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Additional Qualified Years (Years 11 through 15)

A financial institution may claim a credit in years 11 through 15 if it:

  • Employs an average of at least 3,000 qualified employees in each of years 11 through 15; and

  • Has been issued a certificate by the Commissioner of DECD.

Definitions

For purposes of this credit, the following definitions apply:

A financial institution is:

  • Any bank, holding company, or out-of-state bank, as defined in Conn. Gen. Stat. §36a-2, and any out-of-state holding company, as defined in Conn. Gen. Stat. §36a-410; or

  • Any establishment described in major group 61 or 62 in the Standard Industrial Classification (SIC) Manual, 1987, or in Subsector 522 or 523 in the North American Industry Classification System (NAICS), United States, 1997, 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 its 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.

A qualified employee is an individual whose compensation is paid within this state and is either:

  • Employed directly by the financial institution or a related person and works an average of at least 35 hours per week for at least eight consecutive weeks; or

  • An independent contractor of the financial institution or of a related person and works an average of at least 35 hours per week for at least eight consecutive weeks for the financial institution or the related person;

OR

  • An employee or principal of a company other than the financial institution or a related person i:

    • The individual works an average of at least 35 hours per week for at least eight consecutive weeks providing services to the financial institution or a related person; and

    • The company derives at least 80% of its gross revenues from the financial institution, from one or more related persons, or from a combination.

However, this general definition is subject to several limitations (See Conn. Gen. Stat. §12-217u(d)). For example, a qualified employee does not include an individual who would have satisfied the criteria of a qualified employee before the Commissioner of DECD approved the financial institution’s proposal to create new positions in Connecticut.

Compensation is paid within this state if the individual's service is performed:

  • Entirely within the state; or

  • Both within and outside the state, but the service performed outside the state is incidental to the individual’s service within the state.

Special rules apply to determining the number of qualified employees with respect to any taxpayer who has received financial assistance under Conn. Gen. Stat. §32-236. (See Conn. Gen. Stat. §12-217u(n)(3)).

A related person means a corporation, limited liability company, partnership, trust, association, unincorporated organization, or similar organization that is controlled by the financial institution.

With respect to a corporation, control means ownership of stock possessing at least 50% of the total combined voting power of all classes of stock entitled to vote. With respect to a partnership, association, or similar unincorporated organization, control means ownership of at least 50% of the capital or profits interest in such partnership or association. With respect to a trust, control means ownership of at least 50% of the beneficial interest in the principal or income of such trust. (Ownership is determined as provided

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Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07

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