You asked if the General Assembly has ever considered legislation to allow Connecticut municipalities to offer local tax amnesties and, if so, what the proposals were and what happed to them. You also asked if other states allow municipalities to offer local tax amnesties.

SUMMARY

There have been four bills introduced in the Connecticut General Assembly since 1988 to allow municipalities to offer property tax amnesties. None was successful. A 1993 bill was reported favorably by two legislative committees and was sent to the House floor for consideration. But it was recommitted without debate. Despite the failure of proposals for general legislation allowing municipal tax amnesties, the General Assembly has, within the last five years, allowed two towns (Enfield and Colchester) to waive interest on delinquent property taxes in certain situations. In addition, the town of Fairfield had an "amnesty" program that waived the 15% tax collection fee for anyone who paid delinquent motor vehicle or personal property taxes during the month of August 2002.

At least three other states, California, Michigan, and Ohio, allow their municipalities to offer tax amnesties. Computer searches yielded examples of six local tax amnesty programs offered the three states: Los Angeles; Detroit; and Toledo, Wapakoneta, and Warren, Ohio. Unlike Connecticut, cities in these states can levy a variety of local taxes, not just property taxes. Thus, except for Detroit's amnesty, all of the local programs we found cover local income or other non-property taxes. The Detroit and Los Angeles programs waived city penalties for amnesty recipients, while the Ohio cities waived both interest and penalties. Both Michigan and Ohio ran state tax amnesty programs around the same time as their cities ran local programs.

CONNECTICUT

Proposed Legislation

Bills authorizing municipalities to establish tax amnesties have been introduced in the General Assembly in four of the past 14 years. None of the proposals was successful.

1991. HB 6349 (copy enclosed) allowed municipalities to pass ordinances creating property tax amnesty programs as a way to improve tax collections. It was referred to the Finance, Revenue and Bonding Committee in proposed bill form. The committee took no action on it.

1992. HB 5811 (copy enclosed) authorized municipalities, by ordinance, to establish property tax amnesty programs for a limited time period. The bill left the determination of the length of the amnesty and the taxable period covered to the municipalities' discretion. It limited the amnesty to tax penalties and criminal prosecution, but required municipalities to collect back taxes and interest. The bill's language closely tracks the 1991 state tax amnesty law. The Finance Committee raised the bill and had a public hearing on it, but took no further action.

1993. The Planning and Development Committee raised and held a public hearing on HB 6197. The bill was almost identical to the 1992 bill, except that it restricted municipal amnesties to a single 30-day period during 1993 and required municipalities to establish amnesties by resolution rather than ordinance. The committee reported the bill favorably to the Finance, Revenue and Bonding Committee, which reported it favorably to the House floor. The favorable votes in both committees were unanimous.

The bill was tabled for the House calendar on May 12, 1993 as File 736 (copy enclosed). The OLR bill analysis (copy enclosed) raised several technical points about the bill's wording. The bill was later recommitted to the Finance Committee without debate.

1999. The Commerce Committee favorably reported a substitute for SB 1110 (copy enclosed), which allowed a municipality, by vote of its legislative body, to adopt procedures for reviewing delinquent property taxes and to either reduce the interest or penalties due on them or forgive the tax entirely. (The original raised version of SB 1110 would have required the state to suspend the sales tax on goods sold in large cities between Thanksgiving and Christmas. ) The committee referred the substitute bill to the Finance Committee, which took no action it.

Limited Amnesties Enacted

Although proposals to provide general authorization for municipal property tax amnesties have not been successful, the General Assembly has allowed specific towns to provide "amnesty" in certain situations. A 1998 special act barred Colchester from charging or collecting interest on unpaid taxes for periods between July 1, 1996 and February 1, 1998 for property on the 1982 through 1994 grand lists for which collection was improperly waived by the town's tax collector (SA 98-5, § 1). A 2001 law required Enfield to forego, and allowed it to refund, interest on certain delinquent taxes, if the delinquency was caused by mail delivery problems in particular zip codes (PA 01-187, § 20).

Fairfield Program

The town of Fairfield established a program, which it called an "amnesty from collection fees," that allowed those who owe delinquent motor vehicle and personal property taxes from 1998 or earlier to avoid an additional 15% collection fee if they paid the taxes plus interest during the month of August 2002. By law, private tax collection services that contract with towns to collect property taxes may charge a maximum fee of 15% of the amount collected. This is apparently the fee that Fairfield did not charge if delinquent taxes were paid during August. (A copy of Fairfield's announcement is enclosed. )

OTHER STATES

Detroit, Michigan

Detroit declared a property tax amnesty for the month of April 2002. Proposed by the mayor and approved by the city council, it allowed delinquent business and residential taxpayers who paid back taxes between April 1 and April 30, 2002, to have all city penalties forgiven. Taxpayers were still liable for all back taxes plus interest of 0. 5% per month. Michigan state law does not allow cities to waive interest. The city penalty on delinquent taxes is 1% per month up a maximum of 25% of the taxes due. According to a March 14, 2002, Detroit News article on the new program, the city held a similar two-month amnesty in 1993.

Ohio

Toledo. Toledo has an ongoing amnesty program available only to first-time local income tax filers. It allows a person to come forward and pay a tax liability that had not previously been discovered by the city's Division of Taxation and avoid penalties and interest.

Wapakoneta. The city is currently granting amnesty to those who owe municipal income taxes from the year 2000 or before. The amnesty applies to those who (1) failed to file required returns, (2) filed returns but failed to pay or who underpaid, or (3) previously entered a payment agreement with the city but have not yet paid off their entire liability. Under the program, if a person pays his delinquent taxes in full and files all past due returns, the city will waive interest and penalties.

Warren. Warren's amnesty program is similar to the other towns' and runs from October 15 to December 15, 2002. Although the city will allow payment in installments, all past-due taxes must be paid by April 15, 2003.

Los Angeles, California

Los Angeles ran a local tax amnesty program from October 1 to December 31, 2001. The amnesty covered business and payroll expense taxes (two city business taxes) and applied both to businesses that were delinquent and to those who had failed to register to pay taxes. Under the program, businesses that paid delinquent taxes in full, plus interest, by December 31, 2001, were not liable for the city's maximum 40% penalty.

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