What is the Connecticut Tax Amnesty Program?
Earlier this summer, the Connecticut Department of Revenue Services announced the Connecticut Tax Amnesty program. Today, the program begins. So what is the CT Tax Amnesty program, what are the benefits of the CT Tax Amnesty program, and how long will the CT Tax Amnesty program last for?
A way to avoid criminal prosecution
The biggest benefit to participating in the program is that participants will be able to avoid criminal prosecution and civil penalties. However, the program is unavailable to taxpayers who are already facing these penalties and jail-time.
A way to save money on penalties and interest
Taxpayers who do not take advantage of the program will be on the hook for an additional 25% penalty. But that isn’t the biggest stick that DRS is willing to use to beat taxpayers into submission. I am not going to argue that 25% is a drop in the bucket, but jail time is worse. However, though the threat of jail time is real, penalties are more certain. So if a taxpayer qualifies, participating in the amnesty program (for those who can actually afford to do so) is a safe bet that money will be saved.
A way for cash-starved Connecticut to raise some revenue
The tax amnesty program isn’t new to Connecticut. The state has instituted similar programs in the past, and the programs have provided liquidity to our cash-strapped state’s treasury on four previous occasions. The last such program, in 2009, increased state revenue by $25 million for the fiscal year. In 2002, the state brought in over $100 million using a similar program.
For the current year program, the state expects to bring in $35 million dollars in additional revenue for the 2013-2014 fiscal year.
How does the Connecticut Tax Amnesty Program Work?
The CT DRS provides a checklist here. Below is my summary of the necessary steps. As with anything in the arena of state tax issues, it may be in your best interest to hire a tax attorney or other professional to handle the disclosure and make sure that your rights are protected.
Step 1: Collect your information
You will need to know what tax years you want to file for amnesty for. The first step is to collect a list of the years you know you have underreported on, or for which there was a failure file a tax return. Once you have that list, you will need to gather information such as a P+L for each year, tax forms, cash register receipts, and other documentation of expenses and income.
Step 2: Prepare original or amended returns
In order to qualify, you will need to use the information you gathered in step one to prepare any non-filed returns, or any amended returns to report income that was missing on returns you already filed.
Step 3: Find a source of payment for the tax you owe
Before submitting an application, you will need to make sure that you have the money to pay the tax due. DRS requires that payment in full is made at the time the application is made. Payments can be made electronically.
How long will the Connecticut Tax Amnesty Program be Available?
The program begins today, and it will be available until November 15 (unless the DRS starts investigating the taxpayer before then).
How can Connecticut taxpayers take advantage of the program?
Call 860-4-THE-LAW today, or send me an e-mail at tsg [at] 4thelaw [dot] net today to schedule a free confidential consultation.