hose of us in state government
should be forgiven if it seems
we're having a hard time these
days remembering whether we are go-
ing forward, backward, or just stuck in
time. It's been that kind of a year.
For DRS, the legislative budget hold-
up has made it hard for us to get ahead
of the 2018 tax season with timely,
accurate, and complete information
including tax forms and instructions.
There are, however, key concerns and
projects on our agenda:
Trump tax plan. Well, it's not really a
plan yet, but what we see so far is not
good news for Connecticut taxpayers.
Lower corporate and pass-through
corporate tax may help, but overall the
likely proposals are singularly regres-
sive with 78 percent of the tax cuts
going to less than one percent of our
state federal taxpayers.
Loss of state and local tax deductibil-
ity would cost Connecticut taxpayers
$2 billion. The mix of a higher rate,
elimination of personal exemptions,
and changes in deductions and cred-
its looks like a likely increased burden
on lower-income working families.
Worst of all, the overwhelming unpaid
estimated $5.6 trillion total cost over
the next 20 years promises increasing
Tax preparer standards. We have a
big job ahead over the next three years
to roll out statewide standards and
registration for commercial tax prepar-
ers (not including CPAs). With growing
evidence of preparer misinformation,
abusive practices, and fraud, this is
E-commerce parity. As the mis-
match and unfairness in the market-
place continues to grow, Connecti-
cut will be among many other states
pushing the envelope on taxation of
e-commerce sales. We will be hap-
py to enter into voluntary disclosure
agreements to forego past liability but
will not hesitate to bill noncompliant
sellers with substantial business ac-
tivity and at least $300,000 in annual
Snowbirds. Do folks who live here for
less than enough time to satisfy legal
"domicile" for income tax purposes
really pay anything like their fair
share of the cost of state benefits re-
ceived? It's a fair question that DRS
will be exploring.
Business taxes. Is there a smarter,
revenue neutral alternative to Con-
necticut's current business entity, cor-
porate income, and pass-through in-
come taxes? As more and more states
consider business activity taxes, we
need to get ahead of the debate. DRS
is grateful that an external advisory
group of tax professionals has agreed
to work through this with us.
Tax information management mod-
ernization. Our greatest priority right
now is replacing the state's outmoded,
high maintenance, and low productivity
tax information management system.
This is a matter of basic efficiency for
DRS and basic service to taxpayers.
With a solid business case in hand,
we hope to move forward with state fi-
nancing and procurement next year.
In the meantime, best wishes to one
and all for the holiday season ahead.
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Owner Paul Iannone is a successful
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author of Extraordinary Tax Career.
State Tax Update: What's Ahead?
By Connecticut Department of Revenue Services Commissioner Kevin B. Sullivan