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2016 Survey of Connecticut Tax Law Developments

Connecticut Bar Journal

2017 Vol. 90.4

Authors: Louis B. Schatz, Alan E. Lieberman

Coming off a tumultuous year in 2015, which involved significant tax increases, the Governor generally remained true to his pledge in 2016 not to increase Connecticut taxes, although action taken to reduce state grants, PILOT payments and other financial support for municipalities likely will result in increased municipal property taxes. The 2016 legislative session did witness the passage of significant tax legislation that, in particular, should be of assistance to Connecticut-based businesses which provide services and/or sell goods to out-of-state customers.

After adopting a general single-factor apportionment formula in 2015 for the Connecticut corporation business tax, the Legislature in 2016 enacted market-based rules for the sourcing of business income, retroactively effective for income years commencing on or after January 1, 2016. For businesses operated as Sub chapter S corporations, limited liability companies, partnerships and other pass-through entities, the Legislature adopted a general single-factor apportionment formula and market-based sourcing effective for income years commencing on or after January 1, 2017.

Other significant 2016 developments include a partial roll back of the limitation on the property tax mill rate for motor vehicles, and the adoption of a number of new property tax relief provisions, including one for homeowners who are suffering from defective concrete foundations. Finally, the General Assembly established the Connecticut Retirement Security Exchange, a new state-administered retirement savings program that, commencing in 2018, generally will be available to for-profit and non-profit employers in Connecticut. Set forth below is a more detailed summary of these and other of the more significant Connecticut tax developments in 2016.

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Originally published in the Connecticut Bar Journal and reprinted with permission.

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