Connecticut Authorizes Tax Amnesty Program to Run Through November 30, 2018

Connecticut has enacted legislation authorizing the Connecticut Department of Revenue Services to implement a “fresh start” tax amnesty program effective October 31, 2017 through November 30, 2018. The program allows for the waiver of most penalties as well as 50% of the interest related to a failure to pay any amount due to the commissioner by the date prescribed for payment. A fresh start agreement for a qualified taxpayer that has failed to file a tax return(s) may also provide for a limited look-back period.

A “qualified taxpayer” is a taxpayer that:

• Failed to file a tax return, or failed to report the full amount of tax properly due on a previously filed tax return, that was due on or before December 31, 2016;
• voluntarily comes forward prior to receiving a billing notice or a notice from the Department of Revenue Services that an audit is being conducted in relation to the tax type and taxable period or periods for which the taxpayer is seeking a fresh start agreement;
• is not a party to a closing agreement with the Commissioner of Revenue Services in relation to the tax type and taxable period or periods for which the taxpayer is seeking a fresh start agreement;
• has not made an offer of compromise that has been accepted by the commissioner in relation to the tax type and taxable period or periods for which the taxpayer is seeking a fresh start agreement;
• has not protested a determination of an audit for the tax type and taxable period or periods for which the taxpayer is seeking a fresh start agreement;
• is not a party to litigation against the commissioner in relation to the tax type and taxable period or periods for which the taxpayer is seeking a fresh start agreement; and
• applies for a fresh start agreement in the form and manner prescribed by the commissioner.

Qualified taxpayers who participate in the amnesty program must:

• Voluntarily and fully disclose on the application all material facts pertinent to the tax liability;
• file any tax returns or documents that may be required by the commissioner;
• pay in full the tax and interest as set forth in the fresh start agreement;
• agree to timely file any required tax returns and pay any associated tax obligations to the state for a period of three years after the date the fresh start agreement is signed by the parties to such agreement; and
• waive, for the taxable period or periods for which the commissioner has agreed to waive penalties and interest, all administrative and judicial rights of appeal that have not run or expired.

The waiver of penalties and interest will not apply if the commissioner finds that any of the following circumstances exist:

• The taxpayer misrepresented any material fact in applying for or entering into the fresh start agreement;
• the taxpayer fails to provide any information required for any taxable period covered by the fresh start agreement on or before the due date prescribed under the terms of the fresh start agreement;
• the taxpayer fails to pay any tax, penalty or interest due in the time, form or manner prescribed under the terms of the fresh start agreement;
• the tax reported by the taxpayer for any taxable period covered by the fresh start agreement, including any amount shown on an amended tax return, understates by ten per cent or more the tax due and the taxpayer cannot demonstrate to the satisfaction of the commissioner that a good faith effort was made to accurately compute the tax; or
• the qualified taxpayer fails to timely file any required tax returns or pay any associated tax obligations to the state, during the three-year period after the date the fresh start agreement was signed by the parties to such agreement.

No payment made by a taxpayer for a taxable period covered by a fresh start agreement shall be refunded or credited to a taxable period other than the taxable period for which such payment was made. (S.B. 1502, Laws 2017)