DRS: 2014 Legislative Tax Changes

2014 Legislative Tax Changes

 

The following is a brief summary of 2014 legislative changes.  (This report is for information purposes only and should not be relied on as tax guidance.)

STATE TAX GAP. $75M collection initiative focused on transfer payments, non-filers and remaining tax deficiencies following 2013 tax amnesty.

INCOME TAX

  • CHET Baby Scholars Fund.    Refunds may be used to support new fund or to contribute to an individualís CHET account, beginning with the 2014 tax year.
  • Teacher pensions. Portion of teachersí pension income exempted:  10% in 2015, 25% in 2016 and 50% in 2017 and after.
  • Nonqualified deferred compensation plans.  Income from these plans earned in CT while a resident is sourced to CT and taxable for non-residents.
  • Lump sum distributions in fiduciary adjustment.  Fiduciary required to include lump sum distribution total if not already included in federal taxable income.
  • Non-resident indirect sales of CT real estate.  Income from the sale of an interest in an entity holding real property in CT can be sourced to CT for non-residents.

SALES & USE TAX

  • Filing deadline & expedited remittal by delinquents.  Filing and payment due date changed to the 20th of the month for all filers.  Certain delinquent taxpayers to remit on a weekly basis.  These weekly remitters will be notified by DRS.
  • Publication of non-permitees.  DRS to publish list of taxpayers with licenses, permits or certificates denied, not renewed, suspended or revoked for delinquency.
  • Clothing & footwear under $50.  Exempt 7/1/15.
  • Non-prescription drugs.   Exempt 4/1/15.
  • DMV denial for sales tax delinquents.    DMV will not issue or renew a car dealer or repairerís license if the business owes sales taxes.

BUSINESS TAXES & BENEFITS

  • Aerospace reinvestment.  Exchange of accumulated R&D credits based on new investment and employment.
  • Manufacturing Reinvestment Account.  Tax exemption increased from 50% to 100% for amounts used for eligible purposes, effective 7/1/14, for both income and corporation business tax.
  • Apportionment parity.  Sourcing rules for sales of tangible property for income tax purposes changed to match corporation business tax rules.
  • Angel Investors. Income Tax credit extended through 6/30/16.
  • Apprenticeship training.  Pass-through entities in the manufacturing trades eligible to earn and assign the credit, effective 7/1/15.
  • Historic preservation.  Expansion of Historic Homes credit and establishment of a new Historic Rehabilitation Tax Credit Program, which consolidates and expands the Historic Preservation and Historic Structures Rehabilitation credits.
  • Business competitiveness commission.  Includes business tax impact.
  • No business dissolution fee.  Eliminates $50 SOTS fee for business dissolution certificate and $100 fee for foreign corporation withdrawal certificate, effective 7/1/15.  

GIFT & ESTATE TAXES

  • Exclusion of certain taxable gifts for estate tax purposes.  CT taxable gifts already included in federal gross estate no longer added to CT taxable estate.
  • Estate tax effective date.  Clarifies that language adopted in 2013 was effective from its passage and applicable to all open estates.

OTHER MAJOR TAX LEGISLATION

  • Financial institutions data match.  DRS and banks authorized to share information to streamline tax warrant process.
  • State tax policy review.  Panel formed to review CTís state and local tax structure. Report of panelís findings and recommendations due January 1, 2015.
  • Publication of tax delinquents.  DRS must indicate taxpayers removed from list due to payment in full, negotiated settlement or uncollectibility.
  • Cigarette sales to minors.  For the first violation, the person selling is required to successfully complete an online tobacco prevention education program through DMHAS.  Failure to do so will result in a civil penalty.
  • Delinquent heating oil dealers.  DRS to report delinquent home heating oil dealers to DCP annually.
  • Vessel fuels used in interstate commerce. Fuel used in vessels in interstate commerce no longer subject to petroleum products gross earnings tax or the motor vehicles fuels tax.
  • Fuel tax conversion rates.  CT to adopt federal conversion rate used to determine the liquid gallon equivalent for motor fuels in gaseous form, for purposes of the Motor Fuel Tax.
  • Expanded cigarette sales enforcement.  CT has strengthened provisions concerning cigarette regulation as it relates to the Tobacco Master Settlement Agreement.


Content Last Modified on 6/13/2014 9:19:12 AM