1. What is CT Fresh Start?
CT Fresh Start is a voluntary compliance program that is available to both individuals and businesses. This program provides incentives to taxpayers who report and pay their outstanding, unreported tax liabilities to the Department of Revenue Services (“DRS”).
Under this program, participating taxpayers must disclose their unreported tax liabilities to DRS. In exchange, DRS will agree not to impose penalties and will significantly reduce the interest on the taxes reported. Additionally, DRS may agree not to pursue older, unfiled returns by limiting how far back a taxpayer must “look-back” when reporting the tax that it owes.
To participate, taxpayers must complete the online application at: www.MakeAFreshStartCT.com or from the DRS website at: www.ct.gov/DRS. This application only takes a few minutes to complete.
2. What are the benefits of participating in CT Fresh Start?
CT Fresh Start provides incentives to taxpayers who voluntarily report and pay their outstanding, unreported tax liabilities. If you participate, you will be entitled to the following incentives:
- No Penalties. Penalties will not be imposed on the tax you report and pay through CT Fresh Start.
- Interest Reduced by 50%. DRS will waive 50% of the interest on the tax you report and pay through CT Fresh Start.
- Limited Look-Back for Non-Filers. DRS may agree not to pursue older, unfiled returns. See questions 14-17 for details on limited look-back periods.
- No Criminal Prosecution. DRS will not initiate a criminal investigation or seek prosecution in relation to any application submitted and tax paid in good faith under CT Fresh Start.
3. When will CT Fresh Start take place?
CT Fresh Start began on October 31, 2017, and ends on November 30, 2018.
4. Am I eligible to participate in CT Fresh Start?
In general, you are eligible to participate in CT Fresh Start if you failed to file a return, or failed to report the full amount of tax on a previously filed return, for any tax return due on or before December 31, 2016.
However, you may not use CT Fresh Start to resolve outstanding tax liabilities for any tax type and period for which you:
- 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.
NOTE: Even if you cannot use CT Fresh Start to resolve certain of your tax liabilities, you may be eligible to resolve other tax liabilities through the program.
5. What tax types qualify for CT Fresh Start?
All taxes administered by DRS, except for taxes imposed under chapter 222 (IFTA), qualify for CT Fresh Start.
Examples of qualified Connecticut taxes include:
- Income tax;
- Business entity tax;
- Sales and Use tax;
- Withholding tax;
- Corporation business tax; and
- Gift tax.
Examples of taxes and fees not administered by DRS and not qualified for CT Fresh Start include:
- Local property taxes;
- Payroll taxes owed to the Connecticut Department of Labor;
- Taxes owed to the federal government; and
- Fees imposed by the Secretary of the State.
6. How do I participate in CT Fresh Start?
To participate in CT Fresh Start, you must complete a simple online application. The online application will be available on November 29, 2017. Unless you are otherwise directed by DRS, the online CT Fresh Start application will be the only item you must file and you should not submit the actual tax return(s) covered by your application.
On the application, you will enter the tax you owe then the reduced interest and the total balance due will be calculated for you. You must pay the balance due online at the same time that you file.
7. What should I do before applying for CT Fresh Start?
Before beginning the CT Fresh Start application, you must know the tax type(s), tax period(s), and amount of tax that you owe for each period. We strongly recommend that you complete a Connecticut tax return or an amended return for each period as a “worksheet” to aid you in completing your CT Fresh Start application. By completing a return (or returns), you increase the accuracy of your tax calculation.
Do not file any tax return(s) or amended tax return(s) with your CT Fresh Start application.
8. What is the CT Fresh Start agreement?
Under CT Fresh Start, you must agree to timely file all required tax returns and pay any associated tax to DRS for the three years following the date of your CT Fresh Start application.
If you do not file these returns and pay the corresponding tax due, you will not be in compliance with your CT Fresh Start agreement. See question 12 for information on what happens if you fail to comply.
NOTE: At the end of the three years, you must continue to file returns and pay tax as required by law. However, failure to file such returns or pay the associated tax will not cause you to be noncompliant with your CT Fresh Start agreement.
9. How will I know if my CT Fresh Start application has been approved or denied?
DRS will only notify you if your application has been denied. DRS will not notify you if your application has been approved.
10. What records am I required to keep?
You should keep a copy of your CT Fresh Start filing confirmation page and the source documents used to compute your tax liability. In general, these will be the only records of your CT Fresh Start agreement.
11. What can cause me to be noncompliant with my CT Fresh Start agreement?
You will be considered to be noncompliant with your CT Fresh Start agreement if you:
- Fail to timely file any required tax return or pay any associated tax for the three-year period after the date of the CT Fresh Start application;
- Misrepresent any material fact in the CT Fresh Start process;
- Fail to pay the tax or interest due with the CT Fresh Start application; or
- Underreport the amount of tax by ten percent or more, unless you are able to demonstrate that you made a good faith effort to accurately compute the tax due.
12. What happens if I do not comply with my CT Fresh Start agreement?
In addition to other penalties allowed by law, if you do not comply with your CT Fresh Start agreement, DRS may reinstate all applicable penalties and interest for the taxable periods covered by your CT Fresh Start application. Additionally, you will not be entitled to the limited look-back period (if applicable) and you may be subject to criminal prosecution.
13. Why should I apply now if the program runs through November 30, 2018?
There are two reasons. First, the sooner you pay the more savings that you will realize as interest accrues monthly. Second, DRS may select you for audit which would disqualify you from CT Fresh Start.
14. What does “limited look-back” mean?
Outside of CT Fresh Start, there is no limit on how far back DRS can go to assess tax, penalty and interest on any return that you did not file. Under CT Fresh Start, you will only be required to “look-back” and report the tax on just three years of unfiled returns (i.e., 3 annual returns, 12 quarterly returns, and 36 monthly returns). If you comply with all of the terms of your CT Fresh Start agreement, any liabilities prior to the three-year look-back period will be cancelled.
15. Who qualifies for the limited look-back?
If you have not registered and have never filed a return for a tax type, you are eligible for the limited look-back for that tax type.
EXAMPLE: Your business is registered and has previously filed returns for business use tax. Your business, however, has never registered or filed returns for corporation business tax. Under CT Fresh Start, your business is eligible for the limited look-back on its corporation business tax liabilities, but not its business use tax liabilities.
If you believe that you qualify for a limited look-back period, you must call DRS at 1-877-729-6691 prior to applying for CT Fresh Start.
16. Who does not qualify for the limited look-back?
If you have previously registered or filed a return for a tax type, you are not eligible for the limited look-back for that tax type. Also, the limited look-back does not apply to trust taxes (e.g., sales tax or withholding tax) that you collected but did not remit to DRS.
17. If I do not qualify for the limited look-back, is there still a benefit to participating in CT Fresh Start?
Yes. If you do not qualify for the limited look-back, but are otherwise eligible for CT Fresh Start, you may benefit from a significant reduction of interest and elimination of penalties for all periods you report and pay through CT Fresh Start.
18. What if I overpay under CT Fresh Start?
Payments made under CT Fresh Start will not be refunded or credited to another period. Be sure that your computations are correct when completing the online application.
19. Why is the CT Fresh Start application only available online?
CT Fresh Start has been designed to be as efficient as possible for both the taxpayer and DRS. Submitting the CT Fresh Start application electronically means that the entire process is streamlined and cost efficient.
20. How should I calculate the amount of tax I owe under CT Fresh Start?
When calculating the amount of additional tax you owe, be sure to account for any payments you have previously made against such tax. Please verify the amount of your estimated tax payments, withholding or extension payments prior to beginning your application. If you cannot verify the payments from your records, you should log in to your Taxpayer Service Center (TSC) account. The TSC can be accessed through the DRS website at www.ct.gov/drs.
21. How do I report individual use tax?
You may report your individual use tax liabilities under the “Income Tax” section of the CT Fresh Start website. See the DRS website for more information on individual use tax.
22. Can I bulk file a CT Fresh Start application for withholding tax?
No. A separate CT Fresh Start application must be filed for each taxpayer’s withholding tax account.
23. If my CT Fresh Start application is approved, am I still subject to audit?
Yes. The Department of Revenue Services retains the right to make any additional assessments for the tax types and tax periods covered by a CT Fresh Start agreement. If the audit results in an assessment, DRS may impose penalties and unreduced interest on the additional tax you owe.
24. What types of electronic payments are allowed?
Two forms of electronic tax payment will be accepted during the CT Fresh Start program. You can choose to pay the CT Fresh Start balance due through an electronic payment from your checking or savings account (ACH-debit) or by credit card.
25. Will I be charged a convenience fee if I use my credit card?
Yes, your payment will be processed by a third party credit card vendor Official Payments with convenience fee charged by the vendor. Official Payments accepts MasterCard, Visa, Discover and American Express. It’s safe and secure.
Your information will only be used to process your CT Fresh Start payment.
26. What happens if my electronic payment fails?
You will be notified in writing if your payment fails. You will have the opportunity to correct your failed payment.
27. Are installment payment plans available for CT Fresh Start?
No. Full payment must be initiated on the same day the CT Fresh Start application is submitted.
28. Will DRS accept non-electronic payments?
No. Full payment must be made electronically by direct payment, ACH credit, or credit card.
29. If I have questions regarding Fresh Start can I call the DRS?
Yes, for questions on the CT Fresh Start program you may call 1-(877)-729-6691.