Connecticut Senate Bill SB01077

Connecticut 2021 Regular Session

• Introduced: 3/18/21
• Refer: 3/18/21
• Report Pass: 4/22/21
• Refer: 5/3/21
• Report Pass: 5/10/21

Caption

An Act Concerning The Department Of Revenue Services' Recommendations For Tax Administration And Revisions To The Tax And Related Statutes.

Impact

The proposed changes are expected to have a significant impact on tax administration within the state. By allowing composite returns, the bill could reduce the administrative burden for both the Department of Revenue Services and nonresident members of businesses, potentially increasing overall compliance rates. This change would allow for a centralized approach to tax filing for nonresidents, reducing the complexity of having individual members file separate returns, which could be particularly beneficial for small business entities that engage out-of-state investors.

Summary

Substitute Bill No. 1077 seeks to implement recommendations from the Department of Revenue Services regarding tax administration and revisions to state tax laws. The bill introduces provisions allowing certain 'affected business entities'—specifically partnerships and S corporations—to file composite income tax returns on behalf of their nonresident individual members. This aims to simplify tax compliance for entities with nonresident members and to streamline the tax process related to revenue collection from these individuals.

Sentiment

The sentiment around Bill No. 1077 remains generally positive among supporters, primarily comprised of business officials and tax professionals who appreciate the streamlined approach it aims to establish. However, concerns have also been raised regarding potential loss of detailed tax revenue tracking that individual returns provide, leading to hesitance from some fiscal watchdog groups. The response from legislators appears supportive overall, viewing the bill as a step toward modernization of tax administration in the state.

Contention

Notable points of contention involve discussions around the implications of granting such tax filing privileges to business entities. Critics question whether it might unintentionally create loopholes or encourage tax avoidance by making it easier for individuals to mask income through composite returns. There remains a debate on ensuring that such measures do not result in decreased transparency in the state's tax revenue collection. Legislative discussions have highlighted the necessity of balancing ease of compliance while maintaining stringent oversight to prevent potential misuse.