Connecticut Administrative Code › Title 12 - Taxation › 740(a) - INCOME TAX › Part XII - Deficiencies, refunds, interest and penalties › Section 12-736(a)-1 - Penalty on responsible person or persons

Current through July 10, 2024
(a)
Penalty not imposed on employer
. The penalty under subsection (a)
				of section
				12-736
				of the Connecticut General Statutes may not be imposed on an employer but only
				may be imposed on a person or persons who are required, on behalf of the
				employer, to collect, account for, or pay over Connecticut income tax to the
				Department (responsible person or persons). The employer, however, remains
				subject to other penalties, such as the penalty imposed by section
				12-735
				of the Connecticut General Statutes or the penalty imposed under section
				12-728
				of the Connecticut General Statutes.
(b)
Taxes to be collected only
				once
. Although the employer has the primary liability for deducting and
				withholding Connecticut income taxes from wages of employees and paying over
				such taxes to the Department, the Department is not required to attempt to
				collect the taxes from the employer before assessing the penalty against a
				responsible person or persons. A responsible person's liability is independent
				from that of the employer. However, the taxes required to be collected,
				truthfully accounted for and paid over to the Department will be collected only
				once by the Department, whether from the employer alone, or from one or more
				responsible persons, or from the employer and one or more responsible persons.
				In general, the Department will not assess the penalty imposed under subsection
				(a) of section
				12-736
				of the Connecticut General Statutes in the case of an approved and adhered to
				agreement by an employer to pay back taxes in full and in the case of a
				confirmed bankruptcy payment plan of an employer requiring the payment in full
				of back taxes. (However, the Department may gather information to support a
				possible assessment in the event of default on such agreement or plan.) The
				Department shall be considered to have once collected such taxes when its right
				to retain the amount collected is finally established.
(c)
Responsible persons
.
				Responsibility is a matter of status, duty, and authority. In general, there
				will be at least one responsible person, and a responsible person may or may
				not be an employee of the employer that has wilfully failed to collect
				Connecticut income taxes from employee wages or to truthfully account for and
				pay over such taxes to the Department. Those persons performing ministerial
				acts without exercising independent judgment will not be deemed responsible.
				The penalty will not be asserted against non-owner employees of the employer if
				they act solely under the dominion and control of others and are not in a
				position to make independent decisions on behalf of the employer. Nor will the
				penalty be imposed on unpaid, volunteer members of any board of trustees or
				directors, if the employer is an organization referred to in section 501 of the
				Internal Revenue Code to the extent such members are solely serving in an
				honorary capacity, do not participate in the day-to-day or financial operations
				of the organization, or do not have knowledge of the failure in relation to
				which such penalty is imposed.
(d)
Wilful
. A responsible person may not be held liable for the tax
				assessable hereunder unless such person has wilfully failed to collect, account
				for and pay over the tax. For purposes of subsection (a) of section
				12-736,
				wilful action shall mean action that is voluntary, conscious and intentional.
				For example, wilful action may be established by a showing that the responsible
				person knew of the tax liability and either took no steps to satisfy such
				liability or used available funds to pay a creditor other than the Department
				(including another tax creditor). No showing of bad motive or intent to deceive
				is necessary to establish wilfulness.
(e)
Procedure
. The requirements
				of notice and procedure, and provisions for the right of the purportedly
				responsible person to protest and appeal any assessment of penalty made by the
				Commissioner pursuant to subsection (a) of section
				12-736
				of the Connecticut General Statutes, shall be the same as those of sections
				12-728,
				12-729,
				12-729a and
				12-730 of the
				Connecticut General Statutes and any regulations adopted thereunder. The
				commissioner may assess the penalty provided for by section
				12-736
				with respect to the Connecticut income tax that should have been collected from
				an employee, accounted for and paid over at any time not later than three years
				after a Form CT-941, Connecticut Quarterly Reconciliation of Withholding, is
				filed declaring the Connecticut income taxes deducted and withheld from wages
				of the employee. If no such return is filed, the commissioner may assess the
				penalty at any time.
(f)
Employer
. Wherever reference is made in this section to an
				employer, such reference shall include (1) any employer who registers solely
				for the purpose of withholding Connecticut income tax from wages under section
				12-705(c)-2
				of Part IX; (2) any person (other than an employer) who registers solely for
				the purpose of withholding Connecticut income tax from payments (other than
				wages) under section
				12-705(c)-1
				of Part IX; and (3) any person (other than an employer) who is required to
				register for the purpose of withholding Connecticut income tax under sections
				12-705(b)-1,
				12-705(b)-2, or
				12-705(b)-3
				of Part IX.
(g) While this section
				pertains to section
				12-736(a)
				of the Connecticut General Statutes, for purposes of supplementary
				interpretation, as the phrase is used in section
				12-2
				of the Connecticut General Statutes, the adoption of this regulation is
				authorized by section
				12-740(a)
				of the Connecticut General Statutes.