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November 9, 2021
2021-2047

Connecticut's tax amnesty program runs through January 31, 2022

The Connecticut Department of Revenue Services (CT DRS) is conducting a tax amnesty program that began November 1, 2021, and ends January 31, 2022. Amnesty applies to tax periods ending on or before December 31, 2020; according to FAQs, "[t]here is no limit on how far back an applicant may go in reporting back taxes." The CT DRS will waive penalties and 75% of the interest otherwise due and not pursue criminal prosecution for taxpayers that participate and comply with the amnesty program.

The amnesty program applies to most taxes administered by the CT DRS, including: corporation business tax, sales and use tax, income tax (individual, estate and trust), pass-through entity tax, withholding tax and motor vehicle fuels tax. The amnesty program, however, does not apply to: (1) the Connecticut motor carrier road tax (International Fuel Tax Agreement); (2) administrative fees (e.g., registration, permit renewal) collected by the CT DRS; and (3) taxes not administered by the CT DRS.

Taxpayers eligible to participate in the amnesty program include individual and business taxpayers that:

  • Owe taxes and must file Connecticut tax returns for an eligible tax period and have not yet done so
  • Underreported tax due on a filed return
  • Have an unpaid tax lability with the CT DRS that includes penalties and interest
  • Are under audit by the CT DRS for periods ending on or before December 31, 2020
  • Have a protest pending before the CT DRS Appellate Division
  • Are pursuing civil litigation with the CT DRS

The FAQs list the procedures that taxpayers that have a protest pending before the CT DRS Appellate Division or with the Tax Session of the Connecticut Superior Court must follow when applying for amnesty so that their payment is not misapplied. The FAQs also direct taxpayers under audit to contact the revenue examiner conducting the audit to discuss how to close the audit under amnesty guidelines.

Taxpayers are not eligible to participate in the amnesty program if they:

  • Are under criminal investigation by the CT DRS
  • Are party to any criminal investigation pending as of November 1, 2021
  • Are party to a managed audit agreement
  • Are party to a closing agreement with the CT DRS
  • Made an offer of compromise that has been accepted by the CT DRS

Taxpayers eligible to participate in the amnesty program for a particular Connecticut tax or tax period may not be eligible to participate in the program for another tax or tax period.

The CT DRS is sending out an Amnesty Offer Letter to eligible taxpayers. Taxpayers with an eligible tax obligation that do not receive an Amnesty Offer Letter should call the Amnesty Help Line.

The CT DRS noted in the FAQs that receiving a tax bill from the CT CRS for the same liability addressed in an Amnesty Offer Letter will not affect a taxpayer's eligibility to participate in the amnesty program. The CT DRS said it will continue its regular billing practice during the amnesty program.

To participate in the amnesty program, taxpayers must file an online application and, at the same time, electronically submit the full tax and interest due. Taxpayers should not file a tax return or amended return with the amnesty application, as the CT DRS considers the completed and submitted amnesty application to be the return. (Taxpayers may use returns as a "worksheet" in determining how much tax is due; the electronic application will automatically calculate the interest owed.)

Taxpayers participating in the amnesty program waive their administrative and judicial rights to appeal the tax liability subject to amnesty. Payments made in connection with the amnesty program will not be refunded or credited to a taxpayer; installment payment plans are not available for the amnesty program.

Additional information about the amnesty program, including FAQs, is available on the CT DRS's website.

Implications

Eligible taxpayers may want to consider participating in Connecticut's tax amnesty program to have otherwise applicable penalties and 75% of the interest waived for the tax period for which amnesty is granted. It is also worth noting that the CT DRS will not refund or credit to another period any overpayments made during the amnesty program; thus, when calculating the amount due, taxpayers should take into account any amounts previously paid against the tax for which amnesty is being sought.

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Contact Information
For additional information concerning this Alert, please contact:
 
State and Local Taxation
   • Michael Keefe (michael.keefe@ey.com)
 

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