DRS: PS 96(8), Tax Credits and Exemptions for Certain Water Pollution Control Equipment

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 
 

This Policy Statement has been modified and superseded by PS 99(3)

PS 96(8)

Tax Credits and Exemptions for Certain Water
Pollution Control Equipment


PURPOSE: This Policy Statement describes the procedures that taxpayers must follow in making purchases of water pollution control equipment exempt from sales and use taxes pursuant to Conn. Gen. Stat. 12-412(21) and in taking a credit against the corporation business tax, pursuant to Conn. Gen. Stat. 12-217d, of five percent of the amount of expenditures paid or incurred during the income year for the construction, rebuilding, acquisition or expansion of industrial waste treatment facilities. This Policy Statement also provides information about a municipal property tax exemption pursuant to Conn. Gen. Stat. 12-81(51), and explains the qualification process for such exemption.

This Policy Statement lists certain water pollution control equipment which has been designated as approved by the Commissioner of Environmental Protection for use, incorporation, or consumption in water pollution control facilities. If an item of tangible personal property appears on the list contained in this Policy Statement, it is no longer necessary for a purchaser to obtain advance written approval from the Department of Environmental Protection in order to qualify for the exemption from sales and use taxes on the purchase of such item pursuant to Conn. Gen. Stat. 12-412(21); or to obtain the corporation business tax credit pursuant to Conn. Gen. Stat. 12-217d; or to qualify for the municipal property tax exemption pursuant to Conn. Gen. Stat. 12-81(51).


BACKGROUND: An exemption from sales and use taxes is available under Conn. Gen. Stat. 12-412(21) for purchases of tangible personal property or supplies, certified by the Department of Environmental Protection, which are acquired for incorporation into or used and consumed in the operation of facilities for the treatment of industrial waste before the discharge thereof into any waters of the State or into any sewerage system emptying into such waters, the primary purpose of which is the reduction, control or elimination of pollution of such waters. "Industrial waste" means any harmful thermal effect or any liquid, gaseous or solid substance or combination thereof resulting from any process of industry, manufacture, trade or business, or from the development or recovery of any natural resource. This exemption applies only to purchases of tangible personal property or supplies, and is not available for purchases of taxable services.

A credit against the corporation business tax is available under Conn. Gen. Stat. 12-217d for an amount equal to five percent of the expenditures paid or incurred during an income year for the construction, rebuilding, acquisition or expansion of facilities for the treatment of industrial waste, including the planning thereof, approved by the Department of Environmental Protection. Qualifying expenditures include purchases of both tangible personal property and services.

An exemption from municipal property taxes is available under Conn. Gen. Stat. 12-81(51) for structures and equipment acquired for the treatment of industrial waste before the discharge thereof into any waters of the State or into any sewerage system emptying into such waters, the primary purpose of which is the reduction, control or elimination of pollution of such waters, that are certified as approved for such purpose by the Department of Environmental Protection.


EFFECTIVE DATE: Effective upon issuance.


STATUTORY AUTHORITY: Conn. Gen. Stat. 12-412(21), 12-217d and 12-81(51).


PROCEDURES FOR QUALIFYING PURCHASES FOR SALES AND USE TAX EXEMPTION PURSUANT TO CONN. GEN. STAT. 12-412(21): If an item of tangible personal property appears on the list of water pollution control equipment contained in this Policy Statement and is intended to be incorporated into or used and consumed in the operation of facilities in Connecticut for the treatment of industrial waste before the discharge thereof into any waters of the State or into any sewerage system emptying into such waters, the primary purpose of which is the reduction, control or elimination of pollution of such waters, the purchaser need only present the retailer of such item with a copy of a properly completed CERT-124, Certificate For Purchases of Tangible Personal Property Incorporated into or Consumed in Water Pollution Control Facilities.

NOTE: Persons using CERT-124, Certificate For Purchases of Tangible Personal Property Incorporated into or Consumed in Water Pollution Control Facilities, to make exempt purchases of tangible personal property (or for any other purpose specified in this Policy Statement) must be prepared to provide to the Department of Environmental Protection or the Department of Revenue Services, or both, on demand, a detailed list of all items purchased, and to prove that such items were used in facilities the primary purpose of which was water pollution reduction, control or elimination, and not another purpose.

In the event that an item of tangible personal property does not appear on the list in this Policy Statement, but the purchaser intends to use or consume it in the operation of facilities for the treatment of industrial waste before the discharge thereof into any waters of the state or into any sewerage system emptying into such waters, the purchaser must receive written approval from the Commissioner of Environmental Protection indicating that such item of tangible personal property is approved for use in a water pollution control facility. Persons requesting such approval must be prepared to submit, on demand, a detailed list of all such intended purchases, and to prove that such items will be used in facilities the primary purpose of which is water pollution reduction, control or elimination, and not another purpose. Such written approval must be appended to CERT-124, Certificate For Purchases of Tangible Personal Property Incorporated into or Consumed in Water Pollution Control Facilities, and the procedures for use of that certificate should be followed once such written approval has been secured.


PROCEDURES FOR TAKING THE CORPORATION BUSINESS TAX CREDIT PURSUANT TO CONN. GEN. STAT. 12-217d: If an item of tangible personal property appears on the list in this Policy Statement and is intended to be incorporated into or used and consumed in the construction, rebuilding, acquisition or expansion of facilities in Connecticut for the treatment of industrial waste, including the planning thereof, the purchaser need only retain a copy of CERT-124, Certificate For Purchases of Tangible Personal Property Incorporated into or Consumed in Water Pollution Control Facilities, and append it to its Form CT-1120, Connecticut Corporation Business Tax Return. The certificate will substantiate the credit for water pollution treatment facilities pursuant to Conn. Gen. Stat. 12-217d that is listed on Form CT-1120K, Line 2 and Form CT-1120CR, Schedule KC, Line 2.

In the event that an item of tangible personal property does not appear on the list in this Policy Statement, but the purchaser intends to use or consume it in the construction, rebuilding, acquisition, expansion or planning of industrial waste treatment facilities, or if there is a purchase of services related to such construction, rebuilding, acquisition, expansion or planning, and the purchaser desires to include such services in the total amount of expenditures eligible for the credit against the corporation business tax, the purchaser must receive advance written approval from the Commissioner of Environmental Protection indicating that such item of tangible personal property or service is approved for use in an industrial waste treatment facility. Persons requesting such approval must be prepared to submit, on demand, a detailed list of all such intended purchases, and to prove that such items or services will be used in facilities the primary purpose of which is water pollution reduction, control or elimination, and not another purpose. Such written approval must be appended to CERT-124, Certificate For Purchases of Tangible Personal Property Incorporated into or Consumed in Water Pollution Control Facilities, and the procedures listed on that certificate should be followed once such written approval has been secured.


PROCEDURES FOR QUALIFYING PURCHASES FOR MUNICIPAL PROPERTY TAX RELIEF PURSUANT TO CONN. GEN. STAT. 12-81(51):  The Commissioner of Revenue Services does not directly administer Conn. Gen. Stat. 12-81(51), which is a municipal property taxing statute affording an exemption from property tax for certain water pollution control equipment. Nevertheless, in order to facilitate the procedures for qualifying purchases for such an exemption, CERT-124, Certificate For Purchases of Tangible Personal Property Incorporated into or Consumed in Water Pollution Control Facilities, when properly completed, shall serve as the certification of approval by the Commissioner of Environmental Protection as required by Conn. Gen. Stat. 12-81(51) that such equipment has the primary purpose of reducing, controlling or eliminating water pollution. In order to qualify for such exemption, the taxpayer should file a copy of CERT-124 with the assessor of the municipality in which the water pollution control equipment or structure is located, on or before the first day of November in such assessment year. Any inquiries regarding that exemption should be addressed to the municipal assessor.


LIST OF WATER POLLUTION CONTROL EQUIPMENT AND CONSUMABLES DESIGNATED AS APPROVED FOR USE, CONSUMPTION OR INCORPORATION IN WATER POLLUTION CONTROL FACILITIES:

  • Activated Carbon Filters
  • Air Stripping/Off Gas Treatment Systems
  • Ammonia Removal Systems
  • Bag and Strainer Filters
  • Biological Wastewater Treatment Systems (Activated Sludge, Trickling Filters, RBCs, etc.
  • Chemical Feed and Storage Tanks
  • Color Removal Systems for Waste Water
  • Cyanide Destruction Systems
  • Dechlorination Chemicals (sulfur dioxide, sodium sulfite, etc.)
  • Dechlorination Equipment
  • Defoamers
  • Diffusers
  • Disinfection Chemicals (chlorine, bromine, ozone, etc.)
  • Disinfection Systems (e.g., oxidation, ultra-violet)
  • Dissolved Air Flotation Systems
  • Electrolytic Recovery Systems
  • Equalization Tanks
  • Evaporators
  • Flow Meters and Recorders
  • Gravity Clarifiers
  • Grit Separators
  • Heat Exchangers
  • Hexavalent Chromium Reduction Systems
  • Ion Exchange Equipment and Materials
  • Liquid Level Sensing Devices and Alarms
  • Membrane Filtration Systems
  • Metals Precipitation Systems
  • Mixers and Agitators
  • Neutralization Tanks and Systems
  • Oil/Water Separators
  • Oily Waste Demulsification Systems
  • Oily Waste Demulsification Chemicals (sulfuric acid, calcium chloride, etc.)
  • ORP Meters
  • Oxidizing Agents (calcium hypochlorite, chlorine gas, etc.)
  • pH Adjustment Systems
  • pH Adjustment Chemicals (lime, caustic, acid, etc.)
  • pH Meters and Recorders
  • Phase Separation Systems
  • Phosphorous Removal Equipment and Chemicals
  • Recycling Systems for Non-Contact Cooling Water
  • Reducing Agents (sodium metabisulfate, sulfur dioxide, ferrous sulfate, etc.)
  • Reverse Osmosis Systems for Waste Water Reuse or Discharge
  • Sand and Multimedia Filters
  • Settling and Flocculating Agents (alum, lime, ferric chloride, polymers, etc.)
  • Settling Tanks and Sedimentation Basins
  • Sludge Collection and Conveyance Systems
  • Sludge Dewatering Devices and Conditioning Chemicals
  • Sludge Handling and Storage Facilities Used Solely for Sludge (tanks, pumps, agitators, etc.)
  • Sludge Incinerators and Composting Facilities
  • Sludge Stabilization and Conditioning Systems (anaerobic digestion, heat treatment, etc.)
  • Spill Control Equipment and Structures including only: Underground Seepage Protection,
  • Cathodic Protection of Underground Tanks, Leak Detection Equipment, Liquid Level
  • Sensing Devices, Automatic Solenoid Valves, Alarms, Collision Protection, Diversionary
  • Structures, Dikes, Berms, and Retention Basins
  • Temperature Meters and Recorders
  • Wastewater Analysis Equipment
  • Wastewater Collection and Conveyance Systems for Process Wastewater*, Domestic Sewage and Blowdown from Heating and Cooling Equipment (piping, pumps, valves, etc.)

    * As defined in Conn. Agencies Regs. 22a-430-3. THIS DEFINITION DOES NOT INCLUDE STORMWATER.

NOTE: The above list includes equipment and chemicals which may be used for purposes other than water pollution control. Taxpayers may apply for tax credits and exemptions under the statutory provisions listed in this Policy Statement only for items purchased for the primary purpose of the reduction, control or elimination of water pollution.


HOW TO OBTAIN WRITTEN APPROVAL FOR WATER POLLUTION CONTROL EQUIPMENT NOT LISTED IN THIS POLICY STATEMENT:  Call the Permitting, Enforcement and Remediation Division of DEP's Water Management Bureau at 860-424-3848. Written requests should be mailed to:

Permitting, Enforcement and Remediation Division
Bureau of Water Management
Connecticut Department of Environmental Protection
79 Elm Street
Hartford, CT 06106-5127


EFFECT ON OTHER DOCUMENTS: None affected.


EFFECT OF THIS DOCUMENT:  A Policy Statement is a document that explains in depth a current Department policy or practice affecting the liability of taxpayers. A Policy Statement indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or practitioners.


PLEASE NOTE THE FOLLOWING NEW INFORMATION ABOUT DRS.

FOR FURTHER INFORMATION: To order forms and publications or for further information, call the Department of Revenue Services at 860-297-5962 (Hartford area or out-of-state) or 1-800-382-9463 (in-state). Forms and publications may be ordered through voice-mail 24-hours a day by choosing Option 3 on your touch tone telephone.

Electronic Delivery Options: You can also obtain tax forms and publications 24-hours a day from our Web home page at http://www.ct.gov/drs. Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.


PS 96(8)
Sales and Use Taxes
Corporation Business Tax
Issued: 8/9/96