Department of Revenue Services
PAM LAW, Commissioner
Richard D. Nicholson, Deputy Commissioner
Tina M. Lawson, Chief of Staff
John M. Dunham, Assistant Commissioner & General Counsel
Established – 1901
Statutory authority – CGS Sec. 12-1
Central Office – 25 Sigourney Street, Hartford, Conn. 06106-5032
Internet Address - http://www.ct.gov/drs
Number of employees – 698
Recurring operating expenses – $57,026,050
Organization structure – Eight Divisions: Administration, Appellate, Audit, Collection & Enforcement, Information Services, Legal, Operations, and Taxpayer Services
The mission of the Connecticut Department of Revenue Services (DRS) is to administer the tax laws of the State of Connecticut and collect the tax revenues in the most cost effective manner; achieve the highest level of voluntary compliance through accurate, efficient and courteous customer services; and perform in a manner which instills public confidence in the integrity and fairness of the state’s tax programs.
DRS administers state tax laws and collects state tax revenues. The agency is responsible for ensuring voluntary compliance with the tax laws. It accomplishes this by educating the public about their tax responsibilities and by assisting taxpayers in filing appropriate tax returns and paying taxes. DRS also has the authority to initiate action to collect unpaid taxes and apply enforcement measures, when necessary. DRS is responsible for exercising its authority fairly and impartially for both the state and the taxpayer.
During the 2005 tax season DRS extended their telephone hours to assist taxpayers filing their income tax returns on January 31, February 7, and February 14 until 7 p.m. On April 15, the Hartford office was open until 8 p.m. to assist taxpayers and to answer tax questions by telephone.
Working with Accenture, DRS implemented the second of five phases of the new Integrated Tax Administration System (ITAS). Through ITAS, the Agency has:
· Replaced outdated programs previously serving DRS operations;
· Converted the remainder of the business taxes to the new system;
· Streamlined operations for greater efficiency; and
· Retired the 30-year-old system that supported business tax processing.
A third phase, which incorporates a Data Warehouse for improved compliance and research programs, as well as improved functionality for Audit and Appellate, is scheduled for completion in the Fall.
Ensuring that taxes due under the state statutes are in fact remitted accurately and fairly, DRS continues to work toward accuracy in reporting and collection of overdue taxes. Some of the efforts undertaken by the Agency include:
· The Appeals/Litigation process closed 1,082 cases with a resolved dollar value in excess of $62 million. Appellate inventory was reduced by 102 cases to 858 cases, (an 11 percent reduction) while the average age of inventory declined by 72 days to 358 (a 17 percent reduction). Of Appellate Division total determinations, 96 percent became final and were not appealed.
· The Audit Division Income Tax Subdivision administered an Abusive Tax Shelter Compliance Initiative for all taxpayers that participated in potentially abusive tax shelters designated by the IRS as a listed transaction. In exchange for coming forward, DRS did not impose civil penalties and agreed not to pursue criminal prosecution for the taxpayer’s participation in the tax shelter. Approximately 140 individuals and corporations participated in the program, which generated more than $20 million in additional revenue.
· The Collection and Enforcement Special Investigations Section made 90 criminal arrests for tax fraud, failure to file or pay returns, and other state tax violations during the past year. Prosecution of these cases through the Superior Court resulted in the direct recovery of more than $2.2 million in paid restitution. This does not include the future voluntary compliance generated through deterrence. An additional 119 criminal cases are still pending in court or on probation, with the expected potential for even more restitution.
· The Audit Division Refunds, Clearances, and Adjustments Unit along with the Discovery Unit initiated a Marina Sweep during the summer of 2004. Many untaxed vessels were found and current revenue collected to date is $2.36 million.
· The Suspicious Filer Exchange program in fiscal year 2004-2005 successfully blocked more than 200 fraudulent state income tax returns, saving more than $572,000 in fraud refunds. The program saved more than $89,000 in refunds in one peak-filing day.
Paperless filing of tax returns continues to be a growing trend. Connecticut experienced a 30 percent increase in electronically filed (e-filed) returns, along with a 15 percent increase in returns filed through the Agency’s free WebFile system. The breakdown of returns received by various methods for the 2005 filing season is as follows:
107,183 Personal Computer
464,410 Electronically filed
2,869,889 Paper file
Electronic Funds Transfers accounted for $ 5.266 billion of total revenue received.
DRS mandated electronic filing for 24,754 Sales and Use tax filers and 23,000 Withholding tax filers. These taxpayers use the Department’s free web-based Fast-File business tax filing program. The Agency has seen a 112 percent increase in the number of Fast-File participants during the last fiscal year. DRS is in the process of improving Fast-File by providing additional upgrades to the system.
During the last few years, a partnership was created between the Internal Revenue Service (IRS), the Connecticut Department of Labor (DOL), DRS, and the software community. This partnership resulted in the Federal/State Employment Taxes (FSET) program. FSET was implemented during the second quarter of 2005.
The FSET program benefits employers by simplifying the process of quarterly filing of state and federal tax and wage reports along with the payment of employment taxes. DRS benefits from this program through a reduction in paper returns to be processed and an increased efficiency through the electronic filing and payment of taxes.
DRS continues work on future phases of ITAS. The second phase of the project was completed in June of 2005. This phase of the project moved the remaining business taxes onto the new system. Concurrently, DRS begin the creation and implementation of the data warehouse, which is anticipated to be completed in the later part of the year. The third phase of the project, the individual income tax, as well as the fourth phase, which will result in improvements in customer service, are now underway and anticipated to be finished in July of 2006. Once completed, ITAS will provide numerous benefits aimed at streamlining current outdated functions, and eliminating redundant systems that do not interact. Also, ITAS will enable the Agency’s highly trained workforce to maximize taxpayer information for the highest performance of tax administration.
DRS is proud of its accomplishments in developing a truly diverse workforce and an equitable environment for its employees. The Agency’s volunteer Diversity and Opportunity Committee (DOC), with employees from all levels of the organization, has been the catalyst for creating energy and excitement in the Agency’s planning process, and providing valuable assistance. DOC, along with its professional staff, assisted in implementing positive steps to build awareness of differences among the work population and greater understanding of the special needs of colleagues.
DRS achieved more than 64 percent of the Agency’s goal in helping employees in targeted populations realize career advancement opportunities. DRS continues to make available the tools, training, and support which ensures that every employee is able to reach his or her career goals at DRS.
DRS has an internal Speakers' Bureau, which utilizes diverse members of the staff to make presentations in communities, schools, colleges and for professional groups, thus emphasizing career opportunities for all. During the last fiscal year, the Speakers Bureau provided 22 speakers to various organizations and agencies. The topics requested ranged from corporation business tax, electronic filing, farmer’s exemption, income tax, legislative changes, motor vehicle fuel tax, real estate conveyance tax, sales and use taxes, and succession tax.
Taxpayer Services participated in the planning of the Small and Minority Business Showcase under the auspices of the Secretary of State's office on August 12, 2004 at the United States Post Office on 50 Brewery Street in New Haven, CT and on May 3, 2005 at the Mountainside Event Faculty at 350 High Hill Road in Wallingford, CT.
Together, these efforts toward achieving diversity and equity throughout DRS have contributed to the outstanding success of the agency in retaining enthusiastic employees who are committed to the Agency’s mission of public service.