than one million 607
dollars. 608
(4) Any credit allowed under subsection (b) or subsection (g) of this 609
section that has not been claimed prior to January 1, 2010, may be carried 610
forward pursuant to subsection (i) of this section. 611
(e) The maximum amount of credit allowed under subsection (c) of 612
this section shall be [three] five hundred fifty million dollars in 613
aggregate and forty million dollars per year. 614
(f) (1) The Commissioner of Revenue Services may treat one or more 615
corporations that are properly included in a combined unitary tax return 616
under section 12-222 as one taxpayer in determining whether the 617
appropriate requirements under this section are met. Where 618
corporations are treated as one taxpayer for purposes of this subsection, 619
then the credit shall be allowed only against the amount of the combined 620
unitary tax for all corporations properly included in a combined unitary 621
tax return that, under the provisions of subdivision (2) of this 622
subsection, is attributable to the corporations treated as one taxpayer. 623
(2) The amount of the combined unitary tax for all corporations 624
properly included in a combined unitary tax return that is attributable 625
to the corporations that are treated as one taxpayer under the provisions 626
of this subsection shall be in the same ratio to such combined unitary tax 627 Raised Bill No. 435
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that the net income apportioned to this state of each corporation treated 628
as one taxpayer bears to the net income apportioned to this state, in the 629
aggregate, of all corporations included in such combined unitary tax 630
return. Solely for the purpose of computing such ratio, any net loss 631
apportioned to this state by a corporation treated as one taxpayer or by 632
a corporation included in such combined unitary tax return shall be 633
disregarded. 634
(g) (1) Any taxpayer allowed a credit under subsection (b) of this 635
section may assign such credit to another person, provided such person 636
may claim such credit only with respect to a calendar year for which the 637
assigning taxpayer would have been eligible to claim such credit. The 638
fund manager shall include in the report filed with the Commissioner 639
of Revenue Services in accordance with subdivision (1) of subsection (b) 640
of this section information requested by the commissioner regarding 641
such assignments including the current holders of credits as of the end 642
of the preceding calendar year. 643
(2) Any taxpayer allowed a credit under subsection (c) of this section 644
may sell, assign or otherwise transfer such credit, in whole or in part, to 645
one or more taxpayers, provided no such transferee may claim such 646
credit for an income year other than the transferee's income year in 647
which such transferee bought, was assigned or was otherwise 648
transferred such credit. 649
(h) No taxpayer shall be eligible for a credit under this section and 650
[either] section 12-217e [or section 12-217m] for the same investment. No 651
two taxpayers shall be eligible for any tax credit with respect to the same 652
investment, employee or facility. 653
(i) Any tax credit that is not sold, assigned or otherwise transferred 654
pursuant to subdivision (2) of subsection (g) of this section and is not 655
used in the income year for which it was allowed may be carried 656
forward for the five immediately succeeding income years until the full 657
credit has been claimed. 658
(j) The commissioner, with the approval of the Commissioner of 659 Raised Bill No. 435
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Revenue Services and the Secretary of the Office of Policy and 660
Management, may adopt regulations in accordance with chapter 54 to 661
carry out the purposes of this section. 662
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2020 38a-88a
Statement of Purpose:
To specify investment requirements for invest CT funds to be eligible
for certification by the Commissioner of Economic and Community
Development and increase the aggregate amount of tax credits allowed
under the program.
[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.]