Connecticut: Top Sales Tax Compliance Problems
- Jul 11, 2014 | Gail Cole
Sales tax is a “trust tax.” Sellers are trusted by state and local governments to collect it on sales of taxable goods and services and then remit it to the proper tax authority. As a trust tax, sales tax faces a number of challenges.
The Connecticut Department of Revenue Services has enumerated several Connecticut sales tax challenges in its 2014 Sales Tax Collection Initiatives. These 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;
- Low consumer use tax compliance;
Add to that the overall complexity inherent in sales and use tax compliance, and you’ve got a respectable list of problems.
The Connecticut Department of Revenue Services (DRS) collected more than 3.9 million dollars in sales and use tax FY 2012-13. That means a lot of Connecticut retailers are trustworthy. More than 95%, in fact.
The other 4+%
Approximately 1,300 audits conducted by the DRS each year uncover delinquent taxes, many of which arise from errors. DRS no longer renews sales tax permits for businesses with back taxes owed. If payment or an approved payment plan isn’t made in a timely manner, delinquent taxpayers are referred to the DRS Special Investigations Section (SIS).
SIS goes after criminals, which is what people who don’t pay taxes become. It made 34 arrests in FY 2012-13 and 62 arrests in FY 2011-12 for criminal violations related to sales tax.
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