January 24, 2011
QUESTIONS FOR NOMINEE FOR REVENUE SERVICES COMMISSIONER
By: Judith Lohman, Assistant Director
Rute Pinho, Associate Analyst
REVENUE SERVICES COMMISSIONER (CGS §§ 12-2, 12-3, 12-7A, AND 12-7B)
The commissioner may (1) adopt regulations and issue administrative pronouncements interpreting state tax laws, (2) make agreements with other states concerning reciprocal enforcement of tax laws, and (3) negotiate agreements to collect municipal fees and taxes on behalf of municipalities. The commissioner must maintain lists of delinquent taxpayers and report certain tax data to the Office of Fiscal Analysis.
QUESTIONS FOR NOMINEE
1. Which of the state's tax laws is the hardest for the Department of Revenue Services (DRS) to administer?
2. Governor Malloy has stated that he is in favor of giving municipalities the authority to impose other types of taxes in addition to the property tax. What administrative issues would DRS face if municipalities imposed local income or sales taxes?
3. In the past several years, the legislature has established tax amnesty and voluntary disclosure programs to give those who owe back taxes reduced penalties if they acknowledge the delinquency to DRS and pay what they owe. Have these programs been effective? Have they had a positive or negative effect on tax enforcement?
4. What steps has DRS taken to increase electronic permit issuance and tax filing? What has been the effect? What new steps can DRS take to increase taxpayers' ability to transact business with the agency online?
5. What is DRS's biggest challenge in enforcing tax compliance? What additional tax enforcement authority, if any, do you think DRS needs?
6. Do you have suggestions on how the legislature might get additional information from DRS to allow it to evaluate the effectiveness of tax exemptions and credits?
7. Some national organizations have called for all states to adopt administrative tax appeal or review processes independent of state tax departments. Although 29 states, including Massachusetts and New York, have independent processes, in Connecticut, administrative tax appeals are handled by DRS's Appellate Division. What, in your opinion, are the plusses and minuses of establishing an independent appeal system? Do you think doing so would affect Connecticut's competitiveness in attracting businesses?
8. Researchers at the University of Tennessee estimate that Connecticut will lose approximately $60 million in FY 11 in sales tax from e-commerce sales. Do you think Connecticut should take steps to try to collect these taxes? If so, what do you recommend?
9. With the rising popularity of e-readers, mp3 players, and tablet computers, consumers are increasingly turning to digital versions of books, music, and movies. Currently, these downloads are taxed as computer and data processing services at a reduced sales tax rate of 1%. As the distinction between real and virtual goods blurs, do you think the state should reexamine how it assesses tangible personal property versus digital property?
10. The Department of Economic and Community Development (DECD) recently recommended that the state eliminate certain tax credit and abatement programs due to underutilization and negative economic impacts. These include the tax credits for manufacturing facilities and financial institutions, property tax exemption for manufacturing machinery and equipment, and property tax abatement for enterprise zone property. What are your thoughts on DECD's recommendations?