Connecticut 2024 Regular Session

Connecticut House Bill HB05513 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
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3		-	LCO 3183 1 of 4
	3	+	LCO No. 3183 1 of 4
4	4
5	5		General Assembly Raised Bill No. 5513
6	6		February Session, 2024
7	7		LCO No. 3183
8	8
9	9
10	10		Referred to Committee on FINANCE, REVENUE AND
11	11		BONDING
12	12
13	13
14	14		Introduced by:
15	15		(FIN)
	16	+
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18	19
19	20		AN ACT CONCERNING THE DEDUCTION AND WITHHOLDING OF
20	21		PERSONAL INCOME TAX FROM CERTAIN PAYMENTS AND
21	22		DISTRIBUTIONS.
22	23		Be it enacted by the Senate and House of Representatives in General
23	24		Assembly convened:
24	25
25	26		Section 1. Section 12-705 of the general statutes is repealed and the 1
26	27		following is substituted in lieu thereof (Effective January 1, 2025, and 2
27	28		applicable to taxable years commencing on or after January 1, 2025): 3
28	29		(a) (1) Each employer, as defined in section 12-707, maintaining an 4
29	30		office or transacting business within this state and making payment of 5
30	31		any wages taxable under this chapter to a resident or nonresident 6
31	32		individual shall deduct and withhold from such wages for each payroll 7
32	33		period a tax computed in such manner as to result, so far as practicable, 8
33	34		in withholding from the employee's wages during each calendar year 9
34	35		an amount substantially equivalent to the tax reasonably estimated to 10
35	36		be due from the employee under this chapter with respect to the amount 11
36	37		of such wages during the calendar year. The method of determining the 12
37		-	amount to be withheld shall be prescribed by regulations of the 13 Bill No. 5513
	38	+	amount to be withheld shall be prescribed by regulations of the 13 Raised Bill No. 5513
38	39
39	40
40		-	LCO 3183 2 of 4
	41	+
	42	+	LCO No. 3183 2 of 4
41	43
42	44		Commissioner of Revenue Services adopted in accordance with chapter 14
43	45		54. 15
44	46		(2) [Each] (A) Except as provided in subparagraph (B) of this 16
45	47		subdivision, each payer, as defined in section 12-707, of distributions 17
46	48		from a profit-sharing plan, a stock bonus, a deferred compensation plan, 18
47	49		an individual retirement arrangement, an endowment or a life 19
48	50		insurance contract, or of pension payments or annuity distributions, 20
49	51		that [(A)] maintains an office or transacts business within this state [,] 21
50	52		and [(B)] makes payment of any amounts taxable under this chapter to 22
51	53		a resident individual, shall, upon request by such individual, deduct 23
52	54		and withhold an amount from the taxable portion of any such 24
53	55		distribution. [a tax computed in such manner as to result, so far as 25
54	56		practicable, in withholding from the distributions paid during each 26
55	57		calendar year an amount substantially equivalent to the tax reasonably 27
56	58		estimated to be due from the payee, as defined in section 12-707, under 28
57	59		this chapter with respect to such distributions during the calendar year. 29
58	60		The method of determining the amount to be withheld from taxable 30
59	61		payments, other than lump sum distributions, shall be determined in 31
60		-	accordance with instructions provided by the commissioner. ~~The~~ 32
61		-	~~amount to be withheld from] Such~~ request and the determination of the 33
62		-	~~amount to be withheld shall be~~ made in accordance with regulations 34
63		-	~~promulgated by the commissioner~~ for pension payments and annuity 35
64		-	~~distributions.~~ 36
65		-	~~(B) With respect to a lump sum~~ distribution, [shall be equal to] if a 37
66		-	~~payee does not make a request to~~ have an amount withheld from such 38
67		-	~~distribution, the payer shall~~ withhold from the taxable portion of the 39
68		-	~~distribution [multiplied by] at~~ the highest marginal rate, except that no 40
69		-	~~withholding shall be required~~ if (i) any portion of the lump sum 41
70		-	~~distribution was previously subject to~~ tax, or (ii) the lump sum 42
71		-	~~distribution is a rollover that is effected as a~~ direct trustee-to-trustee 43
72		-	~~transfer or as a direct rollover in the form of a~~ check made payable to 44
73		-	~~another qualified account. For purposes of this~~ [section] subdivision, 45
74		-	~~"lump sum distribution" means a payment from a~~ payer to a resident 46
75		-	~~payee of an amount exceeding fifty per cent of such~~ resident payee's 47 Bill No. 5513
	62	+	accordance with instructions provided by the commissioner.] Such 32
	63	+	request and the determination of the amount to be withheld shall be 33
	64	+	made in accordance with regulations promulgated by the commissioner 34
	65	+	for pension payments and annuity distributions. 35
	66	+	[The amount to be withheld from] (B) With respect to a lump sum 36
	67	+	distribution, [shall be equal to] if a payee does not make a request to 37
	68	+	have an amount withheld from such distribution, the payer shall 38
	69	+	withhold from the taxable portion of the distribution [multiplied by] at 39
	70	+	the highest marginal rate, except that no withholding shall be required 40
	71	+	if (i) any portion of the lump sum distribution was previously subject to 41
	72	+	tax, or (ii) the lump sum distribution is a rollover that is effected as a 42
	73	+	direct trustee-to-trustee transfer or as a direct rollover in the form of a 43
	74	+	check made payable to another qualified account. For purposes of this 44
	75	+	[section] subdivision, "lump sum distribution" means a payment from a 45
	76	+	payer to a resident payee of an amount exceeding fifty per cent of such 46
	77	+	resident payee's entire account balance or more than five thousand 47 Raised Bill No. 5513
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77	79
78		-	LCO 3183 3 of 4
79	80
80		-	entire account balance or more than five thousand dollars, whichever is 48
81		-	less, exclusive of any other tax withholding and any administrative 49
82		-	charges and fees. 50
83		-	(3) In no event shall the requirements of this subsection result in 51
84		-	nonpayment of any distribution to a resident individual. For the 52
85		-	calendar year ending December 31, 2018, no taxpayer shall be assessed 53
86		-	interest by the commissioner pursuant to section 12-722 solely on the 54
87		-	basis of a payer's failure to comply with the provisions of this 55
88		-	subsection. 56
89		-	(b) The commissioner may, if such action is deemed necessary for the 57
90		-	protection of the revenue and under such regulations as the 58
91		-	commissioner may adopt in accordance with the provisions of chapter 59
92		-	54, require persons other than employers and payers (1) to deduct and 60
93		-	withhold taxes from payments made by such persons to residents of this 61
94		-	state, nonresidents and part-year residents, (2) to file a withholding 62
95		-	return as prescribed by the commissioner, and (3) to pay over to the 63
96		-	commissioner, or to a depositary designated by the commissioner, the 64
97		-	taxes so required to be deducted and withheld, in accordance with a 65
98		-	schedule established in such regulations. 66
99		-	(c) The commissioner may adopt regulations providing for 67
100		-	withholding from (1) remuneration for services performed by an 68
101		-	employee for his or her employer that does not constitute wages, (2) 69
102		-	wages paid to an employee by an employer not maintaining an office or 70
103		-	transacting business within this state, or (3) any other type of payment 71
104		-	with respect to which the commissioner finds that withholding would 72
105		-	be appropriate under the provisions of this chapter if the employer and 73
106		-	the employee, or, in the case of any other type of payment, the person 74
107		-	making and the person receiving such payment, agree to such 75
108		-	withholding. Such agreement shall be made in such form and manner 76
109		-	as the commissioner may prescribe by regulations adopted in 77
110		-	accordance with the provisions of chapter 54. For purposes of this 78
111		-	chapter, remuneration, wages or other payments with respect to which 79
112		-	such an agreement is made shall be regarded as if they were wages paid 80 Bill No. 5513
	81	+	LCO No. 3183 3 of 4
	82	+
	83	+	dollars, whichever is less, exclusive of any other tax withholding and 48
	84	+	any administrative charges and fees. 49
	85	+	(3) In no event shall the requirements of this subsection result in 50
	86	+	nonpayment of any distribution to a resident individual. For the 51
	87	+	calendar year ending December 31, 2018, no taxpayer shall be assessed 52
	88	+	interest by the commissioner pursuant to section 12-722 solely on the 53
	89	+	basis of a payer's failure to comply with the provisions of this 54
	90	+	subsection. 55
	91	+	(b) The commissioner may, if such action is deemed necessary for the 56
	92	+	protection of the revenue and under such regulations as the 57
	93	+	commissioner may adopt in accordance with the provisions of chapter 58
	94	+	54, require persons other than employers and payers (1) to deduct and 59
	95	+	withhold taxes from payments made by such persons to residents of this 60
	96	+	state, nonresidents and part-year residents, (2) to file a withholding 61
	97	+	return as prescribed by the commissioner, and (3) to pay over to the 62
	98	+	commissioner, or to a depositary designated by the commissioner, the 63
	99	+	taxes so required to be deducted and withheld, in accordance with a 64
	100	+	schedule established in such regulations. 65
	101	+	(c) The commissioner may adopt regulations providing for 66
	102	+	withholding from (1) remuneration for services performed by an 67
	103	+	employee for his or her employer that does not constitute wages, (2) 68
	104	+	wages paid to an employee by an employer not maintaining an office or 69
	105	+	transacting business within this state, or (3) any other type of payment 70
	106	+	with respect to which the commissioner finds that withholding would 71
	107	+	be appropriate under the provisions of this chapter if the employer and 72
	108	+	the employee, or, in the case of any other type of payment, the person 73
	109	+	making and the person receiving such payment, agree to such 74
	110	+	withholding. Such agreement shall be made in such form and manner 75
	111	+	as the commissioner may prescribe by regulations adopted in 76
	112	+	accordance with the provisions of chapter 54. For purposes of this 77
	113	+	chapter, remuneration, wages or other payments with respect to which 78
	114	+	such an agreement is made shall be regarded as if they were wages paid 79
	115	+	to an employee by an employer maintaining an office or transacting 80 Raised Bill No. 5513
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114	117
115		-	LCO 3183 4 of 4
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117		-	to an employee by an employer maintaining an office or transacting 81
118		-	business within this state to the extent that such remuneration or wages 82
119		-	are paid or other payments are made during the period for which the 83
120		-	agreement is in effect. 84
	119	+	LCO No. 3183 4 of 4
	120	+
	121	+	business within this state to the extent that such remuneration or wages 81
	122	+	are paid or other payments are made during the period for which the 82
	123	+	agreement is in effect. 83
121	124		This act shall take effect as follows and shall amend the following
122	125		sections:
123	126
124	127		Section 1 January 1, 2025, and
125	128		applicable to taxable years
126	129		commencing on or after
127	130		January 1, 2025
128	131		12-705
129	132
130		-	FIN Joint Favorable
	133	+	Statement of Purpose:
	134	+	To (1) specify that payees of certain payments and distributions may
	135	+	request that an amount be deducted and withheld from such payments
	136	+	and distributions, and (2) provide that if a lump sum payee does not
	137	+	make such request, the amount to be withheld shall be at the highest
	138	+	marginal rate.
	139	+	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
	140	+	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
	141	+	underlined.]
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