Chapter 211c

HOSPITALS TAX AND NURSING HOME AND
INTERMEDIATE CARE FACILITY USERS FEES

Sec. 12-263p. *(See end of section for amended version and effective date.) Definitions.

Sec. 12-263q. *(See end of section for amended version and effective date.) Tax on net revenue from provision of inpatient hospital services and outpatient hospital services.

Sec. 12-263r. *(See end of section for amended version and effective date.) Nursing home and intermediate care facility resident day user fees. Exemption request and approval.

Sec. 12-263s. *(See end of section for amended version of subsection (b) and effective date.) Tax credits. Returns. Request for extension of time for payment. Penalties.

Sec. 12-263aa. *(See end of section for amended version and effective date.) Determination by the Centers for Medicare and Medicaid Services.

Sec. 12-263p. *(See end of section for amended version and effective date.) Definitions. As used in sections 12-263p to 12-263x, inclusive, unless the context otherwise requires:

(1) “Commissioner” means the Commissioner of Revenue Services;

(2) “Department” means the Department of Revenue Services;

(3) “Taxpayer” means any health care provider subject to any tax or fee under section 12-263q or 12-263r;

(4) “Health care provider” means an individual or entity that receives any payment or payments for health care items or services provided;

(5) “Gross receipts” means the amount received, whether in cash or in kind, from patients, third-party payers and others for taxable health care items or services provided by the taxpayer in the state, including retroactive adjustments under reimbursement agreements with third-party payers, without any deduction for any expenses of any kind;

(6) “Net revenue” means gross receipts less payer discounts, charity care and bad debts, to the extent the taxpayer previously paid tax under section 12-263q on the amount of such bad debts;

(7) “Payer discounts” means the difference between a health care provider's published charges and the payments received by the health care provider from one or more health care payers for a rate or method of payment that is different than or discounted from such published charges. “Payer discounts” does not include charity care or bad debts;

(8) “Charity care” means free or discounted health care services rendered by a health care provider to an individual who cannot afford to pay for such services, including, but not limited to, health care services provided to an uninsured patient who is not expected to pay all or part of a health care provider's bill based on income guidelines and other financial criteria set forth in the general statutes or in a health care provider's charity care policies on file at the office of such provider. “Charity care” does not include bad debts or payer discounts;

(9) “Received” means “received” or “accrued”, construed according to the method of accounting customarily employed by the taxpayer;

(10) “Hospital” means any health care facility, as defined in section 19a-630, that (A) is licensed by the Department of Public Health as a short-term general hospital; (B) is maintained primarily for the care and treatment of patients with disorders other than mental diseases; (C) meets the requirements for participation in Medicare as a hospital; and (D) has in effect a utilization review plan, applicable to all Medicaid patients, that meets the requirements of 42 CFR 482.30, as amended from time to time, unless a waiver has been granted by the Secretary of the United States Department of Health and Human Services;

(11) “Inpatient hospital services” means, in accordance with federal law, all services that are (A) ordinarily furnished in a hospital for the care and treatment of inpatients; (B) furnished under the direction of a physician or dentist; and (C) furnished in a hospital. “Inpatient hospital services” does not include skilled nursing facility services and intermediate care facility services furnished by a hospital with swing bed approval;

(12) “Inpatient” means a patient who has been admitted to a medical institution as an inpatient on the recommendation of a physician or dentist and who (A) receives room, board and professional services in the institution for a twenty-four-hour period or longer, or (B) is expected by the institution to receive room, board and professional services in the institution for a twenty-four-hour period or longer, even if the patient does not actually stay in the institution for a twenty-four-hour period or longer;

(13) “Outpatient hospital services” means, in accordance with federal law, preventive, diagnostic, therapeutic, rehabilitative or palliative services that are (A) furnished to an outpatient; (B) furnished by or under the direction of a physician or dentist; and (C) furnished by a hospital;

(14) “Outpatient” means a patient of an organized medical facility or a distinct part of such facility, who is expected by the facility to receive, and who does receive, professional services for less than a twenty-four-hour period regardless of the hour of admission, whether or not a bed is used or the patient remains in the facility past midnight;

(15) “Nursing home” means any licensed chronic and convalescent nursing home or a rest home with nursing supervision;

(16) “Intermediate care facility for individuals with intellectual disabilities” or “intermediate care facility” means a residential facility for persons with intellectual disability that is certified to meet the requirements of 42 CFR 442, Subpart C, as amended from time to time, and, in the case of a private facility, licensed pursuant to section 17a-227;

(17) “Medicare day” means a day of nursing home care service provided to an individual who is eligible for payment, in full or with a coinsurance requirement, under the federal Medicare program, including fee for service and managed care coverage;

(18) “Nursing home resident day” means a day of nursing home care service provided to an individual and includes the day a resident is admitted and any day for which the nursing home is eligible for payment for reserving a resident's bed due to hospitalization or temporary leave and for the date of death. For purposes of this subdivision, a day of nursing home care service shall be the period of time between the census-taking hour in a nursing home on two successive calendar days. “Nursing home resident day” does not include a Medicare day or the day a resident is discharged;

(19) “Intermediate care facility resident day” means a day of intermediate care facility residential care provided to an individual and includes the day a resident is admitted and any day for which the intermediate care facility is eligible for payment for reserving a resident's bed due to hospitalization or temporary leave and for the date of death. For purposes of this subdivision, a day of intermediate care facility residential care shall be the period of time between the census-taking hour in a facility on two successive calendar days. “Intermediate care facility resident day” does not include the day a resident is discharged;

(20) “Medicaid” means the program operated by the Department of Social Services pursuant to section 17b-260 and authorized by Title XIX of the Social Security Act, as amended from time to time; and

(21) “Medicare” means the program operated by the Centers for Medicare and Medicaid Services in accordance with Title XVIII of the Social Security Act, as amended from time to time.

(June Sp. Sess. P.A. 17-4, S. 1.)

*Note: On and after July 1, 2026, this section, as amended by section 359 of public act 25-168, is to read as follows:

“Sec. 12-263p. Definitions. As used in sections 12-263p to 12-263x, inclusive, unless the context otherwise requires:

(1) “Commissioner” means the Commissioner of Revenue Services;

(2) “Department” means the Department of Revenue Services;

(3) “Taxpayer” means any health care provider subject to any tax or fee under section 12-263q or 12-263r;

(4) “Health care provider” means an individual or entity that receives any payment or payments for health care items or services provided;

(6) “Net revenue” means gross receipts less payer discounts, charity care and bad debts, to the extent the taxpayer previously paid tax under section 12-263q on the amount of such bad debts;

(9) “Received” means “received” or “accrued”, construed according to the method of accounting customarily employed by the taxpayer;

(15) “Nursing home” means any licensed chronic and convalescent nursing home or a rest home with nursing supervision;

(20) “Nursing facility service revenue” means, in accordance with federal law, revenue for which a nursing home provides nursing home care services to an individual and that are covered services for Medicaid payment under section 17b-262-705 of the regulations of Connecticut state agencies, whether or not such services were provided to Medicaid recipients. “Nursing facility service revenue” does not include Medicare payments;

(21) “Intermediate care facility service revenue” means, in accordance with federal law, revenue for which an intermediate care facility provides services to its residents and that are covered services for Medicaid payment under section 17b-262-303 of the regulations of Connecticut state agencies, whether or not such services were provided to Medicaid recipients. “Intermediate care facility service revenue” does not include Medicare payments;

(22) “Medicaid” means the program operated by the Department of Social Services pursuant to section 17b-260 and authorized by Title XIX of the Social Security Act, as amended from time to time; and

(23) “Medicare” means the program operated by the Centers for Medicare and Medicaid Services in accordance with Title XVIII of the Social Security Act, as amended from time to time.”

(June Sp. Sess. P.A. 17-4, S. 1; P.A. 25-168, S. 359.)

History: June Sp. Sess. P.A. 17-4 effective November 21, 2017; P.A. 25-168 added definitions for “nursing facility service revenue” and “intermediate care facility service revenue” and redesignated existing Subdivs. (20) and (21) as Subdivs. (22) and (23), effective July 1, 2026.

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Sec. 12-263q. *(See end of section for amended version and effective date.) Tax on net revenue from provision of inpatient hospital services and outpatient hospital services. (a)(1) For each calendar quarter commencing on or after July 1, 2017, each hospital shall pay a tax on the total net revenue received by such hospital for the provision of inpatient hospital services and outpatient hospital services.

(A) On and after July 1, 2017, through June 30, 2026, the rate of tax for the provision of inpatient hospital services shall be six per cent of each hospital's audited net revenue for fiscal year 2016 attributable to inpatient hospital services. Such rate shall apply for fiscal years commencing on or after July 1, 2026, unless modified through any provision of the general statutes.

(B) (i) On and after July 1, 2017, and prior to July 1, 2019, the rate of tax for the provision of outpatient hospital services shall be nine hundred million dollars less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay such tax, resulting in an effective rate of twelve and three thousand three hundred twenty-five ten thousandths (12.3325) per cent of each hospital's audited net revenue for fiscal year 2016 attributable to outpatient hospital services.

(ii) On and after July 1, 2019, and prior to July 1, 2020, the rate of tax for the provision of outpatient hospital services shall be eight hundred ninety million dollars less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay such tax, resulting in an effective rate of twelve and nine hundred forty-two ten thousandths (12.0942) per cent of each hospital's audited net revenue for fiscal year 2016 attributable to outpatient hospital services, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(iii) On and after July 1, 2020, and prior to July 1, 2021, the rate of tax for the provision of outpatient hospital services shall be eight hundred eighty-two million dollars less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay such tax, resulting in an effective rate of eleven and seven thousand five hundred three ten thousandths (11.7503) per cent of each hospital's audited net revenue for fiscal year 2016 attributable to outpatient hospital services, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(iv) On and after July 1, 2021, and prior to July 1, 2025, the rate of tax for the provision of outpatient hospital services shall be eight hundred fifty million dollars less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay such tax, resulting in an effective rate of eleven and nine hundred seventy-six ten thousandths (11.0976) per cent of each hospital's audited net revenue for fiscal year 2016 attributable to outpatient hospital services, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(v) On and after July 1, 2025, the rate of tax for the provision of outpatient hospital services shall be eight hundred twenty million dollars less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay such tax, resulting in an effective rate of ten and four thousand eight hundred fifty-eight ten thousandths (10.4858) per cent of each hospital's audited net revenue for fiscal year 2016 attributable to outpatient hospital services, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section. The rate set forth in this clause shall apply for fiscal years commencing on or after July 1, 2026, unless modified through any provision of the general statutes.

(C) (i) For each state fiscal year commencing on or after July 1, 2019, the total audited net revenue for fiscal year 2016 attributable to inpatient hospital services, of all hospitals that are required to pay the tax under this section shall be five billion ninety-seven million eight hundred twenty thousand one hundred ninety-seven dollars, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(ii) (I) For the state fiscal year commencing on or after July 1, 2019, and prior to July 1, 2020, the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay the tax under this section shall be four billion eight hundred twenty-nine million eight hundred fifty-nine thousand three hundred ninety-nine dollars, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(II) For each state fiscal year commencing on or after July 1, 2020, the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay the tax under this section shall be four billion nine hundred three million one hundred twenty-seven thousand one hundred thirty-three dollars, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(D) (i) If a hospital or hospitals subject to the tax imposed under this subdivision merge, consolidate, are acquired or otherwise reorganize, the surviving hospital shall assume and be liable for the total tax imposed under this subdivision on the merged, consolidated, acquired or reorganized hospitals, including any outstanding liabilities from periods prior to such merger, consolidation, acquisition or reorganization.

(ii) If a hospital ceases to operate as a hospital for any reason other than a merger, consolidation, acquisition or reorganization, or ceases for any reason to be subject to the tax imposed under this subdivision, the amount of tax due from each taxpayer under this subdivision shall not be recalculated to take into account such occurrence for the state fiscal year in which the hospital dissolves or ceases to operate. The amount of tax that would be due from the dissolved hospital after its dissolution or cessation of operations shall not be collected by the commissioner for the state fiscal year in which such hospital dissolves or ceases to operate. In the next succeeding state fiscal year after the hospital dissolves or ceases to operate and in each subsequent state fiscal year, the total audited net revenue for fiscal year 2016 shall be reduced by such hospital's audited net revenue for fiscal year 2016 and the effective rate of the tax due under this section shall be adjusted to ensure that the total amount of such tax to be collected under subparagraphs (A) and (B) of this subdivision is redistributed among the surviving hospitals in proportion to the reduced total audited net revenue for fiscal year 2016 attributable to inpatient hospital services and outpatient hospital services, of all hospitals.

(E) (i) For each state fiscal year commencing on or after July 1, 2026, if the Commissioner of Social Services determines for any fiscal year that the effective rate of tax for the tax imposed on net revenue for the provision of inpatient hospital services exceeds the rate permitted under the provisions of 42 CFR 433.68(f), as amended from time to time, the amount of tax collected that exceeds the permissible amount shall be refunded to hospitals, in proportion to the amount of net revenue for the provision of inpatient hospital services upon which the hospitals were taxed. The effective rate of tax shall be calculated by comparing the amount of tax paid by hospitals on net revenue for the provision of inpatient hospital services in a state fiscal year with the amount of net revenue received by hospitals subject to the tax for the provision of inpatient hospital services for the equivalent fiscal year.

(ii) On or before July 1, 2026, and annually thereafter, each hospital subject to the tax imposed under this subdivision shall report to the Commissioner of Social Services, in the manner prescribed by and on forms provided by said commissioner, the amount of tax paid pursuant to this subsection by such hospital and the amount of net revenue received by such hospital for the provision of inpatient hospital services, in the state fiscal year commencing two years prior to each such reporting date. Not later than ninety days after said commissioner receives completed reports from all hospitals required to submit such reports, said commissioner shall notify the Commissioner of Revenue Services of the amount of any refund due each hospital to be in compliance with 42 CFR 433.68(f), as amended from time to time. Not later than thirty days after receiving such notice, the Commissioner of Revenue Services shall notify the Comptroller of the amount of each such refund and the Comptroller shall draw an order on the Treasurer for payment of each such refund. No interest shall be added to any refund issued pursuant to this subparagraph.

(2) Except as provided in subdivision (3) of this subsection, each hospital subject to the tax imposed under subdivision (1) of this subsection shall be required to pay the total amount due in four quarterly payments consistent with section 12-263s, with the first quarter commencing with the first day of each state fiscal year and the last quarter ending on the last day of each state fiscal year. Hospitals shall make all payments required under this subsection in accordance with procedures established by and on forms provided by the commissioner.

(3) (A) For the state fiscal year commencing July 1, 2017, each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall make an estimated tax payment on December 15, 2017, which estimated payment shall be equal to one hundred thirty-three per cent of the tax due under chapter 211a for the period ending June 30, 2017. If a hospital was not required to pay tax under chapter 211a on either inpatient hospital services or outpatient hospital services, such hospital shall make its estimated payment based on its unaudited net patient revenue.

(B) Each hospital required to pay tax pursuant to this subdivision on inpatient hospital services or outpatient hospital services shall pay the remaining balance determined to be due in two equal payments, which shall be due on April 30, 2018, and July 31, 2018, respectively.

(C) (i) For each state fiscal year commencing on or after July 1, 2017, each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall calculate the amount of tax due on forms prescribed by the commissioner by multiplying the applicable rate set forth in subdivision (1) of this subsection by its audited net revenue for fiscal year 2016.

(ii) For the state fiscal year commencing July 1, 2019, the payment made for the period ending September 30, 2019, by each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall be considered an estimated payment for purposes of the tax due for said state fiscal year. Each hospital required to pay the tax under this section on inpatient hospital services or outpatient hospital services shall pay the remaining balance due in three equal payments, which shall be due on January 31, 2020, April 30, 2020, and July 31, 2020, respectively.

(D) The commissioner shall apply any payment made by a hospital in connection with the tax under chapter 211a for the period ending September 30, 2017, as a partial payment of such hospital's estimated tax payment due on December 15, 2017, under subparagraph (A) of this subdivision. The commissioner shall return to a hospital any credit claimed by such hospital in connection with the tax imposed under chapter 211a for the period ending September 30, 2017, for assignment as provided under section 12-263s.

(4) (A) Each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall submit to the commissioner such information as the commissioner requires in order to calculate the audited net inpatient revenue for fiscal year 2016, the audited net outpatient revenue for fiscal year 2016 and the audited net revenue for fiscal year 2016 of all such health care providers. Such information shall be provided to the commissioner not later than January 1, 2018. The commissioner shall make additional requests for information as necessary to fully audit each hospital's net revenue. Upon completion of the commissioner's examination, the commissioner shall notify, prior to February 28, 2018, each hospital of its audited net inpatient revenue for fiscal year 2016, audited net outpatient revenue for fiscal year 2016 and audited net revenue for fiscal year 2016.

(B) Any hospital that fails to provide the requested information by the dates specified in subparagraph (A) of this subdivision or fails to comply with a request for additional information made under this subdivision shall be subject to a penalty of one thousand dollars per day for each day the hospital fails to provide the requested information or additional information.

(C) The commissioner may engage an independent auditor to assist in the performance of the commissioner's duties and responsibilities under this subdivision.

(5) Net revenue derived from providing a health care item or service to a patient shall be taxed only one time under this section.

(6) (A) For purposes of this section:

(i) “Audited net inpatient revenue for fiscal year 2016” means the amount of revenue that the commissioner determines, in accordance with federal law, that a hospital received for the provision of inpatient hospital services during the 2016 federal fiscal year;

(ii) “Audited net outpatient revenue for fiscal year 2016” means the amount of revenue that the commissioner determines, in accordance with federal law, that a hospital received for the provision of outpatient hospital services during the 2016 federal fiscal year; and

(iii) “Audited net revenue for fiscal year 2016” means net revenue, as reported in each hospital's audited financial statements, less the amount of revenue that the commissioner determines, in accordance with federal law, that a hospital received from other than the provision of inpatient hospital services and outpatient hospital services. The total audited net revenue for fiscal year 2016 shall be the sum of all audited net revenue for the 2016 fiscal year for all hospitals required to pay tax on inpatient hospital services and outpatient hospital services.

(B) For purposes of this section, if a hospital's audited financial statements for fiscal year 2016 does not report revenue for the entire fiscal year, such hospital's audited net revenue for fiscal year 2016 shall be calculated by projecting the amount of revenue such hospital would have received for the entire fiscal year based proportionally on the audited net revenue reported on its audited financial statements.

(C) Audited net inpatient revenue and audited net outpatient revenue shall be based on information provided by each hospital required to pay tax on inpatient hospital services or outpatient hospital services.

(b) (1) The Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt from the net revenue tax imposed under subsection (a) of this section the following: (A) Specialty hospitals; (B) children's general hospitals; and (C) hospitals operated exclusively by the state other than a short-term general hospital operated by the state as a receiver pursuant to chapter 920. Any hospital for which the Centers for Medicare and Medicaid Services grants an exemption shall be exempt from the net revenue tax imposed under subsection (a) of this section. Any hospital for which the Centers for Medicare and Medicaid Services denies an exemption shall be deemed to be a hospital for purposes of this section and shall be required to pay the net revenue tax imposed under subsection (a) of this section on inpatient hospital services and outpatient hospital services at the same effective rates set forth in subsection (a) of this section.

(2) Each hospital shall provide to the Commissioner of Social Services, upon request, such information as said commissioner may require to make any computations necessary to seek approval for exemption under this subsection.

(3) As used in this subsection, (A) “specialty hospital” means a health care facility, as defined in section 19a-630, other than a facility licensed by the Department of Public Health as a short-term general hospital or a short-term children's hospital. “Specialty hospital” includes, but is not limited to, a psychiatric hospital or a chronic disease hospital, and (B) “children's general hospital” means a health care facility, as defined in section 19a-630, that is licensed by the Department of Public Health as a short-term children's hospital. “Children's general hospital” does not include a specialty hospital.

(c) (1) (A) For each state fiscal year commencing on or after July 1, 2017, and prior to July 1, 2020, the Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt financially distressed hospitals from the net revenue tax imposed on outpatient hospital services. Any such hospital for which the Centers for Medicare and Medicaid Services grants an exemption shall be exempt from the net revenue tax imposed on outpatient hospital services under subsection (a) of this section. Any hospital for which the Centers for Medicare and Medicaid Services denies an exemption shall be required to pay the net revenue tax imposed on outpatient hospital services under subsection (a) of this section.

(B) For purposes of this subdivision, “financially distressed hospital” means a hospital that has experienced over the five-year period from October 1, 2011, through September 30, 2016, an average net loss of more than five per cent of aggregate revenue. A hospital has an average net loss of more than five per cent of aggregate revenue if such a loss is reflected in the applicable years of financial reporting that have been made available by the Health Systems Planning Unit of the Office of Health Strategy for such hospital in accordance with section 19a-670. Upon said commissioner's receipt of a determination by the Centers for Medicare and Medicaid Services that a hospital is not exempt, the total audited net revenue from the provision of outpatient hospital services for fiscal year 2016 shall be increased by such hospital's audited net revenue from the provision of outpatient hospital services for fiscal year 2016 and the effective rate of the tax due under this section shall be adjusted to ensure that the total amount of such tax to be collected under subsection (a) of this section is redistributed, commencing with the calendar quarter next succeeding the date of the determination by the Centers for Medicare and Medicaid Services.

(2) (A) For each state fiscal year commencing on or after July 1, 2020, the Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt sole community hospitals from the net revenue tax imposed on outpatient hospital services. Any such hospital for which the Centers for Medicare and Medicaid Services grants an exemption shall be exempt from the net revenue tax imposed on outpatient hospital services under subsection (a) of this section. Any hospital for which the Centers for Medicare and Medicaid Services denies an exemption shall be required to pay the net revenue tax imposed on outpatient hospital services under subsection (a) of this section.

(B) For purposes of this subdivision, “sole community hospital” means a hospital that is classified by the Centers for Medicare and Medicaid Services for purposes of Medicare as a sole community hospital under 42 CFR 412.92. Upon said commissioner's receipt of a determination by the Centers for Medicare and Medicaid Services that a hospital is not exempt, the total audited net revenue from the provision of outpatient hospital services for fiscal year 2016 shall be increased by such hospital's audited net revenue from the provision of outpatient hospital services for fiscal year 2016 and the effective rate of the tax due under this section shall be adjusted to ensure that the total amount of such tax to be collected under subsection (a) of this section is redistributed, commencing with the calendar quarter next succeeding the date of the determination by the Centers for Medicare and Medicaid Services.

(3) Upon receipt of a determination by the Centers for Medicare and Medicaid Services under this subsection that a hospital is not exempt, said commissioner shall notify all hospitals subject to the tax under this section of such determination, the corresponding increase to the total audited net revenue for fiscal year 2016 and the change in any effective rate of the tax to be collected under subsection (a) of this section through the state fiscal year 2026. Such notice shall be provided prior to the end of the calendar quarter next succeeding the date of the determination by the Centers for Medicare and Medicaid Services. If a state fiscal year has commenced when such determination is made, the adjusted audited net revenue for fiscal year 2016 and the change in any effective rate of the tax to be collected under subsection (a) of this section shall be prorated to take into account the amount of the tax already paid during the applicable state fiscal year.

(d) The commissioner shall issue guidance regarding the administration of the tax on inpatient hospital services and outpatient hospital services. Such guidance shall be issued upon completion of a study of the applicable federal law governing the administration of tax on inpatient hospital services and outpatient hospital services. The commissioner shall conduct such study in collaboration with the Commissioner of Social Services, the Secretary of the Office of Policy and Management, the Connecticut Hospital Association and the hospitals subject to the tax imposed on inpatient hospital services and outpatient hospital services.

(e) (1) The commissioner shall determine, in consultation with the Commissioner of Social Services, the Secretary of the Office of Policy and Management, the Connecticut Hospital Association and the hospitals subject to the tax imposed on inpatient hospital services and outpatient hospital services, if there is any underreporting of revenue on hospitals' audited financial statements. Such consultation shall only be as authorized under section 12-15. The commissioner shall issue guidance, if necessary, to address any such underreporting.

(2) If the commissioner determines, in accordance with this subsection, that a hospital underreported net revenue on its audited financial statements, the amount of underreported net revenue shall be added to the amount of net revenue reported on such hospital's audited financial statements so as to comply with federal law and the revised net revenue amount shall be used for purposes of calculating the amount of tax owed by such hospital under this section. For purposes of this subsection, “underreported net revenue” means any revenue of a hospital subject to the tax imposed under this section that is required to be included in net revenue from the provision of inpatient hospital services and net revenue from the provision of outpatient hospital services to comply with 42 CFR 433.56, as amended from time to time, 42 CFR 433.68, as amended from time to time, and Section 1903(w) of the Social Security Act, as amended from time to time, but that was not reported on such hospital's audited financial statements. Underreported net revenue shall only include revenue of the hospital subject to such tax.

(f) Nothing in this section shall affect the commissioner's obligations under section 12-15 regarding disclosure and inspection of returns and return information.

(g) The provisions of section 17b-8 shall not apply to any exemption or exemptions sought by the Commissioner of Social Services from the Centers for Medicare and Medicaid Services under this section.

(June Sp. Sess. P.A. 17-4, S. 2; P.A. 18-91, S. 76; P.A. 19-117, S. 356; Dec. Sp. Sess. P.A. 19-1, S. 1.)

*Note: On and after July 1, 2026, this section, as amended by section 360 of public act 25-168, is to read as follows:

“Sec. 12-263q. Tax on net revenue from provision of inpatient hospital services and outpatient hospital services. (a)(1) For each calendar quarter commencing on or after July 1, 2017, each hospital shall pay a tax on the total net revenue received by such hospital for the provision of inpatient hospital services and outpatient hospital services.

(A) (i) On and after July 1, 2017, through June 30, 2026, the rate of tax for the provision of inpatient hospital services shall be six per cent of each hospital's audited net revenue for fiscal year 2016 attributable to inpatient hospital services.

(ii) On and after July 1, 2026, the rate of tax for the provision of inpatient hospital services shall be six per cent of each hospital's audited net revenue for the applicable federal fiscal year attributable to inpatient hospital services.

(v) On and after July 1, 2025, and prior to July 1, 2026, the rate of tax for the provision of outpatient hospital services shall be eight hundred twenty million dollars less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay such tax, resulting in an effective rate of ten and four thousand eight hundred fifty-eight ten thousandths (10.4858) per cent of each hospital's audited net revenue for fiscal year 2016 attributable to outpatient hospital services, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(vi) (I) On and after July 1, 2026, the rate of tax for the provision of outpatient hospital services shall be equal to the amount specified under clause (vi)(II) of this subparagraph less the total tax imposed on all hospitals for the provision of inpatient hospital services, which sum shall be divided by the total audited net revenue for the applicable federal fiscal year attributable to outpatient hospital services, of all hospitals that are required to pay such tax, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(II) For the state fiscal year commencing July 1, 2026, the amount shall be one billion one hundred ninety-five million dollars. For the state fiscal year commencing July 1, 2027, and each state fiscal year thereafter, such amount shall be increased by twenty-five million dollars from the prior state fiscal year.

(C) (i) (I) For each state fiscal year commencing on or after July 1, 2019, and prior to July 1, 2026, the total audited net revenue for fiscal year 2016 attributable to inpatient hospital services, of all hospitals that are required to pay the tax under this section, shall be five billion ninety-seven million eight hundred twenty thousand one hundred ninety-seven dollars, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(II) For each state fiscal year commencing on or after July 1, 2026, the total audited net revenue for the applicable federal fiscal year attributable to inpatient hospital services, of all hospitals that are required to pay the tax under this section, shall be the total amount of net revenue attributable to inpatient hospital services reported to the commissioner for the applicable federal fiscal year by all hospitals subject to the tax or, if applicable, as adjusted by the commissioner, in accordance with the provisions of subparagraph (A) of subdivision (4) of this subsection, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision, disallowed exemptions pursuant to subsections (b) and (c) of this section or the provisions of subdivision (4) of this subsection.

(II) For each state fiscal year commencing on or after July 1, 2020, and prior to July 1, 2026, the total audited net revenue for fiscal year 2016 attributable to outpatient hospital services, of all hospitals that are required to pay the tax under this section, shall be four billion nine hundred three million one hundred twenty-seven thousand one hundred thirty-three dollars, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision or disallowed exemptions pursuant to subsections (b) and (c) of this section.

(III) For each state fiscal year commencing on or after July 1, 2026, the total audited net revenue for the applicable federal fiscal year attributable to outpatient hospital services, of all hospitals that are required to pay the tax under this section, shall be the total amount of net revenue attributable to outpatient hospital services reported to the commissioner for the applicable federal fiscal year by all hospitals subject to the tax or, if applicable, as adjusted by the commissioner, in accordance with the provisions of subparagraph (A) of subdivision (4) of this subsection, subject to any hospital dissolutions or cessation of operations pursuant to subparagraph (D) of this subdivision, disallowed exemptions pursuant to subsections (b) and (c) of this section or the provisions of subdivision (4) of this subsection.

(ii) If a hospital ceases to operate as a hospital for any reason other than a merger, consolidation, acquisition or reorganization, or ceases for any reason to be subject to the tax imposed under this subdivision, the amount of tax due from each taxpayer under this subdivision shall not be recalculated to take into account such occurrence for the state fiscal year in which the hospital dissolves or ceases to operate. The amount of tax that would be due from the dissolved hospital after its dissolution or cessation of operations shall not be collected by the commissioner for the state fiscal year in which such hospital dissolves or ceases to operate. In the next succeeding state fiscal year after the hospital dissolves or ceases to operate and in each subsequent state fiscal year, the total audited net revenue for the applicable federal fiscal year shall be adjusted to exclude such hospital's audited net revenue for the applicable federal fiscal year and the effective rate of the tax due under this section shall be adjusted to ensure that the total amount of such tax to be collected under subparagraphs (A) and (B) of this subdivision is redistributed among the surviving hospitals in proportion to the reduced total audited net revenue for the applicable federal fiscal year attributable to inpatient hospital services and outpatient hospital services, of all hospitals.

(C) (i) (I) For each state fiscal year commencing on or after July 1, 2017, and prior to July 1, 2026, each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall calculate the amount of tax due on forms prescribed by the commissioner by multiplying the applicable rate set forth in subdivision (1) of this subsection by its audited net revenue for fiscal year 2016.

(II) For each state fiscal year commencing on or after July 1, 2026, each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall calculate the amount of tax due on forms prescribed by the commissioner.

(4) (A) (i) Each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall submit to the commissioner such information as the commissioner requires in order to calculate the audited net inpatient revenue for fiscal year 2016, the audited net outpatient revenue for fiscal year 2016 and the audited net revenue for fiscal year 2016 of all such health care providers. Such information shall be provided to the commissioner not later than January 1, 2018. The commissioner shall make additional requests for information as necessary to fully audit each hospital's net revenue. Upon completion of the commissioner's examination, the commissioner shall notify, prior to February 28, 2018, each hospital of its audited net inpatient revenue for fiscal year 2016, audited net outpatient revenue for fiscal year 2016 and audited net revenue for fiscal year 2016.

(ii) (I) Not later than January 1, 2026, and January 1, 2029, and quadrennially thereafter, each hospital required to pay tax on inpatient hospital services or outpatient hospital services shall submit to the commissioner such information as the commissioner requires in order to calculate, for the applicable federal fiscal year, the audited net inpatient revenue, the audited net outpatient revenue and the audited net revenue of all such hospitals. The amounts reported by each hospital shall be deemed accepted on the first day of the state fiscal year, provided the commissioner has not initiated an audit of the hospital before such first day.

(II) If the commissioner initiates an audit of a hospital, such hospital shall comply with all additional requests by the commissioner for information necessary to enable the commissioner to fully audit the hospital within fourteen days of the date the commissioner requests such information.

(III) The commissioner shall issue any notice setting forth additional audited net revenue not later than the first day of the state fiscal year. Such additional audited net revenue shall be final fourteen days after the date such notice is mailed to the taxpayer, except for any amounts as to which the taxpayer files a written protest with the commissioner. If a protest is filed, the commissioner shall reconsider the additional audited net revenue and, if the taxpayer or the taxpayer's authorized representative has requested a hearing, shall grant or deny such hearing. The commissioner shall mail notice of the commissioner's determination to the taxpayer, which notice shall briefly set forth the commissioner's findings of fact and the basis of the commissioner's decision in each case decided adversely, in whole or in part, to the taxpayer. The commissioner's action on the taxpayer's protest shall be final upon the expiration of one month from the date the commissioner mails the notice of the commissioner's determination to the taxpayer, unless the taxpayer seeks judicial review of such determination within such period.

(IV) If any protest or appeal is pending on the first day of the next succeeding state fiscal year, the amounts reported by the protesting or appealing taxpayer shall be used to tentatively calculate the tax due under this section until such protest or appeal is finally resolved. If any amount is revised pursuant to such protest or appeal from the amount originally reported by a hospital, the commissioner shall recalculate for each hospital the amounts due under this section and shall issue assessments or refunds, as applicable, with respect to any affected calendar quarter.

(V) A notice under this clause shall not be required for any hospital for which an audit has not been issued.

(C) The commissioner may engage an independent auditor to assist in the performance of the commissioner's duties and responsibilities under this subdivision.

(5) Net revenue derived from providing a health care item or service to a patient shall be taxed only one time under this section.

(6) (A) For purposes of this section:

(iv) “Audited net inpatient revenue for the applicable federal fiscal year” means the amount of revenue that a hospital reports to the commissioner that such hospital received for the provision of inpatient hospital services during the applicable federal fiscal year, subject to the provisions of subdivision (4) of subsection (a) of this section;

(v) “Audited net outpatient revenue for the applicable federal fiscal year” means the amount of revenue that a hospital reports to the commissioner that such hospital received for the provision of outpatient hospital services during the applicable federal fiscal year, subject to the provisions of subdivision (4) of subsection (a) of this section;

(vi) “Audited net revenue for the applicable federal fiscal year” means net revenue, as reported in each hospital's audited financial statements, less the amount of revenue a hospital received from other than the provision of inpatient hospital services and outpatient hospital services. The total audited net revenue shall be the sum of all audited net revenue for the applicable federal fiscal year for all hospitals required to pay tax on inpatient hospital services and outpatient hospital services; and

(vii) “Applicable federal fiscal year” means (I) for state fiscal years commencing on or after July 1, 2026, and prior to July 1, 2029, federal fiscal year 2024, (II) for state fiscal years commencing on or after July 1, 2029, and prior to July 1, 2033, federal fiscal year 2027, and (III) for the periods commencing with the state fiscal year commencing July 1, 2033, and quadrennially thereafter, the federal fiscal year that concluded in the calendar year that is two years prior to the start of such quadrennial period.

(B) For purposes of this section, if a hospital's audited financial statements for the applicable federal fiscal year does not report revenue for the entire fiscal year, such hospital's audited net revenue for the applicable federal fiscal year shall be calculated by projecting the amount of revenue such hospital would have received for the entire fiscal year based proportionally on the audited net revenue reported on its audited financial statements.

(2) The Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to remove the exemption approved pursuant to subdivision (1) of this subsection for children's general hospitals from the net revenue tax imposed under subsection (a) of this section. If the Centers for Medicare and Medicaid Services approves the removal of such exemption, any children's general hospitals that were exempt prior to July 1, 2026, from the net revenue tax imposed under subsection (a) of this section shall be required, on and after July 1, 2026, to pay such tax on inpatient hospital services and outpatient hospital services at the same effective rates set forth in subsection (a) of this section.

(3) Each hospital shall provide to the Commissioner of Social Services, upon request, such information as said commissioner may require to make any computations necessary to seek approval for exemption under this subsection.

(4) As used in this subsection, (A) “specialty hospital” means a health care facility, as defined in section 19a-630, other than a facility licensed by the Department of Public Health as a short-term general hospital or a short-term children's hospital. “Specialty hospital” includes, but is not limited to, a psychiatric hospital or a chronic disease hospital, and (B) “children's general hospital” means a health care facility, as defined in section 19a-630, that is licensed by the Department of Public Health as a short-term children's hospital. “Children's general hospital” does not include a specialty hospital.

(B) For purposes of this subdivision, “sole community hospital” means a hospital that is classified by the Centers for Medicare and Medicaid Services for purposes of Medicare as a sole community hospital under 42 CFR 412.92. Upon said commissioner's receipt of a determination by the Centers for Medicare and Medicaid Services that a hospital is not exempt, the total audited net revenue from the provision of outpatient hospital services for the applicable federal fiscal year shall be increased by such hospital's audited net revenue from the provision of outpatient hospital services for the applicable federal fiscal year and the effective rate of the tax due under this section shall be adjusted to ensure that the total amount of such tax to be collected under subsection (a) of this section is redistributed, commencing with the calendar quarter next succeeding the date of the determination by the Centers for Medicare and Medicaid Services.

(3) Upon receipt of a determination by the Centers for Medicare and Medicaid Services under this subsection that a hospital is not exempt, said commissioner shall notify all hospitals subject to the tax under this section of such determination, the corresponding increase to the total audited net revenue for the applicable federal fiscal year and the change in any effective rate of the tax to be collected under subsection (a) of this section. Such notice shall be provided prior to the end of the calendar quarter next succeeding the date of the determination by the Centers for Medicare and Medicaid Services. If a state fiscal year has commenced when such determination is made, the adjusted audited net revenue for the applicable federal fiscal year and the change in any effective rate of the tax to be collected under subsection (a) of this section shall be prorated to take into account the amount of the tax already paid during the state fiscal year.

(f) On or before November 15, 2026, and quarterly thereafter, the commissioner shall report to the Commissioner of Social Services and the Secretary of the Office of Policy and Management the amount of tax paid under this section by each hospital for the most recently completed calendar quarter and the amount of any delinquent tax, plus penalty and interest thereon, owed by a hospital and due under this section.

(g) Nothing in this section shall affect the commissioner's obligations under section 12-15 regarding disclosure and inspection of returns and return information.

(h) The provisions of section 17b-8 shall not apply to any exemption or exemptions sought by the Commissioner of Social Services from the Centers for Medicare and Medicaid Services under this section.”

(June Sp. Sess. P.A. 17-4, S. 2; P.A. 18-91, S. 76; P.A. 19-117, S. 356; Dec. Sp. Sess. P.A. 19-1, S. 1; P.A. 25-168, S. 360.)

History: June Sp. Sess. P.A. 17-4 effective November 21, 2017; P.A. 18-91 amended Subsec. (c) by replacing “Office of Health Care Access” with “Health Systems Planning Unit of the Office of Health Strategy”, effective May 14, 2018; P.A. 19-117 substantially amended Subsec. (a) including by deleting references to July 1, 2019, adding references to Subpara. (C), replacing provision re rate of tax with provisions re fiscal year upon which tax is to be imposed in Subdiv. (1)(C), adding Subpara. (D) re tax liability after merger, consolidation or other reorganization in Subdiv. (1), adding Subpara. (E) re determination of effective rate of tax and refund in Subdiv. (1), adding clause (ii) re calculation of amount of tax for each state fiscal year commencing on or after July 1, 2019 in Subdiv. (3)(C), adding “(i) For each state fiscal year commencing on or after July 1, 2017, and prior to July 1, 2019,” and adding clause (ii) re biennial submission of information to commissioner in Subdiv. (4)(A), amended Subsec. (c) by replacing “January 1, 2018” with “July 1, 2019” re seeking approval from Centers for Medicare and Medicaid Services, amended Subsec. (g) by replacing “Department” with “Commissioner”, and made technical and conforming changes, effective June 26, 2019; Dec. Sp. Sess. P.A. 19-1 substantially revised Subsec. (a) re imposition of tax in Subdivs. (1)(A) to (6), amended Subsec. (b)(1) by changing “acute hospital” to “general hospital” and adding reference to effective rates in Subsec. (a) of section, substantially revised Subsec. (c) re exemptions from tax and Commissioner of Social Services' duties to seek such exemptions, and made technical changes in Subsec. (e)(2), effective December 19, 2019; P.A. 25-168 substantially revised Subsec. (a) re imposition of tax under section for state fiscal years commencing on or after July 1, 2026, amended Subsec. (b) by adding new Subdiv. (2) re seeking approval from Centers for Medicare and Medicaid Services of exemption removal for children's general hospitals and redesignating existing Subdivs. (2) and (3) as Subdivs. (3) and (4), amended Subsec. (c) by making conforming changes, added new Subsec. (f) re reporting by Commissioner of Revenue Services of tax paid under section, and redesignated existing Subsecs. (f) and (g) as Subsecs. (g) and (h), effective July 1, 2026, and applicable to calendar quarters commencing on or after July 1, 2026.

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Sec. 12-263r. *(See end of section for amended version and effective date.) Nursing home and intermediate care facility resident day user fees. Exemption request and approval. (a) For each calendar quarter commencing on or after July 1, 2017, there is hereby imposed a quarterly fee on each nursing home and intermediate care facility in this state, which fee shall be the product of each facility's total resident days during the calendar quarter multiplied by the user fee. Except as otherwise provided in this section, (1) the user fee for nursing homes shall be twenty-one dollars and two cents, and (2) the user fee for intermediate care facilities shall be (A) twenty-seven dollars and twenty-six cents for calendar quarters commencing on or after July 1, 2017, and prior to July 1, 2019, and (B) twenty-seven dollars and seventy-six cents for calendar quarters commencing on or after July 1, 2019. As used in this subsection, “resident day” means nursing home resident day and intermediate care facility resident day, as applicable.

(b) (1) (A) Prior to January 1, 2018, the Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt from the quarterly fee imposed on nursing homes under subsection (a) of this section those nursing homes set forth in subparagraph (A) of subdivision (2) of this subsection that are licensed on or prior to July 1, 2017.

(B) Upon the licensure of any nursing home set forth in subparagraph (B) of subdivision (2) of this subsection on or after July 2, 2017, the Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt such nursing home from such quarterly fee.

(C) Any nursing home for which the Centers for Medicare and Medicaid Services grants an exemption shall be exempt from such quarterly fee. Any nursing home for which the Centers for Medicare and Medicaid Services denies an exemption shall be required to pay the quarterly fee imposed on nursing homes under subsection (a) of this section.

(2) Upon approval by the Centers for Medicare and Medicaid Services, each of the following nursing homes shall be exempt from the quarterly fee imposed on nursing homes under subsection (a) of this section:

(A) Each nursing home licensed on or prior to July 1, 2017, that is owned and operated by a legal entity registered as a continuing care facility with the Department of Social Services on July 1, 2017, in accordance with section 17b-521 and (i) that is licensed for not more than seventy-five beds, (ii) that is licensed for more than seventy-five beds but less than one hundred fifty-one beds and provided more than six thousand five hundred days of care paid by Medicare was reported by the nursing home in its most recently filed cost report with the Department of Social Services as of the date of submission of the request for an exemption, or (iii) that, pursuant to section 17b-352, is not subject to the certificate of need provisions set forth in sections 17b-352 to 17b-354, inclusive; and

(B) Each nursing home licensed on or after July 2, 2017, that is owned and operated by a legal entity registered as a continuing care facility with the Department of Social Services in accordance with section 17b-521 and (i) that is licensed for not more than seventy-five beds, (ii) that is licensed for more than seventy-five beds but less than one hundred fifty-one beds and provided more than six thousand five hundred days of care paid by Medicare was reported by the nursing home in its most recently filed cost report with the Department of Social Services as of the date of submission of the request for an exemption, or (iii) that, pursuant to section 17b-352, is not subject to the certificate of need provisions set forth in sections 17b-352 to 17b-354, inclusive.

(c) The Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services for permission to impose a user fee in the amount of sixteen dollars and thirteen cents upon nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds. If the Centers for Medicare and Medicaid Services grants permission, the user fee imposed on nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds shall be sixteen dollars and thirteen cents. If the Centers for Medicare and Medicaid Services denies permission, the user fee for nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds shall be twenty-one dollars and two cents.

(d) The provisions of section 17b-8 shall not apply to any exemption or exemptions sought by the Department of Social Services from the Centers for Medicare and Medicaid Services under this section.

(June Sp. Sess. P.A. 17-4, S. 3; P.A. 19-117, S. 357.)

*Note: On and after July 1, 2026, this section, as amended by section 363 of public act 25-168, is to read as follows:

“Sec. 12-263r. Nursing home and intermediate care facility resident day user fees and taxes. Exemption request and approval. (a)(1) For each calendar quarter commencing on or after July 1, 2017, and prior to July 1, 2026, there is hereby imposed a quarterly fee on each nursing home and intermediate care facility in this state, which fee shall be the product of each facility's total resident days during the calendar quarter multiplied by the user fee. Except as otherwise provided in this section, (A) the user fee for nursing homes shall be twenty-one dollars and two cents, and (B) the user fee for intermediate care facilities shall be (i) twenty-seven dollars and twenty-six cents for calendar quarters commencing on or after July 1, 2017, and prior to July 1, 2019, and (ii) twenty-seven dollars and seventy-six cents for calendar quarters commencing on or after July 1, 2019. As used in this subdivision, “resident day” means nursing home resident day and intermediate care facility resident day, as applicable.

(2) Subject to the provisions of subsection (b) of section 12-263aa, for each calendar quarter commencing on or after July 1, 2026, there is hereby imposed a tax on all nursing homes and intermediate care facilities at a rate of six per cent of the nursing facility service revenue and intermediate care facility service revenue received by such nursing facility and intermediate care facility, except that an intermediate care facility operated exclusively by the state, other than an intermediate care facility operated by the state as a receiver pursuant to chapter 920, shall be exempt from the tax.

(b) (1) (A) (i) Prior to January 1, 2018, the Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt from the quarterly fee imposed on nursing homes under subdivision (1) of subsection (a) of this section those nursing homes set forth in subparagraph (A) of subdivision (2) of this subsection that are licensed on or prior to July 1, 2017.

(ii) Prior to January 1, 2026, the Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services to exempt from the tax imposed on nursing homes under subdivision (2) of subsection (a) of this section those nursing homes set forth in subparagraph (A) of subdivision (2) of this subsection that are licensed on or prior to July 1, 2017.

(C) Any nursing home for which the Centers for Medicare and Medicaid Services grants an exemption shall be exempt from such quarterly fee or tax. Any nursing home for which the Centers for Medicare and Medicaid Services denies an exemption shall be required to pay the quarterly fee or tax imposed on nursing homes under subsection (a) of this section.

(2) Upon approval by the Centers for Medicare and Medicaid Services, each of the following nursing homes shall be exempt from the quarterly fee or tax imposed on nursing homes under subsection (a) of this section:

(c) (1) The Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services for permission to impose a user fee in the amount of sixteen dollars and thirteen cents upon nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds. If the Centers for Medicare and Medicaid Services grants permission, the user fee imposed on nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds shall be sixteen dollars and thirteen cents. If the Centers for Medicare and Medicaid Services denies permission, the user fee for nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds shall be twenty-one dollars and two cents.

(2) The Commissioner of Social Services shall seek approval from the Centers for Medicare and Medicaid Services for permission to impose a tax at the rate of four and six-tenths per cent of the nursing facility service revenue received by nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds. If the Centers for Medicare and Medicaid Services grants permission, the rate of the tax imposed under subdivision (2) of subsection (a) of this section on nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds shall be four and six-tenths per cent. If the Centers for Medicare and Medicaid Services denies permission, the rate of the tax imposed under said subdivision on nursing homes owned by municipalities and nursing homes licensed for more than two hundred thirty beds shall be six per cent.

(d) The provisions of section 17b-8 shall not apply to any exemption or exemptions sought by the Department of Social Services from the Centers for Medicare and Medicaid Services under this section.”

(June Sp. Sess. P.A. 17-4, S. 3; P.A. 19-117, S. 357; P.A. 25-168, S. 363.)

History: June Sp. Sess. P.A. 17-4 effective November 21, 2017; P.A. 19-117 amended Subsec. (a) by designating existing provisions re user fee for nursing homes as Subdiv. (1), designating existing provisions re user fee for intermediate care facilities as Subdiv. (2) and amending same by increasing user fee rate for calendar quarters commencing on or after July 1, 2019, from $27.26 to $27.76, effective June 26, 2019; P.A. 25-168 substantially revised section re imposition of tax for calendar quarters commencing on or after July 1, 2026, effective July 1, 2026, and applicable to calendar quarters commencing on or after July 1, 2026.

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Sec. 12-263s. *(See end of section for amended version of subsection (b) and effective date.) Tax credits. Returns. Request for extension of time for payment. Penalties. (a) No tax credit or credits shall be allowable against any tax or fee imposed under section 12-263q or 12-263r. Notwithstanding any other provision of the general statutes, any health care provider that has been assigned tax credits under section 32-9t for application against the taxes imposed under chapter 211a may further assign such tax credits to another taxpayer or taxpayers one time, provided such other taxpayer or taxpayers may claim such credit only with respect to a taxable year for which the assigning health care provider would have been eligible to claim such credit and such other taxpayer or taxpayers may not further assign such credit. The assigning health care provider shall file with the commissioner information requested by the commissioner regarding such assignments, including but not limited to, the current holders of credits as of the end of the preceding calendar year.

*(b) (1) Each taxpayer doing business in this state shall, on or before the last day of January, April, July and October of each year, render to the commissioner a quarterly return, on forms prescribed or furnished by the commissioner and signed by one of the taxpayer's principal officers, stating specifically the name and location of such taxpayer, the amount of its net patient revenue or resident days during the calendar quarter ending on the last day of the preceding month and such other information as the commissioner deems necessary for the proper administration of this section and the state's Medicaid program. Except as provided in subdivision (2) of this subsection, the taxes and fees imposed under section 12-263q or 12-263r shall be due and payable on the due date of such return. Each taxpayer shall be required to file such return electronically with the department and to make such payment by electronic funds transfer in the manner provided by chapter 228g, irrespective of whether the taxpayer would have otherwise been required to file such return electronically or to make such payment by electronic funds transfer under the provisions of said chapter.

(2) (A) A taxpayer may file, on or before the due date of a payment of tax or fee imposed under section 12-263q or 12-263r, a request for a reasonable extension of time for such payment for reasons of undue hardship. Undue hardship shall be demonstrated by a showing that such taxpayer is at substantial risk of defaulting on a bond covenant or similar obligation if such taxpayer were to make payment on the due date of the amount for which the extension is requested. Such request shall be filed on forms prescribed by the commissioner and shall include complete information of such taxpayer's inability, due to undue hardship, to make payment of the tax or fee on or before the due date of such payment. The commissioner shall not grant any extension for a general statement of hardship by the taxpayer or for the convenience of the taxpayer.

(B) The commissioner may grant an extension if the commissioner determines an undue hardship exists. Such extension shall not exceed three months from the original due date of the payment, except that the commissioner may grant an additional extension not exceeding three months from the initial extended due date of the payment (i) upon the filing of a subsequent request by the taxpayer on or before the extended due date of the payment, on forms prescribed by the commissioner, and (ii) upon a showing of extraordinary circumstances, as determined by the commissioner.

(3) If the commissioner grants an extension pursuant to subdivision (2) of this subsection, no penalty shall be imposed and no interest shall accrue during the period of time for which an extension is granted if the taxpayer pays the tax or fee due on or before the extended due date of the payment. If the taxpayer does not pay such tax or fee by the extended due date, a penalty shall be imposed in accordance with subsection (c) of this section and interest shall begin to accrue at a rate of one per cent per month for each month or fraction thereof from the extended due date of such tax or fee until the date of payment.

(c) (1) Except as provided in subdivision (2) of subsection (b) of this section, if any taxpayer fails to pay the amount of tax or fee reported to be due on such taxpayer's return within the time specified under the provisions of this section, there shall be imposed a penalty equal to ten per cent of such amount due and unpaid, or fifty dollars, whichever is greater. The tax or fee shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax or fee until the date of payment.

(2) If any taxpayer has not made its return within one month of the due date of such return, the commissioner may make such return at any time thereafter, according to the best information obtainable and according to the form prescribed. There shall be added to the tax or fee imposed upon the basis of such return an amount equal to ten per cent of such tax or fee, or fifty dollars, whichever is greater. The tax or fee shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax or fee until the date of payment.

(3) Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalties provided under this subsection when it is proven to the commissioner's satisfaction that the failure to pay any tax or fee on time was due to reasonable cause and was not intentional or due to neglect.

(4) The commissioner shall notify the Commissioner of Social Services of any amount delinquent under this section and, upon receipt of such notice, the Commissioner of Social Services shall deduct and withhold such amount from amounts otherwise payable by the Department of Social Services to the delinquent taxpayer.

(d) (1) Any person required under sections 12-263q to 12-263v, inclusive, to pay any tax or fee, make a return, keep any records or supply any information, who wilfully fails, at the time required by law, to pay such tax or fee, make such return, keep such records or supply such information, shall, in addition to any other penalty provided by law, be fined not more than one thousand dollars or imprisoned not more than one year, or both. As used in this subsection, “person” includes any officer or employee of a taxpayer under a duty to pay such tax or fee, make such return, keep such records or supply such information. Notwithstanding the provisions of section 54-193, no person shall be prosecuted for a violation of the provisions of this subsection committed on or after July 1, 1997, except within three years next after such violation has been committed.

(2) Any person who wilfully delivers or discloses to the commissioner or the commissioner's authorized agent any list, return, account, statement or other document, known by such person to be fraudulent or false in any material matter, shall, in addition to any other penalty provided by law, be guilty of a class D felony. No person shall be charged with an offense under both this subdivision and subdivision (1) of this subsection in relation to the same tax period but such person may be charged and prosecuted for both such offenses upon the same information.

(June Sp. Sess. P.A. 17-4, S. 4.)

*Note: On and after July 1, 2026, subsection (b) of this section, as amended by section 361 of public act 25-168, is to read as follows:

“Sec. 12-263s. Tax credits. Returns.

(b) Each taxpayer doing business in this state shall, on or before the last day of January, April, July and October of each year, render to the commissioner a quarterly return, on forms prescribed or furnished by the commissioner and signed by one of the taxpayer's principal officers, stating specifically the name and location of such taxpayer, the amount of its net patient revenue, nursing facility service revenue, intermediate care facility service revenue or resident days during the calendar quarter ending on the last day of the preceding month and such other information as the commissioner deems necessary for the proper administration of this section and the state's Medicaid program. The taxes and fees imposed under section 12-263q or 12-263r shall be due and payable on the due date of such return. Each taxpayer shall be required to file such return electronically with the department and to make such payment by electronic funds transfer in the manner provided by chapter 228g, irrespective of whether the taxpayer would have otherwise been required to file such return electronically or to make such payment by electronic funds transfer under the provisions of said chapter.”

(June Sp. Sess. P.A. 17-4, S. 4; P.A. 25-168, S. 361.)

History: June Sp. Sess. P.A. 17-4 effective November 21, 2017; P.A. 25-168 amended Subsec. (b) by deleting Subdiv. (1) designator, adding reference to nursing facility service revenue and intermediate care facility service revenue, deleting former Subdivs. (2) and (3) re extension of time for payment of tax or fee and penalty for failure to pay, and making conforming changes, effective July 1, 2026, and applicable to calendar quarters commencing on or after July 1, 2026.

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Sec. 12-263aa. *(See end of section for amended version and effective date.) Determination by the Centers for Medicare and Medicaid Services. For the state fiscal years ending June 30, 2020, through June 30, 2026, the tax imposed under section 12-263q on the provision of inpatient hospital services and outpatient hospital services shall cease to be imposed if the Centers for Medicare and Medicaid Services (1) determines that such tax is an impermissible tax under Section 1903(w) of the Social Security Act, as amended from time to time, or (2) does not approve the applicable Medicaid state plan amendments necessary for the state to receive federal financial participation under the Medicaid program for the payments set forth in subsection (i) of section 17b-239 and subsection (c) of section 17b-239e. In the event of such a determination or disapproval, the General Assembly shall consider, during the next occurring regular or special session, whichever is sooner, such amendments to the general statutes as are necessary to comply with federal law regarding such tax.

(Dec. Sp. Sess. P.A. 19-1, S. 4.)

*Note: On and after July 1, 2026, this section, as amended by section 364 of public act 25-168, is to read as follows:

“Sec. 12-263aa. Determination by the Centers for Medicare and Medicaid Services. (a) For the state fiscal years ending June 30, 2020, through June 30, 2026, the tax imposed under section 12-263q on the provision of inpatient hospital services and outpatient hospital services shall cease to be imposed if the Centers for Medicare and Medicaid Services (1) determines that such tax is an impermissible tax under Section 1903(w) of the Social Security Act, as amended from time to time, or (2) does not approve the applicable Medicaid state plan amendments necessary for the state to receive federal financial participation under the Medicaid program for the payments set forth in subsection (i) of section 17b-239 and subsection (c) of section 17b-239e. In the event of such a determination or disapproval, the General Assembly shall consider, during the next occurring regular or special session, whichever is sooner, such amendments to the general statutes as are necessary to comply with federal law regarding such tax.

(b) On and after July 1, 2026, the tax imposed under subdivision (2) of subsection (a) of section 12-263r shall cease to be imposed if the Centers for Medicare and Medicaid Services determines that such tax is an impermissible tax under Section 1903(w) of the Social Security Act, as amended from time to time. In the event of such a determination, the quarterly fee under subdivision (1) of subsection (a) of section 12-263r shall be reinstated and applicable to the calendar quarter during which such determination was made and each calendar quarter thereafter. If the state successfully appeals such determination, such quarterly fee shall cease and the tax under subdivision (2) of subsection (a) of section 12-263r shall be reinstated and applicable to the calendar quarter commencing immediately after the date of the final decision of such appeal and each calendar quarter thereafter.”

(Dec. Sp. Sess. P.A. 19-1, S. 4; P.A. 25-168, S. 364.)

History: Dec. Sp. Sess. P.A. 19-1 effective December 19, 2019; P.A. 25-168 designated existing provision as Subsec. (a) and added Subsec. (b) re contingent imposition of tax under Sec. 12-263r(a)(2) on or after July 1, 2026, depending on Centers for Medicare and Medicaid Services determination, effective July 1, 2026.

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CHAPTER 211c

HOSPITALS TAX AND NURSING HOME ANDINTERMEDIATE CARE FACILITY USERS FEES

Table of Contents

HOSPITALS TAX AND NURSING HOME AND
INTERMEDIATE CARE FACILITY USERS FEES