Tax Notes Newsletter

Connecticut Imposes New Electronic Tax Return Filing Requirements in 2014

By Sandy Weinberg, Principal and Michele Galakoutis, Tax Supervisor
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 after January 1, 2014, 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 pay the associated taxes that way too: Sales and use tax; Business use tax; Room occupancy tax; Admissions and dues tax; Income tax withholding; Corporations 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% "Failure to Comply" penalty. The penalty will be imposed even if the paper check payment is received timely. 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 January 31, 2014 is due by February 28, 2014. 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, 2014. For those taxpayers who file their tax returns on an annual basis: your first required electronically filed return for the period ending December 31, 2014 is due by January 31, 2015.

Sandy Weinberg Principal sweinberg@odpkf.com 203.323.2400 www.odpkf.com

Contact: New York, NY (downtown) 212.867.8000 New York, NY (midtown) 212.286.2600 Harrison, NY 914.381.8900 Stamford, CT 203.323.2400 Paramus, NJ 201.712.9800 New Windsor, NY 845.220.2400 Wethersfield, CT 860.257.1870

For those taxpayers who must remit their income tax withholding on a monthly payment frequency: the due date for the January remittance is February 15, 2014 (extended to Monday 2/17/2014).

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 states its an effort to streamline the way DRS conducts business and becom[es] more environmentally green by eliminating paper. There are likely cost savings as well. In any event, taxpayers should ensure that they are prepared to file and pay electronically. In addition, they should speak to their payroll service providers on the issue as well. For more information regarding, or any assistance in registering, for Connecticuts new electronic filing requirements, do not hesitate to contact Sandy Weinberg at sweinberg@odpkf.com or your OConnor Davies tax professional.
About OConnor Davies, LLP: O'Connor Davies, LLP is a full service Certified Public Accounting and consulting firm that has a long history of serving clients both domestically and internationally and providing specialized professional services of the highest quality. With roots tracing to 1891, seven offices located in New York, New Jersey and Connecticut, and approximately 400 professionals including 70 partners, the Firm provides a complete range of accounting, auditing, tax and management advisory services. OConnor Davies is ranked as number 36 in Accounting Today's 2013 "Top 100 Firms" in the United States. The Firm is also within the 20 largest accounting firms in the New York Metropolitan area according to Crain's New York Business and the Westchester and Fairfield County Business Journals. OConnor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. IRS CIRCULAR 230 DISCLOSURE: To comply with IRS regulations, we are required to inform you that unless expressly stated otherwise, any discussion of U.S. federal tax issues in this correspondence (including any attachments) is not intended or written to be used, and cannot be used, (i) to avoid any penalties imposed under the Internal Revenue Code, or (ii) to promote, market, or recommend to another party any transaction or matter addressed herein.