Governor Malloy signs Public Act No. 17-105, An Act Concerning Revisions and Technical Changes to the Tax and Related Statutes and Certain Exemptions from the Property Tax

Governor Malloy signs Public Act No. 17-105, An Act Concerning Revisions and Technical Changes to the Tax and Related Statutes and Certain Exemptions from the Property Tax

Governor Malloy has signed a new law that makes changes to existing tax and related statues.  The following is a summary of those changes as prepared by the Office of Legislative Research. Of interest are certain exemptions to the property tax as appear below.

The new law itself can be read here.

 Here is the summary:

OLR Bill Analysis

sHB 7263 (as amended by House "A")*

AN ACT CONCERNING REVISIONS AND CHANGES TO THE TAX AND RELATED STATUTES, CERTAIN EXEMPTIONS FROM THE PROPERTY TAX, AND DIRT BIKES AND SIMILAR VEHICLES.

SUMMARY

This bill makes the following unrelated changes in state laws:

1. Makes several minor changes to the state's tobacco settlement law (§§ 1-3);

2. Allows the ranking members of the Commerce and Finance, Revenue and Bonding committees to appoint designees to serve in their place on the Commission on Economic Competitiveness (§ 4);

3. Makes various technical corrections and changes to statutes concerning taxes and motor vehicle fines (§§ 5-9); and

4. Exempts from property tax certain (a) household electronic devices and (b) paint coloring and mixing machinery and equipment (§§ 10 & 11).

*House Amendment “A” eliminates provisions allowing municipalities to destroy certain confiscated vehicles.

EFFECTIVE DATE: October 1, 2017, except the change to the Commission on Economic Competitiveness is effective upon passage and the property tax exemptions are effective October 1, 2017 and applicable to assessment years beginning on or after that date.

TOBACCO SETTLEMENT LAW CHANGES

The state's tobacco settlement law requires tobacco product manufacturers to either (1) enter into the master settlement agreement between Connecticut and four leading tobacco companies and comply with its terms and conditions (i.e., participating manufacturers) or (2) pay into a qualified escrow account a specified amount for each cigarette they sell in the state (i.e., nonparticipating manufacturers (NPM)).  All manufacturers must annually certify to the Department of Revenue Services (DRS) commissioner and attorney general that they are complying with these requirements in order to have their “brand families” listed in the Connecticut Tobacco Directory and sell their products in the state.

NPM Sales Reports (§ 2)

The tobacco settlement law requires NPMs to demonstrate through their sales reports and invoices that their products are being sold legally throughout the country. It prohibits the DRS commissioner from listing an NPM's brand families in the directory if there are discrepancies between the NPM's nationwide sales on which federal excise tax has been paid and its sales documented on federally required sales reports. Under current law, the maximum allowable discrepancy is the lesser of 5% of the NPM's total annual sales or one million cigarettes.  The bill instead sets the maximum allowable discrepancy at 2.5% of the NPM's total annual sales. It also makes technical changes to the sales reports used to assess the discrepancy.

Surety Bonds (§ 1)

Current law requires NPMs to quarterly file a surety bond with the DRS commissioner to have their brand families listed in the directory. The bill authorizes them to provide an alternative form of security that is acceptable to the DRS commissioner (e.g., cash) and requires them to post the bond or security annually. The amount of the bond or security must be the greater of (1) $25,000 or (2) the greatest amount of total escrow owed in any of the five calendar years before the bond's or security's posting, as is currently required for the quarterly surety bond.

The bill also allows the DRS commissioner, in consultation with the attorney general, to release the bond or security once the NPM has met its escrow obligation.

Information Disclosures (§ 3)

The bill broadens the tax return and return information the attorney general may disclose under the tobacco settlement law and the entities to whom he may disclose this information.

Current law authorizes him to disclose a licensed cigarette or tobacco product distributor's tax information to an NPM. The bill instead allows him to disclose tax information for any person purchasing or selling taxable cigarettes or tobacco products, not just distributors, to both participating and nonparticipating manufacturers. As under existing law, the attorney general may only disclose such tax information if it relates to the manufacturer's Connecticut sales.

The bill also eliminates a requirement that disclosures pursuant to the NPM Adjustment Settlement Agreement (i.e., the May 24, 2013 settlement between the state and certain tobacco product manufacturers) be limited to an entity the agreement designates to serve as a data clearinghouse.

PROPERTY TAX EXEMPTIONS

The bill exempts the following items from property tax:

1. Cellular mobile telephones, computers, and mobile electronic devices (e.g., text messaging and paging devices, personal digital assistants, video gaming devices, digital video disk players, and digital cameras) used by and belonging to a family and

2. Machinery and equipment used to color or mix paint that is used by paint retailers, including spectrographic color matching machines, automatic colorant dispensers, paint shakers, and related computer equipment.

COMMITTEE ACTION

Finance, Revenue and Bonding Committee

Joint Favorable Substitute

Yea

51

Nay

0

(04/27/2017)