DRS: Job Expansion Tax Credit 01MAR2012

Job Expansion Tax Credit
Conn. Gen. Stat. §12-217pp

 

Description and Applicable Taxes

A tax credit is available for the income years beginning on or after January 1, 2012 for taxpayers that hire new employees to fill new jobs after January 1, 2012 and before January 1, 2014. The tax credit can be claimed against the taxes imposed under Chapters 207, 208, 212, or 229 (other than Conn. Gen. Stat. §12-707) of the Connecticut General Statutes.

 

This tax credit is administered by the Connecticut Department of Economic and Community Development  (DECD). Any taxpayer interested in obtaining this tax credit must apply to DECD.

 

 

Definitions

Full-time job means a job in which an employee is required to work at least thirty-five hours per week for not less than forty-eight weeks in a calendar year. “Full-time job” does not include a temporary or seasonal job.

 

New employee means a person who resides in this state and is hired by a taxpayer on or after January 1, 2012, and prior to January 1, 2014, to fill a new job. “New employee” does not include a person who was employed in this state by a related person with respect to a taxpayer during the prior twelve months.

 

New job means a job that did not exist in this state prior to a taxpayer’s application to DECD for certification under this section for a job expansion tax credit, is filled by a new, qualifying or veteran employee, and 1) is a full-time job, or 2) in the case of a qualifying employee, is a job in which an employee is required to work at least twenty hours per week for not less than forty-eight weeks in a calendar year.

 

Qualifying employee means a new employee who, at the time of hiring by the taxpayer: 1) is receiving unemployment compensation; 2) has exhausted unemployment compensation benefits and has not had an interviewing full-time job; 3) is receiving vocational rehabilitation services from the Bureau of Rehabilitative Services. 

 

Related person means 1) a  corporation, limited liability company, partnership, association or trust controlled by the taxpayer, 2) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, 3) a corporation, limited  liability company, partnership, association or trust controlled by an individual, corporation, limited  liability company, partnership, association or trust that is in control of the taxpayer, or 4) a member of the same controlled group as the taxpayer.

 

Taxpayer means a person that has been in business for at least twelve consecutive months prior to the date of the taxpayer’s application to the commissioner for certification under this section for a Job Expansion Tax Credit, and is subject to tax under Chapters 207, 208, 212, or 229 of the Connecticut General Statutes.

 

Veteran employee means a new employee who, at the time of hiring by the taxpayer, is a member of, was honorably discharged from or released under honorable conditions from active service in the armed forces, as defined in section 27-103 of the general statutes.

 

 

Tax Credit Amount

The amount of the tax credit is:

  • $500 per month for each new employee.
  • $900 per month for each veteran employee or qualifying employee.

The tax credit can be claimed in the year of the hire and the next two income years. Any tax credit not claimed by a taxpayer in an income year shall expire and is not refundable.

 

Taxpayers must create a minimum number of new jobs to be eligible for the tax credit. The required number of new jobs depends upon the number of employees the taxpayer employs in full-time jobs in Connecticut on the date of the application to DECD. Specifically:

 

  • For taxpayers that employ not more than fifty employees in full-time jobs in Connecticut on the date of application, the creation of at least one new job in Connecticut is required.
  • For taxpayers that employ more than fifty, but not more than one hundred employees in full-time jobs in Connecticut on the date of application, the creation of at least five new jobs in Connecticut is required.
  • For taxpayers that employ more than one hundred employees in full-time jobs in Connecticut on the date of the application, the creation of at least ten new jobs in Connecticut is required.

No taxpayer shall claim a tax credit for any new, qualifying or veteran employee who is an owner, member or partner in the business or who is not employed by the taxpayer at the close of the taxpayer’s income year.

 

No taxpayer claiming the tax credit with respect to a new, qualifying or veteran employee shall claim any tax credit against any tax under any other provision of the Connecticut General Statutes with respect to the same new, qualifying or veteran employee.

 

 

Carryforward and Carryback Limitations

No carryforward or carryback is allowed.

 

 

How to Apply

To be eligible to claim the tax credit, a taxpayer must apply to DECD. The taxpayer must provide DECD with a description of its primary activities, its NAICS Code, the number of employees it employs on the date of the application, the name and position or job title of the new, qualifying or veteran employee, if applicable, and any other information that DECD requires with its application. Within 30 days of receiving the application, DECD shall render a decision on the application and shall issue a certificate letter if the taxpayer’s application is approved.

 

DECD may impose a fee for such application.

 

 

Flow-Through of the Tax Credit

If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, then the tax credit may be claimed by the shareholder or partners. If the taxpayer is a single member limited liability company that is disregarded as an entity separate from its owner, then the tax credit may be claimed by its owner.

 

 

How to Claim the Tax Credit

Complete Form CT-1120 JET, Job Expansion Tax Credit, and attach it to Form CT-1120K, Business Tax Credit Summary, and/or Form CT-207K, Insurance/Health Care Tax Credit Schedule.

 

To take this tax credit against the tax imposed by Chapter 229 of the Connecticut General Statutes, see the applicable income tax instruction booklet.

 

 

Where to Get Additional Information

Direct inquiries to:

Connecticut Department of Economic and Community Development

505 Hudson Street

Hartford CT 06106-7107

860-270-8143

www.ct.gov/ecd

 

 

Statutory and Regulatory References

Conn. Gen. Stat. §12-217pp

 

 

Last updated March 1, 2012