(a) For purposes of this section:
(1) “Commissioner” means the Commissioner of Economic and Community Development;
(2) “Company” means any corporation, partnership, trust, association, unincorporated organization or similar organization;
(3) “Compensation is paid within this state” if (A) the individual's service is performed entirely within the state; or (B) the individual's service is performed both within and without the state, but the service performed without the state is incidental to the individual's service within the state;
(4) “Control” with respect to a corporation means ownership of stock possessing at least fifty per cent of the total combined voting power of all classes of stock entitled to vote. “Control” with respect to a partnership, association or similar unincorporated organization means ownership of at least fifty per cent of the capital or profits interest in such partnership or association. “Control” with respect to a trust, means ownership of at least fifty per cent of the beneficial interest in the principal or income of such trust. Ownership shall be determined as provided in Section 267(c) of the Internal Revenue Code of 1986, as in effect on October 14, 1994, other than paragraph (3) of such section;
(5) “Financial institution” means any bank, holding company or out-of-state bank, as those terms are defined in section 36a-2, or out-of-state holding company, as that term is defined in section 36a-410, which directly or indirectly establishes an office in Connecticut and is subject to the supervision of or regulation by the Banking Commissioner pursuant to title 36a or by one or more federal banking agencies pursuant to applicable federal law. “Financial institution” also means any establishment described in major group 61 or 62 in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, or in Subsector 522 or 523 in the North American Industrial Classification System, United States Manual, United States Office of Management and Budget, 1997 edition, as engaged primarily in the extending of credit in the form of loans or the underwriting, purchase, sale or brokerage of securities and other financial contracts on their own account or for the account of others, and exchanges, exchange clearinghouses and other services allied with the exchange of securities and commodities or a holding company controlling any such establishment;
(6) “Related person” means a corporation, limited liability company, partnership, trust, association, unincorporated organization or similar organization that is controlled by the financial institution;
(7) “Tax” means the corporation business tax imposed by this chapter.
(b) In any income year commencing prior to January 1, 2014, there shall be allowed a credit against the tax imposed on a financial institution not to exceed fifty per cent of the amount of such tax, provided the aggregate amount of the credit that may be taken under this subsection shall in no event exceed one hundred twenty million dollars over the period for which it is allowed and provided further the total amount of credit allowed in any qualified income year shall not exceed the aggregate amount as determined in accordance with the employment requirements for such year under subsection (c) of this section, reduced by the amount of credit previously allowed, but in no event shall the amount be below zero. The credit shall be allowed in the initial qualified year and in each of the nine consecutive income years thereafter which is a subsequent qualified year.
(c) For purposes of this section, (1) the initial qualified year is the income year with respect to which the financial institution first meets all of the following criteria: (A) It has constructed a new facility in Connecticut of at least nine hundred thousand gross square feet for the purpose of carrying on, directly or indirectly, the business of the financial institution; (B) it has obtained a temporary or permanent certificate of occupancy for such facility; (C) it has employed, during the income year for which the credit is claimed, an average of at least (i) one thousand two hundred qualified employees to claim a thirty per cent tax credit, which shall not exceed seventy-two million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, (ii) one thousand six hundred qualified employees to claim a forty per cent tax credit, which shall not exceed ninety-six million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, and (iii) two thousand qualified employees to claim a fifty per cent tax credit, which shall not exceed one hundred twenty million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed; and (D) it has been issued an initial certificate of eligibility by the commissioner under subsection (g) of this section; and (2) a subsequent qualified year is an income year, following an initial qualified year, with respect to which the financial institution employs an average of at least (A) one thousand two hundred qualified employees to claim a thirty per cent tax credit, which shall not exceed seventy-two million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, (B) one thousand six hundred qualified employees to claim a forty per cent tax credit, which shall not exceed ninety-six million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, and (C) two thousand qualified employees to claim a fifty per cent tax credit, which shall not exceed one hundred twenty million dollars in the aggregate over the period of initial and subsequent qualified years for which the credit under subsection (b) is allowed, and has been issued an annual certificate of eligibility by the commissioner under subsection (g) of this section.
(d) For purposes of this section, (1) a qualified employee is an individual whose compensation is paid within this state and (A) is employed directly by the financial institution or a related person and who works an average of at least thirty-five hours per week for at least eight consecutive weeks for such financial institution or related person, (B) is an independent contractor of the financial institution or of a related person and who works an average of at least thirty-five hours per week for at least eight consecutive weeks for such financial institution or related person, or (C) is an employee or principal of a company other than the financial institution or a related person if (i) such individual works an average of at least thirty-five hours per week for at least eight consecutive weeks providing services to the financial institution or a related person, and (ii) such company derives not less than eighty per cent of its gross revenues from the financial institution, one or more related persons or a combination thereof. A qualified employee shall not include any individual who would have satisfied the criteria of a qualified employee prior to the date that a proposal by the financial institution to create new positions in this state was approved by the commissioner; and (2) notwithstanding the provisions of subdivision (1) of this subsection, an individual is not a qualified employee if (A) the prior employer of such individual was a company other than the financial institution or a related person, (B) compensation was paid in this state to such individual by such employer, (C) the individual was employed for an average of at least thirty-five hours per week and had been employed by such employer for at least eight consecutive weeks, and (D) either (i) the individual is employed directly by the financial institution or a related person in which the prior employer had an ownership interest equal to ten per cent or more of the voting rights of the financial institution or related person at the time such individual became employed by the financial institution or related person, unless the position previously held by such individual with the prior employer has been filled by the prior employer; (ii) the individual is employed directly by the financial institution or a related person which had an ownership interest equal to ten per cent or more of the voting rights of the prior employer at the time such individual became employed by the financial institution or related person, unless the position previously held by such individual with the prior employer has been filled by the prior employer; or (iii) the prior employer of such individual was a company which was acquired directly or indirectly by, or merged or consolidated with, the financial institution or a related person and the individual was employed by that company at the date of such acquisition, merger or consolidation.
(e) For each income year in which the credit is claimed, the average number of qualified employees shall be the sum of (1) the average of the number of qualified employees reported in the quarterly Federal Insurance Contributions Act tax returns of the financial institution or a related person; (2) the average of the number of qualified employees who are included in the quarterly reports described in subsection (g) of this section; and (3) the average of the number of qualified employees reported in the quarterly Federal Insurance Contributions Act tax returns of the company as described in subparagraph (C) of subdivision (1) of subsection (d) of this section. If the number of qualified employees in any income year fails to equal or exceed the number necessary to qualify under subsection (b) or (f) of this section, as the case may be, the financial institution may compute an average which includes the first quarter of the next succeeding income year with the four quarters of the subject income year and, if such new average equals or exceeds the criteria set forth in subsection (c) or (f) of this section, as the case may be, such financial institution shall be deemed to have met the employment criteria necessary to qualify under subsection (b) or (f) of this section, as the case may be. If two otherwise unrelated financial institutions have a related person in common, the employees of such related person may be considered in determining the average number of employees for only one of the financial institutions.
(f) (1) In any income year commencing prior to January 1, 2014, there shall be allowed a credit against the tax imposed on a financial institution for an additional five-year period if the financial institution (A) employs an average of at least three thousand qualified employees in the tenth income year after the initial qualified year and during each subsequent income year for which the credit is claimed; and (B) has been issued a certificate by the commissioner under subsection (g) of this section. The credit allowed under this subsection may be claimed each year for five consecutive income years beginning with the tenth income year after the initial qualified year.
(2) The amount of the credit allowed by this subsection shall equal twenty-five per cent of the tax imposed on a financial institution provided the aggregate amount of the credit that may be taken under this subsection and subsection (b) of this section may not exceed one hundred forty-five million dollars.
(g) Upon application from a financial institution, the commissioner shall issue an initial certificate of eligibility for the credit allowed under subsection (b) of this section after it has been established that the applicant satisfies the new facility construction, certificate of occupancy and relevant employment requirements of this section and, after consultation with the Commissioner of Revenue Services and the Banking Commissioner, that the applicant is a financial institution. If the commissioner determines that all appropriate requirements are met, the commissioner shall issue an annual certificate of eligibility for the credit allowed under subsection (b) or (f) of this section for each income year for which an application for a credit under either of said subsections is made. The commissioner shall require the financial institution to submit quarterly reports of the number of individuals to whom the financial institution or a related person made payments of six hundred dollars or more which must be reported as provided by Section 6041 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, for each income year for which the credit is claimed and to submit such other information as may be necessary to determine whether all appropriate requirements have been met and that the applicant continues to be a financial institution. Such reports shall also include the number of individuals who are principals and who qualify as qualified employees under subparagraph (C) of subdivision (1) of subsection (d) of this section.
(h) The sale, merger, acquisition, bankruptcy or other reorganization by or of a financial institution may not create new eligibility for the credit allowed under subsection (b) or (f) of this section in a succeeding company. Any successor to the financial institution which is a financial institution may qualify under subsection (b) or (f) of this section if either the original financial institution or such successor satisfies the new facility construction and certificate of occupancy requirements and such successor qualifies under subsection (b) or (f) of this section on an annual basis, provided the total credits available to the successor financial institution, when added to all credits taken by the original financial institution, shall not exceed the applicable limits under subsection (b) or (f) of this section, or both, as the case may be.
(i) The commissioner may accept and approve proposals to create new positions as described in subsection (d) of this section. The commissioner shall prescribe the form of such proposals.
(j) The commissioner shall, upon request, provide a copy of the certificate of eligibility to the Commissioner of Revenue Services.
(k) No taxpayer claiming the credit under this section is eligible for the credit allowed under section 12-217w.
(l) (1) In the case of a financial institution included in a combined unitary tax return under section 12-222, a credit allowed under subsection (b) or (f) of this section may be taken against the tax of the combined unitary group. (2) The credit allowed to a financial institution under subsection (b) or (f) of this section may be taken by any corporation which is eligible to elect to file a combined unitary tax return with a group with which the financial institution is eligible to file a combined unitary tax return, provided the aggregate credit taken by all such corporations in any income year shall not exceed the aggregate credit for which such group would have been eligible if it had filed a combined unitary tax return.
(m) The credits allowed under this section shall be claimed prior to any other credits allowed against the corporation business tax.
(n) (1) No taxpayer which has received financial assistance from the state under section 32-236 may claim the credit under subsection (b) of this section. The total amount of credit allowed under subsection (f) of this section to such a taxpayer shall not exceed, in the aggregate, twenty-five million dollars.
(2) Notwithstanding the provisions of subsection (c) of this section, for purposes of any credit allowed under subsection (f) of this section to a taxpayer which has received financial assistance under section 32-236, the initial qualified year shall be the income year in which the Commissioner of Economic and Community Development executes an agreement with such financial institution to provide financial assistance pursuant to section 32-236.
(3) For purposes of determining the number and specification of qualified employees under subsection (d) of this section, and the number and specification of new employees under section 12-217e, with respect to any taxpayer which has received financial assistance under section 32-236, the dates, numbers and specifications shall be the dates, numbers and specifications provided in an agreement executed by the Commissioner of Economic and Community Development with such financial institution to provide financial assistance pursuant to section 32-236. In no event shall the definition of qualified employee be more favorable to the employer than the definition provided in this section.
(Oct. Sp. Sess. P.A. 94-1, S. 17, 21; P.A. 95-79, S. 28, 189; 95-129, S. 4, 5; 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A. 97-295, S. 5, 25; P.A. 98-262, S. 14, 22; P.A. 00-170, S. 26, 42; 00-174, S. 24, 83; P.A. 03-84, S. 13, 14; P.A. 06-159, S. 11; P.A. 10-75, S. 26, 27; P.A. 15-244, S. 146; June Sp. Sess. P.A. 15-5, S. 139.)
History: Oct. Sp. Sess. P.A. 94-1, S. 17 effective January 1, 1995, and applicable to income years of corporations commencing on or after said date; P.A. 95-79 amended Subsec. (a) to redefine “related person” to include a limited liability company, effective May 31, 1995; P.A. 95-129 amended Subsec. (b) by adding proviso re the ceiling and floor of the total credit allowed in any qualified income year, and amended Subsec. (c) by changing the minimum average number of employees from 2,000 to the levels specified in Subdiv. (1)(C)(i), (ii) and (iii) in the initial qualified year and specified in Subsec. (c)(2)(A), (B) and (C) in a subsequent qualified year, effective May 25, 1995; P.A. 95-250 and P.A. 96-211 replaced Commissioner and Department of Economic Development with Commissioner and Department of Economic and Community Development; P.A. 97-295 amended Subsec. (k) to change reference from Sec. 12-217m to 12-217w, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-170 added Subsec. (n) re a restriction on credits under this section for recipients of assistance under Sec. 32-236, effective May 26, 2000; P.A. 00-174 amended Subsec. (a)(5) to add references to the North American Industrial Classification System in the definition of “financial institution”, effective May 26, 2000; P.A. 03-84 changed “Commissioner of Banking” to “Banking Commissioner” in Subsecs. (a)(5) and (g) and made a technical change in Subsec. (g), effective June 3, 2003; P.A. 06-159 amended Subsec. (j) to require commissioner, rather than taxpayer, to provide copy of certificate of eligibility, effective June 6, 2006, and applicable to income years commencing on or after January 1, 2006; P.A. 10-75 amended Subsecs. (b) and (f)(1) to specify that credit shall be allowed in any income year commencing prior to January 1, 2014, effective July 1, 2010; P.A. 15-244 amended Subsec. (l) to add “unitary tax” re combined return and “unitary” re combined group and make a technical change, effective June 30, 2015, and applicable to income years commencing on or after January 1, 2015; June Sp. Sess. P.A. 15-5 changed effective date of P.A. 15-244, S. 146, from June 30, 2015, and applicable to income years commencing on or after January 1, 2015, to January 1, 2016, and applicable to income years commencing on or after that date, effective June 30, 2015.