***Update: The CT Tax Amnesty program is expired. If you have a tax debt you need assistance with, contact us to set up a complimentary consultation.***
To fight the budget crunch, the state of Connecticut is hoping that the Connecticut Tax Amnesty program will convince both businesses and individuals to come forward and pay the taxes they owe to the state government. Lawmakers expect that this Connecticut Tax Amnesty program will generate $40 million for the state. As an incentive, effective July 1, 2013, business and individuals have an opportunity to enter the Connecticut Tax Amnesty program and get a whopping 75% off interest and penalties. For those accepted into the program, the Connecticut Department of Revenue will waive civil penalties and criminal prosecution for program participants.
If you can't come up with the Amnesty amount but would like to deal with your State of Connecticut DRS problems, click here to learn your settlement options.
The Connecticut Tax Amnesty program affects Connecticut businesses that have yet to pay, are late paying, or may have audit issues; and individuals who have yet to pay their entire tax liabilities or have under reported their liabilities. However, if you fail to participate in the program, you lose the right to the lower interest rates and will end up paying the full 12% annual interest, up from the discounted 3% rate, and face a 25% penalty. The amnesty program provides businesses with a means of coming clean and paying what you owe and at a reduced interest, no civil penalty, and no criminal action. Unlike non-payment of IRS taxes, the state is very aggressive in pursuing criminal charges for tax evasion. What most residents of Connecticut don't realize, is that they are far more likely to get arrested by the state of Connecticut for non-payment of taxes than the IRS. And here's proof. This page lists Connecticut taxpayers who were arrested in the first three months of 2013 alone.
How the Connecticut Tax Amnesty Program works
Let’s say your business owes $100,000 in back taxes. If you are accepted into the Connecticut Tax Amnesty program, you need only pay the amount you owe and interest of a 3% annualized rate. If you don’t enter the program and the state audits you, you will end up paying 25% in penalties and an additional 12% in annualized interest. In just two years, this number is more than 50% of the under reported or delinquent taxes owed. After two years of under reporting on $100,000, the penalty and interest comes to $56,800! If enrolled in the program, the interest penalties are only $6,090. Some individuals only recently discovered that they have an unreported tax liability. Remember that item you bought on Amazon? Turns out you were supposed to report that on your state tax return when you did not pay sales tax on it. Many may think that if caught they can afford to pay the taxes and penalties and whatever else they throw at them, however this may not be so with those with more significant purchases. John Smith bought a one of a kind Picasso, Stradivarius, or a Patek Philippe from Christies, Sothebys or a private dealer anywhere in the world. He had the items shipped to Connecticut where he maintains a second residence. By shipping this item he avoided paying sales tax on the item at the time of sale but come tax season must file a return indicating the item he purchased so he can pay the appropriate use tax. Come April 15th when John files his state tax return in the state of Connecticut and forgets to report the additions to his collection, he has committed tax evasion. Yes TAX EVASION. And for Connecticut taxpayers considering whether or not to enter into the 2012 IRS Voluntary Disclosure program for offshore accounts, there appears to be added incentive to get into the IRS OVDP so that this Connecticut tax Amnesty program can be taken advantage of. If the taxpayer’s application is accepted, the taxes and interest are due in full on November 15, 2013.