Working at the Facility
There are six different credit percentages as provided in the chart below, to be applied against the portion of the Connecticut corporation business tax that is allocable to the service facility. The percentage varies depending upon the number of new employees occupying the service facility.
300 – 599
600 – 899
900 – 1,199
1,200 – 1,499
1,500 – 1,999
2,000 or more
How to Compute the Credit
The credit is computed by using the arithmetical mean of two fractions (property and wages) to determine the portion of the corporation business tax liability that is allocable to the Connecticut service facility.
Property (numerator calculation)
Determine the average monthly net book value of the Connecticut service facility and the machinery and equipment acquired for and installed therein (without reduction for any encumbrance). If the facility is rented, the service facility portion of the numerator is calculated by multiplying the annual gross rents payable for the service facility times eight.
Property (denominator calculation)
Determine the average monthly net book value of all real property and machinery and equipment located in Connecticut and the value of all real property and machinery and equipment rented by the corporation in Connecticut.
Wages (numerator calculation)
Determine the wages, salaries, and compensation of employees whose positions are directly attributable to the Connecticut service facility.
An employment position is directly attributable to the manufacturing facility if all of the following are true:
The work is performed or the base of operations is at the service facility;
The position did not exist prior to the acquisition, construction, renovation, or expansion of the service facility; and
If not for the acquisition, construction, renovation, or expansion of the service facility, the position would not have existed.
Wages (denominator calculation)
Determine the wages, salaries, and compensation paid to all Connecticut employees.
The credit period is ten years and begins with the first full income year following the year of issuance of the eligibility certificate and continues for the following nine income years.
If within the ten year period the facility ceases to qualify as a service facility or the taxpayer ceases to occupy the property, the entitlement to the credit terminates and there is no pro-rata application of the credit during the income year in which the entitlement or occupancy terminates.
The credit is claimed on Form CT-1120SF, Service Facility Credit, and must also be entered on Form CT-1120K, Business Tax Credit Summary.
No carryforward or carryback is allowed.
Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07