SB 20 — AN ACT ESTABLISHING A TAX CREDIT FOR BUSINESSES THAT HIRE FORMERLY INCARCERATED INDIVIDUALS.

General Assembly ProposedCommittee Bill No.

7662308 Referred to Committee on COMMERCE Introduced by:

SEN.(CE) AN ACT ESTABLISHING A TAX CREDIT FOR BUSINESSES THAT HIRE FORMERLY INCARCERATED INDIVIDUALS.

OSTEN, 19th Dist.

AN ACT ESTABLISHING A TAX CREDIT FOR BUSINESSES THAT HIRE FORMERLY INCARCERATED INDIVIDUALS.

ThatSection the1. general statutes be amended to establish a tax credit for businesses that hire formerly incarcerated individuals.

Statement(NEW) of(Effective Purpose:July 1, 2020, and applicable to taxable years commencing on or after January 1, 2020) (a) As used in this section:

To(1) establish"Commissioner" ameans taxthe creditCommissioner forof businessesEconomic thatand hireCommunity formerlyDevelopment; incarcerated individuals.

(2) "Control", with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote.

"Control" with respect to a trust means, ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust.

The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding LCO No.

2308 1 of 6 Committee Bill No.20 internal revenue code of the United States, as amended from time to time, other than paragraph (3) of said Section 267(c);

(3) "Full-time job" means a job in which a qualifying employee is required to work at least thirty-two hours per week for not less than forty-eight weeks in a calendar year.

"Full-time job" does not include a temporary or seasonal job;

(4) "Income year" means, with respect to a taxpayer subject to the salesanduse tax under chapter 219ofthe generalstatutes,theinsurance companies and health care centers tax under chapter 207 of the general statutes, the corporation business tax under chapter 208 of the general statutes, the utilities company tax under chapter 212 of the general statutes or the income tax under chapter 229 of the general statutes, the income year as determined under each of said chapters, as the case may be;

(5) "New qualifying employee" means a qualifying employee who residesinthisstate andishiredby ataxpayeronorafterOctober1,2020, and prior to October 1, 2022, to fill a new job.

"New employee" does not include a person who was employed in this state by the taxpayer or by a related person to the taxpayer during the prior twelve months;

(6) "New job" means a job that did not exist in this state prior to a taxpayer's application to the commissioner for certification under this section for a second chance tax credit, is filled by a new qualifying employee and is a full-time job;

(7) "Qualifying employee" means a new employee who, at the time of hiring by the taxpayer:

(A) Was incarcerated in a correctional facility or a Federal Bureau of Prisons facility within the twenty-four monthspreceding such hiring;

or (B) Is receiving vocational services or job placement services from the Department of Correction, an American Job Center or a federal reintegration of ex-offenders initiative;

7662308 12 of 16 Committee Bill No.20 (8) "Related person" means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer;

and (9) "Taxpayer" means a person that (A) has been in business for at least twelve consecutive months prior to the date of the taxpayer's application to the commissioner for certification under this section for a job expansion tax credit, and (B) is subject to tax under chapter 207, 208, 212, 219 or 229 of the general statutes.

(b) (1) There is established a second chance employee tax credit program whereby a taxpayer may be allowed a credit against the tax imposed under chapter 207, 208, 212, 219 or 229 of the general statutes, other than the liability imposed by section 12-707 of the general statutes, for each new qualifying employee hired on or after October 1, 2020, and prior to October 1, 2022.

For taxpayers that employ less than fifty employees in full-time jobs in this state on the date of application to the commissioner for certification under this section, the creation of at least three new jobs in this state shall be required for said tax credit.

For taxpayers that employ more than fifty, but not more than two hundred employees in full-time jobs in this state on the date of application to the commissioner for certification under this section, the creation of at least five new jobs in this state shall be required for said tax credit.

For taxpayers that employ more than two hundred employees in full-time jobs in this state of the date of application to the commissioner for certification under this section, the creation of at least ten new jobs in this state shall be required for said tax credit.

(2) For the purposes of determining the number of new jobs a taxpayer is required to create in order to claim a credit under this LCO No.

2308 3 of 6 Committee Bill No.20 section, the number of employees working in full-time jobs the taxpayer employs in this state on the date of its application to the commissioner for certification under this section shall apply to such taxpayer for the duration of such certification.

(c) The amount of the credit shall be nine hundred dollars per month for each qualifying employee.

(d) (1) The taxpayer shall claim the credit in the income year in which it is earned, and, if eligible, in the two immediately succeeding income years.

Any credit not claimed by the taxpayer in an income year shall expire and shall not be refundable.

(2) If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, the shareholders or partners of such taxpayer may claim the credit.

If thetaxpayer is a single member limited liability company that is disregarded as an entity separate from its owner, the limited liability company's owner may claim the credit.

(3) No taxpayer shall claim a credit for any new qualifying employee who is an owner, member or partner in the business or who is not employed by the taxpayer at the close of the taxpayer's income year.

(4) No taxpayer claiming the credit under this section with respect to a new qualifying employee shall claim any credit against any tax under any other provision of the general statutes with respect to the same new qualifying employee.

(e) (1) To be eligible to claim the credit, a taxpayer shall apply to the commissioner in accordance with the provisions of this section.

The application shall be on a form provided by the commissioner and shall contain sufficient information as required by the commissioner, including, but not limited to, (A) the activities that the taxpayer primarily engages in, (B) the North American Industrial Classification System code of the taxpayer, (C) the number of employees employed by LCO No.

2308 4 of 6 Committee Bill No.20 the taxpayer as of the application date, and (D) if applicable, the names and positions or job titles of the new qualifying employees.

The commissioner shall consult with the Commissioner of Correction, director of the Federal Bureau of Prisons, or other agencies, as applicable, for any verification the commissioner deems necessary to confirm the eligibility of a qualifying employee.