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advocacy community education
To say that it's been a busy summer at
the Department of Revenue Services is
the understatement of the year. Few
can remember when so many state tax
changes rolled out in so little time. In
fact, implementation will likely continue
for months as businesses and con-
sumers become fully aware of these
changes, especially in what are
already the arcane worlds of sales tax-
ation and business tax credits. All this,
while Connecticut joins the rapidly
growing number of states demanding a
level playing field for online sellers
doing business in the state.
No doubt, implementation will take a
while. But the DRS has done a great job
getting the word out. Beating even my
deadline, new personal income tax with-
holding tables and instructions were dis-
seminated barely two weeks after
enactment more than two months
before withholding became effective in
August and three months before quar-
terly filing for estimated taxes.
For all the sales and excise tax
changes, we chose a somewhat new
approach for disseminating information,
given the lack of funds for publications.
Our Taxpayer Services staff became a
daily source for targeting information by
monitoring actual inquiries that usually
came in at a rate of more than 60 a day.
Our website then became a daily
source of new information in increasing
detail, better focused by already know-
ing frequently asked questions. Our
e-alerts and Twitter added even faster
dissemination, showing why more peo-
ple should go online to sign up for these
great tax information services at
DRS staff also identified and recruited
organizations and professional associ-
ations, including CSCPA, to dissemi-
nate information through their own
websites, email, mail, and regular pub-
lications. All of this was guided by a
cross-agency legislative implementa-
tion team vigilantly focused on triage in
getting information out serially rather
than waiting for one big and likely way-
too-late publication.
Even as I write this and you read this,
more questions remain to be answered
and more guidance needs to be provid-
ed. In that respect, two things are even
clearer to me now than during my
years in the State Senate. First, even
the best of legislative intentions do not
always translate into the clearest of
administrative directions. The DRS will
always be left to do the best we can to
fill in the blanks.
A few of my favorites so far? Yoga
instruction that's only taxable when it
takes place in a yoga studio. Packing
and crating for a shipment that's tax-
able for UPS but not taxable when
shipped by a moving company? Yes,
you can use a self-service dog wash
(who knew?) without paying tax. No,
the luxury taxable value of a leased
vehicle or boat is not incremental com-
pared to regular purchase value but
nice try. And what the hell are taxable
"services in connection with a cosmet-
ic medical procedure"? There's a good
reason why only one other state does
this. DRS has probably already spent
more trying to figure this one out than
the state will ever collect.
Sales and use taxes aren't the only
swamp. So is our increasingly convo-
luted array of business tax credits
(probably more valued now as com-
modities than as actual credits).
Hopefully, when the hard work
Governor Dannel Malloy is doing to put
the state budget back into balance is
done, there will be an opportunity to
simplify and focus our state tax policy.
Finally, a note on the new legislation
clarifying the responsibility, even under
prior law, of remote sellers to collect and
remit state sales taxes. Can anyone
truly believe that the purpose of the fed-
eral Commerce Clause to bar unfair
state barriers was also meant to advan-
tage out-of-state sellers and bar a level
playing field with in-state sellers? That it
is any burden at all to ask Amazon and
others to add sales tax collection and
remission to their already exquisite
automated promotional, processing,
payment, tracking, and fulfillment sys-
tems as they already do in other states?
Or that concurrent jurisdiction was not
reserved to the states?
It will probably take litigation all the way
up to the U.S. Supreme Court, but
Connecticut and a growing number of
states will forge ahead because it's only
fair. Like the writing instrument, the old
Quill decision is ripe for reconsideration.
The DRS is grateful to Governor Malloy
and the General Assembly for enacting
a variety of policy changes that we pro-
posed or supported. These include:
Clarifying nonresident contractor
bond requirements.
More enforceable penalties for
cigarette tax evasion.
Lesser penalties when required
electronic filers fail to do so.
Elimination of the separate payment
deadline trap for electronic payments.
Tax offset from lottery winnings for
Now, back to work.
So, a horse is a horse, but when is it a
"pet" for purposes of the new tax on
Taxing Times: Implementing State Revenue Changes
The Commissioner's Column
By Kevin B. Sullivan
Connecticut Commissioner of Revenue Services