September 13, 2011

Changes to Connecticut's Neighborhood Assistance Act Tax Credit Program

Contributor Ann Arpino, Director, Tax & Business

Related Service Tax & Business

Changes to Connecticut's Neighborhood Assistance Act Tax Credit Program Tax & Business

The Connecticut Neighborhood Assistance Act Tax Credit Program encourages funding for municipal and tax exempt organizations by providing credits for cash contributions. Credits can be applied against the Connecticut Corporation Business Tax.

Newly enacted changes to the program include:

  • Increasing the credit limit a business can receive from $75,000 to $150,000;
  • Eliminating the requirement that this year’s total charitable giving amount equal or exceed the prior year’s amount;
  • Expansion of “business firm” to include any business entity authorized to do business in Connecticut and subject to the taxes imposed under chapter 213a (Business Entity Tax). However, for purposes of a business entity subject to the provisions of Chapter 213a, the credit earned by such an entity may only be used by the members or partners of said entity to the extent that they are subject to the Corporation Business Tax.

 

The program, which allows a Connecticut tax credit of 60% of approved contributions to approved programs (100% for certain energy conservation programs), is capped at $5 million annually. If exceeded, approved donations will be prorated.

Credits not taken in the current income year can be carried back to the immediate two prior years.

A business can request approval for tax credits by completing Form NAA-02 for each program it wishes to sponsor. Form NAA-0 2 must be mailed or hand-delivered to the Department of Revenue Services between September 15, 2011 and October 3, 2011. Faxed or e-mailed applications are not accepted. (Note: these deadlines have NOT been extended due to the hurricane.)

Resource Documents

Should you have any questions related to this recently enhanced Connecticut credit program, please contact your Marcum LLP SALT tax professional.