CT
Connecticut Senate Bill SB00443

Connecticut 2024 Regular Session

Connecticut Senate Bill SB00443 Compare Versions

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3-LCO 1 of 4
3+LCO No. 2899 1 of 8
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5-General Assembly Substitute Bill No. 443
5+General Assembly Raised Bill No. 443
66 February Session, 2024
7+LCO No. 2899
8+
9+
10+Referred to Committee on FINANCE, REVENUE AND
11+BONDING
12+
13+
14+Introduced by:
15+(FIN)
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817
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11-
12-AN ACT CONCERNING THE ACCRUAL OF INTEREST ON CERTAIN
13-TAX UNDERPAYMENTS AND THE BUSINESS OPERATING LOSS
14-CARRY-OVER PERIOD.
20+AN ACT CONCERNING CERTAIN TAX APPEALS, ACCRUAL OF
21+INTEREST ON CERTAIN TAX UNDERPAYMENTS AND THE
22+BUSINESS OPERATING LOSS CARRY -OVER PERIOD.
1523 Be it enacted by the Senate and House of Representatives in General
1624 Assembly convened:
1725
18- Section 1. (Effective July 1, 2025) Sections 12-204c, 12-242d, 12-699a 1
19-and 12-722 of the general statutes shall not apply with respect to the 2
20-accrual of any interest, in the case of any underpayment of tax by a 3
21-taxpayer under chapter 208, 228z or 229 of the general statutes, to the 4
22-extent such underpayment was due to the filing of an amended return 5
23-necessitated by the guidance in Notice 2021-20, issued by the Internal 6
24-Revenue Service, concerning the federal employee retention credit 7
25-program. If such interest has already been paid to the Department of 8
26-Revenue Services, the Commissioner of Revenue Services shall treat 9
27-such payment as an overpayment and shall refund the amount of such 10
28-payment, without interest, to the taxpayer. 11
29-Sec. 2. Subdivision (4) of subsection (a) of section 12-217 of the 2024 12
30-supplement to the general statutes is repealed and the following is 13
31-substituted in lieu thereof (Effective from passage): 14
32-(4) Notwithstanding any provision of this section: 15
33-(A) Any excess of the deductions provided in this section for any 16 Substitute Bill No. 443
26+Section 1. Section 12-237 of the general statutes is repealed and the 1
27+following is substituted in lieu thereof (Effective July 1, 2024, and 2
28+applicable to written protests filed prior to, on or after July 1, 2024): 3
29+(a) Any taxpayer aggrieved because of any order, decision, 4
30+determination or disallowance of the Commissioner of Revenue 5
31+Services under the provisions of this part may, not later than thirty days 6
32+after service upon the taxpayer of notice of such order, decision, 7
33+determination or disallowance, take an appeal therefrom to the superior 8
34+court for the judicial district of New Britain. [, which] If no order, 9
35+decision, determination or disallowance has been issued within one 10
36+year after a written protest was filed under the provisions of this part, 11
37+the taxpayer may file a written request to the commissioner that an 12
38+order, decision, determination or disallowance be issued and the 13
39+commissioner shall issue such order, decision, determination or 14 Raised Bill No. 443
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3541
36-LCO 2 of 4
3742
38-income year commencing on or after January 1, 1973, over the gross 17
39-income for such year or the amount of such excess apportioned to this 18
40-state under the provisions of this chapter, shall be an operating loss of 19
41-such income year and shall be deductible as an operating loss carry-over 20
42-for operating losses incurred prior to income years commencing January 21
43-1, 2000, in each of the five income years following such loss year; [, and] 22
44-for operating losses incurred in income years commencing on or after 23
45-January 1, 2000, and prior to January 1, 2025, in each of the twenty 24
46-income years following such loss year; [,] and for operating losses 25
47-incurred in income years commencing on or after January 1, 2025, in 26
48-each of the thirty income years following such loss; except that: 27
49-(i) For income years commencing prior to January 1, 2015, the portion 28
50-of such operating loss that may be deducted as an operating loss carry-29
51-over in any income year following such loss year shall be limited to the 30
52-lesser of (I) any net income greater than zero of such income year 31
53-following such loss year, or in the case of a company entitled to 32
54-apportion its net income under the provisions of this chapter, the 33
55-amount of such net income that is apportioned to this state pursuant 34
56-thereto, or (II) the excess, if any, of such operating loss over the total of 35
57-such net income for each of any prior income years following such loss 36
58-year, such net income of each of such prior income years following such 37
59-loss year for such purposes being computed without regard to any 38
60-operating loss carry-over from such loss year allowed under this 39
61-subparagraph and being regarded as not less than zero, and provided 40
62-further the operating loss of any income year shall be deducted in any 41
63-subsequent year, to the extent available for such deduction, before the 42
64-operating loss of any subsequent income year is deducted; 43
65-(ii) For income years commencing on or after January 1, 2015, the 44
66-portion of such operating loss that may be deducted as an operating loss 45
67-carry-over in any income year following such loss year shall be limited 46
68-to the lesser of (I) fifty per cent of net income of such income year 47
69-following such loss year, or in the case of a company entitled to 48
70-apportion its net income under the provisions of this chapter, fifty per 49
71-cent of such net income that is apportioned to this state pursuant 50 Substitute Bill No. 443
43+LCO No. 2899 2 of 8
44+
45+disallowance not later than fifteen days after receipt of the written 15
46+request. 16
47+(b) Any appeal to said court under subsection (a) of this section shall 17
48+be accompanied by a citation to the Commissioner of Revenue Services 18
49+to appear before said court. Such citation shall be signed by the same 19
50+authority, and such appeal shall be returnable at the same time and 20
51+served and returned in the same manner, as is required in case of a 21
52+summons in a civil action. The authority issuing the citation shall take 22
53+from the appellant a bond or recognizance to the state of Connecticut, 23
54+with surety to prosecute the appeal to effect and to comply with the 24
55+orders and decrees of the court in the premises. Such appeals shall be 25
56+preferred cases, to be heard, unless cause appears to the contrary, at the 26
57+first session, by the court or by a committee appointed by it. 27
58+(c) Said court may grant such relief as may be equitable and, if such 28
59+tax has been paid prior to the granting of such relief, may order the 29
60+Treasurer to pay the amount of such relief, with interest at the rate of 30
61+eight per cent per annum, to the aggrieved taxpayer. If the appeal has 31
62+been taken without probable cause, the court may tax double or triple 32
63+costs, as the case demands; and, upon all such appeals [which] that may 33
64+be denied, costs may be taxed against the appellant at the discretion of 34
65+the court, but no costs shall be taxed against the state. 35
66+Sec. 2. Section 12-422 of the general statutes is repealed and the 36
67+following is substituted in lieu thereof (Effective July 1, 2024, and 37
68+applicable to hearing applications and written protests filed prior to, on or after 38
69+July 1, 2024): 39
70+(a) Any taxpayer aggrieved because of any order, decision, 40
71+determination or disallowance of the Commissioner of Revenue 41
72+Services under section 12-418, 12-421 or 12-425 may, not later than thirty 42
73+days after service upon the taxpayer of notice of such order, decision, 43
74+determination or disallowance, take an appeal therefrom to the superior 44
75+court for the judicial district of New Britain. [, which] If no order, 45
76+decision, determination or disallowance has been issued within one 46
77+year after an application for a hearing or a written protest, as applicable, 47 Raised Bill No. 443
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7379
74-LCO 3 of 4
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76-thereto, or (II) the excess, if any, of such operating loss over the 51
77-operating loss deductions allowable with respect to such operating loss 52
78-under this subparagraph for each of any prior income years following 53
79-such loss year, such net income of each of such prior income years 54
80-following such loss year for such purposes being computed without 55
81-regard to any operating loss carry-over from such loss year allowed 56
82-under this subparagraph and being regarded as not less than zero, and 57
83-provided further the operating loss of any income year shall be 58
84-deducted in any subsequent year, to the extent available for such 59
85-deduction, before the operating loss of any subsequent income year is 60
86-deducted; and 61
87-(iii) If a combined group so elects, the combined group shall 62
88-relinquish fifty per cent of its unused operating losses incurred prior to 63
89-the income year commencing on or after January 1, 2015, and before 64
90-January 1, 2016, and may utilize the remaining operating loss carry-over 65
91-without regard to the limitations prescribed in subparagraph (A)(ii) of 66
92-this subdivision. The portion of such operating loss carry-over that may 67
93-be deducted shall be limited to the amount required to reduce a 68
94-combined group's tax under this chapter, prior to surtax and prior to the 69
95-application of credits, to two million five hundred thousand dollars in 70
96-any income year commencing on or after January 1, 2015. Only after the 71
97-combined group's remaining operating loss carry-over for operating 72
98-losses incurred prior to income years commencing January 1, 2015, has 73
99-been fully utilized, will the limitations prescribed in subparagraph 74
100-(A)(ii) of this subdivision apply. The combined group, or any member 75
101-thereof, shall make such election on its return for the income year 76
102-beginning on or after January 1, 2015, and before January 1, 2016, by the 77
103-due date for such return, including any extensions. Only combined 78
104-groups with unused operating losses in excess of six billion dollars from 79
105-income years beginning prior to January 1, 2013, may make the election 80
106-prescribed in this clause; and 81
107-(B) Any net capital loss, as defined in the Internal Revenue Code 82
108-effective and in force on the last day of the income year, for any income 83
109-year commencing on or after January 1, 1973, shall be allowed as a 84 Substitute Bill No. 443
81+LCO No. 2899 3 of 8
82+
83+was filed under any of said sections, the taxpayer may file a written 48
84+request to the commissioner that an order, decision, determination or 49
85+disallowance be issued and the commissioner shall issue such order, 50
86+decision, determination or disallowance not later than fifteen days after 51
87+receipt of the written request. 52
88+(b) Any appeal to said court under subsection (a) of this section shall 53
89+be accompanied by a citation to the Commissioner of Revenue Services 54
90+to appear before said court. Such citation shall be signed by the same 55
91+authority, and such appeal shall be returnable at the same time and 56
92+served and returned in the same manner, as is required in case of a 57
93+summons in a civil action. The authority issuing the citation shall take 58
94+from the appellant a bond or recognizance to the state of Connecticut, 59
95+with surety to prosecute the appeal to effect and to comply with the 60
96+orders and decrees of the court in the premises. Such appeals shall be 61
97+preferred cases, to be heard, unless cause appears to the contrary, at the 62
98+first session, by the court or by a committee appointed by it. 63
99+(c) Said court may grant such relief as may be equitable and, if such 64
100+tax has been paid prior to the granting of such relief, may order the 65
101+Treasurer to pay the amount of such relief, with interest at the rate of 66
102+two-thirds of one per cent per month or fraction thereof, to the 67
103+aggrieved taxpayer. If the appeal has been taken without probable 68
104+cause, the court may tax double or triple costs, as the case demands; and, 69
105+upon all such appeals [which] that are denied, costs may be taxed 70
106+against the appellant at the discretion of the court, but no costs shall be 71
107+taxed against the state. 72
108+Sec. 3. Section 12-730 of the general statutes is repealed and the 73
109+following is substituted in lieu thereof (Effective July 1, 2024, and 74
110+applicable to written protests filed prior to, on or after July 1, 2024): 75
111+(a) Notwithstanding the provisions of chapter 54 to the contrary, any 76
112+taxpayer aggrieved because of any determination or disallowance by 77
113+the commissioner under section 12-729, 12-729a or 12-732 may, not later 78
114+than thirty days after notice of the commissioner's determination or 79 Raised Bill No. 443
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113117
114-capital loss carry-over to reduce, but not below zero, any net capital 85
115-gain, as so defined, in each of the five following income years, in order 86
116-of sequence, to the extent not exhausted by the net capital gain of any of 87
117-the preceding of such five following income years; and 88
118-(C) Any net capital losses allowed and carried forward from prior 89
119-years to income years beginning on or after January 1, 1973, for federal 90
120-income tax purposes by companies entitled to a deduction for dividends 91
121-paid under the Internal Revenue Code other than companies subject to 92
122-the gross earnings taxes imposed under chapters 211 and 212, shall be 93
123-allowed as a capital loss carry-over. 94
118+LCO No. 2899 4 of 8
119+
120+disallowance is mailed to the taxpayer, take an appeal therefrom to the 80
121+superior court for the judicial district of New Britain. [, which] If no 81
122+determination or disallowance has been issued within one year after a 82
123+written protest was filed under any of said sections, the taxpayer may 83
124+file a written request to the commissioner that a determination or 84
125+disallowance be issued and the commissioner shall issue such 85
126+determination or disallowance not later than fifteen days after receipt of 86
127+the written request. 87
128+(b) Any appeal to said court under subsection (a) of this section shall 88
129+be accompanied by a citation to the commissioner to appear before said 89
130+court. Such citation shall be signed by the same authority, and such 90
131+appeal shall be returnable at the same time and served and returned in 91
132+the same manner, as is required in case of a summons in a civil action. 92
133+The authority issuing the citation shall take from the appellant a bond 93
134+or recognizance to the state of Connecticut, with surety to prosecute the 94
135+appeal to effect and to comply with the orders and decrees of the court 95
136+in the premises. Such appeals shall be preferred cases, to be heard unless 96
137+cause appears to the contrary, at the first session by the court or by a 97
138+committee appointed by it. 98
139+(c) Said court may grant such relief as may be equitable and, if such 99
140+tax has been paid prior to the granting of such relief, may order the 100
141+Treasurer to pay the amount of such relief, with interest at the rate of 101
142+two-thirds of one per cent per month or fraction thereof, to the 102
143+aggrieved taxpayer. If the appeal has been taken without probable 103
144+cause, the court may charge double or triple costs, as the case demands, 104
145+and upon all such appeals [which] that may be denied, costs may be 105
146+taxed against the appellant at the discretion of the court but no costs 106
147+shall be taxed against the state. 107
148+Sec. 4. (Effective from passage) Sections 12-204c, 12-242d, 12-699a and 108
149+12-722 of the general statutes shall not apply with respect to the accrual 109
150+of any interest, in the case of any underpayment of tax by a taxpayer 110
151+under chapter 208, 228z or 229 of the general statutes, to the extent such 111
152+underpayment was due to the filing of an amended return necessitated 112 Raised Bill No. 443
153+
154+
155+
156+LCO No. 2899 5 of 8
157+
158+by the guidance in Notice 2021-20, issued by the Internal Revenue 113
159+Service, concerning the federal employee retention credit program. If 114
160+such interest has already been paid to the Department of Revenue 115
161+Services, the Commissioner of Revenue Services shall treat such 116
162+payment as an overpayment and shall refund the amount of such 117
163+payment, without interest, to the taxpayer. 118
164+Sec. 5. Subdivision (4) of subsection (a) of section 12-217 of the 2024 119
165+supplement to the general statutes is repealed and the following is 120
166+substituted in lieu thereof (Effective from passage): 121
167+(4) Notwithstanding any provision of this section: 122
168+(A) Any excess of the deductions provided in this section for any 123
169+income year commencing on or after January 1, 1973, over the gross 124
170+income for such year or the amount of such excess apportioned to this 125
171+state under the provisions of this chapter, shall be an operating loss of 126
172+such income year and shall be deductible as an operating loss carry-over 127
173+for operating losses incurred prior to income years commencing January 128
174+1, 2000, in each of the five income years following such loss year; [, and] 129
175+for operating losses incurred in income years commencing on or after 130
176+January 1, 2000, and prior to January 1, 2025, in each of the twenty 131
177+income years following such loss year; [,] and for operating losses 132
178+incurred in income years commencing on or after January 1, 2025, in 133
179+each of the thirty income years following such loss; except that: 134
180+(i) For income years commencing prior to January 1, 2015, the portion 135
181+of such operating loss that may be deducted as an operating loss carry-136
182+over in any income year following such loss year shall be limited to the 137
183+lesser of (I) any net income greater than zero of such income year 138
184+following such loss year, or in the case of a company entitled to 139
185+apportion its net income under the provisions of this chapter, the 140
186+amount of such net income that is apportioned to this state pursuant 141
187+thereto, or (II) the excess, if any, of such operating loss over the total of 142
188+such net income for each of any prior income years following such loss 143
189+year, such net income of each of such prior income years following such 144 Raised Bill No. 443
190+
191+
192+
193+LCO No. 2899 6 of 8
194+
195+loss year for such purposes being computed without regard to any 145
196+operating loss carry-over from such loss year allowed under this 146
197+subparagraph and being regarded as not less than zero, and provided 147
198+further the operating loss of any income year shall be deducted in any 148
199+subsequent year, to the extent available for such deduction, before the 149
200+operating loss of any subsequent income year is deducted; 150
201+(ii) For income years commencing on or after January 1, 2015, the 151
202+portion of such operating loss that may be deducted as an operating loss 152
203+carry-over in any income year following such loss year shall be limited 153
204+to the lesser of (I) fifty per cent of net income of such income year 154
205+following such loss year, or in the case of a company entitled to 155
206+apportion its net income under the provisions of this chapter, fifty per 156
207+cent of such net income that is apportioned to this state pursuant 157
208+thereto, or (II) the excess, if any, of such operating loss over the 158
209+operating loss deductions allowable with respect to such operating loss 159
210+under this subparagraph for each of any prior income years following 160
211+such loss year, such net income of each of such prior income years 161
212+following such loss year for such purposes being computed without 162
213+regard to any operating loss carry-over from such loss year allowed 163
214+under this subparagraph and being regarded as not less than zero, and 164
215+provided further the operating loss of any income year shall be 165
216+deducted in any subsequent year, to the extent available for such 166
217+deduction, before the operating loss of any subsequent income year is 167
218+deducted; and 168
219+(iii) If a combined group so elects, the combined group shall 169
220+relinquish fifty per cent of its unused operating losses incurred prior to 170
221+the income year commencing on or after January 1, 2015, and before 171
222+January 1, 2016, and may utilize the remaining operating loss carry-over 172
223+without regard to the limitations prescribed in subparagraph (A)(ii) of 173
224+this subdivision. The portion of such operating loss carry-over that may 174
225+be deducted shall be limited to the amount required to reduce a 175
226+combined group's tax under this chapter, prior to surtax and prior to the 176
227+application of credits, to two million five hundred thousand dollars in 177
228+any income year commencing on or after January 1, 2015. Only after the 178 Raised Bill No. 443
229+
230+
231+
232+LCO No. 2899 7 of 8
233+
234+combined group's remaining operating loss carry-over for operating 179
235+losses incurred prior to income years commencing January 1, 2015, has 180
236+been fully utilized, will the limitations prescribed in subparagraph 181
237+(A)(ii) of this subdivision apply. The combined group, or any member 182
238+thereof, shall make such election on its return for the income year 183
239+beginning on or after January 1, 2015, and before January 1, 2016, by the 184
240+due date for such return, including any extensions. Only combined 185
241+groups with unused operating losses in excess of six billion dollars from 186
242+income years beginning prior to January 1, 2013, may make the election 187
243+prescribed in this clause; and 188
244+(B) Any net capital loss, as defined in the Internal Revenue Code 189
245+effective and in force on the last day of the income year, for any income 190
246+year commencing on or after January 1, 1973, shall be allowed as a 191
247+capital loss carry-over to reduce, but not below zero, any net capital 192
248+gain, as so defined, in each of the five following income years, in order 193
249+of sequence, to the extent not exhausted by the net capital gain of any of 194
250+the preceding of such five following income years; and 195
251+(C) Any net capital losses allowed and carried forward from prior 196
252+years to income years beginning on or after January 1, 1973, for federal 197
253+income tax purposes by companies entitled to a deduction for dividends 198
254+paid under the Internal Revenue Code other than companies subject to 199
255+the gross earnings taxes imposed under chapters 211 and 212, shall be 200
256+allowed as a capital loss carry-over. 201
124257 This act shall take effect as follows and shall amend the following
125258 sections:
126259
127- Section July 1, 2025 New section
128-Sec. 2 from passage 12-217(a)(4)
260+Section 1 July 1, 2024, and
261+applicable to written
262+protests filed prior to, on or
263+after July 1, 2024
264+12-237
265+Sec. 2 July 1, 2024, and
266+applicable to hearing
267+applications and written
268+protests filed prior to, on or
269+after July 1, 2024
270+12-422 Raised Bill No. 443
129271
130-FIN Joint Favorable Subst.
272+
273+
274+LCO No. 2899 8 of 8
275+
276+Sec. 3 July 1, 2024, and
277+applicable to written
278+protests filed prior to, on or
279+after July 1, 2024
280+12-730
281+Sec. 4 from passage New section
282+Sec. 5 from passage 12-217(a)(4)
283+
284+Statement of Purpose:
285+To (1) provide that an aggrieved taxpayer may, under certain
286+circumstances, file a written request that the Commissioner of Revenue
287+Services issue an order, decision, determination or disallowance, (2)
288+require that interest not accrue on tax underpayments resulting from
289+certain amended returns related to the employee retention credit
290+program, and (3) allow business operating losses incurred in income
291+years commencing on or after January 1, 2025, to be deductible over
292+thirty income years.
293+[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
294+that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
295+underlined.]
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