State of Connecticut Writes Off $135 Plus Million Tax
Dollars as Being Uncollectible
Over $350
Million referred to State’s Suspense List in 2005
A Message from Susan Kniep,
President, FCTO, August 15, 2006
Due to the following concerns, The Federation of Connecticut
Taxpayer Organizations, Inc. (FCTO) has asked Governor Rell
to consider a Blue Ribbon Committee be convened to review the State’s
policies on tax abatement with the goal of increasing our tax revenue,
assessing the status of the State’s computer conversion, and opening up the Tax
Abatement Review Committee to the public under FOI.
- $135 million
plus tax dollars have been written off by the State's Tax Abatement Review
Committee as Uncollectible
- The State's
Tax Abatement Review Committee meeting for July, 2006 has been
indefinitely postponed due to tax information not being available.
- The Tax
Abatement Review Committee does not post an agenda. Its meetings are
not open to the public.
- The State’s
Computer Conversion is not yet complete thereby prohibiting access to
pertinent tax information and raising a concern for the accuracy of
information following conversion.
The following letter was recently submitted by FCTO to
Governor Rell ....
**********
August 14, 2006
To: Governor Jodi Rell
State of Connecticut
Office of the Governor
State Capitol
210 Capitol
Avenue
Hartford, Connecticut 06106
Governor.Rell@po.state.ct.us
(860) 566-4840
From: Susan Kniep, President
The Federation of Connecticut Taxpayer Organizations, Inc.
Website:
http://ctact.org/
email: fctopresident@ctact.org
841-8032
Subjects:
1)
July 11, 2005 – Abatement of $135 million plus
tax dollars by the State’s Tax Abatement Review Committee.
2)
July, 2006 – Postponement of July, 2006 meeting
of the State’s Tax Abatement Review Committee due to tax information being
unavailable because of incomplete computer system conversion.
3)
Lack of public access to Tax Abatement Review
Committee
Dear Governor Rell:
My search for information regarding the aforementioned began
in January, 2006 at which time I visited the offices of the State Tax
Department to review information on taxes due the State which were being
referred to the State’s Suspense List as uncollectible. What I had assumed would be a simple process
became an insurmountable task as hundreds of pages of computer sheets were laid
before me delineating tax liabilities by corporations which reached as high as
hundreds of thousands of dollars.
Examples included tax liabilities to be written off of $325,115;
$172,000; $176,000; $66,933; $116,886, and more by individual
corporations.
Only recently did I receive from Attorney Shawn Sims, Tax
Attorney, Legal Division, State of Connecticut,
under an FOI request, the minutes of the Abatement Committee’s July 11, 2005
meeting. In summary, the three members
of the Abatement Review Committee in July, 2005 agreed to Abate the Tax
Liabilities of 17,825 referrals totaling in excess of $135 million dollars, or
more specifically $135,745,896.92 . The
period included June, 1991 through April, 1997 in accordance with the State
Statutes requiring a 7 year moratorium as defined below and on the following
website http://www.cga.ct.gov/2005/pub/Chap202.htm#Sec12-37.htm.
Monthly taxes are referred to the State’s Suspense
List. The Office of the State
Comptroller informed me that the following taxes were referred to the State’s
Suspense List as uncollectible for the year 2005. They would be subject to the 7 year
moratorium prior to being referred to the State’s Tax Abatement Committee.
Income - $149 million
Sales - $102.1
Corporation - $63.3
Other - $25.7
Motor Fuels - $2.6
Today, I learned that the July, 2006 meeting of the Tax
Abatement Review Committee has been postponed indefinitely due to the fact that
necessary tax information is not available because of the ongoing computer
system conversion. In fact, the computer
sheets I had reviewed earlier in the year are the only hard copy documents
available. Referrals made for 2006 are apparently
not available for the public to review.
I have also learned that the Abatement Review Committee does
not post an Agenda prior to their meetings and the meetings are not open to the
public. I question if this is in
conformance with our Freedom of Information Statutes.
As I looked at one example - the $325,115 owed by Berkshire
Petroleum of Branford which is denoted as uncollectible, no assets, out of
business - I wondered what are the
State’s policies and procedures currently in effect which triggers the
State’s pursuit of delinquent taxes prior to a corporation finding its way onto
the State’s Suspense List. How much
time lapses before the State realizes there could be a serious problem
collecting the taxes due and moving to avoid the State’s liability of lost
revenue.
An even more important question is - Did any of these
corporations receive State funding or benefits of any kind.
In reflecting upon the aforementioned, I would propose the
following….
- A Blue Ribbon Committee be convened to
review the State’s policies on this
matter, with the goal of increasing our tax revenue. This Committee might also consider –
·
What property tax liability towns might have suffered;
·
What is the percentage of recently established companies
having their taxes abated versus those which have a history with the
State;
·
Should the State consider looking for a form of security for
new businesses to avoid this lost revenue.
2. The
Agenda and Minutes of the Meetings of the Tax Abatement Committee be made
available to the public within the time constraints required under FOI and that
the meetings be open to the public.
Further that this information be posted on the State’s website.
3.
Prior to a meeting of the Tax Abatement Committee, the public have
access through the internet to learn of those companies referred to the Tax
Abatement Committee and the taxes proposed to be abated.
4. An assessment be done and
provided to the public as it relates to when the computer conversion will be
completed and what is in place to assure the accuracy of the tax information
following conversion.
Thank you for your consideration of my request.
I look forward to your response.
Sec. 12-37. State suspense tax book. Wherever used in
this section, "tax" includes not only the principal of any tax but
also includes the principal of any license, permit and fee and also all
interest, fees, penalties, forfeitures and other charges which may be added by
law to the principal of any such tax, license, permit and fee. Each state
collection agency may have a suspense tax book. Any state collection agency
may, at any time, deliver to the Treasurer and Comptroller a statement showing:
(1) The amount of such uncollectible tax shown on the records of the agency;
(2) the date when each such tax became due and payable; (3) the name and
address of the person against whom each such tax was levied, and (4) the reason
why the agency believes each such tax to be uncollectible. At the end of such
statement, the agency head shall certify that to the best of his knowledge and
belief each tax shown in such statement has not been paid and is uncollectible.
Each tax so designated as uncollectible shall thereupon be transferred by such
state collection agency to its suspense tax book, and its records shall be
written up accordingly. Each tax so transferred shall not thereafter be
included as an asset of the state. The amount of each tax so transferred during
the last fiscal year and the name and address of the person against whom each
such tax was levied shall be available to the public for inspection by any
person. Not less than seven years after delivering such a statement
to the Treasurer and the Comptroller, the head of the collection agency may
request the Abatement Review Committee, as established by section 12-3b, to
approve the abatement of any tax designated on such statement as uncollectible. Nothing herein contained shall be construed as an abatement
of any tax so transferred, but any such tax, as it has been increased by
interest, penalties, fees, fines, forfeitures and other charges, may be collected by the state collection agency then or
subsequently in office.