***Note: this Program has expired. If you have a state or IRS tax issue you need assistance with, contact us to set up a free, confidential consultation.
The State of Connecticut has just rolled out their Tax Amnesty Program that we talked about in July. According to the website:
The Connecticut Tax Amnesty Program is giving you a 60-day window of opportunity from September 16, 2013 through November 15, 2013 to pay back taxes to the state at a reduced interest rate and to avoid penalties and criminal prosecution. Amnesty is open to anyone, individuals or businesses, owing Connecticut taxes for any period ending on or before November 30, 2012. Please pay your fair share and take advantage of this amnesty opportunity. It's good for you, and good for everyone.
This program is intended to give taxpayers an opportunity to resolve their tax matters with great savings to them, and not have to worry about criminal charges. (NOTE: It is our experience that one has a much bigger risk of criminal prosecution by the Department of Revenue Services, than the IRS). Taxpayers will be able to save 75% of the interest they owe and all penalties and just pay the full tax amount due plus 25% of the interest. Taxpayers will have until November 15, 2013 to take advantage of these huge savings just by paying the tax and 25% of interest they owe in full by the deadline.
Yes, the Connecticut tax amnesty is a good deal….if you have the money. But what can you do if you don't?
Great deal, but I can't afford even 75% of my Connecticut state tax bill. What should I do?
But what about those of you who would like to take advantage of this program, but there is no way you can come up with payment in full by November 15, 2013? Well, you will have to resolve your outstanding tax liability using these options:
- You can full pay your liability within 12 months.
- If you are unable to full pay your liability in 12 months, you can work out a payment arrangement, providing a complete financial analysis in order to show your ability to pay.
- After 12 months, you will present your financials again in order to determine an ability to pay. All the while a 1% interest rate is being added to your liability each month.
- An Offer in Compromise gives the taxpayer an opportunity to present a figure to the state in lieu of the full tax liability owed. Problem with that is that the state rules aren't nearly as favorable as the IRS Offer in Compromise rules. One of the reasons why is that unlike federal tax debt, Connecticut tax debts never expire. They can follow you for the rest of your life, constantly accruing interest.
- If you have personal tax liabilities, you may declare Chapter 7 Bankruptcy and discharge the taxes in bankruptcy court.
What you need to know about Connecticut tax amnesty
Whatever you decide to do, realize that, unless you plan on "going off the grid" for the rest of your life, you really need to do something — the Connecticut DRS can levy 25% of your pay or wipe out your bank accounts.
Typically, when someone owes the DRS, they also owe the IRS. The most critical thing is that when negotiating with the IRS, that you get "credit" for any back payments you are paying to the DRS, so that your settlement amount with the IRS is reduced. Otherwise, both the IRS and DRS may seek to collect more money from you than you can possibly afford.