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General Assembly Substitute Bill No. 443
February Session, 2024
AN ACT CONCERNING THE ACCRUAL OF INTEREST ON CERTAIN
TAX UNDERPAYMENTS AND THE BUSINESS OPERATING LOSS
CARRY-OVER PERIOD.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (Effective July 1, 2025) Sections 12-204c, 12-242d, 12-699a 1
and 12-722 of the general statutes shall not apply with respect to the 2
accrual of any interest, in the case of any underpayment of tax by a 3
taxpayer under chapter 208, 228z or 229 of the general statutes, to the 4
extent such underpayment was due to the filing of an amended return 5
necessitated by the guidance in Notice 2021-20, issued by the Internal 6
Revenue Service, concerning the federal employee retention credit 7
program. If such interest has already been paid to the Department of 8
Revenue Services, the Commissioner of Revenue Services shall treat 9
such payment as an overpayment and shall refund the amount of such 10
payment, without interest, to the taxpayer. 11
Sec. 2. Subdivision (4) of subsection (a) of section 12-217 of the 2024 12
supplement to the general statutes is repealed and the following is 13
substituted in lieu thereof (Effective from passage): 14
(4) Notwithstanding any provision of this section: 15
(A) Any excess of the deductions provided in this section for any 16 Substitute Bill No. 443
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income year commencing on or after January 1, 1973, over the gross 17
income for such year or the amount of such excess apportioned to this 18
state under the provisions of this chapter, shall be an operating loss of 19
such income year and shall be deductible as an operating loss carry-over 20
for operating losses incurred prior to income years commencing January 21
1, 2000, in each of the five income years following such loss year; [, and] 22
for operating losses incurred in income years commencing on or after 23
January 1, 2000, and prior to January 1, 2025, in each of the twenty 24
income years following such loss year; [,] and for operating losses 25
incurred in income years commencing on or after January 1, 2025, in 26
each of the thirty income years following such loss; except that: 27
(i) For income years commencing prior to January 1, 2015, the portion 28
of such operating loss that may be deducted as an operating loss carry-29
over in any income year following such loss year shall be limited to the 30
lesser of (I) any net income greater than zero of such income year 31
following such loss year, or in the case of a company entitled to 32
apportion its net income under the provisions of this chapter, the 33
amount of such net income that is apportioned to this state pursuant 34
thereto, or (II) the excess, if any, of such operating loss over the total of 35
such net income for each of any prior income years following such loss 36
year, such net income of each of such prior income years following such 37
loss year for such purposes being computed without regard to any 38
operating loss carry-over from such loss year allowed under this 39
subparagraph and being regarded as not less than zero, and provided 40
further the operating loss of any income year shall be deducted in any 41
subsequent year, to the extent available for such deduction, before the 42
operating loss of any subsequent income year is deducted; 43
(ii) For income years commencing on or after January 1, 2015, the 44
portion of such operating loss that may be deducted as an operating loss 45
carry-over in any income year following such loss year shall be limited 46
to the lesser of (I) fifty per cent of net income of such income year 47
following such loss year, or in the case of a company entitled to 48
apportion its net income under the provisions of this chapter, fifty per 49
cent of such net income that is apportioned to this state pursuant 50 Substitute Bill No. 443
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thereto, or (II) the excess, if any, of such operating loss over the 51
operating loss deductions allowable with respect to such operating loss 52
under this subparagraph for each of any prior income years following 53
such loss year, such net income of each of such prior income years 54
following such loss year for such purposes being computed without 55
regard to any operating loss carry-over from such loss year allowed 56
under this subparagraph and being regarded as not less than zero, and 57
provided further the operating loss of any income year shall be 58
deducted in any subsequent year, to the extent available for such 59
deduction, before the operating loss of any subsequent income year is 60
deducted; and 61
(iii) If a combined group so elects, the combined group shall 62
relinquish fifty per cent of its unused operating losses incurred prior to 63
the income year commencing on or after January 1, 2015, and before 64
January 1, 2016, and may utilize the remaining operating loss carry-over 65
without regard to the limitations prescribed in subparagraph (A)(ii) of 66
this subdivision. The portion of such operating loss carry-over that may 67
be deducted shall be limited to the amount required to reduce a 68
combined group's tax under this chapter, prior to surtax and prior to the 69
application of credits, to two million five hundred thousand dollars in 70
any income year commencing on or after January 1, 2015. Only after the 71
combined group's remaining operating loss carry-over for operating 72
losses incurred prior to income years commencing January 1, 2015, has 73
been fully utilized, will the limitations prescribed in subparagraph 74
(A)(ii) of this subdivision apply. The combined group, or any member 75
thereof, shall make such election on its return for the income year 76
beginning on or after January 1, 2015, and before January 1, 2016, by the 77
due date for such return, including any extensions. Only combined 78
groups with unused operating losses in excess of six billion dollars from 79
income years beginning prior to January 1, 2013, may make the election 80
prescribed in this clause; and 81
(B) Any net capital loss, as defined in the Internal Revenue Code 82
effective and in force on the last day of the income year, for any income 83
year commencing on or after January 1, 1973, shall be allowed as a 84 Substitute Bill No. 443
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capital loss carry-over to reduce, but not below zero, any net capital 85
gain, as so defined, in each of the five following income years, in order 86
of sequence, to the extent not exhausted by the net capital gain of any of 87
the preceding of such five following income years; and 88
(C) Any net capital losses allowed and carried forward from prior 89
years to income years beginning on or after January 1, 1973, for federal 90
income tax purposes by companies entitled to a deduction for dividends 91
paid under the Internal Revenue Code other than companies subject to 92
the gross earnings taxes imposed under chapters 211 and 212, shall be 93
allowed as a capital loss carry-over. 94
This act shall take effect as follows and shall amend the following
sections:
Section July 1, 2025 New section
Sec. 2 from passage 12-217(a)(4)
FIN Joint Favorable Subst.