Connecticut 2021 Regular Session

Connecticut House Bill HB06632 Compare Versions

Only one version of the bill is available at this time.

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5	5	LCO No. 4914 1 of 22
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7	7	General Assembly Raised Bill No. 6632
8	8	January Session, 2021
9	9	LCO No. 4914
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11	11
12	12	Referred to Committee on FINANCE, REVENUE AND
13	13	BONDING
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15	15
16	16	Introduced by:
17	17	(FIN)
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22	22	AN ACT CONCERNING TH E INVEST CT FUND PROGRAM.
23	23	Be it enacted by the Senate and House of Representatives in General
24	24	Assembly convened:
25	25
26	26	Section 1. Section 38a-88a of the general statutes is repealed and the 1
27	27	following is substituted in lieu thereof (Effective July 1, 2021): 2
28	28	(a) As used in this section: 3
29	29	(1) "Facility" means an insurance business facility; 4
30	30	(2) "Insurance business" means a business with a North American 5
31	31	Industry Classification System code of 524113 to 524298, inclusive, that 6
32	32	is engaged in the business of insuring risks or of providing services 7
33	33	necessary to the business of insuring risks; 8
34	34	(3) "New job" means a job that did not exist in the business of a subject 9
35	35	insurance business in this state prior to the subject insurance business's 10
36	36	application to the commissioner for an eligibility certificate under this 11
37	37	section for a new facility and that is filled by a new employee, but does 12
38	38	not include a job created when an employee is shifted from an existing 13 Raised Bill No. 6632
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40	40
41	41
42	42	LCO No. 4914 2 of 22
43	43
44	44	location of the subject insurance business in this state to a new facility; 14
45	45	(4) "New employee" means a person who resides in Connecticut and 15
46	46	is hired by a subject insurance business to fill a position for a new job or 16
47	47	a person shifted from an existing location of the subject insurance 17
48	48	business outside this state to a new facility in this state, provided (A) in 18
49	49	no case shall the total number of new employees allowed for purposes 19
50	50	of this credit exceed the total increase in the taxpayer's employment in 20
51	51	this state, which increase shall be the difference between (i) the number 21
52	52	of employees employed by the subject insurance business in this state at 22
53	53	the time of application for an eligibility certificate to the commissioner 23
54	54	plus the number of new employees who would be eligible for inclusion 24
55	55	under the credit allowed under this section without regard to this 25
56	56	calculation, and (ii) the highest number of employees employed by the 26
57	57	subject insurance business in this state in the year preceding the subject 27
58	58	insurance business's application for an eligibility certificate to the 28
59	59	commissioner, and (B) a person shall be deemed to be a "new employee" 29
60	60	only if such person's duties in connection with the operation of the 30
61	61	facility are on a regular, full-time, or equivalent thereof, and permanent 31
62	62	basis; 32
63	63	(5) "New facility" means a facility [which] that (A) is acquired by, 33
64	64	leased to, or constructed by, a subject insurance business on or after the 34
65	65	date of the subject insurance business's application to the commissioner 35
66	66	for an eligibility certificate under this section, unless, upon application 36
67	67	of the subject insurance business and upon good and sufficient cause 37
68	68	shown, the commissioner waives the requirement that such activity take 38
69	69	place after the application, and (B) was not in service or use during the 39
70	70	one-year period immediately prior to the date of the subject insurance 40
71	71	business's application to [said] the commissioner for an eligibility 41
72	72	certificate under this section, unless upon application of the subject 42
73	73	insurance business and upon good and sufficient cause shown, the 43
74	74	commissioner consents to waiving the one-year period; 44
75	75	(6) "Related person" means (A) a corporation, limited liability 45
76	76	company, partnership, association or trust controlled by the taxpayer or 46 Raised Bill No. 6632
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82	82	subject insurance business, as the case may be, (B) an individual, 47
83	83	corporation, limited liability company, partnership, association or trust 48
84	84	that is in control of the taxpayer or subject insurance business, as the 49
85	85	case may be, (C) a corporation, limited liability company, partnership, 50
86	86	association or trust controlled by an individual, corporation, limited 51
87	87	liability company, partnership, association or trust that is in control of 52
88	88	the taxpayer or subject insurance business, as the case may be, or (D) a 53
89	89	member of the same controlled group as the taxpayer or subject 54
90	90	insurance business, as the case may be. For purposes of this section, 55
91	91	"control", with respect to a corporation, means ownership, directly or 56
92	92	indirectly, of stock possessing fifty per cent or more of the total 57
93	93	combined voting power of all classes of the stock of such corporation 58
94	94	entitled to vote. "Control", with respect to a trust, means ownership, 59
95	95	directly or indirectly, of fifty per cent or more of the beneficial interest 60
96	96	in the principal or income of such trust. The ownership of stock in a 61
97	97	corporation, of a capital or profits interest in a partnership or association 62
98	98	or of a beneficial interest in a trust shall be determined in accordance 63
99	99	with the rules for constructive ownership of stock provided in Section 64
100	100	267(c) of the Internal Revenue Code of 1986, or any subsequent 65
101	101	corresponding internal revenue code of the United States, as from time 66
102	102	to time amended, other than paragraph (3) of Section 267(c) of said 67
103	103	[internal revenue] code; 68
104	104	(7) "Moneys of the taxpayer" means all amounts invested in a fund, 69
105	105	directly or indirectly, on behalf of a taxpayer, including but not limited 70
106	106	to (A) direct investments made by the taxpayer, and (B) loans made to 71
107	107	the fund for the benefit of the taxpayer which loans are guaranteed by 72
108	108	the taxpayer, provided no amounts represented by any such loan shall 73
109	109	be used for the purpose of obtaining any tax credit by any person 74
110	110	making such loan against any tax levied by this state; 75
111	111	(8) "Income year" means (A) with respect to corporations subject to 76
112	112	taxation under chapter 208, the income year as determined under said 77
113	113	chapter, (B) with respect to insurance companies, hospital service 78
114	114	corporations and medical service corporations subject to taxation under 79
115	115	chapter 207, the income year as determined under said chapter, and (C) 80 Raised Bill No. 6632
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121	121	with respect to taxpayers subject to taxation under chapter 229, the 81
122	122	taxable year determined under chapter 229; 82
123	123	(9) "Taxpayer" means any person as defined in section 12-1, whether 83
124	124	or not subject to any taxes levied by this state; and 84
125	125	(10) "Commissioner" means the Commissioner of Economic and 85
126	126	Community Development. 86
127	127	(b) (1) On or before July 1, 2000, the commissioner shall register 87
128	128	managers of funds created for the purpose of investing in insurance 88
129	129	businesses. Any manager registered under this subsection shall have its 89
130	130	primary place of business in this state. Each applicant shall submit an 90
131	131	application under oath to the commissioner to be registered and shall 91
132	132	furnish evidence satisfactory to the commissioner of its financial 92
133	133	responsibility, integrity, and professional competence to manage 93
134	134	investments. Failure to maintain adequate fiduciary standards shall 94
135	135	constitute cause for the commissioner to revoke, after hearing, any 95
136	136	registration granted under this section. The fund manager shall make a 96
137	137	report on or before the first day of March in each year, under oath, to 97
138	138	the Commissioner of Revenue Services specifying the name, address 98
139	139	and Social Security number or employer identification number of each 99
140	140	investor, the year during which each investment was made by each 100
141	141	investor, the amount of each investment and a description of the fund's 101
142	142	investment objectives and relative performance. 102
143	143	(2) There shall be allowed as a credit against the tax imposed under 103
144	144	chapter 207, 208 or 229 or section 38a-743 an amount equal to the 104
145	145	following percentage of the moneys of the taxpayer invested through a 105
146	146	fund manager in an insurance business with respect to the following 106
147	147	income years of the taxpayer: (A) With respect to the income year in 107
148	148	which the investment in the subject insurance business was made and 108
149	149	the two next succeeding income years, zero per cent; (B) with respect to 109
150	150	the third full income year succeeding the year in which the investment 110
151	151	in the subject insurance business was made and the three next 111
152	152	succeeding income years, ten per cent; (C) with respect to the seventh 112 Raised Bill No. 6632
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158	158	full income year succeeding the year in which the investment in the 113
159	159	subject insurance business was made and the two next succeeding 114
160	160	income years, twenty per cent. The sum of all tax [credit] credits granted 115
161	161	pursuant to the provisions of this subsection shall not exceed fifteen 116
162	162	million dollars with respect to investments made by a fund or funds in 117
163	163	any single insurance business, and with respect to all investments made 118
164	164	by a fund shall not exceed the total amount originally invested in such 119
165	165	fund. Any fund manager may apply to the Commissioner of Economic 120
166	166	and Community Development for a credit that exceeds the limitations 121
167	167	established by this subdivision. The commissioner shall evaluate the 122
168	168	benefits of such application and make recommendations to the General 123
169	169	Assembly if [he] the commissioner determines that the proposal would 124
170	170	be of economic benefit to the state. 125
171	171	(3) The credit allowed by this subsection may be claimed only by a 126
172	172	taxpayer who has invested in an insurance business through a fund that 127
173	173	(A) [which] has a total asset value of not less than thirty million dollars 128
174	174	for the income year for which the initial credit is taken; (B) has not less 129
175	175	than three investors who are not related persons with respect to each 130
176	176	other or to any insurance business in which any investment is made 131
177	177	other than through the fund at the date the investment is made; and (C) 132
178	178	[which] invests only in insurance businesses that are not related persons 133
179	179	with respect to each other. 134
180	180	(4) The credit allowed by this subsection may be claimed only with 135
181	181	respect to a subject insurance business [which] that (A) occupies the new 136
182	182	facility for which an eligibility certificate has been issued by the 137
183	183	commissioner and with respect to which the certification required under 138
184	184	subdivision (6) of this subsection has been issued as its home office, and 139
185	185	(B) employs not less than twenty-five per cent of its total work force in 140
186	186	new jobs. 141
187	187	(5) The credit allowed by this subsection may be claimed only with 142
188	188	respect to an income year for which a certification of continued 143
189	189	eligibility required under subdivision (6) of this subsection has been 144
190	190	issued. If, with respect to any year for which a tax credit is claimed, any 145 Raised Bill No. 6632
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196	196	subject insurance business ceases at any time to employ at least twenty-146
197	197	five per cent of its total work force in new jobs, then, except as provided 147
198	198	in subdivision (6) of this subsection, the entitlement to the credit allowed 148
199	199	by this subsection shall not be allowed for the taxable year in which such 149
200	200	employment ceases, and there shall not be a pro rata application of the 150
201	201	credit to such taxable year, [; provided,] except that if the reason for such 151
202	202	cessation is the dissolution, liquidation or reorganization of such 152
203	203	insurance business in a bankruptcy or delinquency proceeding, as 153
204	204	defined in section 38a-905, the credit shall be allowed. 154
205	205	(6) The commissioner, upon application, shall issue an eligibility 155
206	206	certificate for an insurance business occupying a new facility in this state 156
207	207	and employing new employees, after it has been established [,] to [his] 157
208	208	the commissioner's satisfaction [,] that the subject insurance business 158
209	209	has complied with the provisions of this subsection. If the commissioner 159
210	210	determines that such requirements have been met as a result of 160
211	211	transactions with a related person for other than bona fide business 161
212	212	purposes, [he] the commissioner shall deny such application. The 162
213	213	commissioner shall require the subject insurance business to submit 163
214	214	annually such information as may be necessary to determine whether 164
215	215	the appropriate occupancy and employment requirements have been 165
216	216	met at all times during an income year. If the commissioner determines 166
217	217	that such requirements have been so met, [he] the commissioner shall 167
218	218	issue a certification of continued eligibility to that effect to the subject 168
219	219	insurance business on or before the first day of the third month 169
220	220	following the close of the subject insurance business's income year. 170
221	221	(7) The commissioner shall, upon request, provide a copy of the 171
222	222	eligibility certificate and the certification required under subdivision (6) 172
223	223	of this subsection to the Commissioner of Revenue Services. 173
224	224	(8) (A) If (i) the number of new employees on account of which a 174
225	225	taxpayer claimed the credit allowed by this subsection decreases to less 175
226	226	than twenty-five per cent of its total work force for more than sixty days 176
227	227	during any of the taxable years for which a credit is claimed, (ii) those 177
228	228	employees are not replaced by other employees who have not been 178 Raised Bill No. 6632
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234	234	shifted from an existing location of the subject insurance business in this 179
235	235	state, and (iii) the subject insurance business has relocated operations 180
236	236	conducted in the new facility to a location outside this state, the taxpayer 181
237	237	shall be required to recapture a percentage, as determined under the 182
238	238	provisions of subparagraph (B) of this subdivision, of the credit allowed 183
239	239	under this subsection on its tax return and no subsequent credit shall be 184
240	240	allowed. If the credit claimed by the taxpayer under this subsection is 185
241	241	attributable to investments made in more than one insurance business, 186
242	242	the credit recaptured and disallowed under this subdivision shall be 187
243	243	that portion of the credit attributable to the investment in the insurance 188
244	244	business as described in subparagraphs (A)(i) to (A)(iii), inclusive, of 189
245	245	this subdivision. 190
246	246	(B) If the taxpayer is required under the provisions of subparagraph 191
247	247	(A) of this subdivision to recapture a portion of the credit during (i) the 192
248	248	first year such credit was claimed, then ninety per cent of the credit 193
249	249	allowed shall be recaptured on the tax return required to be filed for 194
250	250	such year, (ii) the second of such years, then sixty-five per cent of the 195
251	251	credit allowed for the entire period of eligibility shall be recaptured on 196
252	252	the tax return required to be filed for such year, (iii) the third of such 197
253	253	years, then fifty per cent of the credit allowed for the entire period of 198
254	254	eligibility shall be recaptured on the tax return required to be filed for 199
255	255	such year, (iv) the fourth of such years, then thirty per cent of the credit 200
256	256	allowed for the entire period of eligibility shall be recaptured on the tax 201
257	257	return required to be filed for such year, (v) the fifth of such years, then 202
258	258	twenty per cent of the credit allowed for the entire period of eligibility 203
259	259	shall be recaptured on the tax return required to be filed for such year, 204
260	260	and (vi) the sixth or subsequent of such years, then ten per cent of the 205
261	261	credit allowed for the entire period of eligibility shall be recaptured on 206
262	262	the tax return required to be filed for such year. Any credit recaptured 207
263	263	pursuant to this subdivision shall not be in excess of the credit that 208
264	264	would be allowed for the applicable investment. The Commissioner of 209
265	265	Revenue Services may recapture such credits from the taxpayer who has 210
266	266	claimed such credits. If the commissioner is unable to recapture all or 211
267	267	part of such credits from such taxpayer, the commissioner may seek to 212 Raised Bill No. 6632
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273	273	recapture such credits from any taxpayer who has assigned such credits 213
274	274	to another taxpayer. If the commissioner is unable to recapture all or 214
275	275	part of such credits from any such taxpayer, the commissioner may 215
276	276	recapture such credits from the fund. 216
277	277	(C) The recapture provisions of this subdivision shall not apply and 217
278	278	tax credits may continue to be claimed under this subsection if, for the 218
279	279	entire period that the credit is applicable, such decrease in the 219
280	280	percentage of total work force employed in this state does not result in 220
281	281	an actual decrease in the number of persons employed by the subject 221
282	282	insurance business in this state on a regular, full-time, or equivalent 222
283	283	thereof, and permanent basis as compared to the number of new 223
284	284	employees on account of which the taxpayer claimed the credit allowed 224
285	285	by this subsection. 225
286	286	(c) (1) As used in this subsection: 226
287	287	(A) "Allocation date" means the date an invest CT fund receives an 227
288	288	investment of eligible capital equaling the amount of credits against the 228
289	289	tax imposed under chapter 207 and section 38a-743 allocated to 229
290	290	taxpayers who invest in such invest CT fund; 230
291	291	(B) "Cybersecurity business" means an eligible business primarily 231
292	292	engaged in providing information technology products, goods or 232
293	293	services intended to detect, prevent or respond to activity intended to 233
294	294	result in unauthorized access to, exfiltration of, manipulation of, or 234
295	295	impairment to the integrity, confidentiality or availability of an 235
296	296	information technology system or information stored on, or transiting, 236
297	297	an information technology system; 237
298	298	(C) "Eligible business" means a business that has its principal 238
299	299	business operations in Connecticut, has fewer than two hundred fifty 239
300	300	employees at the time of investment and not more than ten million 240
301	301	dollars in net income in the previous year; 241
302	302	(D) "Eligible capital" means an investment of cash by a taxpayer in an 242
303	303	invest CT fund that fully funds the purchase price of an equity interest 243 Raised Bill No. 6632
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309	309	in the invest CT fund or an eligible debt instrument issued by an invest 244
310	310	CT fund, at par value or a premium, that (i) has an original maturity 245
311	311	date of at least five years after the date of issuance, (ii) has a repayment 246
312	312	schedule that is not faster than a level principal amortization over five 247
313	313	years, and (iii) has no interest, distribution or payment features tied to 248
314	314	the invest CT fund's profitability or the success of the investments; 249
315	315	(E) "Green technology business" means an eligible business with not 250
316	316	less than twenty-five per cent of its employment positions being 251
317	317	positions in which green technology is employed or developed and may 252
318	318	include the occupation codes identified as green jobs by the Department 253
319	319	of Economic and Community Development and the Labor Department 254
320	320	for such purposes; 255
321	321	(F) "Income year" means the income year as determined [in] under 256
322	322	chapter 207 for the taxpayer; 257
323	323	(G) "Invest CT fund" means a Connecticut partnership, corporation, 258
324	324	trust or limited liability company, whether organized on a profit or not-259
325	325	for-profit basis, that (i) is managed by at least two principals or persons 260
326	326	that have at least four years of experience each in managing venture 261
327	327	capital or private equity funds, with at least fifty million dollars of such 262
328	328	funds from people unaffiliated with the manager, (ii) has received an 263
329	329	equity investment of capital other than eligible capital equal to no less 264
330	330	than five per cent of the total amount of the eligible capital to be invested 265
331	331	in such invest CT fund on or before June 30, 2015, and equal to not less 266
332	332	than ten per cent of the total amount of eligible capital to be invested in 267
333	333	such invest CT fund on or after September 1, 2015, and (iii) is not, or will 268
334	334	not be after the receipt of eligible capital, controlled by or under 269
335	335	common control with, one or more insurance companies. An investment 270
336	336	of eligible capital shall not result in insurance company control unless 271
337	337	such investment exceeds forty million dollars per taxpayer and results 272
338	338	in insurance companies having the right to vote more than fifty per cent 273
339	339	of the equity interests of the invest CT fund cash invested in such invest 274
340	340	CT fund, provided this provision shall not prohibit the interim control 275
341	341	of an invest CT fund by one or more insurance companies upon a breach 276 Raised Bill No. 6632
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347	347	of any payment obligation of the invest CT fund or contractual or other 277
348	348	agreement by the invest CT fund that is designed to ensure compliance 278
349	349	with this section; and 279
350	350	(H) "Principal business operations" means at least eighty per cent of 280
351	351	the business organization's employees reside in the state or eighty per 281
352	352	cent of the business payroll is paid to individuals living in this state. 282
353	353	(2) A taxpayer that makes an investment of eligible capital shall, in 283
354	354	the year of investment, earn a vested credit against the premium tax 284
355	355	imposed pursuant to chapter 207 and section 38a-743. Such credit shall 285
356	356	be available as follows: (A) With respect to investments of eligible 286
357	357	capital made on or before June 30, 2015, (i) commencing with the tax 287
358	358	return due for the first to third, inclusive, tax years, zero per cent; (ii) 288
359	359	commencing with the tax return due for the fourth to seventh, inclusive, 289
360	360	tax years, not more than ten per cent; and (iii) commencing with the tax 290
361	361	return due for the eighth to tenth, inclusive, tax years, not more than 291
362	362	twenty per cent; and (B) with respect to investments of eligible capital 292
363	363	made on or after September 1, 2015, (i) commencing with the tax return 293
364	364	due for the first to fifth, inclusive, tax years, zero per cent; and (ii) 294
365	365	commencing with the tax return due for the sixth to tenth, inclusive, tax 295
366	366	years, not more than twenty per cent. The maximum amount of eligible 296
367	367	capital for which credits may be allowed under this subsection shall not 297
368	368	result in more than forty million dollars of tax credits being used in any 298
369	369	one year exclusive of any carried forward credits and no fund shall 299
370	370	apply for more than the total amount of credits available under this 300
371	371	[section] subsection. 301
372	372	(3) (A) (i) On or before July 1, 2010, the Commissioner of Economic 302
373	373	and Community Development shall begin to accept applications for 303
374	374	certification as an invest CT fund and for allocations of tax credits under 304
375	375	this subsection with allocation dates of June 30, 2015, or earlier. 305
376	376	(ii) On and after September 1, 2015, the commissioner shall accept 306
377	377	applications for certification as an invest CT fund and for allocations of 307
378	378	tax credits under this subsection with allocation dates of September 1, 308 Raised Bill No. 6632
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384	384	2015, or later. 309
385	385	(B) Applications shall include: 310
386	386	[(A)] (i) The amount of eligible capital the applicant will raise; 311
387	387	[(B) a] (ii) A nonrefundable application fee of seven thousand five 312
388	388	hundred dollars; 313
389	389	[(C) evidence] (iii) Evidence of satisfaction of the requirements of the 314
390	390	definition of "invest CT fund" pursuant to subparagraph (G) of 315
391	391	subdivision (1) of this subsection; 316
392	392	[(D) an] (iv) An affidavit by each taxpayer committing an investment 317
393	393	of eligible capital; 318
394	394	[(E) a] (v) A business plan detailing [(i)] (I) the approximate 319
395	395	percentage of eligible capital the applicant will invest in eligible 320
396	396	businesses by the third, fifth, seventh and ninth anniversaries of its 321
397	397	allocation date, [(ii)] (II) the industry segments listed by the North 322
398	398	American Industrial Classification System code and percentage of 323
399	399	eligible capital in which the applicant will invest, [(iii)] (III) the number 324
400	400	of jobs that will be created or retained as a result of the applicant's 325
401	401	investments once all eligible capital has been invested, [(iv)] (IV) the 326
402	402	percentage of eligible capital to be invested in eligible businesses 327
403	403	primarily engaged in conducting research and development or 328
404	404	manufacturing, processing or assembling technology–based products, 329
405	405	and [(v)] (V) a revenue impact assessment demonstrating that the 330
406	406	applicant's business plan has a revenue neutral or positive impact on the 331
407	407	state; 332
408	408	[(F)] (vi) With respect to applications submitted before September 1, 333
409	409	2021, a commitment to invest at least twenty-five per cent of its eligible 334
410	410	capital in green technology businesses; 335
411	411	[(G) with] (vii) With respect to applications submitted on or before 336
412	412	June 30, 2015, a commitment to invest, by the third anniversary of its 337
413	413	allocation date, three per cent of its eligible capital in preseed 338 Raised Bill No. 6632
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419	419	investments, and with respect to applications submitted on or after 339
420	420	September 1, 2015, a commitment to invest, by the fourth anniversary of 340
421	421	the allocation date, seven per cent of its eligible capital in preseed 341
422	422	investments, in consultation with Connecticut Innovations, 342
423	423	Incorporated, pursuant to the corporation's program for preseed 343
424	424	financing established pursuant to section 32-41x; [and] 344
425	425	[(H) with] (viii) With respect to applications submitted on or after 345
426	426	September 1, 2015, and before September 1, 2021, a commitment to 346
427	427	invest at least three per cent of its eligible capital in cybersecurity 347
428	428	businesses and at least twenty-five per cent of its eligible capital in 348
429	429	eligible businesses located in municipalities with a population greater 349
430	430	than eighty thousand. The commissioner may require the applicant to 350
431	431	obtain a revenue impact assessment conducted by an independent third 351
432	432	party; and 352
433	433	(ix) With respect to applications submitted on or after September 1, 353
434	434	2021, a commitment to invest at least twenty-five per cent of its eligible 354
435	435	capital in eligible businesses located in municipalities with a population 355
436	436	greater than eighty thousand. 356
437	437	(4) Applications for tax credits pursuant to this subsection shall be 357
438	438	accepted and approved on a first-come, first-served basis with all 358
439	439	applications received on the same date deemed to be received 359
440	440	simultaneously and approvals being made on a pro rata basis if such 360
441	441	applications exceed the amount of remaining credits. 361
442	442	(5) The commissioner shall issue an allocation of credits subject to 362
443	443	confirmation by the fund on a form prescribed by the commissioner that 363
444	444	an investment of eligible capital was received within five business days. 364
445	445	If an invest CT fund does not receive an investment of eligible capital 365
446	446	equaling the amount of credits against the tax imposed under chapter 366
447	447	207 and section 38a-743 allocated to a taxpayer, for which it filed an 367
448	448	affidavit with its application prior to the fifth business day after receipt 368
449	449	of certification, the invest CT fund shall notify the commissioner by 369
450	450	overnight common carrier delivery service and that portion of eligible 370 Raised Bill No. 6632
451	451
452	452
453	453
454	454	LCO No. 4914 13 of 22
455	455
456	456	capital allocated to the insurance company shall be forfeited. Such invest 371
457	457	CT fund and forfeiting taxpayer shall each be assessed a twenty-five-372
458	458	thousand-dollar administrative penalty. The commissioner shall 373
459	459	reallocate the forfeited eligible capital among all other remaining 374
460	460	taxpayers that invested eligible capital. 375
461	461	(6) (A) To continue to be certified, an invest CT fund shall: 376
462	462	[(A) be] (i) Be in compliance with the investment parameters set forth 377
463	463	in its business plan, provided an invest CT fund may apply to the 378
464	464	commissioner to amend its business plan based on unavoidable or 379
465	465	reasonably unanticipated changes to various conditions, including, but 380
466	466	not limited to, the general economic climate of the state or particular 381
467	467	sectors of the economy, technological advances and high employment 382
468	468	and revenue growth opportunities, with approval for such changes not 383
469	469	to be unreasonably withheld by the commissioner; 384
470	470	[(B) be] (ii) Be in compliance with the revenue impact assessment 385
471	471	provided in the application demonstrating that the fund's business plan 386
472	472	continues to have a revenue neutral or positive impact on the state; 387
473	473	[(C) have] (iii) Have invested one hundred per cent of its eligible 388
474	474	capital in eligible businesses by the tenth anniversary of its allocation 389
475	475	date and for allocation dates of August 31, 2021, or earlier, with a 390
476	476	minimum of twenty-five per cent of eligible capital invested in green 391
477	477	technology businesses; 392
478	478	[(D) for] (iv) For allocation dates of June 30, 2015, or earlier: [(i)] (I) 393
479	479	Have invested sixty per cent of its eligible capital in eligible businesses 394
480	480	by the fourth anniversary of such allocation date, and [(ii)] (II) have 395
481	481	invested a minimum of three per cent of such eligible capital in preseed 396
482	482	investments, as described in subdivision (3) of this subsection, by the 397
483	483	third anniversary of such allocation date; [and] 398
484	484	[(E) for] (v) For allocation dates of September 1, 2015, or later [: (i)] 399
485	485	and before September 1, 2021: (I) Have invested sixty per cent of its 400
486	486	eligible capital in eligible businesses by the sixth anniversary of such 401 Raised Bill No. 6632
487	487
488	488
489	489
490	490	LCO No. 4914 14 of 22
491	491
492	492	allocation date, [(ii)] (II) have invested a minimum of seven per cent of 402
493	493	its eligible capital in preseed investments, as described in subdivision 403
494	494	(3) of this subsection, by the fourth anniversary of such allocation date, 404
495	495	[(iii)] (III) have invested a minimum of three per cent of its eligible 405
496	496	capital in cybersecurity businesses, and [(iv)] (IV) have invested a 406
497	497	minimum of twenty-five per cent of its eligible capital in eligible 407
498	498	businesses located in municipalities with a population greater than 408
499	499	eighty thousand; and 409
500	500	(vi) For allocation dates of September 1, 2021, or later: (I) Have 410
501	501	invested sixty per cent of its eligible capital in eligible businesses by the 411
502	502	sixth anniversary of such allocation date, (II) have invested a minimum 412
503	503	of seven per cent of its eligible capital in preseed investments, as 413
504	504	described in subdivision (3) of this subsection, by the fourth anniversary 414
505	505	of such allocation date, and (III) have invested a minimum of twenty-415
506	506	five per cent of its eligible capital in eligible businesses located in 416
507	507	municipalities with a population greater than eighty thousand. 417
508	508	(B) An invest CT fund shall only invest eligible capital in eligible 418
509	509	businesses, bank deposits, certificates of deposit or other fixed income 419
510	510	securities and may not invest more than fifteen per cent of its eligible 420
511	511	capital in any one eligible business without prior approval of the 421
512	512	commissioner. The commissioner may approve a request to consider a 422
513	513	business as eligible that does not meet the requirements of an eligible 423
514	514	business, as defined in subparagraph (C) of subdivision (1) of this 424
515	515	subsection, in order to achieve significant job creation or other 425
516	516	substantial economic impact to the state, as both are determined by the 426
517	517	commissioner. 427
518	518	(7) Not later than January thirty-first annually, each invest CT fund 428
519	519	shall report to the commissioner: (A) The amount of eligible capital 429
520	520	remaining at the end of the preceding year; (B) each investment in an 430
521	521	eligible business during the preceding year and, with respect to each 431
522	522	eligible business, its location and North American Industrial 432
523	523	Classification System code; (C) the percentage of eligible capital 433
524	524	invested in green technology businesses, if applicable, preseed 434 Raised Bill No. 6632
525	525
526	526
527	527
528	528	LCO No. 4914 15 of 22
529	529
530	530	investments, cybersecurity businesses, if applicable, and eligible 435
531	531	businesses located in municipalities with a population greater than 436
532	532	eighty thousand; and (D) distributions made by the invest CT fund in 437
533	533	the preceding year. In the annual report due in the third, fifth, seventh 438
534	534	and ninth years after its allocation date, each invest CT fund shall also 439
535	535	report to the commissioner its compliance with the investment 440
536	536	parameters set forth in its business plan and the revenue impact 441
537	537	assessment provided in the application demonstrating that the fund's 442
538	538	business plan continues to have a revenue neutral or positive impact on 443
539	539	the state. Each invest CT fund shall provide to the commissioner annual 444
540	540	audited financial statements. 445
541	541	(8) (A) To make a distribution or payment, except a distribution or 446
542	542	payment set forth in subdivision (9) of this subsection, an invest CT fund 447
543	543	certified by the commissioner on or before June 30, 2015, must have 448
544	544	invested one hundred per cent of its eligible capital in eligible 449
545	545	businesses, with a minimum of twenty-five per cent of eligible capital 450
546	546	invested in green technology businesses and a minimum of three per 451
547	547	cent of eligible capital invested in preseed investment, as described in 452
548	548	subdivision (3) of this subsection, with principal business operations in 453
549	549	this state at the time of such determination. [except: (A) Distributions 454
550	550	related to the payment of any projected increase in federal or state taxes, 455
551	551	including penalties and interest related to state and federal income 456
552	552	taxes, of the equity owners of the invest CT fund resulting from the 457
553	553	earnings or other tax liability of the invest CT fund to the extent that the 458
554	554	increase is related to the ownership, management or operation of the 459
555	555	invest CT fund; (B) payments of interest and principal on the debt of the 460
556	556	invest CT fund, provided after such payment, the invest CT fund still 461
557	557	has cash and other marketable securities in an amount that, when added 462
558	558	to the cumulative investments it has made in eligible recipients, equals 463
559	559	not less than sixty per cent of the eligible capital invested in such 464
560	560	reinvestment fund; or (C) payments related to the reasonable costs and 465
561	561	expenses of forming, syndicating, managing and operating the fund, 466
562	562	provided the distribution or payment is not made directly or indirectly 467
563	563	to an insurance company that has invested eligible capital in the invest 468 Raised Bill No. 6632
564	564
565	565
566	566
567	567	LCO No. 4914 16 of 22
568	568
569	569	CT fund, including: (i) Reasonable and necessary fees paid for 469
570	570	professional services, including legal and accounting services, related to 470
571	571	the formation and operation of the invest CT fund; and (ii) an annual 471
572	572	management fee in an amount that does not exceed two and one-half 472
573	573	per cent of the eligible capital of the invest CT fund. The state shall 473
574	574	receive a share of any distribution, except as set forth in subparagraphs 474
575	575	(A), (B) and (C) of this subdivision and distributions made to return any 475
576	576	equity capital invested in the invest CT fund that is not eligible capital, 476
577	577	in the following percentages: (I) Ten per cent when less than eighty per 477
578	578	cent but more than sixty per cent of the jobs set forth in the invest CT 478
579	579	fund's business plan are created or retained, and (II) twenty per cent 479
580	580	when sixty per cent or less of the jobs set forth in the invest CT fund's 480
581	581	business plan are created or retained.] 481
582	582	[(9)] (B) To make a distribution or payment, except a distribution or 482
583	583	payment set forth in subdivision (9) of this subsection, an invest CT fund 483
584	584	certified by the commissioner on or after September 1, 2015, and before 484
585	585	September 1, 2021, must have invested one hundred per cent of its 485
586	586	eligible capital in eligible businesses, with a minimum of twenty-five 486
587	587	per cent of eligible capital invested in green technology businesses, a 487
588	588	minimum of seven per cent of eligible capital invested in preseed 488
589	589	investments, as described in subdivision (3) of this subsection, a 489
590	590	minimum of three per cent of eligible capital invested in cybersecurity 490
591	591	businesses, and a minimum of twenty-five per cent of eligible capital 491
592	592	invested in businesses located in municipalities with a population 492
593	593	greater than eighty thousand, with principal business operations in this 493
594	594	state at the time of such determination. [, except: (A) Distributions 494
595	595	related to the payment of any projected increase in federal or state taxes, 495
596	596	including penalties and interest related to state and federal income 496
597	597	taxes, of the equity owners of the invest CT fund resulting from the 497
598	598	earnings or other tax liability of the invest CT fund to the extent that the 498
599	599	increase is related to the ownership, management or operation of the 499
600	600	invest CT fund; (B) payments of interest and principal on the debt of the 500
601	601	invest CT fund, provided after such payment, the invest CT fund still 501
602	602	has cash and other marketable securities in an amount that, when added 502 Raised Bill No. 6632
603	603
604	604
605	605
606	606	LCO No. 4914 17 of 22
607	607
608	608	to the cumulative investments it has made in eligible recipients, equals 503
609	609	not less than sixty per cent of the eligible capital invested in such 504
610	610	reinvestment fund; or (C) payments related to the reasonable costs and 505
611	611	expenses of forming, syndicating, managing and operating the fund, 506
612	612	provided the distribution or payment is not made directly or indirectly 507
613	613	to an insurance company that has invested eligible capital in the invest 508
614	614	CT fund, including: (i) Reasonable and necessary fees paid for 509
615	615	professional services, including legal and accounting services, related to 510
616	616	the formation and operation of the invest CT fund; and (ii) an annual 511
617	617	management fee in an amount that does not exceed two and one-half 512
618	618	per cent of the eligible capital of the invest CT fund. The state shall 513
619	619	receive a share of any distribution, except as set forth in subparagraphs 514
620	620	(A), (B) and (C) of this subdivision and distributions made to return any 515
621	621	equity capital invested in the invest CT fund that is not eligible capital, 516
622	622	in the following percentages: (I) Ten per cent when less than eighty per 517
623	623	cent but more than sixty per cent of the jobs set forth in the invest CT 518
624	624	fund's business plan are created or retained, and (II) twenty per cent 519
625	625	when sixty per cent or less of the jobs set forth in the invest CT fund's 520
626	626	business plan are created or retained.] 521
627	627	(C) To make a distribution or payment, except a distribution or 522
628	628	payment set forth in subdivision (9) of this subsection, an invest CT fund 523
629	629	certified by the commissioner on or after September 1, 2021, must have 524
630	630	invested one hundred per cent of its eligible capital in eligible businesses 525
631	631	with a minimum of seven per cent of its eligible capital in preseed 526
632	632	investments, as described in subdivision (3) of this subsection, and a 527
633	633	minimum of twenty-five per cent of its eligible capital in eligible 528
634	634	businesses located in municipalities with a population greater than 529
635	635	eighty thousand. 530
636	636	(9) (A) The provisions of subdivision (8) of this subsection shall not 531
637	637	apply to: 532
638	638	(i) Distributions related to the payment of any projected increase in 533
639	639	federal or state taxes, including penalties and interest related to state 534
640	640	and federal income taxes, of the equity owners of the invest CT fund 535 Raised Bill No. 6632
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642	642
643	643
644	644	LCO No. 4914 18 of 22
645	645
646	646	resulting from the earnings or other tax liability of the invest CT fund to 536
647	647	the extent that the increase is related to the ownership, management or 537
648	648	operation of the invest CT fund; 538
649	649	(ii) Payments of interest and principal on the debt of the invest CT 539
650	650	fund, provided, after such payment, the invest CT fund still has cash 540
651	651	and other marketable securities in an amount that, when added to the 541
652	652	cumulative investments it has made in eligible recipients, equals not less 542
653	653	than sixty per cent of the eligible capital invested in such reinvestment 543
654	654	fund; or 544
655	655	(iii) Payments related to the reasonable costs and expenses of 545
656	656	forming, syndicating, managing and operating the fund, provided the 546
657	657	distribution or payment is not made directly or indirectly to an 547
658	658	insurance company that has invested eligible capital in the invest CT 548
659	659	fund, including: (I) Reasonable and necessary fees paid for professional 549
660	660	services, including legal and accounting services, related to the 550
661	661	formation and operation of the invest CT fund, and (II) an annual 551
662	662	management fee in an amount that does not exceed two and one-half 552
663	663	per cent of the eligible capital of the invest CT fund. 553
664	664	(B) The state shall receive a share of any distribution made pursuant 554
665	665	to subdivision (8) of this subsection, except distributions made to return 555
666	666	any equity capital invested in the invest CT fund that is not eligible 556
667	667	capital, in the following percentages: (i) Ten per cent when less than 557
668	668	eighty per cent but more than sixty per cent of the jobs set forth in the 558
669	669	invest CT fund's business plan are created or retained, and (ii) twenty 559
670	670	per cent when sixty per cent or less of the jobs set forth in the invest CT 560
671	671	fund's business plan are created or retained. 561
672	672	(10) The commissioner shall review each annual report to ensure 562
673	673	compliance with subdivisions (6), (7), (8) and (9) of this subsection. A 563
674	674	material variation from subdivision (6), (7), (8) or (9) of this subsection 564
675	675	[is] shall be grounds for decertification of the invest CT fund. If the 565
676	676	commissioner determines that an invest CT fund is not in compliance 566
677	677	with subdivision (6), (7), (8) or (9) of this subsection or the investment 567 Raised Bill No. 6632
678	678
679	679
680	680
681	681	LCO No. 4914 19 of 22
682	682
683	683	parameters of its business plan, the commissioner shall notify the 568
684	684	officers of the invest CT fund, in writing, that the invest CT fund may 569
685	685	be subject to decertification after the one hundred twentieth day after 570
686	686	the date of mailing the notice, unless the deficiencies are waived by the 571
687	687	commissioner or are corrected and the invest CT fund returns to 572
688	688	compliance with subdivisions (6), (7), (8) and (9) of this subsection. 573
689	689	(11) Decertification of an invest CT fund shall cause the forfeiture of 574
690	690	future credits against the tax imposed by chapter 207 and section 38a-575
691	691	743 to be claimed with respect to an invest CT fund when (A) such 576
692	692	decertification occurs on or before the fourth anniversary of an 577
693	693	allocation date of June 30, 2015, or earlier, or on or before the sixth 578
694	694	anniversary of an allocation date of September 1, 2015, or later, and (B) 579
695	695	such fund has invested less than sixty per cent of its eligible capital in 580
696	696	eligible businesses by said anniversary. The commissioner shall send 581
697	697	written notice to the last-known address of each taxpayer whose credit 582
698	698	against the tax imposed by chapter 207 is subject to recapture or 583
699	699	forfeiture. 584
700	700	(d) (1) The tax [credit] credits allowed by this section shall only be 585
701	701	available for investments [(1)] (A) in funds that are not open to 586
702	702	additional investments or investors beyond the amount subscribed at 587
703	703	the formation of the fund, or [(2)] (B) under subsection (c) of this section, 588
704	704	in invest CT funds that are not open to additional investments or 589
705	705	investors after submission of the invest CT fund's application to the 590
706	706	commissioner pursuant to subsection (c) of this section. 591
707	707	(2) On and after June 30, 2010, no eligibility certificate shall be 592
708	708	provided under subdivision (6) of subsection (b) of this section for 593
709	709	investments made in an insurance business. 594
710	710	(3) On [or] and after July 1, 2011, no credit shall be allowed under 595
711	711	subdivision (2) or (6) of subsection (b) of this section for an investment 596
712	712	of less than one million dollars for which the commissioner has issued 597
713	713	an eligibility certificate. A fund manager who has received an eligibility 598
714	714	certificate but is not yet eligible to receive a certificate of continued 599 Raised Bill No. 6632
715	715
716	716
717	717
718	718	LCO No. 4914 20 of 22
719	719
720	720	eligibility shall provide documentation satisfactory to the commissioner 600
721	721	not later than June 30, 2011, of its investment of one million dollars or 601
722	722	more. Such documentation shall include, but is not limited to, cancelled 602
723	723	checks, wire transfers, investment agreements or other documentation 603
724	724	as the commissioner may request. On and after July 1, 2011, the 604
725	725	commissioner shall revoke the certificate of eligibility for any insurance 605
726	726	business for which its fund manager failed to provide sufficient 606
727	727	documentation of said investment of not less than one million dollars. 607
728	728	(4) Any credit allowed under subsection (b) or subsection (g) of this 608
729	729	section that has not been claimed prior to January 1, 2010, may be carried 609
730	730	forward pursuant to subsection (i) of this section. 610
731	731	(e) The maximum amount of credit allowed under subsection (c) of 611
732	732	this section shall be [three] five hundred fifty million dollars in 612
733	733	aggregate and forty million dollars per year. 613
734	734	(f) (1) The Commissioner of Revenue Services may treat one or more 614
735	735	corporations that are properly included in a combined unitary tax return 615
736	736	under section 12-222 as one taxpayer in determining whether the 616
737	737	appropriate requirements under this section are met. Where 617
738	738	corporations are treated as one taxpayer for purposes of this subsection, 618
739	739	then the credit shall be allowed only against the amount of the combined 619
740	740	unitary tax for all corporations properly included in a combined unitary 620
741	741	tax return that, under the provisions of subdivision (2) of this 621
742	742	subsection, is attributable to the corporations treated as one taxpayer. 622
743	743	(2) The amount of the combined unitary tax for all corporations 623
744	744	properly included in a combined unitary tax return that is attributable 624
745	745	to the corporations that are treated as one taxpayer under the provisions 625
746	746	of this subsection shall be in the same ratio to such combined unitary tax 626
747	747	that the net income apportioned to this state of each corporation treated 627
748	748	as one taxpayer bears to the net income apportioned to this state, in the 628
749	749	aggregate, of all corporations included in such combined unitary tax 629
750	750	return. Solely for the purpose of computing such ratio, any net loss 630
751	751	apportioned to this state by a corporation treated as one taxpayer or by 631 Raised Bill No. 6632
752	752
753	753
754	754
755	755	LCO No. 4914 21 of 22
756	756
757	757	a corporation included in such combined unitary tax return shall be 632
758	758	disregarded. 633
759	759	(g) (1) Any taxpayer allowed a credit under subsection (b) of this 634
760	760	section may assign such credit to another person, provided such person 635
761	761	may claim such credit only with respect to a calendar year for which the 636
762	762	assigning taxpayer would have been eligible to claim such credit. The 637
763	763	fund manager shall include in the report filed with the Commissioner 638
764	764	of Revenue Services in accordance with subdivision (1) of subsection (b) 639
765	765	of this section information requested by the commissioner regarding 640
766	766	such assignments including the current holders of credits as of the end 641
767	767	of the preceding calendar year. 642
768	768	(2) Any taxpayer allowed a credit under subsection (c) of this section 643
769	769	may sell, assign or otherwise transfer such credit, in whole or in part, to 644
770	770	one or more taxpayers, provided no such transferee may claim such 645
771	771	credit for an income year other than the transferee's income year in 646
772	772	which such transferee bought, was assigned or was otherwise 647
773	773	transferred such credit. 648
774	774	(h) No taxpayer shall be eligible for a credit under this section and 649
775	775	[either] section 12-217e [or section 12-217m] for the same investment. No 650
776	776	two taxpayers shall be eligible for any tax credit with respect to the same 651
777	777	investment, employee or facility. 652
778	778	(i) Any tax credit that is not sold, assigned or otherwise transferred 653
779	779	pursuant to subdivision (2) of subsection (g) of this section and is not 654
780	780	used in the income year for which it was allowed may be carried 655
781	781	forward for the five immediately succeeding income years until the full 656
782	782	credit has been claimed. 657
783	783	(j) The commissioner, with the approval of the Commissioner of 658
784	784	Revenue Services and the Secretary of the Office of Policy and 659
785	785	Management, may adopt regulations in accordance with chapter 54 to 660
786	786	carry out the purposes of this section. 661 Raised Bill No. 6632
787	787
788	788
789	789
790	790	LCO No. 4914 22 of 22
791	791
792	792	This act shall take effect as follows and shall amend the following
793	793	sections:
794	794
795	795	Section 1 July 1, 2021 38a-88a
796	796
797	797	Statement of Purpose:
798	798	To specify investment requirements for the invest CT fund program on
799	799	or after September 1, 2021, and increase the aggregate amount of credits
800	800	allowed under the program.
801	801	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
802	802	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
803	803	underlined.]
804	804