Connecticut Payroll Tax Nonpayment Emergency
Checklist
Introduction
Connecticut payroll tax nonpayment occurs when an employer fails to deposit withheld state income taxes with the Department of Revenue Services by the required deadline. Because these amounts include federal income tax withholding, FICA taxes under the Federal Insurance
Contributions Act, and state withholding, the state treats missed deposits as trust fund violations.
Payroll taxes must be remitted on time as required by law, as they support vital programs linked to Social Security, Unemployment Insurance, and Connecticut's Paid Family and Medical Leave.
Demand notices, tax penalties, interest on unpaid taxes, and enforcement procedures may be swiftly followed in the event of nonpayment.
What This Issue Means
Payroll tax nonpayment occurs when required deposits reported on Form CT-941 are not received through electronic payment or other approved methods by the assigned due date. The
Department of Revenue Services identifies nonpayment by reconciling filed returns with deposit activity tied to the employer’s withholding account.
Employers in Connecticut are required to submit withheld taxes based on the amounts deducted from employee wages if they assign monthly, quarterly, or weekly schedules. An account is flagged and may be subject to an enforcement review or an estimated tax penalty if deposits do not match filing records.
Why the State Issued This or Requires This
Connecticut law requires employers to withhold and remit payroll taxes on behalf of employees, similar to federal income tax withholding obligations under the Fair Labor Standards Act. The
Department of Revenue Services enforces compliance to protect funds collected for state operations and public programs.
Nonpayment is commonly identified after late deposits, returned payments, mismatches between Form CT-W3 totals and W-2 Forms, or failed electronic filing confirmations. In some cases, audits or cross-agency coordination with the Connecticut Department of Labor also reveal inconsistencies.
What Happens If This Is Ignored
Failing to pay payroll taxes can result in escalating enforcement actions, including UCC-1 liens, bank levies, wage garnishment, or permit suspension by the Connecticut Department of Motor
Vehicles or local tax collector offices. Interest on unpaid taxes continues accruing monthly, increasing the total liability.
The Department of Revenue Services may also assess responsible person liability against owners or Board of Directors members with authority over payroll decisions. Once enforcement begins, reversing actions becomes more difficult without immediate engagement.
What This Does NOT Mean
A nonpayment notice does not automatically result in business closure, criminal prosecution, or immediate seizure of assets. These notices represent administrative enforcement steps, not final determinations or Penalty relief decisions.
The notice also does not cover unemployment Insurance obligations handled by the
Connecticut Department of Labor or contributions administered by the Connecticut Paid Leave
Authority. Each agency operates separately and issues its own assessments.
Checklist: What to Do After Receiving This or Identifying
This Issue
Step 1: Review the nonpayment notice details
Locate the Demand notices issued by the Department of Revenue Services and confirm the tax type, assessment date, amount due, and stated response deadline. Keep all notices together to avoid missing enforcement timelines.
Step 2: Confirm employer account information
Verify the business name, federal employer identification number, and withholding account number listed on the notice. Errors in registration details may affect how deposits are credited.
Step 3: Gather payroll and filing records
Collect payroll registers, bank statements, Form CT-941 filings, Form CT-W3 summaries, and
W-2 Forms for the affected periods. These records establish what was withheld and what was remitted.
Step 4: Calculate withheld tax amounts
Review payroll data to determine state income tax withholding, federal income tax withholding, and FICA taxes deducted from employee wages. This confirms the trust fund liability owed.
Step 5: Compare deposits to reported amounts
Match electronic payment confirmations against reported totals on filed returns. Identify whether discrepancies involve timing issues, short payments, or missing deposits.
Step 6: Identify response deadlines
Record the deadline stated in the notice and treat it as firm. Missing the deadline may trigger additional Tax penalties or enforcement mechanisms.
Step 7: Contact the Department of Revenue Services
Call the Department of Revenue Services to verify the balance and request clarification on how the amount was calculated. Ask for the assigned representative’s contact information.
Step 8: Request a breakdown of charges
Request written details showing tax, penalties, Interest on unpaid taxes, and any $50 penalty assessments. This information supports Penalty appeal or payment discussions.
Step 9: Evaluate reasonable cause options
Review whether circumstances such as system failures, reliance on third-party payroll providers, or Emergency Declarations apply. Document facts clearly before requesting Penalty relief.
Step 10: Request payment arrangements if needed
If full payment is not possible, inquire about installment options or extensions that comply with payment requirements. Obtain written confirmation of any agreement.
Step 11: Submit penalty waiver documentation
File Form 843 or Form DRS-PW, if applicable, within the required timeframes and include supporting evidence. Incomplete requests are commonly denied.
Step 12: Make required payments promptly
Submit payment using approved electronic payment methods and retain confirmation. Proof of payment is essential in the event of disputes.
Step 13: Confirm actions in writing
Follow up each call or payment with written correspondence that summarizes the actions taken.
Documentation protects against future misunderstandings.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 14: Monitor future compliance
Continue electronic filing and electronic payment for all future payroll periods. Ongoing compliance reduces audit and enforcement risk.
What Happens After This Is Completed
After the employer responds, the Department of Revenue Services reviews the account and determines whether enforcement should continue, pause, or be modified based on compliance.
Approved arrangements typically shift the account to monitoring status once payments post successfully.
The department may make balancing adjustments or grant penalty relief if documentation backs up an error or penalty appeal. Payroll obligations must be maintained to avoid new enforcement.
Common Mistakes to Avoid
Employers often miss deadlines or ignore follow-up notices, which unnecessarily escalates enforcement. Failing to keep documentation, confusing agency responsibilities, or relying on verbal agreements without written confirmation also delays resolution.
Frequently Asked Questions
Does payroll tax nonpayment affect Social Security or employee benefits?
Payroll taxes support Social Security and related programs, but nonpayment affects the employer’s compliance, not employee benefit eligibility. The state pursues recovery from the employer.
Can penalties be waived?
Tax penalties may be waived for reasonable cause, but Interest on unpaid taxes cannot be removed. Timely submission of complete documentation is required.
What if a payroll provider caused the error?
Third-party provider errors do not absolve employers of liability, although they may support
Penalty appeal requests. Employers remain responsible for Payroll Management oversight.
Can bank accounts be levied?
Yes, unresolved payroll tax debt may result in bank levies or UCC-1 liens. Early communication reduces this risk.
Does business closure end payroll tax liability?
No, payroll tax obligations survive closure, and responsible individuals may remain liable.
Notifying the department promptly is critical.
Closing Section
Connecticut payroll tax nonpayment requires immediate attention but can be resolved through accurate records, timely communication, and consistent compliance. Understanding enforcement processes and responding early limits penalties and protects business operations.
Employers who engage promptly with the Department of Revenue Services and meet payment mandates are better positioned to resolve issues before escalation. Proactive action is always more effective than delay.
Facing State Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
We help with:
20+ years experience • Same-day reviews available
