DRS: DRS COMMISSIONER WELCOMES “TRIFECTA OF BUSINESS TAX REFORM"


 FOR IMMEDIATE RELEASE
MAY 23, 2016 


DRS COMMISSIONER WELCOMES

“TRIFECTA OF BUSINESS TAX REFORM”

Legislature enacts added fairness for Connecticut companies

 

With enactment of market sourcing for business taxes during the just-completed special session, plus the passage of unitary reporting and single sales factor apportionment earlier in the year, Connecticut has achieved what Department of Revenue Services (DRS) Commissioner Kevin Sullivan calls, “the trifecta of business tax reform.” 

 

Said Commissioner Sullivan, “For far too long, Connecticut taxes actually favored out-of-state companies making money here over in-state companies doing business in other states.  Fixing this inequity and recognizing the realities of the modern marketplace was a top priority for DRS.  Thanks to Governor Malloy and the State Legislature, our state is now even better positioned to grow business in Connecticut, provide greater fairness and not increase business taxes overall.”

 

“It’s also important that the new legislation begins to undo arcane distinctions in Connecticut taxes based on how businesses organize legally rather than the business they do.  This tax reform will apply to traditional corporations and all business entities,” Sullivan said.

 

More specifically, the now completed business tax reform makes the following changes:

  • Combined Unitary Reporting: All corporations that are engaged in a singular business enterprise will now be treated and taxed as a single business.  This eliminates a common tax strategy employed by sophisticated, multistate corporations and puts all corporations on equal footing.
  • Single Sales Factor Apportionment: Corporations and other business entities will generally determine the percentage of their income subject to tax based solely upon the percentage of their Connecticut sales.  Previously, most businesses were required to include the percentage of their Connecticut property and payroll in this calculation which disadvantaged companies based in the state.
  • Market Based Sourcing:  Sales of services and most intangible property were considered to be made at the location of the seller. These sales will now be considered to be made where the customer is located.  As a result, the sourcing rules governing tangible property, services and intangibles are consistent.  

Commissioner Sullivan especially thanked Ben Barnes, Secretary of the Office of Policy and Management, State Senate Majority Leader Bob Duff and the Connecticut Business and Industry Association for their persistence in making sure the final reform legislation was enacted during the special session. 

 

“Now,” added Sullivan, “we will continue to work with our external advisory group that helped craft this legislation to assure that the business community is actively involved in successful implementation of these changes.”



Content Last Modified on 5/24/2016 9:36:44 AM