Bill Text: CT HB05122 | 2016 | General Assembly | Comm Sub
Bill Title: An Act Concerning Personal Income Tax Deductions For Contributions To Family And Medical Leave Benefit Accounts.
Spectrum: Committee Bill
Status: (Introduced - Dead) 2016-03-04 - Public Hearing 03/09 [HB05122 Detail]
Download: Connecticut-2016-HB05122-Comm_Sub.html
General Assembly |
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February Session, 2016 |
LCO No. 2584 | ||
*02584HB05122FIN* | |||
Referred to Committee on FINANCE, REVENUE AND BONDING |
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Introduced by: |
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(FIN) |
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AN ACT CONCERNING PERSONAL INCOME TAX DEDUCTIONS FOR CONTRIBUTIONS TO FAMILY AND MEDICAL LEAVE BENEFIT ACCOUNTS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Subparagraph (B) of subdivision (20) of subsection (a) of section 12-701 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2017, and applicable to taxable years commencing on or after January 1, 2017):
(B) There shall be subtracted therefrom (i) to the extent properly includable in gross income for federal income tax purposes, any income with respect to which taxation by any state is prohibited by federal law, (ii) to the extent allowable under section 12-718, exempt dividends paid by a regulated investment company, (iii) the amount of any refund or credit for overpayment of income taxes imposed by this state, or any other state of the United States or a political subdivision thereof, or the District of Columbia, to the extent properly includable in gross income for federal income tax purposes, (iv) to the extent properly includable in gross income for federal income tax purposes and not otherwise subtracted from federal adjusted gross income pursuant to clause (x) of this subparagraph in computing Connecticut adjusted gross income, any tier 1 railroad retirement benefits, (v) to the extent any additional allowance for depreciation under Section 168(k) of the Internal Revenue Code, as provided by Section 101 of the Job Creation and Worker Assistance Act of 2002, for property placed in service after December 31, 2001, but prior to September 10, 2004, was added to federal adjusted gross income pursuant to subparagraph (A)(ix) of this subdivision in computing Connecticut adjusted gross income for a taxable year ending after December 31, 2001, twenty-five per cent of such additional allowance for depreciation in each of the four succeeding taxable years, (vi) to the extent properly includable in gross income for federal income tax purposes, any interest income from obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, (vii) to the extent properly includable in determining the net gain or loss from the sale or other disposition of capital assets for federal income tax purposes, any gain from the sale or exchange of obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district or similar public entity created under the laws of the state of Connecticut, in the income year such gain was recognized, (viii) any interest on indebtedness incurred or continued to purchase or carry obligations or securities the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such interest on indebtedness is not deductible in determining federal adjusted gross income and is attributable to a trade or business carried on by such individual, (ix) ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income which is subject to taxation under this chapter but exempt from federal income tax, or the management, conservation or maintenance of property held for the production of such income, and the amortizable bond premium for the taxable year on any bond the interest on which is subject to tax under this chapter but exempt from federal income tax, to the extent that such expenses and premiums are not deductible in determining federal adjusted gross income and are attributable to a trade or business carried on by such individual, (x) (I) for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is less than fifty thousand dollars, or as a married individual filing separately whose federal adjusted gross income for such taxable year is less than fifty thousand dollars, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income for such taxable year is less than sixty thousand dollars or a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is less than sixty thousand dollars, an amount equal to the Social Security benefits includable for federal income tax purposes; and (II) for a person who files a return under the federal income tax as an unmarried individual whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or as a married individual filing separately whose federal adjusted gross income for such taxable year is fifty thousand dollars or more, or for a husband and wife who file a return under the federal income tax as married individuals filing jointly whose federal adjusted gross income from such taxable year is sixty thousand dollars or more or for a person who files a return under the federal income tax as a head of household whose federal adjusted gross income for such taxable year is sixty thousand dollars or more, an amount equal to the difference between the amount of Social Security benefits includable for federal income tax purposes and the lesser of twenty-five per cent of the Social Security benefits received during the taxable year, or twenty-five per cent of the excess described in Section 86(b)(1) of the Internal Revenue Code, (xi) to the extent properly includable in gross income for federal income tax purposes, any amount rebated to a taxpayer pursuant to section 12-746, (xii) to the extent properly includable in the gross income for federal income tax purposes of a designated beneficiary, any distribution to such beneficiary from any qualified state tuition program, as defined in Section 529(b) of the Internal Revenue Code, established and maintained by this state or any official, agency or instrumentality of the state, (xiii) to the extent allowable under section 12-701a, contributions to accounts established pursuant to any qualified state tuition program, as defined in Section 529(b) of the Internal Revenue Code, established and maintained by this state or any official, agency or instrumentality of the state, (xiv) to the extent properly includable in gross income for federal income tax purposes, the amount of any Holocaust victims' settlement payment received in the taxable year by a Holocaust victim, (xv) to the extent properly includable in gross income for federal income tax purposes of an account holder, as defined in section 31-51ww, interest earned on funds deposited in the individual development account, as defined in section 31-51ww, of such account holder, (xvi) to the extent properly includable in the gross income for federal income tax purposes of a designated beneficiary, as defined in section 3-123aa, interest, dividends or capital gains earned on contributions to accounts established for the designated beneficiary pursuant to the Connecticut Homecare Option Program for the Elderly established by sections 3-123aa to 3-123ff, inclusive, (xvii) to the extent properly includable in gross income for federal income tax purposes, any income received from the United States government as retirement pay for a retired member of (I) the Armed Forces of the United States, as defined in Section 101 of Title 10 of the United States Code, or (II) the National Guard, as defined in Section 101 of Title 10 of the United States Code, (xviii) to the extent properly includable in gross income for federal income tax purposes for the taxable year, any income from the discharge of indebtedness in connection with any reacquisition, after December 31, 2008, and before January 1, 2011, of an applicable debt instrument or instruments, as those terms are defined in Section 108 of the Internal Revenue Code, as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009, to the extent any such income was added to federal adjusted gross income pursuant to subparagraph (A)(xi) of this subdivision in computing Connecticut adjusted gross income for a preceding taxable year, (xix) to the extent not deductible in determining federal adjusted gross income, the amount of any contribution to a manufacturing reinvestment account established pursuant to section 32-9zz in the taxable year that such contribution is made, [and] (xx) to the extent properly includable in gross income for federal income tax purposes, for the taxable year commencing January 1, 2015, ten per cent of the income received from the state teachers' retirement system, for the taxable year commencing January 1, 2016, twenty-five per cent of the income received from the state teachers' retirement system, and for the taxable year commencing January 1, 2017, and each taxable year thereafter, fifty per cent of the income received from the state teachers' retirement system, and (xxi) contributions to a family and medical leave benefit account established pursuant to sections 2 to 8, inclusive, of this act, established and maintained by this state or any official, agency or instrumentality of the state.
Sec. 2. (NEW) (Effective October 1, 2016) As used in this section and sections 3 to 9, inclusive, of this act:
(1) "Family and medical leave benefit account" or "FMLA account" means an account established and maintained pursuant to sections 3 to 9, inclusive, of this act for the purposes of paying qualified family and medical leave expenses.
(2) "Deposit" means a deposit, payment, contribution, gift or other transfer of funds.
(3) "Depositor" means any person making a deposit into an FMLA account pursuant to a participation agreement.
(4) "Designated beneficiary" means any individual state resident originally designated in the participation agreement who is the owner of an FMLA account.
(5) "Participation agreement" means an agreement between the trust established pursuant to section 3 of this act and depositors that provides for participation in an FMLA account for the benefit of a designated beneficiary.
(6) "Qualified family and medical leave expenses" means any expenses incurred during periods when the designated beneficiary is on approved leave pursuant to the provisions of the federal Family and Medical Leave Act of 1993 and the regulations promulgated pursuant to said act or pursuant to section 5-248a of the general statutes or sections 31-51kk to 31-51qq, inclusive, of the general statutes.
Sec. 3. (NEW) (Effective October 1, 2016) (a) (1) The State Treasurer shall establish an FMLA account program pursuant to sections 2 to 8, inclusive, of this act. Under the program: (A) The State Treasurer shall administer individual FMLA accounts to encourage and assist eligible individuals in saving private funds to provide support during periods of approved job protected leave pursuant to the provisions of the federal Family and Medical Leave Act of 1993 and the regulations promulgated pursuant to said act, and (B) a person may make contributions to an individual FMLA account to meet the qualified family and medical leave expenses of the designated beneficiary of the account.
(2) For the purposes of the program, there is established within the Office of the State Treasurer the Connecticut Family and Medical Benefit Trust. The trust shall constitute an instrumentality of the state and shall perform essential governmental functions, as provided in sections 2 to 8, inclusive, of this act. The trust shall receive and hold all payments and deposits intended for FMLA accounts as well as gifts, bequests, endowments or federal, state or local grants and any other funds from public or private sources and all earnings, until disbursed in accordance with sections 2 to 8, inclusive, of this act.
(b) (1) The amounts on deposit in the trust shall not constitute property of the state and the trust shall not be construed to be a department, institution or agency of the state. Amounts on deposit in the trust shall not be commingled with state funds and the state shall have no claim to or against, or interest in, such amounts, except as provided in subdivision (2) of this subsection. Any contract entered into by, or any obligation of, the trust shall not constitute a debt or obligation of the state and the state shall have no obligation to any designated beneficiary or any other person on account of the trust and all amounts obligated to be paid from the trust shall be limited to amounts available for such obligation on deposit in the trust. The amounts on deposit in the trust may only be disbursed in accordance with the provisions of sections 2 to 8, inclusive, of this act.
(2) The trust shall continue in existence as long as it holds any deposits or other funds or has any obligations and until its existence is terminated by law, and upon termination of the trust, any unclaimed assets of the trust shall return to the state. Property of the trust shall be governed by section 3-61a of the general statutes.
(c) The State Treasurer shall be responsible for the receipt, maintenance, administration, investment and disbursements of amounts from the trust. The trust shall not receive deposits in any form other than cash. No depositor or designated beneficiary may direct the investment of any contributions or amounts held in the trust other than in the specific fund options provided for by the trust and shall not direct investments in such specific fund options more than two times in any calendar year. No interest, or portion of any interest, in the program shall be used as security for a loan.
(d) A person may make deposits to an FMLA account to meet their qualified family and medical leave expenses, provided the trust and deposits meet the other requirements of this section and any regulations adopted by the State Treasurer.
(e) On or before December 31, 2017, and annually thereafter, the State Treasurer shall submit (1) in accordance with the provisions of subsection (a) of section 3-37 of the general statutes, a report to the Governor on the operations of the trust, including the receipts, disbursements, assets, investments and liabilities and administrative costs of the trust for the prior fiscal year, and (2) in accordance with the provisions of section 11-4a of the general statutes, a report on the trust to the joint standing committee of the General Assembly having cognizance of matters relating to finance, and shall make such report available to each depositor and designated beneficiary. The report required under subdivision (2) of this subsection shall include, but need not be limited to: (A) The number of FMLA accounts; (B) the total amount of contributions to such accounts; (C) the total amount and nature of distributions from such accounts; and (D) a description of issues relating to the abuse of such accounts, if any.
Sec. 4. (NEW) (Effective October 1, 2016) The State Treasurer, on behalf of the trust and for purposes of the trust, may:
(1) Receive and invest moneys in the trust in any instruments, obligations, securities or property in accordance with section 5 of this act;
(2) Establish consistent terms for each participation agreement, bulk deposit, coupon or installment payments, including, but not limited to, (A) the method of payment into an FMLA account by payroll deduction, transfer from bank accounts or otherwise, (B) the termination, withdrawal or transfer of payments under an FMLA account, (C) penalties for distributions not used for qualified family and medical leave expenses, and (D) the amount of any charges or fees to be assessed in connection with the administration of the trust;
(3) Enter into one or more contractual agreements, including contracts for legal, actuarial, accounting, custodial, advisory, management, administrative, advertising, marketing and consulting services for the trust and pay for such services from the gains and earnings of the trust;
(4) Procure insurance in connection with the trust's property, assets, activities or deposits or contributions to the trust;
(5) Apply for, accept and expend gifts, grants or donations from public or private sources to enable the Connecticut Family and Medical Benefit Trust to carry out its objectives;
(6) Sue and be sued;
(7) Establish one or more funds within the trust and maintain separate FMLA accounts for each designated beneficiary; and
(8) Take any other action necessary to carry out the purposes of sections 2 to 8, inclusive, of this act and incidental to the duties imposed on the State Treasurer pursuant to said sections.
Sec. 5. (NEW) (Effective October 1, 2016) Notwithstanding the provisions of sections 3-13 to 3-13h, inclusive, of the general statutes, the State Treasurer shall invest the amounts on deposit in the trust in a manner reasonable and appropriate to achieve the objectives of the trust, exercising the discretion and care of a prudent person in similar circumstances with similar objectives. The State Treasurer shall give due consideration to the rate of return, risk, term or maturity, diversification of the total portfolio within the trust, liquidity, projected disbursements and expenditures and the expected payments, deposits, contributions and gifts to be received. The State Treasurer shall not require the trust to invest directly in obligations of the state or any political subdivision of the state or in any investment or other fund administered by the State Treasurer. The assets of the trust shall be continuously invested and reinvested in a manner consistent with the objectives of the trust until disbursed for qualified family and medical leave expenses, expended on expenses incurred by the operations of the trust or refunded to the depositor or designated beneficiary on the conditions provided in the participation agreement.
Sec. 6. (NEW) (Effective October 1, 2016) Participation in the trust and the offering, sale and solicitation of opportunities to participate in the trust are exempt from sections 36b-16 and 36b-22 of the general statutes, provided the State Treasurer has obtained written advice of counsel or written advice from the Securities Exchange Commission, or both, that the trust and the offering, sale and solicitation of opportunities to participate in the trust are not subject to federal securities laws.
Sec. 7. (NEW) (Effective October 1, 2016) The property of the trust and the earnings on the trust shall be exempt from taxation by the state and political subdivisions of the state.
Sec. 8. (NEW) (Effective October 1, 2016) The state pledges to depositors, designated beneficiaries and any party who enters into contracts with the trust, pursuant to the provisions of sections 2 to 8, inclusive, of this act, that the state will not limit or alter the rights under said sections vested in the trust or contract with the trust until such obligations are fully met and discharged and such contracts are fully performed on the part of the trust, provided nothing in this section shall preclude such limitation or alteration if adequate provision is made by law for the protection of such depositors and designated beneficiaries pursuant to the obligations of the trust or parties who entered into such contracts with the trust. The trust, on behalf of the state, may include a description of such pledge and undertaking for the state in participation agreements and such other obligations or contracts.
Sec. 9. (NEW) (Effective October 1, 2016) (a) Notwithstanding any provision of the general statutes, moneys invested in an individual FMLA account, contributions to an individual FMLA account and distributions for qualified family and medical leave expenses pursuant to sections 2 to 8, inclusive, of this act, shall be disregarded for purposes of determining an individual's eligibility for assistance under the temporary family assistance program, as described in section 17b-112 of the general statutes, programs funded under the federal Low Income Home Energy Assistance Program block grant and any other federally funded assistance or benefit program, including, but not limited to, the state's medical assistance program, whenever such program requires consideration of one or more financial circumstances of an individual for the purpose of determining the individual's eligibility to receive any assistance or benefit or the amount of any assistance or benefit.
(b) Notwithstanding any provision of the general statutes, no moneys invested in the FMLA accounts shall be considered to be an asset for purposes of determining an individual's eligibility for need-based, institutional aid grants offered to an individual at the public eligible educational institutions in the state.
This act shall take effect as follows and shall amend the following sections: | ||
Section 1 |
January 1, 2017, and applicable to taxable years commencing on or after January 1, 2017 |
12-701(a)(20)(B) |
Sec. 2 |
October 1, 2016 |
New section |
Sec. 3 |
October 1, 2016 |
New section |
Sec. 4 |
October 1, 2016 |
New section |
Sec. 5 |
October 1, 2016 |
New section |
Sec. 6 |
October 1, 2016 |
New section |
Sec. 7 |
October 1, 2016 |
New section |
Sec. 8 |
October 1, 2016 |
New section |
Sec. 9 |
October 1, 2016 |
New section |
Statement of Purpose:
To establish a deduction under the personal income tax for contributions to a family and medical leave benefit account and to allow for the establishment of such accounts by the State Treasurer.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]
REP. HOYDICK, 120th Dist.; REP. CANDELORA, 86th Dist. REP. KOKORUDA, 101st Dist. |