Connecticut taxpayers can get a fresh start with outstanding tax liability

Connecticut wants taxpayers with outstanding tax liability to know that although unreported taxes don’t go unnoticed, there’s a way for them to “make a fresh start.”

The CT Fresh Start program is a voluntary compliance initiative, open to both businesses and individuals, that incentivizes compliance. Its goal is to “help individuals and businesses get back on track on their tax payments” — and generate revenue for the state. Governor Dannel Malloy expects the program to bring in $60 million by the end of FY 18, and another $15 million by the program’s end on November 30, 2018.

Eligibility

The program is open to individuals and businesses that either failed to file a return due on or before December 31, 2016, or underreported the tax due on a return filed by or prior to that date. Taxes eligible for the program include the business entity tax, corporation business tax, gift tax, income tax, sales and use tax, and withholding tax.

Taxes not administered by the Connecticut Department of Revenue Services (DRS) aren’t eligible for the program. These include federal taxes, fees imposed by the Secretary of State, local property taxes, and payroll taxes owed to the Connecticut Department of Labor.

In addition, the program is closed to any outstanding tax liabilities for which the taxpayer:

• Has received a bill
• Is under audit
• Is party to a closing agreement with the DRS
• Has made an offer of compromise that’s been accepted by the DRS
• Has protested a determination of an audit
• Is a party to litigation against the Commissioner

For applicants accepted into the program, the DRS will waive all penalties and cut the interest owed in half. The department may also limit the look-back period for taxpayers who request that before applying to the program. Finally, taxpayers who come forward and pay the taxes they owe won’t be criminally prosecuted.

Applying

The application period is now open. Interested taxpayers should complete the online application before by November 30, 2018, when the program closes. Additional information.

It's a good idea to speak with a trusted tax advisor before applying for a voluntary disclosure or tax amnesty program. The team at Avalara Professional Services can help. Learn more.