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Department of Taxation and Finance

Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update

STATE OF CONNECTICUT

1. Basis for taxation:

 Basis for taxation
UtilityAd Valorem
Property Tax
Public Utility Tax on
Gross Receipts
Railroads No (a) (d)
Express company No (a) 2%
Car company No --
Airline Yes (b) --
Telecommunications
(including telephone)
Yes (c) --
Telegraph or cable company No (a) 4.5%
Pipeline Yes --
Petroleum products company Yes 3% (e)
Electric company Yes 5% (f)
Gas company Yes 5% (f)
Water company Yes 5%
Steam power company Yes 5%
Cable television No 5%
Motor carrier (b) Yes (b) --
(a)     Exempt from property tax because subject to gross earning tax.

(b)     Intrastate companies only.

(c)     All companies -- liable for state-assessed tax described in #5 below. Non-regulated companies -- also liable for locally assessed taxes.

(d)     Varies according to the proportion of net railway operating income to gross earnings: 0 to 8% - 2%, 8+ to 10% - 2.25%, 10+ to 12% - 2.5%, 12+ to 14% - 2.75%, 14+ to 16 - 3%, 16+ to 18% - 3.25%, and more than 18% - 3.5%. The amount of taxes paid in any town on the real estate not used exclusively in the business of the corporation must be deducted from the amount of tax on gross earnings.

(e)     Receipts from sales of home heating oil are exempt.

(f)     4% on earnings from residential sales.

2. Property subject to taxation    

Taxable: Real and personal property.

Exempt: Intangible personal property, property of interstate airlines and motor carriers, property of regulated telephone companies (exempt from locally assessed tax), and property of cable television companies.

3. Classification (if applicable):     No.

4. Level of government which determines basis for tax liability - ad valorem property tax:

Telecommunications property subject to state assessment - Secretary of State Office of Policy and Management.

Other property - City and town assessors.

5. Report filing and valuation method(s) required by statute for ad valorem taxation:

Reporting Requirements

Telecommunications property subject to state assessment - Company must file an annual list of personal property to the state Commissioner of Revenue Services and the secretary of the state Office of Policy and Management. The list must show the location of each item of property and its fair market value, recognizing depreciation of the property to the maximum extent allowed for the state corporation business tax. If the records of the taxpayer do not contain the data necessary to develop the list without undue cost, the taxpayer may petition the Commissioner of Revenue Services for approval of an alternate method of determining the value of the plant used to transmit telecommunications services, but not including central office or switching equipment, located in each town in the state.

Other property - None.

Valuation Factors

Telecommunications property subject to state assessment - The secretary of the state Office of Policy and Management must accept the values given in the taxpayer's list as certified by the state Commissioner of Revenue Services and then assess the property at 70% of that value. The tax to be levied is 47 mills ($47 per $1,000 of assessed value).

Other property - Not stated in statute.

6. Practical application of valuation method(s):

Telecommunications property subject to state assessment -See #5 above.

Other property - Varies by locality. Most often, property is valued on the basis of its historical cost less depreciation (using a very accelerated depreciation schedule).

7. Valuation treatment of large facilities such as power plants, dams, or rail yards:     Power plants are valued locally. Given the move toward divestiture of such plants from transmission and delivery utility companies, they are now being valued by the market and income approaches to value.

8. Apportionment method(s) required by statute:

To the state - Not applicable.

Among local units -

Telecommunications property subject to state assessment - Value of property is distributed to its location.

Other property - Not applicable.

9. Practical application or apportionment requirements:

To the state - Not applicable.

Among local units -

Telecommunications property - See #7 above.

Other property - Not applicable.

10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:     Not applicable.

11. Description of assessment appeals system:

Property owners first appeal to local boards of assessment review. Further appeal can be made in Superior Court.

12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:

As indicated above, market and income approaches are being used by local assessors to value facilities that cannot be valued by the cost approach without owner grievances. In 2001 the state began a 10-year reimbursement program for municipalities negatively impacted by loss in value of power plants. The amount of reimbursement declines over this period.

13. State Government Staffing:     Staff consists of one employee (full-time equivalent basis)

Law Source(s):     Connecticut General Statutes

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