SALT Report 3015 – The Connecticut Department of Revenue Services issued a policy statement that addresses the procedures for requesting a waiver of civil penalties. The policy statement will clarify the penalty waiver process and the standard the Department uses to determine whether to waive a penalty of $1,000 or less, or to recommend the waiver of a penalty over $1,000.
Under the provisions of section 12-3a, the Commissioner has the authority to waive all or part of a penalty when it is proven that the failure to pay any tax was due to reasonable cause and was not intentional or due to neglect. The Department notes that there is similar language in the penalty provisions found in the Internal Revenue Code that basically, require the IRS to use a “reasonable cause standard” when determining whether to grant relief to a taxpayer.
Therefore, the Department stated that using the Internal Revenue Code provisions as a guide, they would apply a similar reasonable cause standard when determining whether to waive a penalty. A reasonable cause determination will be made on a case-by-case basis and will be judged on the facts and circumstances specific to each case.
To file a penalty waiver request, taxpayers should complete and submit Form DRS-PW. This form requires taxpayers to provide the Department with the specific details surrounding their penalty waiver request. The taxpayer or the person authorized to file a return or pay the tax must sign the form or it will not be accepted.
Taxpayers who are on a Department approved payment plan and are in compliance with the terms of the plan are eligible to submit a penalty waiver request. In addition, taxpayers who have timely filed a protest or timely appealed an assessed liability are also eligible to submit a penalty waiver request. However, the Department will not consider a request from a taxpayer who has an outstanding tax liability or who has unfilled tax returns.
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