Bill Text: CT SB00529 | 2018 | General Assembly | Introduced

Connecticut Senate Bill 529 (Prior Session Legislation)

Introduced

Bill Title: An Act Concerning A Voluntary Employer Compensation Expense Tax.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2018-03-29 - Public Hearing 04/02 [SB00529 Detail]

Download: Connecticut-2018-SB00529-Introduced.html


General Assembly		*Raised Bill No. 529*
*February Session, 2018*		LCO No. 3070
		03070_______FIN
Referred to Committee on FINANCE, REVENUE AND BONDING
Introduced by:
(FIN)

AN ACT CONCERNING A VOLUNTARY EMPLOYER COMPENSATION EXPENSE TAX.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective from passage) (a) As used in this section:

(1) "Employer" means an employer required to deduct and withhold tax from wages pursuant to section 12-705 of the general statutes;

(2) "Electing employer" means an employer that has made the election provided for under subsection (b) of this section;

(3) "Payroll expense" means (A) wages, as defined in Section 3121 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, without regard to Section 3121(a)(1) of said code, and (B) compensation, as defined in Section 3231 of said code, without regard to Section 3231(e)(2)(A)(i) of said code, that are paid to all covered employees; and

(4) "Covered employee" means an employee of an electing employer who is required to have amounts withheld from wages pursuant to section 12-705 of the general statutes and receives an annual gross income from wages and compensation of more than forty thousand dollars.

(b) Commencing in the taxable year commencing January 1, 2019, any employer with covered employees in the state may make an election to be taxed under this section.

(1) To be effective, such election shall be made (A) for an employer that is not a corporation, by the unanimous vote of all owners of the employer, (B) for a for-profit or nonprofit corporation, by any person authorized under such corporation's certificate of incorporation, bylaws or other corporate documents to make such an election, (C) for an employer that is a trust, by the unanimous vote of all trustees, and (D) for an employer that is a governmental entity, by the chief elected officer of such governmental entity.

(2) Any such election made on or before October first shall take effect in the immediately succeeding taxable year. Any such election made after October first shall take effect in the second succeeding taxable year.

(3) An employer may elect to no longer be taxed under this section in the same manner as the election to be so taxed was made. The provisions of subdivision (2) of this subsection shall apply to an election to no longer be taxed under this section.

(c) (1) Each electing employer shall pay a tax on such employer's payroll expense at the following rates, provided such employer shall be subject to the tax imposed under this section only on the payroll expense in excess of forty thousand dollars paid to any covered employee during a taxable year: (A) For the taxable year commencing January 1, 2019, one and one-half per cent of such employer's payroll expense during the quarter; (B) for the taxable year commencing January 1, 2020, three per cent of such employer's payroll expense during the quarter; and (C) for the taxable year commencing January 1, 2021, and for each taxable year thereafter, five per cent of such employer's payroll expense during the quarter.

(2) An electing employer may not deduct from the wages or compensation of a covered employee any amount that represents all or any portion of the tax imposed on such employer pursuant to this section.

(d) Each electing employer shall pay the tax imposed under this section to the Commissioner of Revenue Services at the same time and in the same manner such employer would be required to pay the tax under section 12-705 of the general statutes, and shall file a return in such form and manner as the commissioner prescribes. Any individual who is under a duty to act on behalf of an electing employer to comply with the provisions of this section shall be jointly and severally liable with the electing employer for any tax, penalty or interest owed under this section.

(e) All provisions of chapter 229 of the general statutes 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 chapter had been incorporated in full into this section and had expressly referred to the tax imposed under this section, except to the extent that any such provision is inconsistent with a provision of this section.

Sec. 2. (NEW) (Effective from passage) (a) For taxable years commencing on or after January 1, 2019, there shall be allowed a credit against the personal income tax imposed under chapter 229 of the general statutes for covered employees of an electing employer, as those terms are defined in subsection (a) of section 1 of this act. Such credit shall be in the following amounts:

(1) For the taxable year commencing January 1, 2019, the credit shall be in an amount equal to (A) the covered employee's wages and compensation in excess of forty thousand dollars received by such employee during the taxable year from the electing employer, multiplied by the product of (B) (i) one and one-half per cent and (ii) the result of one minus a fraction, the numerator of which shall be the tax imposed on such employee pursuant to chapter 229 of the general statutes prior to the application of any credits for the taxable year and the denominator of which shall be such employee's taxable income as determined pursuant to said chapter for the taxable year;

(2) For the taxable year commencing January 1, 2020, the credit shall be in an amount equal to (A) the covered employee's wages and compensation in excess of forty thousand dollars received by such employee during the taxable year from the electing employer, multiplied by the product of (B) (i) three per cent and (ii) the result of one minus a fraction, the numerator of which shall be the tax imposed on such employee pursuant to chapter 229 of the general statutes prior to the application of any credits for the taxable year and the denominator of which shall be such employee's taxable income as determined pursuant to said chapter for the taxable year; and

(3) For the taxable year commencing January 1, 2021, and each taxable year thereafter, the credit shall be in an amount equal to (A) the covered employee's wages and compensation in excess of forty thousand dollars received by such employee during the taxable year from the electing employer, multiplied by the product of (B) (i) five per cent and (ii) the result of one minus a fraction, the numerator of which shall be the tax imposed on such employee pursuant to chapter 229 of the general statutes prior to the application of any credits for the taxable year and the denominator of which shall be such employee's taxable income as determined pursuant to said chapter for the taxable year.

(b) If the amount of the credit allowed pursuant to subsection (a) of this section exceeds the covered employee's liability for the tax imposed under chapter 229 of the general statutes, the excess may be carried forward to the immediately succeeding taxable year or years.


This act shall take effect as follows and shall amend the following sections:
Section 1	from passage	New section
Sec. 2	from passage	New section

Statement of Purpose:

To establish a voluntary employer compensation expense tax.

[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.]