Connecticut General Statutes 12-699 – Definitions. Imposition of tax. Rate
(a) As used in this chapter:
Terms Used In Connecticut General Statutes 12-699
- Affected business entity: means a partnership or an S corporation, but does not include a publicly-traded partnership, as defined in Section 7704(b) of the Internal Revenue Code, that has agreed to file an annual return pursuant to section 12-726 reporting the name, address, Social Security number or federal employer identification number and such other information required by the Commissioner of Revenue Services of each unitholder whose distributive share of partnership income derived from or connected with sources within this state was more than five hundred dollars. See Connecticut General Statutes 12-699
- another: may extend and be applied to communities, companies, corporations, public or private, limited liability companies, societies and associations. See Connecticut General Statutes 1-1
- company: means any person, partnership, association, company, limited liability company or corporation, except an incorporated municipality. See Connecticut General Statutes 12-1
- Connecticut source income: means (A) the separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code with respect to a partnership or Section 1366 of the Internal Revenue Code with respect to an S corporation, of the affected business entity, excluding any item treated as an itemized deduction for federal income tax purposes, plus any item described in Section 707(c) of the Internal Revenue Code with respect to a partnership, to the extent any such items under this subparagraph are derived from or connected with sources within this state, as determined under the provisions of chapter 229, (B) as increased or decreased by any modification described in section 12-701 that relates to an item of the affected business entity's income, gain, loss or deduction, to the extent derived from or connected with sources within this state, as determined under the provisions of chapter 229. See Connecticut General Statutes 12-699
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Member: means (A) a shareholder of an S corporation, (B) a partner in (i) a general partnership, (ii) a limited partnership, or (iii) a limited liability partnership, or (C) a member of a limited liability company that is treated as a partnership or an S corporation for federal income tax purposes. See Connecticut General Statutes 12-699
- month: means a calendar month, and the word "year" means a calendar year, unless otherwise expressed. See Connecticut General Statutes 1-1
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership: includes a limited liability company that is treated as a partnership for federal income tax purposes. See Connecticut General Statutes 12-699
- person: means any individual, partnership, company, limited liability company, public or private corporation, society, association, trustee, executor, administrator or other fiduciary or custodian. See Connecticut General Statutes 12-1
- Resident portion of unsourced income: means unsourced income multiplied by a percentage equal to the sum of the ownership interests in the affected business entity owned by members who are residents of this state. See Connecticut General Statutes 12-699
- S corporation: means a corporation or a limited liability company that is treated as an S corporation for federal income tax purposes. See Connecticut General Statutes 12-699
- Taxable year: means the taxable year of an affected business entity for federal income tax purposes. See Connecticut General Statutes 12-699
- Unsourced income: means the separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code with respect to a partnership or Section 1366 of the Internal Revenue Code with respect to an S corporation, of the affected business entity, excluding any item treated as an itemized deduction for federal income tax purposes, plus any item described in Section 707(c) of the Internal Revenue Code with respect to a partnership, regardless of the location from which such item is derived or connected, as increased or decreased by any modification described in section 12-701, that relates to an item of the affected business entity's income, gain, loss or deduction, regardless of the location from which such item is derived or connected, less (A) Connecticut source income, and (B) (i) the separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code, of the affected business entity, excluding any item treated as an itemized deduction for federal income tax purposes, plus any item described in Section 707(c) of the Internal Revenue Code with respect to a partnership, to the extent any such items under this clause are derived from or connected with sources within another state that has jurisdiction to tax the affected business entity and actually imposes tax on the affected business entity or its members who are residents of this state, with respect to such items, (ii) as increased or decreased by any modification described in section 12-701, that relates to an item of the affected business entity's income, gain, loss or deduction, to the extent derived from or connected with sources within another state that has jurisdiction to tax the affected business entity and actually imposes tax on the affected business entity or its members who are residents of this state, with respect to such items. See Connecticut General Statutes 12-699
(1) “Partnership” has the same meaning as provided in Section 7701(a)(2) of the Internal Revenue Code, as defined in section 12-213, and regulations adopted thereunder. “Partnership” includes a limited liability company that is treated as a partnership for federal income tax purposes;
(2) “S corporation” means a corporation or a limited liability company that is treated as an S corporation for federal income tax purposes;
(3) “Affected business entity” means a partnership or an S corporation, but does not include a publicly-traded partnership, as defined in Section 7704(b) of the Internal Revenue Code, that has agreed to file an annual return pursuant to section 12-726 reporting the name, address, Social Security number or federal employer identification number and such other information required by the Commissioner of Revenue Services of each unitholder whose distributive share of partnership income derived from or connected with sources within this state was more than five hundred dollars;
(4) “Member” means (A) a shareholder of an S corporation, (B) a partner in (i) a general partnership, (ii) a limited partnership, or (iii) a limited liability partnership, or (C) a member of a limited liability company that is treated as a partnership or an S corporation for federal income tax purposes;
(5) “Taxable year” means the taxable year of an affected business entity for federal income tax purposes;
(6) “Resident of this state” has the same meaning as provided in section 12-701;
(7) “Resident portion of unsourced income” means unsourced income multiplied by a percentage equal to the sum of the ownership interests in the affected business entity owned by members who are residents of this state;
(8) “Unsourced income” means the separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code with respect to a partnership or Section 1366 of the Internal Revenue Code with respect to an S corporation, of the affected business entity, excluding any item treated as an itemized deduction for federal income tax purposes, plus any item described in Section 707(c) of the Internal Revenue Code with respect to a partnership, regardless of the location from which such item is derived or connected, as increased or decreased by any modification described in section 12-701, that relates to an item of the affected business entity’s income, gain, loss or deduction, regardless of the location from which such item is derived or connected, less (A) Connecticut source income, and (B) (i) the separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code, of the affected business entity, excluding any item treated as an itemized deduction for federal income tax purposes, plus any item described in Section 707(c) of the Internal Revenue Code with respect to a partnership, to the extent any such items under this clause are derived from or connected with sources within another state that has jurisdiction to tax the affected business entity and actually imposes tax on the affected business entity or its members who are residents of this state, with respect to such items, (ii) as increased or decreased by any modification described in section 12-701, that relates to an item of the affected business entity’s income, gain, loss or deduction, to the extent derived from or connected with sources within another state that has jurisdiction to tax the affected business entity and actually imposes tax on the affected business entity or its members who are residents of this state, with respect to such items;
(9) “Modified Connecticut source income” means Connecticut source income multiplied by a percentage equal to the sum of the ownership interests in the affected business entity owned by members that are (A) subject to tax under chapter 229, or (B) affected business entities to the extent such entities are directly or indirectly owned by persons subject to tax under chapter 229. A member that is an affected business entity shall be presumed to be directly or indirectly owned by persons subject to tax under chapter 229 unless the affected business entity that has elected to pay the tax under this section can establish otherwise by clear and convincing evidence to the satisfaction of the commissioner; and
(10) “Connecticut source income” means (A) the separately and nonseparately computed items, as described in Section 702(a) of the Internal Revenue Code with respect to a partnership or Section 1366 of the Internal Revenue Code with respect to an S corporation, of the affected business entity, excluding any item treated as an itemized deduction for federal income tax purposes, plus any item described in Section 707(c) of the Internal Revenue Code with respect to a partnership, to the extent any such items under this subparagraph are derived from or connected with sources within this state, as determined under the provisions of chapter 229, (B) as increased or decreased by any modification described in section 12-701 that relates to an item of the affected business entity’s income, gain, loss or deduction, to the extent derived from or connected with sources within this state, as determined under the provisions of chapter 229.
(b) For taxable years commencing on or after January 1, 2024, an affected business entity that is required to file a return under the provisions of section 12-726 may elect to pay to the commissioner a tax as determined under this section. Any affected business entity making such election shall submit written notice of such election to the commissioner (1) not later than the due date or, if an extension of time to file has been requested and granted, the extended due date, of the return due from such entity, and (2) for each taxable year such entity makes the election under this subsection. Each affected business entity that has made the election under this subsection shall pay to the commissioner, on or before the fifteenth day of the third month following the close of each taxable year that such entity makes such election, a tax as determined under this section.
(c) The tax due under subsection (b) of this section shall be equal to six and ninety-nine-hundredths per cent multiplied by the tax base. The tax base shall be equal to the resident portion of unsourced income plus modified Connecticut source income.
(d) If an affected business entity, the lower-tier entity, is a member of another affected business entity, the upper-tier entity, the lower-tier entity shall, when calculating its Connecticut source income, subtract its distributive share of income or add its distributive share of loss from the upper-tier entity to the extent that the income or loss was derived from or connected with sources within this state.
(e) Each affected business entity shall report to each of its members, for each taxable year, such member’s direct share of the tax imposed under this section on such affected business entity and indirect share of the tax imposed on any upper-tier entity of which such affected business entity is a member.
(f) (1) Each person that is subject to the tax imposed under chapter 229 and is a member of an affected business entity shall be entitled to a credit against the tax imposed under said chapter, other than the tax imposed under section 12-707. Such credit shall be in an amount equal to such person’s direct and indirect share of the tax due and paid under this section by any affected business entity of which such person is a member multiplied by eighty-seven and one-half per cent. If the amount of the credit allowed pursuant to this subdivision exceeds such person’s tax liability for the tax imposed under said chapter, the commissioner shall treat such excess as an overpayment and, except as provided in section 12-739 or 12-742, shall refund the amount of such excess, without interest, to such person.
(2) Each person that is subject to the tax imposed under chapter 229 as a resident or a part-year resident of this state and is a member of an affected business entity shall also be entitled to a credit against the tax imposed under said chapter, other than the tax imposed under section 12-707, for such person’s direct and indirect share of taxes paid to another state of the United States or the District of Columbia, on income of any affected business entity of which such person is a member that is derived therefrom, provided the taxes paid to another state of the United States or the District of Columbia results from a tax that is substantially similar to the tax imposed under this section. Any such credit shall be calculated in a manner consistent with the provisions of section 12-704.
(g) Upon the failure of any affected business entity to pay the tax due under this section within thirty days of the due date, the provisions of section 12-35 shall apply with respect to the enforcement of this section and the collection of such tax. The warrant therein provided for shall be signed by the commissioner or an authorized agent of the commissioner. The amount of any such tax, penalty and interest shall be a lien, from the last day of the last month of the taxable year next preceding the due date of such tax until discharged by payment, against all real estate of the taxpayer within the state, and a certificate of such lien signed by the commissioner may be recorded in the office of the clerk of any town in which such real estate is situated, provided no such lien shall be effective as against any bona fide purchaser or qualified encumbrancer of any interest in any such property. When any tax with respect to which a lien has been recorded under the provisions of this section has been satisfied, the commissioner, upon request of any interested party, shall issue a certificate discharging such lien, which certificate shall be recorded in the same office in which the lien was recorded. Any action for the foreclosure of such lien shall be brought by the Attorney General in the name of the state in the superior court for the judicial district in which the property subject to such lien is situated, or, if such property is located in two or more judicial districts, in the superior court for any one such judicial district, and the court may limit the time for redemption or order the sale of such property or make such other or further decree as it judges equitable.
(h) If any tax is not paid when due as provided in this section, there shall be added to the amount of the tax interest at the rate of one per cent per month or fraction thereof from the date the tax became due until it is paid.
(i) The provisions of sections 12-723, 12-725 and 12-728 to 12-737, inclusive, shall apply to the provisions of this section in the same manner and with the same force and effect as if the language of said sections had been incorporated in full into this section and had expressly referred to the tax under this section, except to the extent that any such provision is inconsistent with a provision of this section.