Connecticut Unfiled Sales Tax Returns Checklist
Introduction
An unfiled sales tax return in Connecticut occurs when a business fails to submit a required tax return to the Connecticut Department of Revenue Services by the assigned deadline. Sales tax is a transaction-based state tax collected from customers and held in trust before remittance.
When a sales tax return is unfiled, the state lacks documentation showing sales activity, tax liability, or payment status for that period. This failure to file creates a tax issue that often triggers notices, penalties, and tax collection activity.
What This Issue Means
An unfiled sales tax return means the required tax return was not submitted, regardless of whether sales occurred or tax was owed. The issue is a filing delinquency, not automatically a failure to pay.
Sales tax returns document gross sales, exemptions, zero filing of return periods, and tax due or refundable amounts. Without a filed return, the Department of Revenue Services cannot assess tax liability or verify compliance.
Why the State Issued This or Requires This
Connecticut requires sales tax returns to track state taxes collected by registered businesses and ensure accurate remittance. Filing requirements apply to companies with a sales tax permit, including those reporting zero activity.
When a return is missing, CT DRS systems flag the account as having failed to file. The state issues notices because unfiled tax returns prevent enforcement of the tax code and disrupt revenue oversight.
What Happens If This Is Ignored
Failing to file a sales tax return typically results in escalating civil penalties, estimated taxes, and assessment letters. The state may estimate tax liability based on prior periods or available data.
Continued failure to file can result in tax liens, bank levies, wage garnishment, or referral to broader tax collection programs. Interest and late fees accumulate, increasing overall tax debts.
What This Does NOT Mean
An unfiled return does not automatically mean tax liability exists or criminal penalties apply. The state has not necessarily finalized an assessment or rejected future payment plan options.
It also does not prevent filing the return later in good faith. Businesses can still file returns, request penalty abatement, or pursue Connecticut tax relief options.
Checklist: What to Do After Receiving This or Identifying
This Issue
Step 1: Review the state notice
Locate the Connecticut Unfiled Return Demand or assessment letter from the Connecticut
Department of Revenue Services. Record the tax period, deadline, and reference number listed.
Step 2: Confirm filing requirements
Verify the required filing frequency and confirm that Form OS-114 is the correct sales tax return.
Check registration details through the myconneCT portal.
Step 3: Gather sales and tax records
Collect invoices, receipts, sales summaries, and exemption documentation for the unfiled period. Include records supporting zero filing of return claims if applicable.
Step 4: Calculate sales tax liability
Determine gross sales, taxable sales, exemptions, and applicable sales tax rates. Separate local taxes, withholding taxes, and state taxes if reported differently.
Step 5: Prepare the delinquent tax return
Complete the sales tax return accurately using actual records rather than estimates. Ensure all required fields are completed before submission.
Step 6: Review penalties and interest
Estimate potential failure to file penalties, failure to pay fines, and interest charges. Request an updated balance from CT DRS if necessary.
Step 7: File the return electronically
Submit the completed tax return through the myconneCT portal as required by state policy.
Retain the confirmation number as proof of filing.
Step 8: Submit payment if tax is owed
Pay taxes due electronically at the time of filing. If full payment is not available, prepare to discuss installment agreements.
Step 9: Request payment plan options
Contact the Department of Revenue Services to ask about payment plan options or Offer in
Compromise eligibility. Document all communications.
- 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 10: Monitor for follow-up notices
Watch for confirmation or additional correspondence from CT DRS. Respond promptly to avoid further tax collection action.
What Happens After This Is Completed
After the return is filed, CT DRS reviews the submission against any estimated taxes or prior assessments. Adjustments may be issued if discrepancies exist.
If payment is made or an installment agreement is approved, enforcement actions typically pause. The account returns to standard filing status once compliance resumes.
Common Mistakes to Avoid
Missing deadlines stated in the notice often leads to additional civil penalties. Filing without payment when payment is required does not resolve tax debts.
Submitting incomplete returns or failing to respond to follow-up correspondence can trigger audits or tax liens. Estimating figures without records increases audit risk.
Frequently Asked Questions
What if no sales occurred during the unfiled period?
A sales tax return must still be filed showing zero activity. Zero filing periods satisfy the filing requirements under Connecticut tax law.
Can penalties be removed after filing?
Penalty abatement may be requested if failure to file resulted from reasonable cause. Approval is not automatic and depends on state review.
How far back can the state pursue unfiled returns?
If no return was filed, the statute of limitations may not apply. Connecticut can assess unfiled tax returns without a time limitation.
Can the business file electronically?
Yes, most businesses are required to file sales tax returns electronically using the myconneCT portal, unless they have written authorization to file on paper.
What if records are missing?
File the return using available information and contact CT DRS to explain the situation. Waiting for perfect records increases the risk of enforcement.
Closing
Unfiled sales tax returns represent a serious but manageable tax problem when addressed promptly. Filing required returns, paying taxes owed, and communicating in good faith reduce exposure to penalties and enforcement. Businesses that act early, use the myconneCT portal, and maintain proper documentation protect themselves from escalating tax debts. Prompt compliance restores standing and limits long-term tax collection consequences.
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.
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