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Insurance Reinvestment Fund Credit

Description

Tax credits are available for investments made in an Insurance Reinvestment Fund that invests in Connecticut companies engaged in an insurance business or providing services to insurance companies. This tax credit is administered by the Department of Economic and Community Development (DECD).

At this time all funds are closed and are no longer open to new investors. No tax credit will be granted for investments made in an insurance business after December 31, 2015.

The credit may be applied to any of the following taxes:

  • Insurance companies, hospital and medical services corporations taxes (Chapter 207);

  • Health care centers tax (Chapter 207);

  • Corporation business tax (Chapter 208);

  • Income tax (Chapter 229); or

  • Surplus lines broker tax (Conn. Gen. Stat. §38a-743).

Claiming the Credit

The tax credit may only be claimed with respect to an income year for which a certification of continued eligibility is issued by DECD to the insurance business in which the investment was made. In order to obtain a certificate of continued eligibility, the insurance business in which the investment was made must annually submit the information required by DECD to determine whether the occupancy and employment requirements have been met. The certificate of continued eligibility is issued on the first day of the third month following the close of the insurance business' income year.

The tax credit is claimed by completing Form CT-IRF, Insurance Reinvestment Fund. Attach Form CT-IRF to Form CT-1120K, Business Tax Credit Summary.

The same investment in an insurance business can not generate tax credits for both the investor and the insurance business. For example, the investment that allows an eligible insurance business to qualify for the Fixed Capital Investment credit (Form CT-1120 FCIC, Fixed Capital Investment Credit) can not also be used to claim the Insurance Reinvestment Fund credit.

The tax credits may be assigned by the taxpayer to another person provided the person may claim the credit only with respect to a calendar year for which the assigning taxpayer would have been eligible to claim the credit.

Credit Percentage The credit is allowable over ten years as follows:

  • Income year in which the investment was made and the two succeeding income years, 0%;

  • Third full income year following the year in which the investment in the insurance business was made and the three succeeding income years, 10%; and

  • Seventh full income year following the year in which the investment in the insurance business was made and the two succeeding income years, 20%.

How to Compute the Credit

Computation procedures can be obtained by calling DECD at 860-270-8128.

Carryforward/Carryback Limitations

Any unused credit balance may be carried forward for the five immediately succeeding income years until the entire credit is taken. No carryback is allowed.

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

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