Connecticut Tax Relief

How Connecticut Collects Taxes & Tax Help Options for Taxpayers

The Connecticut Department of Revenue Services has responsibility for administering the tax laws of the State and that includes acting as tax collector. When taxpayers fail to file their tax returns or pay what they owe in taxes on time, they face a series of fairly aggressive collection activities, as follows:

Interest & Penalties

If you fail to file your tax return when due or do not include the full amount in taxes you owe, you will likely face interest and penalty charges, as follows:

  • Late payment on income taxes: interest charges of 1% per month until your taxes are paid in full and a 10% penalty on the balance owed.
  • Late payment on sales taxes: interest charges of 1% per month until paid in full and a penalty of 15% of the amount of sales tax due or a total of $50.
  • Late payment on use taxes: interest charges of 1% per month until paid in full and a penalty of 10% of the amount of use tax due.

Collection Activities

The Collection & Enforcement Division is responsible for documenting tax returns and seeing that the taxes owed are quickly paid. Taxpayers who do not pay what they owe in taxes are sent a 30-Day Notice advising them that civil enforcement actions may be taken to collect the debt. If you are able to fully pay your taxes within those 30 days you can avoid these actions being taken against you. The actions that the Division could take include offset, bank levies, your case being referred to a collection agency, and etc.

Tax Liens

If you do not pay your tax assessment when due, you may find that any real estate you own and/or personal property have a lien filed against them. Even if you’ve made arrangements with the Department of Revenue Services to make installment payments, the Department may still file a lien against your property in order to secure the State’s interest.

A tax lien will most likely impair your ability to buy, sell or transfer real estate and since it is public record, it will likely adversely impact on your credit score. Once you’ve fully paid what you owe in taxes, interest and penalties you will be issued a Certificate of Release, lifting the lien.

Bank Levies

A bank levy is a one-time garnishment of the funds in an account resulting from the Department of Revenue Services’ issuance of a tax warrant for unpaid taxes. The warrant would be for the amount of tax due plus any other unpaid fees. The bank is legally obligated to withhold this amount for 15-21 days before sending the money on to the Department of Revenue.

If your bank notifies you that a levy has been placed on your account(s) you should immediately consult with a tax professional or CPA for his/her tax help and advice in resolving the matter so that the levy can be released as quickly as possible.

Garnishment of Wages

The Department of Revenue Services typically sends a 30-Day Notice to taxpayers if it intends to garnish their wages immediately upon issuing a tax warrant. If you cannot pay the full amount you owe in taxes and neglect to make payment arrangements with the Department, you are at risk of your employer being forced to garnish your wages.

The amount deducted and paid to the State would be equal to 25% of what would be your disposable income or an amount equal to the difference between what your disposable income would be and 40 times the minimum wage in your state, whichever is the lesser amount. Disposable income would be your gross income before taxes are deducted, plus normal retirement, health insurance and union dues.

Before risking wage garnishment, it would only make sense to consult with a reputable tax professional or CPA to determine what kind of tax help and advice they could provide.

Programs Available to Taxpayers in Need of Tax Help & Tax Relief

The Department of Revenue Services offers a number of different options to eligible taxpayers who cannot pay their taxes in full. Gaining approval for any of these options would depend on your history of paying taxes, your present financial situation and whether you meet the specific eligibility requirements.

Installment Payment Plans

You may be eligible for a short-term Installment Payment Plan if you do not have the money to pay your taxes in full on the due date. You must meet the following requirements before the Department of Revenue Services would consider your request for an Installment Payment Plan:

  • You are up-to-date in filing all required tax returns.
  • You have not reached collection status with the Department of Revenue Services.
  • You agree to pay your taxes off in full, including interest and penalties, within one year of the day you made your request.
  • You are not currently in bankruptcy, a tax warrant has not been issued, your account is not under criminal investigation or suspended.
  • You owe no more than $10,000.

Even if you meet these requirements, the Collection & Enforcement Division may still offer other payment options that you should consider. It would be wise to consult with an experienced tax professional or CPA who could provide the kind of tax help and expertise you need at this time.

To apply for a Short-Term Payment Plan you can phone the Department of Revenue Services at (860) 297-4936 and speak to someone about making payment arrangements. You can also fill out the Short-Term Payment Plan Request form and mail it to the address indicated on the form.

To request a short-term payment plan over the Internet, you would need to do the following:

  • Go online to the Connecticut Department of Revenue Services Center (TSC).
  • You will need to enter your social security number in order to log in.
  • Under the Main Menu, select Request Payment Agreement.
  • Follow the prompts.

If you do not meet the eligibility requirements for an Installment Payment Plan, there are other options available for resolving your tax problems, as follows:

  • If you have been assigned an agent, contact the Department and speak to your agent.
  • If your tax debt is in excess of $10,000, phone (860) 297-4936
  • If you are in bankruptcy, phone (860) 297-5921.
  • If your account has been sent to a collection agency, contact them directly.

If a tax warrant has already been issued against you, phone:

Bank Warrants: (860) 297-5845
Wage Warrants: (860) 297-5944
Other Warrants: (860) 297-5883

Offer in Compromise

You may be eligible to settle your taxes for less than what you owe under certain circumstances.

Before proceeding with this option it would be best if you sought tax help from an experienced tax professional or CPA so you have the best chances of being approved. If you were approved for the Offer in Compromise program it would allow you to have a measure of tax relief.

However, the Department of Revenue Services will not even consider your request for an Offer in Compromise if:

  • You have not yet filed all the tax returns you are required to file.
  • You have voluntarily filed for bankruptcy.
  • You are in involuntary bankruptcy due to the actions of someone else.
  • You are being criminally prosecuted for a tax debt owed to the State of Connecticut.
  • The amount you owe in taxes has not yet been formally assessed.
  • The audit assessment of your tax liability is now final.

You are eligible to request tax relief through Connecticut’s Offer in Compromise program if you meet the following requirements:

  • If you accept the amount owed, but do not have the money to pay the liability.
  • You would need to submit Offer in Compromise Form CT-656a, fully disclose your financial situation in writing and provide the required documentation. Send your packet to the Compliance Process Group Bureau Chief.
  • If you have received a Notice of Assessment and doubt the amount of taxes it claims you owe, do the following:
  • If you have not yet gotten your Final Determination Letter, fill out the Offer in Compromise Form CT-656a and send it with all the documentation and any other information to the Director of the Appellate Division.
  • If you have already received your Final Determination Letter but have not yet appealed the determination to the Superior Court, complete Offer in Compromise Form CT-656a and send it and all additional documentation to the Director of the Legal Division.
  • If you have gotten a Final Determination and already appealed it to Superior Court, complete Offer in Compromise Form CT-656a and send it, along with all supporting documentation to the General Counsel.
  • If you have doubts about whether you owe this tax debt and the State’s ability to collect this amount of money from you in any case, do the following:
  • If you have not yet gotten your Final Determination Letter, Complete Offer in Compromise Form CT-656a and send it along with all required documentation to the Director of the Appellate Division.
  • If you have already received your Final Determination Letter but have not yet appealed the determination to the Superior Court, complete Offer in Compromise Form CT-656a and send it and all additional documentation to the Director of the Legal Division.
  • If you have gotten your Final Determination and already appealed it to Superior Court, complete the Offer in Compromise Form CT-656a and send it, along with all supporting documentation to the General Counsel.

Once your packet has been received the Department will send you a Letter of Receipt. After the Commissioner or an agent in his/her office makes a decision, it is final and not subject to review or appeal to the Superior Court. Please phone (860) 297-5962 if you have any questions.

Power of Attorney

You can represent yourself on matters before the Department of Revenue Services, but you also have a right to get tax help by designating some other qualified person to represent you. If you would like to have a qualified tax professional, CPA or tax attorney to represent you, then you must complete and file Power of Attorney Form LGL-001.

Taxpayer Advocacy Office

If you have done everything you can through normal channels, which are discussed in detail on the Department’s website, to resolve your tax issues and have been unable to resolve your tax problems, you should reach out to the Taxpayer Advocacy Office. You could phone them at (203) 297-5603 or write them a letter with all the details, providing your contact information so they are able to respond back.

Send your letter to the following address:

Department of Revenue Services
Taxpayer Advocacy Office
25 Sigourney Street
Hartford, CT 06106

Call 612.524.5811