The Connecticut Neighborhood Assistance Act Tax Credit Program is designed to encourage a push in funding for municipal and tax-exempt organizations by providing a corporation business tax credit for businesses that make cash contributions to these entities.
Businesses that contribute to certain programs can receive a credit of 60% of their approved contribution. In some cases, businesses can receive a credit of 100% if contributing to certain energy conservation programs. The tax credit must be approved by the Department of Revenue Services. Any tax credit that is not taken in the income year in which the contribution was made may be carried back to the two immediately preceding income years (beginning with the earlier of such years). The credit can only be used to offset the following taxes:
- Chapter 207 (Insurance Companies and Health Care Centers Taxes);
- Chapter 208 (Corporation Business Tax);
- Chapter 209 (Air Carriers Tax);
- Chapter 210 (Railroad Companies Tax);
- Chapter 211 (Community Antenna Television Systems and One-Way Satellite Transmission Business Tax); and
- Chapter 212 (Utility Companies Tax)
The credit does not apply to pass-through entities or unincorporated businesses.
A list of approved programs participating in the program can be found here.
The program has several statutory limits, including the following:
- A business is limited to receiving $150,000 in tax credit annually.
- A non-profit organization is limited to receiving $150,000 in contributions in the aggregate.
- The minimum contribution on which credit can be granted is $250.
- The program has a five-million-dollar cap, which, if exceeded, results in the proration of approved donations.
Businesses wishing to Participate
Each business wishing to participate must electronically submit Form NAA-02 through the DRS website for each program it wishes to sponsor. The form was made available on September 15th and the deadline for submission is October 1st, 2022. The contribution must be cash and needs to be made in the corporation’s income year that corresponds to the same year as the approved program.
For questions or assistance, contact The Innovative CPA Group or fill out our contact form.