Tax Alert

Tax Alert: Connecticut Unveils New Tax Proposals

6/22/2009

In an effort to balance the state budget, Connecticut has proposed several tax changes that may impact you and your business. These changes relate to the income tax, sales tax, and other tax. The proposed changes include: 
  
Business Taxes
  • Unitary filing proposals that may require certain “related” corporations to file on a combined (i.e. consolidated) basis, potentially resulting in higher compliance costs and could raise the amount of tax owed to Connecticut.
  • Proposed 30 percent increase of the corporate income tax rate for the next three years. 
  • Reduction of certain current corporate tax credits by either limiting the amount of credits to be used against the corporate business tax or placing a moratorium on certain tax credits. 
Personal Income Taxes 
  • Various proposals to raise the personal income tax from five percent to six percent on incomes greater than $250,000.
  • Increase the income tax on lower-income taxpayers by modifying the current tax exemption.
Sales Taxes
  • Reduce the sales tax from 6 percent to 5 percent, but tax many more goods and services.
  • Impose a sales tax on professional services, including but not limited to accounting tax preparation services, legal, architectural, and insurance.
  • Increase computer data processing services (currently taxed at 1 percent) to the general sales tax rate of either 5 percent or 6 percent.
  • Proposal to make certain internet retailers collect the Connecticut sales tax on their sales to Connecticut residents. Currently many retail internet providers do not need to file, collect, or remit Connecticut sales tax.  
We expect to see many Connecticut tax proposals over the next few months, and remain committed to keeping you informed as these proposals evolve and change. For more information on this tax matter, please contact Brenden Healy at 860-633-3000, or your J.H. Cohn tax professional.

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing or recommending to another party any tax related matters.