In the post-Wayfair world, and with the pandemic creating financial hardships, many individuals and organizations will find themselves out of sales tax compliance. Though it may seem like a viable strategy, doing nothing carries the very real risk for excessive penalties, interest and even criminal prosecution. So why not resolve the sales tax liability in the most efficient and penalty-free way possible? Sales tax amnesty programs may be the answer.

 

The state of Connecticut recently announced a new tax amnesty program that began November 1, 2021 and will end January 31, 2022. If you are an individual or organization that owes back taxes prior to December 31, 2020, this may be an opportunity to become compliant with the Connecticut Department of Revenue Services (“DRS”) and have all penalties waived, interest reduced by 75% and avoid criminal prosecution. All taxes administered by the DRS, except for the Connecticut motor carrier road tax (IFTA), are included with this amnesty program.

 

As with most amnesty programs, there are some strings attached. The window to apply for tax amnesty is short with applications not being accepted after January 31, 2022. Furthermore, tax liabilities incurred after December 31, 2020, will not be eligible for amnesty. Once accepted into the program, there is no limit on prior tax periods the DRS can include to recapture taxes due. The amnesty program does not apply to all taxpayers and specifically excludes taxpayers with criminal litigation pending with the DRS on or after November 1, 2021, criminal matters currently under investigation by the DRS and agreements that have already been accepted by the DRS. To apply for this amnesty program or to find a complete list of details go to www.getrightct.com. All applications are required to be filed electronically and tax liabilities are required to be resolved electronically by January 31, 2022.

 

As states want to increase tax compliance and sales tax revenue, tax amnesty programs like the Connecticut program provide an avenue for wayward taxpayers to become tax compliant in way that is more friendly and appealing than an audit or criminal prosecution. Currently, only a handful of states have an active sales tax amnesty program: Alabama, Connecticut and Tennessee. Every state is different and the conditions for acceptance and benefits/risks to a tax amnesty program vary. Clarus Partners can help you navigate the complexities within a sales tax amnesty program.

 

Our company focuses exclusively on indirect tax compliance and advisory services – sales/use tax, property tax, business licenses, and unclaimed property. If you feel overwhelmed by tax compliance issues, you are not alone, and we can help. It’s what we do and we do it well. Talk to us before the state talks to you. We’re nicer. And more helpful. We’ll get you on the right path to sales tax compliance and maybe a good night’s sleep too!

 

By Jim Heine