Connecticut State Department of Revenue Services

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SN 96(5)

1996 Legislative Changes Affecting Payment of Connecticut Taxes by Electronic Funds Transfer

PURPOSE: The purpose of this Special Notice is to describe legislative changes made during the 1996 session of the Connecticut General Assembly requiring more taxpayers to pay particular Connecticut taxes by electronic funds transfer.

BACKGROUND: Since the passage of 1992 Conn. Pub. Acts 17, §§35 to 39, inclusive (May Spec. Sess.), the Department has been authorized to require taxpayers whose 12-month liability for a particular tax exceeded $500,000 to pay that tax for the next 12-month period by electronic funds transfer. Taxpayers which were subject to this requirement included those that file tax returns for a particular tax on a monthly, quarterly or annual basis and those that are employers deducting and withholding Connecticut income tax from employee wages.

STATUTORY AUTHORITY: Conn. Gen. Stat. §12-686(a), as amended by 1996 Conn. Pub. Acts 221, §§9 and 10.

EFFECTIVE DATES: 1996 Conn. Pub. Acts 221, §9 is effective July 1, 1996; 1996 Conn. Pub. Acts 221, §10 is effective July 1, 1997.

THRESHOLD DROPPED FROM $500,000 TO $300,000 EFFECTIVE JULY 1, 1996: The Department is authorized, effective July 1, 1996, to require taxpayers whose 12-month liability for a particular tax exceeded $300,000 to pay that tax for the next 12-month period by electronic funds transfer. See No Requirement to Pay by Electronic Funds Transfer Until Notice is Issued by the Department to the Taxpayer, below.

THRESHOLD DROPPED FROM $300,000 TO $100,000 EFFECTIVE JULY 1, 1997: The Department is authorized, effective July 1, 1997, to require taxpayers whose 12-month liability for a particular tax exceeded $100,000 to pay that tax for the next 12-month period by electronic funds transfer.

NO REQUIREMENT TO PAY BY ELECTRONIC FUNDS TRANSFER UNTIL NOTICE IS ISSUED BY THE DEPARTMENT TO THE TAXPAYER: No taxpayer (other than a taxpayer which has previously been issued notice to pay a particular tax by electronic funds transfer) will be required to pay a particular tax by electronic funds transfer until the Department issues notice of such requirement to such taxpayer.

Although the Department is not required by law to provide notice two months in advance of the first payment that will be required to be made by electronic funds transfer, it has been and remains the Department's practice to do so.

Although the Department reviews annually whether a taxpayer must continue to pay a particular tax by electronic funds transfer, any taxpayer that has previously been issued notice to pay a particular tax by electronic funds transfer must continue to pay that particular tax by electronic funds transfer until the Department issues notice to such taxpayer that payment of that particular tax by electronic funds transfer by the taxpayer is no longer required.

FAILURE TO PAY BY ELECTRONIC FUNDS TRANSFER WHEN SO REQUIRED: Any taxpayer which is required to make payment by electronic funds transfer but which fails to do so will be treated as having made a late payment. For taxes other than sales and use taxes, the late payment penalty of 10% or $50, whichever is greater, will be imposed, and interest will accrue at the rate of 1% per month or fraction of a month. For sales and use taxes, the late payment penalty of 15% or $50, whichever is greater, will be imposed, and interest will accrue at the rate of 1% per month or fraction of a month. The imposition of the late payment penalty and the accrual of interest cannot be avoided by the early mailing of a check or money order to the Department.

IMPLEMENTATION SCHEDULE: As stated above, the Department will notify taxpayers two months in advance of the first payment to be made by EFT. In general, the Department intends to issue such notices on a schedule that will require the following tax payments for taxpayers whose 12-month liability for that particular tax exceeded $300,000 to be made for the next 12-month period by electronic funds transfer:

  • All estimated corporation business tax payments and estimated insurance premiums tax payments (and any other estimated tax payments by companies subject to the tax imposed under Conn. Gen. Stat. §12-202a or 12-212a) due on or after September 15, 1996.
  • All motor vehicle fuels tax payments due on or after November 25, 1996.
  • All monthly tax payments (other than motor vehicle fuels tax payments) due on or after November 30, 1996.
  • All Connecticut income tax withholding payments due on or after December 1, 1996.
  • All quarterly tax payments (other than estimated corporation business tax payments and estimated insurance premiums tax payments) due on or after January 31, 1997.
  • All annual tax payments by companies subject to the tax imposed under Conn. Gen. Stat. §12-256 due on or after April 1, 1997.

INFORMATIONAL PUBLICATION RECENTLY RELEASED: The Department recently issued IP 93(2.1), Q & A on Paying Taxes by Electronic Funds Transfer. That Informational Publication provides basic information about electronic funds transfer in a question-and-answer format, and modifies and supersedes the previously issued IP 93(2), Q & A on Paying Taxes by Electronic Funds Transfer.

VOLUNTARY PAYMENT OF TAXES BY ELECTRONIC FUNDS TRANSFER: Any taxpayer that is not otherwise required to pay a particular tax by electronic funds transfer may request permission from the Department to pay that tax by electronic funds transfer by sending a written request and a properly completed Form EFT-1, Authorization Agreement for Electronic Funds Transfers, to: Department of Revenue Services, P.O. Box 2937, Hartford, Connecticut 06104-2937.

EFFECT OF THIS DOCUMENT: A Special Notice is a document that announces a new policy or practice in response to changes in State or federal laws or regulations or to judicial decisions. A Special Notice indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.

EFFECT ON OTHER DOCUMENTS: SN 92(26) is modified and superseded, and may no longer be relied upon after the date of issuance of this Special Notice. 

SN 96(5)
All taxes
Issued: 7/5/96