With the signing of S.B. 502, Connecticut Governor Dannel P. Mallory enacted notable changes to the state's corporate and personal income tax statutes that are effective for tax years beginning on or after January 1, 2016.
Corporation Business Tax
Under prior law, corporation business taxpayers that derived revenue from providing services were required to source that revenue to the state in which the service was provided. However, under the new law, effective for tax years beginning on or after January 1, 2016, the revenue will be sourced using the market-based sourcing approach. Under this approach, revenues that are derived from providing services are sourced to Connecticut if the service is used at a location in the state.
Personal Income Tax
Under current law, personal income taxpayers are required to utilize the traditional three-factor (property, payroll and sales) apportionment formula to calculate the portion of their business income that is derived from Connecticut sources. As with the corporation business tax, revenue derived from providing services is to be sourced in the state in which the service is performed. With the enactment of S.B. 502, effective for tax years beginning on or after January 1, 2017, personal income taxpayers will be required to utilize a single sales factor method for apportioning income, and revenues that are derived from providing services are to be sourced to Connecticut if the service is used at a location in the state.
You’ve heard our thoughts… We’d like to hear yours
The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.