State tax officials give late filers a break
Taxpayers who believe employees at the Connecticut Department of Revenue Services are unforgiving souls looking for any excuse to shake down residents for their last nickel may have some cause to reconsider.
A recent audit found that DRS, despite state mandates, has for three decades adopted an unwritten policy of giving last-minute filers who may not have made their payments on time a few days' break, rather than levying penalties.
"We were informed by members of the DRS administrative staff that the department has been following a practice of allowing a grace period in determining the timeliness of receipt of required tax returns or payments when received after the prescribed period or due date," reads the report, released this week by the state Auditors of Public Accounts.
For instance, although state statutes deem any individual income tax payments postmarked after the due date as late, the auditors found DRS does not bother to check.
"DRS' general practice has been to accept ... any filing received within the grace period of three business days immediately following the prescribed period or due date, regardless of the postmark date," reads the audit.
Penalties depend on the tax type but are typically 10 percent of the tax due or $50, whichever is greater, according to DRS.
The auditors want the agency to come into compliance with state law or ask that the law be changed. Auditor John Geragosian said his agency has no enforcement powers other than continuing to point out the issue in future reports.
This unwritten grace period took some observers by surprise.
"I was not aware of it. I spoke to a couple of other colleagues and they weren't aware of it," said Richard DiMarco, a tax attorney with Cohen and Wolf, a firm with offices in Bridgeport, Danbury and Westport.
Christopher Gallo of BlumShapiro, a Shelton-based accounting firm, said, "I've never heard anybody talk about this -- `Don't worry, just get it in close.' "
Both men said they understand DRS' argument, outlined in the audit, that because of a lack of staff it is unrealistic to expect the department to closely examine postmarks on every tax return received in the first few days after a deadline.
"It's a practical matter," Gallo said. "The volume of mail they get on the filing deadline is tremendous."
In an emailed statement responding to this story, DRS Commissioner Kevin Sullivan wrote that the grace period in no way reduces state tax collections.
"It does avoid the cost and delay of what would otherwise be a significant number of disputes over date of postmarking, date of delivery and date of receipt," Sullivan said. "It also allows the department to manage its workflow with a work force that is now about 33 percent below peak. We certainly respect the comments of the Auditors of Public Accounts and would change our practice if the state Legislature determines that the grace period is unwarranted."
DiMarco said despite the revelation about DRS' grace periods, "I would advise clients to comply with the statute and get payments postmarked" by the deadline.