Fred owned a package store in Willimantic, CT. In 2008 he was audited by the State of Connecticut for sales and use taxes. Fred's CPA tried to help but wasn't able to convince the auditor that Fred's sales were actually what Fred originally claimed. So the Department of Revenue Service (DRS) auditor assessed a massive Sales & Use bill for $250,000. Fred felt suffocated. He closed his store and sold his permit. He was struggling for years. While he wanted to open a new wine-focused liquor store and had backers, he couldn't get anywhere due to the $250,000 bill owed to the State of Connecticut hanging over his head.
We never promise any of our clients that the DRS will accept less payment with a Connecticut Offer of Compromise. The result can be hit or miss. Fred knew full well we could fail, but he thought it a worthy gamble. After many months and being told "no" many times, we finally got a DRS agent to accept $30,000 that Fred had in an old pension account to settle the $250,000 debt. We told Fred to act quickly to pay… before the DRS agents changed their mind.
The offer was accepted and paid — and sure enough, Fred was able to get going with his new wine shop, with his back Sales & Use taxes fading away in the rear-view mirror.
NOTE: We wondered if the DRS agent could tell that there really should not have been a $250,000 assessment in the first place, and if that had something to do with them accepting less. See, if this was an IRS back tax owed, we could file for an audit reconsideration to lower the taxes due to the amount actually owed. But the State of Connecticut has no such mechanism. There is really no effective way to challenge the validity of a tax debt owed to the state of Connecticut once the 30-day collection notice has expired. It is why if you are under audit by the DRS, you take it seriously. It may be impossible to undo a mistake, like we did with Fred.