Connecticut Sales Tax Collections: Catching a Thief
- Sales Tax News
- Feb 25, 2014 | Gail Cole
The Connecticut Department of Revenue Services (DRS) has released Sales Tax Collection Initiatives, which provides an overview of Connecticut sales and use tax, DRS sales tax collection initiatives, and a list of alternative methods of tax collection. The report underscores that sales tax is a “trust tax,” in that it relies on taxpayers to collect, remit and report it.
The state of Connecticut collected over $3.9 billion in sales tax revenue during FY 2012-13, and over $3.8 billion in FY 2011-2012. Delinquent sales and use taxes amounted to just over 4.25% in FY 2012-13 (or $169,482,565) and just under that in 2011-12 (or $162,281,117).
Challenges to collection include:
- “Failure to register;
- Inconsistent business registration information or inconsistent inter-agency enforcement;
- Cash sales or shadow booking;
- Non-reporting or under-reporting;
- Lack of statewide automated point-of-sales (POS) infrastructure;
- Out of state sales, on-line sales and other remote sales (as well as low individual use tax compliance); and
- Overall tax complexity.”
Efforts by DRS to improve sales tax collection are led by audits. The department conducts approximately 1,300 audits annually. Recent technological advances such as automated collection storage help “to increase efficiency, encourage compliance and maximize collections.”
Criminal enforcement is equally important part of sales tax collections. Typically, the Special Investigations Section (SIS) focuses on investigating businesses with invalid permits and businesses that fail to file and remit. Sales tax fraud is a Class C felony in Connecticut, and carries with it a maximum of 5 years in prison, a maximum fine of $5,000, or both.
In FY 2012-13, DRS made 34 arrests for sales tax criminal violations. In FY 2011-12, that number was nearly double, at 62.
Interested in learning more about Connecticut sales tax compliance? Read the Sales Tax Collection Initiatives.
Interested in being sales tax compliant? Automate.
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