In January, Connecticut Governor Dan Malloy introduced S.B. 843, which includes a number of revenue items that are part of the governor’s 2014-2015 biennial state budget. Among the revenue items included in the bill is a tax amnesty program (the “Amnesty”) to be conducted from September 16, 2013 through November 15, 2013. Based on discussions with Connecticut Department of Revenue Services personnel, there is a support for the enactment of legislation authorizing the Amnesty, either as part of S.B. 843 or as a piece of stand-alone legislation.
The Amnesty would be available to persons owing tax for any period ending on or before November 30, 2013, and would cover all taxes imposed by the state and collected by the Department of Revenue Services, with the exception of the motor carrier road tax imposed on licensees. The term “persons” would include all individuals, partnerships, companies or corporations other than those who (1) are party to any criminal or civil litigation or investigation as of July 1, 2013 in any court of the United State or Connecticut, (2) are party to a closing agreement with the Department, (3) have made an offer of compromise that has been accepted by the Department, or (4) are party to a managed audit agreement.
In exchange for coming forward through the Amnesty, a taxpayer would receive abatement of all civil penalties and criminal prosecution. In addition, taxpayers will receive a 75 percent reduction of interest shown due and payable as of the date of filing the amnesty application, provided that such interest and tax are paid in full by November 15, 2013.
In sharp contrast to Connecticut’s 2009 tax amnesty program, the proposed Amnesty would be available to taxpayers under audit.1 Thus, taxpayers who are currently under audit and expecting an assessment, may want to wait before entering into any sort of settlement with the Department of Revenue Services until after it becomes clear whether the Amnesty will be enacted this year in something close to its current form. In addition, and distinguishable from the 2009 tax amnesty program, under the proposed Amnesty, any eligible person who does not participate and has not previously filed a return as required by Connecticut law would be subject to an undisputable penalty of 25 percent of the tax owed for the affected taxable period.2
Taxpayers with outstanding tax liabilities in Connecticut, including taxpayers under audit, are encouraged to contact the authors of this Alert or other members of the Reed Smith State Tax Group to further discuss the Amnesty, and other Connecticut tax opportunities.