AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE LEGISLATIVE PROGRAM REVIEW AND INVESTIGATIONS COMMITTEE RELATING TO CONNECTICUT'S TAX SYSTEM.

AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE LEGISLATIVE PROGRAM REVIEW AND INVESTIGATIONS COMMITTEE RELATING TO CONNECTICUT'S TAX SYSTEM.

This bill requires the Department of Revenue Services (DRS) commissioner to (1) periodically assess the state's tax gap, which is the difference between the total state taxes owed and the amount voluntarily paid; (2) compile and annually report certain tax compliance information to the Finance, Revenue and Bonding and Appropriations committees, starting at the end of 2008; (3) publish and annually update a strategic plan for DRS; and (4) study the effect of requiring everyone who does business with the state to be in compliance with all tax laws.

It requires (1) the Office of Policy and Management (OPM) secretary to report additional property tax information in his annual statistical report on property tax assessments and collections and (2) the Advisory Commission on Intergovernmental Relations (ACIR) to submit an additional quadrennial report on state mandates to the General Assembly.

*House Amendment “A” eliminates provisions changing the interest rate on delinquent payments of state taxes.

The bill requires the ACIR to submit an additional report to the General Assembly that (1) identifies and describes each unfunded and partly funded state mandate on local governments, (2) identifies its actual cost to local governments, and (3) analyzes the effect of eliminating or reducing it. The first report is due on or after the second Wednesday after the 2007 regular legislative session convenes, the second on the same date in 2010, and subsequent reports every four years.

By law, ACIR must already submit a quadrennial report to the legislature listing each state mandate; categorizing it as constitutional, statutory, or executive; giving the date it was first passed and a brief history; and analyzing local government costs to implement it. The commissioner may make recommendations on state mandates as part of its current report. The bill allows it to include such recommendations in the additional report as well.

The bill requires the DRS commissioner to compile certain information and submit annual reports with the information to the Appropriations and Finance, Revenue and Bonding committees starting December 31, 2008. The commissioner must:

1. starting July 1, 2007, periodically estimate the difference between the state taxes owed assuming full compliance with all state tax laws and those voluntarily paid, whether it results from failure to file tax returns, underreporting liability, or failure to pay taxes owed (“tax gap”);

2. starting July 1, 2007, develop a strategy to discourage tax avoidance and promote compliance;

3. starting July 1, 2007, conduct an annual cost-benefit analysis of each major compliance initiative, including amnesty programs; and

4. annually report information, after consulting the OPM secretary, on local property tax collections for the most recent available five-year period.

It also requires that, by July 1, 2007 and annually thereafter, the commissioner annually update and publish a strategic plan for the department, including its mission, measurable goals for accomplishing the mission, strategies to achieve the goals, and a timetable for measuring progress.

§ 3 — STUDY OF REQUIRING TAX COMPLIANCE IN ORDER TO DO BUSINESS WITH THE STATE

The bill requires the DRS commissioner to study the effect of requiring every person or entity doing business with the state to be in compliance with all tax laws. The study must:

1. assess methods available for DRS to verify tax compliance to state agencies before they issue grants or contracts;

2. review legal issues, including those arising out of statutory definitions of compliance and confidentiality;

3. consider the possibility of delays in awarding contracts and the effect of those delays; and

4. estimate resources needed to implement such a requirement.

The commissioner must report the study to the Finance, Revenue and Bonding and Government Administration and Elections committees by January 1, 2007.

The bill requires the OPM secretary, in his annual statistical report on property tax assessments and collections during the preceding year, to include:

1. information on local property values and tax trends, such as the average and median single-family residence tax bills and the percentage changes in these bills over time;

2. town-by-town information on availability and use of local-option property tax exemptions; and

3. measures of the accuracy and uniformity of local revaluations.

It also requires local tax collectors to report this additional information in their annual reports to OPM.

EFFECTIVE DATE: October 1, 2006 for the OPM report; July 1, 2006 for the reports from local tax collectors.

The commission is made up of state executive branch officials, legislative leaders, and municipal and local board of education officials. Its purpose is to enhance coordination and cooperation between the state and local governments.

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(03/09/2006)

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(04/04/2006)

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(04/25/2006)

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(04/28/2006)

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(05/01/2006)