By Sandy Weinberg and Michele Galakoutis
In the future, perhaps all tax returns will be required to be filed electronically. Effective this month, the state of Connecticut took a step in that direction.
For tax periods beginning on and after Jan. 1, the Connecticut Department of Revenue Services (DRS) will require everyone registered for any of the following seven taxes to not only file returns electronically, but also to pay the associated taxes that way:
· sales and use tax;
· business use tax;
· room occupancy tax;
· admissions and dues tax;
· income tax withholding;
· corporation business tax; and
· composite income tax.
There are no opt-out provisions.
What if a taxpayer fails to file and pay electronically and still sends in a paper return and a check? The DRS has made it clear that the taxpayer will be subject to a 10 percent “Failure to Comply” penalty. The penalty will be imposed even if the paper check payment is received on time.
Taxpayers who are now required to file any of the seven taxes will need to create an account through the Connecticut Taxpayer Service Center (TSC). Those who use a payroll company or tax service have the burden of confirming that their service provider is properly filing and paying electronically.
Examples of the start dates for the requirement to file and pay electronically are as follows:
· For those taxpayers who file their tax returns on a monthly basis: your first required electronically filed return for the period ending Jan. 31, 2014 was due Feb. 28.
· For those taxpayers who file their tax returns on a quarterly basis: your first required electronically filed return for the period ending March 31, 2014 is due by April 30.
· For those taxpayers who file their tax returns on an annual basis: your first required electronically filed return for the period ending Dec. 31, 2014 is due by Jan. 31, 2015.
· For those taxpayers who must remit their income tax withholding on a monthly payment frequency: the due date for the January remittance was Feb. 15, 2014 (which was extended to Feb. 17).
The new Connecticut requirements are in addition to others previously announced. Tax practitioners that prepare 50 or more prior year Connecticut income tax returns are required to file electronically.
So, why is the DRS imposing the new electronic filing and paying requirement? In its 2014 Electronic Filing Requirements Notice, the DRS said it is “an effort to streamline the way DRS conducts business and becomes more environmentally ”˜green”™ by eliminating paper.” There are likely cost savings, as well.
In any event, taxpayers should ensure they are prepared to file and pay electronically. In addition, they should speak to their payroll service providers on the issue, as well.
Sandy Weinberg is a principal and Michele Galakoutis is a tax supervisor at O”™Connor Davies”™ Stamford office. Among its other offices, the firm also operates from Harrison, N.Y. For more information on the topics addressed here, contact: sweinberg@odpkf.com.
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