Connecticut is raking in money with its tax amnesty program, but it may not do another one for a while
Businesses and individuals owing taxes in Connecticut have until January 31 to take advantage of an amnesty program which reduces interest on late payments by 75% and allows delinquent taxpayers to avoid penalties and criminal prosecution.
The state’s chief tax collector says the program is already raking in money.
When state lawmakers approved the tax amnesty program, they had anticipated it would help Connecticut raise about $40 million a year from delinquent taxpayers over a two-year period. Department of Revenue Services Commissioner Mark Boughton said that goal might be surpassed. He said about $3 million came in just in the first week of the program this month.
“So if we do two, two-and-a-half million a week I’ll be really, really pleased. And that would be a very, very successful rollout,” Boughton said.
Boughton said the amnesty program is a good deal for delinquent taxpayers.
“To give you an example, we just had a case that we settled, the amount of dispute goes back to 2014, and it was about $3 million. And by waiving the penalties and interest under the program, it got down to $1.2 million. And the business wrote a check right then and there and call it a day.”
He said it also saved the business money.
“This company is able to get it cleaned up and not spend money on lawyers and accountants trying to argue that they don't owe the money,” Boughton said.
This is not the first time Connecticut is offering a tax amnesty program. It’s done so several times since 1995. But Boughton said this might be the last amnesty for a long time. That’s because the state has become more efficient in identifying delinquent taxpayers.
“One of the things that we're doing really well in what we initiated over the last year is a new data analytics division within DRS. So we're now able to use algorithms, artificial intelligence, to be able to find out who's paying what they owe, why they're not paying and to be able to target various categories, whether they be sales tax, or income tax or corporate tax,” Boughton said.
Boughton said the state also has several tools to get people to pay.
“I mean, their property can be leaned, we could garnish your wages, we could ultimately, we don't want to, you could be arrested,” Boughton said.
Beyond the amnesty program, Boughton said tax collection is up in Connecticut because of the amount of money pumped into the economy by various federal economic stimulus programs.
“Sales tax is up. You know, if you order something from Amazon or a company online, we're collecting all that now, the real estate market has gone through the roof. So we're collecting a lot of conveyance fees, and then some other taxes that we have the P T as a pass through entity tax that's doing very well,” Boughton said.
And he said people are also going back into the workforce, so payroll taxes are up.
In the meantime, Boughton said there are still 40% to 45% of individuals and businesses who don’t pay their full obligation or don’t pay their taxes at all. He said that’s why the amnesty is needed.
Taxpayers seeking amnesty must apply with the Department of Revenue Services. The application is online at GetRightCT.com.