As part of the 2017/2018 budget, Connecticut enacted a Fresh Start Program, which is a voluntary tax compliance initiative available to both individuals and businesses wishing to report their outstanding unreported or underreported tax liabilities.

The program, which is slated to close on November 30, applies to tax returns due before December 31, 2016. In exchange for filing outstanding or corrected returns and paying the associated tax liabilities, the Department of Revenue Services (DRS) will waive penalties and half of the interest due.

Qualifying taxes (other than motor carrier road taxes) include personal income tax, corporate business tax, business entity tax, sales and use tax, withholding tax, and gift tax. Applications must be completed online on the DRS’s website or at www.makeafreshstartct.com.

Ineligible taxpayers

Taxpayers are ineligible for the program if they:

• Have received a bill;
• Are under audit;
• Are party to a closing agreement with DRS;
• Have made an offer of compromise that has been accepted by DRS;
• Have protested a determination of an audit; or 
• Are a party to litigation against the commissioner.

Special rules for unregistered taxpayers

For taxpayers who have not registered with the DRS for taxes owed, the DRS allows a limited three-year look-back period (i.e., limits the taxes owed for unfiled returns to three prior years). Taxpayers must contact the DRS at 1-877-729-6691 prior to applying for the limited look-back period.

After the initial telephone contact, taxpayers will be requested to apply for the three year look back in writing. The application must provide the reason for the error and approximate amount of liability. After reviewing the application, the DRS will contact the taxpayer to either approve or deny the application. It is possible for a taxpayer to use their advisor to anonymously contact the DRS and apply for a limited look back. Upon approval of an anonymous application, the taxpayer would then reveal their identity.

The three year look back period:

•  Starts the day the request is submitted (including periods beyond the December 31, 2016 cut off for other taxpayers);
• Qualifies for the beneficial 50% interest on all taxes due (even taxes due beyond December 31, 2016).

Taxpayers or their advisors, interested in applying for a limited look back must contact the DRS at 1-877-729-6691 prior to filing a written application.

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