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 Section 12-705 of the general statutes is repealed and the 1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