Connecticut agency tracks down $85.8M in uncollected taxes
HARTFORD, Conn. (AP) — Connecticut’s Department of Revenue Services announced Monday it unearthed about $85.8 million in uncollected tax revenue after ramping up efforts to resolve audit disputes with larger companies and making more personal visits to delinquent businesses.
Commissioner Kevin Sullivan said the funds were tracked down as part of a challenge from Gov. Dannel P. Malloy and the General Assembly to close the state’s so-called tax gap. That’s the amount of tax revenue the state is not collecting and does not know about, such as cash-only businesses that avoid paying sales taxes.
Sullivan said the $85.8 million collected exceeds the agency’s goal of rounding up $75 million. The revenue was counted in the new two-year, $40.3 billion state budget recently signed by Malloy.
“It’s the right thing,” Sullivan said of the initiative, adding how he’d prefer to track down the much-needed revenue from businesses that owe taxes rather than having everyday taxpayers make up the difference.
The agency was able to find some of the uncollected revenue by using newly available federal tax data. Sullivan said this year marked the first time the Internal Revenue Service has provided states with data from 1099 forms, which allow Connecticut to examine retailers’ credit card transactions to make sure state tax is being paid.
Sullivan said DRS also worked with large multistate and multinational companies with a presence in Connecticut to settle on how much tax they owe. He said these have been long-running disputes in some cases.
Also, he said DRS is now refusing to issue sales tax permit renewals to delinquent taxpayers and has made more visits to delinquent businesses, primarily bars and restaurants.
“You can ignore only so many letters,” Sullivan said, adding how businesses are “essentially stealing” when they don’t pay “trust taxes,” such as sales and withholding.
DRS also retrained its delinquent tax collection staff and added mobile field audit capabilities.