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advocacy community education
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A
ttorney Eric Green noted in his
May/June Connecticut CPA arti-
cle that, "Over the last several
years, our Department of Revenue
Services (DRS) has made great strides
in collecting back taxes and identifying
non-filers." Much of this progress contin-
ues to be driven by our clear under-
standing that we have to do more with
less and with new approaches. For us, it
begins with a focus upfront on informa-
tion and education, but continues right
through collections and enforcement.
Just a few of our new approaches are:
Internal paperwork reduction and
externally expanding electronic filing
and payment.
Making more information and
assistance accessible online.
Working groups that reach out to
practitioners upfront in order to have
improved mutual understanding on
issues. This can then help practi-
tioners better guide taxpayers.
Our E-Warrant system for asset
attachment and wage garnishment.
Utilizing technology and third-party
data to identify non-filers and
under-reporters.
Self-audit options available on
request.
Using LexisNexis as a tool to reduce
the high volume of mail returned and
reprocessed for bad addresses.
Effective offset protocols with the IRS
and several states, as well as with
other state agencies and within the
agency among multiple tax types.
A cross-agency Delinquency Unit
that, after completing a major clean-
up this summer for sales, withhold-
ing, and corporate taxes, will help
focus us on strategies to help avoid
delinquencies and help taxpayers
when they first get into trouble.
An automated scoring system to
focus collections and enforcement
more strategically as well as provide
more opportunity for assistance
when taxpayers are first delinquent.
While agency resources diminished and
the economy struggled this past year,
the DRS still increased collections on
overdue accounts. In fact, for several
years now, revenue available for collec-
tions as overdue has been less than
four percent of total revenue collected.
That's a rate most businesses would
envy.
Governor Dannel Malloy has made
clear that part of being open for busi-
ness in Connecticut means less "busi-
ness as usual" in state government. As
commissioner, I am committed to shift-
ing the paradigm from a traditional
bureaucratic approach to a more
strategic approach in tax policy and
practice. This means linking the DRS
more integrally to state fiscal and eco-
nomic development policy. It also
means being much more guided by
what it takes strategically to reduce the
tax gap by improving voluntary compli-
ance. For the DRS, enforcement is one
of many revenue collection tools, but it
is not our primary purpose.
Being smart is not being soft when it
comes to revenue collection. Penalty
waivers, offers of compromise (includ-
ing "doubt as to collectability" in terms
of ability to pay), voluntary disclosures,
payment plans, and determinations of
currently non-collectable stats are all
DRS tools that can help maximize col-
lections and encourage voluntary com-
pliance. Doing more to identify and
work with taxpayers at the first sign of
delinquency makes more sense than
building up interest and penalties that
only become more difficult to collect
from businesses and individuals
already struggling to remain solvent.
Automatic installment payment agree-
ments will be also considered further.
The DRS has a clear legal and fiscal
obligation to collect what's due when it's
due. Those who evade taxes do so at
the expense of those who do not. Tax
evasion jeopardizes fairness and public
confidence. Particularly when it comes
to trust taxes, blowing through a series
of business entities and leaving the
state and employees holding the bag is
not an acceptable business or tax prac-
tice. Nor is using trust taxes as a busi-
ness loan under any circumstances.
At the same time, being rigorous in col-
lections and enforcement is not the
same as being rigid. Inflexible systems
are prone to collapse under their own
weight. We are here to inform, assist,
and work with taxpayers first and police
taxpayers as a last resort. Building vol-
untary compliance will always be
smarter, more productive, and less
costly than relying on enforcement.
Hard economic times or not, the
Department of Revenue Services will
always pursue new and smart
approaches.
There's Nothing New About New Approaches
at the Department of Revenue Services
The Commissioner's Column
By Kevin B. Sullivan
Connecticut Commissioner of Revenue Services