June 15, 2006



Tax Appeal Processes in connecticut and other states


By: Judith Lohman, Chief Analyst


You asked the following questions about the tax appeal process in Connecticut and other states:


1.   How many states have tax appeal or review processes independent of state tax departments?


2.   What is Connecticut’s current tax appeal process?


3.   What Connecticut laws would need to be changed to establish an independent tax appeal process?


4.   Are there any models for an independent process?


5.   What are the appeal time limits in other states?


6.   What number and percentage of tax appeals were resolved in favor of Connecticut taxpayers in most recent year for which figures are available?


This report has been updated by OLR Report 2008-R-0352.



Almost half the states, but not Connecticut, have independent tax appeal processes, according to the 2004 survey of tax appeal procedures in the 50 states and the District of Columbia by the Council on State Taxation (COST), a corporate trade group.  Among the states around Connecticut, Massachusetts, New York, and New Hampshire have independent administrative appeal processes.


Under current law, all the administrative steps in a Connecticut tax appeal take place within and under the supervision of the Department of Revenue Services (DRS).  The final administrative step is a determination by the Appellate Division, a separate unit in DRS.  Taxpayers who dispute an Appellate Division outcome must appeal to Superior Court, or in the case of certain estate tax determinations, to the appropriate probate court. Connecticut’s tax appeal process is specified in separate statutory sections dealing with each major state tax.  Thus, any change in the process would require extensive legislative changes.


Massachusetts and New York have independent tax appeal processes that could serve as models for Connecticut.  Both have a range of taxes that are similar to Connecticut’s taxes and both have independent nonjudicial bodies to adjudicate tax disputes before they go to court.  New York also offers a less expensive independent small claims process that can informally resolve cases when the amount of tax in dispute is below a certain threshold.


All states allow at least 30 days for a taxpayer to appeal a tax assessment.  The only exception is a 15-day deadline in Louisiana for appealing an assessment when no return was filed.  Connecticut also allows only 10 days to appeal a jeopardy assessment, which is a special expedited procedure used when delay would endanger the state’s ability to collect the tax.  The most common deadlines for filing appeals are 30 and 60 days after an assessment.  Connecticut’s normal deadline is 60 days.  Only 10 states allow more time to appeal.


DRS does not keep statistics on the number of Appellate Division cases that are resolved in the taxpayer’s favor.  But the Program Review and Investigations Committee’s 2005 tax study found that the division has reduced aggregate audit assessments against taxpayers by an average of more than 45% over the past four years.  In addition, only a small percentage of the division’s final determinations are appealed to court.

states with independent tax appeal or review processes


Computer searches yielded only one source of recent information on tax appeals processes in all 50 states.  In 2004, the Council on State Taxation (COST), which is a trade association consisting of 575 large American corporations, ranked all 50 states on the basis of certain tax appeal procedural requirements. According to the COST survey, 24 states have independent tax appeal forums, which COST defines as nonjudicial processes outside the state’s tax department that are specifically dedicated to hearing tax cases. 


The 24 states are: Alaska, Arizona, Delaware, Hawaii, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New York, Ohio, Oregon, South Carolina, Washington, West Virginia, Wisconsin, and Wyoming.

Connecticut’s tax appeal process


Connecticut’s tax appeal process usually starts after a DRS audit determines a taxpayer owes more taxes.  DRS audited an average of 74,201 tax returns of all types per year in the three fiscal years 2003, 2004, and 2005, according to the Program Review and Investigations Committee’s report, Connecticut’s Tax System (January 2006). This number represents almost 1.5% of all returns.  DRS performs audits through the mail and in seven field offices around the state.


If DRS proposes changes in the amount of taxes owed as a result of an audit, it must explain the reasons in writing and provide the taxpayer with copies of audit work papers and with a Tax Determination Report that summarizes all adjustments made on the work papers.  The report must also show the proposed amount of tax with any interest and penalties due.


If a taxpayer disagrees with the audit results, he may ask for an informal conference with the manager or supervisor of the office that conducted the audit to discuss any disputed issues.  After the conference, DRS issues a notice of assessment, which incorporates any adjustments resulting from the conference.


A taxpayer who disagrees with a notice of assessment or notice of proposed disallowance may file a protest with DRS’s Appellate Division.  The protest must be filed within 60 days after the notice date.  If the notice is a jeopardy assessment, the taxpayer has 10 days from the notice date to file his appeal. (A jeopardy assessment is a special assessment order that becomes final after 10 days.  It is used when the DRS commissioner determines that the collection of the tax will be jeopardized by delay (CGS § 12-417).)


Protests are assigned to an appellate officer or specialist in the Appellate Division, who gathers and considers relevant information, including information the taxpayer provides.  At the end of the process, the division issues a final determination letter.  An aggrieved taxpayer has one month from the date of this letter to file an appeal with the Superior Court in the New Britain Judicial District. Either the DRS or the taxpayer can appeal court decisions up to the Connecticut Supreme Court (DRS Policy Statement 2001 (3): Your Rights as a Connecticut Taxpayer).


The only deviation from this process occurs in certain estate tax appeals.  Under prior law, aggrieved taxpayers had to appeal DRS estate tax orders, decisions, determinations, and disallowances to the probate court where the deceased lived, or if the deceased was not a state resident, where the property is located, instead of to Superior Court.  PA 06-194 changed this to limit probate court appeals only to DRS decisions concerning a decedent’s domicile for estate tax purposes.

laws to be changed to establish an independent appeals process in connecticut


Although the DRS appeals process is the same for all types of taxes, the legal authority for the process appears in separate statutory sections that apply individually to most major taxes.  Establishing an independent tax appeal authority would require the legislature to amend or repeal all of these provisions. Among them are:


·         § 12-33 regarding court appeals from actions by the DRS commissioner


·         §§ 12-236 and 12-237 – corporation tax


·         §§ 12-311 and 12-312 – cigarette tax


·         §§ 12-330l and 12-330m – tobacco products tax


·         §§ 12-421 and 12-422 – sales and use taxes


·         §§ 12-447 and 12-448 – alcoholic beverages tax


·         §§ 12-461 and 463 – motor vehicle fuels tax


·         § 12-489 – motor carrier road tax


·         §§ 12-553 and 12-554 – admission, cabaret, and dues taxes (and many other taxes including the estate and gift taxes among others)


·         §§ 12-729 and 12-730 – personal income tax

models for an independent tax appeal process


Two of Connecticut’s border states, Massachusetts and New York, have independent tax appeal processes that could serve as models for such a process in Connecticut.  We summarize each state’s process below.  Information is taken from the states’ tax agency web sites.




If the Massachusetts Department of Revenue (DOR) determines that a taxpayer owes additional taxes, either as a result of an audit or of the department’s routine verification of taxpayer records, it sends the taxpayer a written notice of intent to assess (NIA).  If the taxpayer disagrees with an NIA, he can ask the DOR’s Office of Appeals for a conference or settlement consideration.  He must make the conference request within 30 days of the NIA issuance date. The Office of Appeals is a separate unit within DOR that operates under the DOR commissioner’s control.


After the conference, if the appeals office determines the taxpayer owes additional tax, it issues a notice of assessment (NOA) and letter of determination explaining the reasons for the assessment.  A taxpayer wishing to protest an NOA must file for an abatement.  The taxpayer may then request an abatement hearing, which DOR grants only if it intends to deny the abatement claim.  Abatement hearings are also conducted by DOR’s appeals office.


If DOR denies the abatement claim, the taxpayer can appeal to the Appellate Tax Board (ATB), an independent quasi-judicial administrative board that hears such appeals. In rare cases, taxpayers can qualify to bypass the ATB and file an appeal directly to the Massachusetts Trial Court. The appeal to the ATB must be filed within 60 days after DOR denies the abatement application.  The ATB holds public hearings on the disputed tax case.  Once the ATB makes a decision, either the taxpayer or DOR may appeal it to the Massachusetts Appeals Court (Your Taxpayer Bill of Rights: A Guide to the Department of Revenue, Massachusetts Department of Revenue, 2006).


New York


A taxpayer who disagrees with an action taken by the New York Department of Taxation and Finance on a tax deficiency or determination; denial of a refund claim; or denial of a license, registration, or exemption certificate may protest by filing a request for a conciliation conference.  Estate tax protests must be filed with the clerk of the Surrogate’s Court with jurisdiction over the estate.


Conciliation conferences are conducted informally by a conciliation conferee, who is a tax department employee.  After the conference, the conferee issues a conciliation order.  A taxpayer may appeal the order within 90 days after it is issued by petitioning for a hearing with the Division of Tax Appeals, which is a nonjudicial body that is independent of the tax department. The Division of Tax Appeals hearing is a formal adversary proceeding before an impartial administrative law judge (ALJ).  A transcript of the hearing is made.  After the hearing, the ALJ issues a determination. 


Either the taxpayer or the tax department can appeal the ALJ’s decision to Tax Appeals Tribunal. The tribunal is also independent of the tax department and consists of three commissioners appointed by the governor and confirmed by the State Senate.  Commissioners serve nine-year terms. At least two of the three must be attorneys who have been admitted to practice in New York for at least 10 years and are knowledgeable about taxation. The tribunal reviews the case based on the record of the appeals division hearing and any additional oral or written arguments.  The tribunal can affirm or reverse the ALJ’s decision or remand it to the ALJ for further proceedings. Taxpayers who dispute the tribunal’s decision can appeal to court.


As an alternative to a formal hearing, taxpayers can elect a small claims proceeding by the appeals division if the disputed tax amount (not including penalties and interest) for any 12-month period is no more than $20,000 for personal income and corporation taxes or $40,000 for sales and use tax.  Small claims hearings are conducted informally by a presiding officer.  The officer’s determination is final for both parties. Taxpayers can discontinue the small claims proceeding at any time before conclusion and request a formal ALJ proceeding (Your Rights and Obligations Under the Tax Law, New York Department of Taxation and Finance, Publication 131.)

other states’ tax appeal time limits


In addition to assessing the independence of each state’s tax appeal process, the COST report cited above also compiles each state’s so-called protest periods, that is, the time a taxpayer has to file an appeal of an assessment notification.  The most common limits are 30 and 60 days.  Some states have different time limits for different taxes (see Table 1).


Table 1:  Time Limits for Filing Tax Appeals


Time Limit


15 days

Louisiana (if no tax return is filed)

30 days



California (sales and use tax)










Nebraska (sales and use, withholding tax)

New Mexico

North Carolina

North Dakota

Pennsylvania (sales and use tax)

Rhode Island

South Dakota





35 days


45 days

Arizona (other than income tax)



60 days


California (income tax)










New Hampshire




West Virginia


63 days


90 days

Arizona (income tax)

Nebraska (income tax)

New Jersey

New York


Pennsylvania (corporate and income tax)

South Carolina



Source:  “Best and Worst of State Tax Administration: COST Scorecard on Appeals, Procedural Requirements,” Tax Management Multistate Tax Report, BNA Tax, March 26, 2004.

Number and percentage of Connecticut appeals won by taxpayers


According to the Program Review report, the DRS Appellate Division does not keep statistics on whether appeals are closed in favor of the taxpayer or DRS.  Cases are often “not closed in favor of one party or the other, but rather there is a reduction in the amount assessed” from the original audit (PRI report, p. 130).  The aggregate reductions after appeal have been substantial over the last four years, which appears to indicate outcomes favorable to taxpayers (see Table 2):


Table 2:  Total Assessment Reductions After Appeal to DRS Appellate Division



FY 02

FY 03

FY 04

FY 05

Audit Assessments





Assessments after appeals





% Reduction





Source:  Connecticut’s Tax System, Program Review and Investigations Committee, January 2006, p. 130.


Another indication of appeal outcomes is the number and percentage of cases appealed to court.  Table 3 shows the information for the last four years.


Table 3:  Court Appeals from DRS Appellate Division Final Decisions





Appealed to Court



FY 02




FY 03




FY 04




FY 05








Source:  Connecticut’s Tax System, Program Review and Investigations Committee, January 2006, p. 130.