The credit amount applied against the Connecticut corporation business tax is 50% of the tax allocable to any manufacturing facility located within a designated Enterprise Zone (or other area designated as having Enterprise Zone level benefits).
To qualify for the 50% credit, the corporation must meet the employment criteria (see Employment Criteria, Page 65). If the employment criteria is not met, the corporation is only entitled to a 25% credit.
How to Compute the Credit
The tax 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 manufacturing facility. This portion is then multiplied by 50%.
Property (numerator calculation)
Determine the average monthly net book value of the Connecticut manufacturing facility and the machinery and equipment acquired for and installed therein (without reduction for any encumbrance). If the facility is rented, the facility portion of the numerator is calculated by multiplying the annual gross rents payable for the manufacturing 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 manufacturing 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 facility;
The position did not exist prior to the acquisition, construction, renovation, or expansion of the facility; and
If not for the acquisition, construction, renovation, or expansion of the 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 manufacturing 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.
Complete Form CT-1120 TIC/EZ, Manufacturing Facility Credit for Facilities Located in a Targeted Investment Community/Enterprise Zone, to compute the credit. Attach Form CT-1120 TIC/EZ to Form CT-1120K, Business Tax Credit Summary.
Forms are available anytime from the DRS website at www.ct.gov/DRS or by calling the DRS Forms Unit at 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and selecting Option 2 from a touch-tone phone, or 860-297-4753 (from anywhere).
TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.
Where to Get Additional Information
Direct inquiries to:
Department of Economic and Community Development 505 Hudson Street Hartford CT 06106-7107
Conn. Gen. Stat. §§12-217e, 32-9p, and 32-70
Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07