Tax Law Blog | IRS Tax Attorneys

New Connecticut tax laws set to go in effect tomorrow bring new fees and tax increases in Connecticut. Changes include:

• Cigarette tax jumps from $2 to $3 a pack
• Most bottles of water will cost a nickel more because of an expanded bottle and can redemption law
• Hundreds of state licenses and fees, ranging from a pet shop license to the cost of filing small claims cases in superior court, will be higher.
• Fee that allows people to feed garbage to pigs is increasing from $5 to $15 a year
• The license to manufacture cheese in Connecticut jumps from $50 to $100
• Liquor permits for a bowling alley are increasing from $2,000 to $2,250
• A youth camp license climbs from $650 to $815 a year.

The increases were included in the two-year, $37.6 billion budget approved by the Democratic controlled General Assembly following a lengthy impasse with Republican Gov. M. Jodi Rell.

It’s the first major expansion of the water bottle tax in Connecticut in nearly 30 years. According to the Department of Environmental Protection, approximately 500 million containers are sold each year in the state. Based on the number of uncollected beer and soda cans and bottles, the state expects it will collect about $17 million in unclaimed water bottle deposits.

Other new laws include:

• Pet owners will be allowed to create legal trusts that ensure after their death that their pets are taken care of financially.
• New law broadens the definition of identity theft, increasing the penalties for criminal impersonation and creating the crime of unlawful possession of personal access devices, such as PIN numbers.
• Drivers will be required to slow down when approaching a stopped emergency vehicle and, if possible, move over one lane to provide space between the motorist and the emergency vehicle.
• Any 16- or 17-year-old seeking a driver’s license must pass the Department of Motor Vehicle’s 25-question “final exam” before receiving a license.

Connecticut residents will no longer have to flee to Florida to avoid the Connecticut estate tax because of a new law enacted Sept. 8 (House Bill 6802).

Beginning with deaths occurring on or after Jan. 1, 2010, estates (and gifts) of as much as $3.5 million will be exempt from Connecticut estate (and gift) tax. That moves the threshold for taxable estates (and gifts) up from the current $2 million level.

Importantly, the new law will lift the Connecticut “cliff” where a single U.S. dollar bill counts as $101,700 in Connecticut.

The cliff, which will die on Jan. 1, 2010, is an unfair happenstance for estates a smidge over $2 million. Right now, an estate of $2 million pays no Connecticut estate taxes. But, an estate of $2,000,001 — just a dollar more — pays Connecticut $101,700.

These are two very important estate tax changes. And there is one more. The new legislation also reduces rates by 25 percent beginning in 2010.

“These changes are a step in the right direction,” says state Rep. Livvy Floren, R-149th Dist.

Under current law, an estate (or gift) of $3.5 million pays a Connecticut estate tax of $190,800, according to the state Office of Fiscal Analysis. Under the new law, for deaths occurring after the end of 2009, the tax will be zero, and there will be no cliff — that is, the tax for estates above $3.5 million will be taxed only on the amounts above $3.5 million. The tax rate is 7.2 percent for estates of $3.5 million to $3.6 million, down from 9.6 percent.

Full Story.