For Immediate Release
Monday, December 30, 2002
Hartford – Tax Commissioner Gene Gavin today announced that he would not seek his third, four-year term as Connecticut’s Commissioner of the Department Revenue Services (DRS) He said that, instead, he would seek new challenges in the private sector.
In his announcement, Commissioner Gavin said, “It is with a great sense of accomplishment and satisfaction that I have chosen not to seek reappointment as Revenue Commissioner. My eight years as Commissioner have been very rewarding; however, it is the right time for me to bring my honesty, integrity and professionalism back to the private sector. The Gavin Posse will ride out to meet new challenges and will create new opportunities to make a difference.
“I would like to thank my people at DRS and Governor Rowland for giving me the opportunity and support to bring the DRS into the new millennium. I can say without hesitation that the people of Connecticut are in, not good, but great hands with the staff at DRS. We have done much during the past eight years. I made a list – 13 typed pages – Wow!
“Technically, the infrastructure of DRS was totally revamped - with the finest computers and software we met Y2K and didn’t even blink. We have become more efficient in both collection of taxes and in refunding due monies. Both DRS and the people of the state – business and private – all benefited. We know at DRS we all have to serve the people – to remind us that tax payment is our civic duty, but should not be a civic chore. My people at DRS believe this and have made this Agency “user-friendly.”
“What else have we done? We have successfully run two tax amnesty programs, which have increased state revenues by $155 million and brought new taxpayers on the rolls. Under my guidance, significant legislation has been passed. Not laws for their own sake, but laws borne out of an innovate new concept of Ad-Hoc Committees comprised of members of the General Assembly, business leaders, tax professionals and me. I have been a national leader in telecommuting.
“For our various efforts, DRS has won 16 awards nationally and locally. Prior to my tenure, no awards were won by this Agency. I am grateful to have been able to achieve so much, so well, and with so much support from the people at DRS, the people of Connecticut and, of course, our Governor and legislature.
“I took this position saying I would bring my experience as a lawyer, CPA and business professional to the state – that I would work with all groups to improve the delivery of services at DRS. We wrote this mission statement:
‘The Mission of the Connecticut Department of Revenue Services is to administer the tax laws of the State of Connecticut and collect the tax revenues in the most cost effective manner; achieve the highest level of voluntary compliance through accurate, efficient and courteous customer services; and perform in a manner which instills public confidence in the integrity and fairness of the State’s tax programs.’
“It is now time that I, Gene Gavin, take these accomplishments and expertise back to the private sector from where I came. More than ever, business leaders must lead with accountability, honesty and competence.
“It has been an honor and privilege to serve my home state of Connecticut as DRS Commissioner. I thank my people at DRS, the legislature and the Governor for the opportunity. As of March 1st, the Gavin Posse and the G-Men are riding on to new challenges.”
Gene Gavin has served as Connecticut Commissioner of Revenue Services since 1995. An attorney and CPA, he was director of state and local taxes with Coopers & Lybrand (now PricewaterhouseCoopers) before accepting his current appointment. He also held positions with J.C.Penney Company, and Kennecott Corporation.
Commissioner Gavin served as a representative in the Connecticut General Assembly and on the municipal finance boards in his hometown of Westport, CT. He is active in the Federation of Tax Administrators and the North Eastern States Tax Officials Association (NESTOA), and served as NESTOA President during 2001. He also is a member of the AICPA, Connecticut Society of CPAs, New York Society of CPAs, and the American and New York State Bar Associations.
Since 1997, Commissioner Gavin has been the tax executive in residence at the University of New Haven, where he teaches graduate courses in federal, state and local taxation. He holds a BA degree from Fordham University, a law degree and MBA from Rutgers University and an LLM from New York University.Commissioner Gavin currently resides in Westport with his wife, Cathy.
TAX COMMISSIONER GENE GAVIN -
CONNECTICUT DEPARTMENT OF REVENUE SERVICES -
PROGRAMMATIC ACCOMPLISHMENTS AND HIGHLIGHTS BY YEAR -
JANUARY 1995 TO PRESENT
- The Department of Revenue Services (DRS) has won 16 awards for effective communication, excellence and innovation from both the private sector and nonpartisan, public organizations during the past eight years (DRS had never won a single award prior hereto);
- In its 1997 annual survey, the Connecticut Business & Industry Association (CBIA) members gave DRS the highest ranking of all state agencies in responsiveness to businesses in the state;
- DRS has worked with the Governor, Office of Fiscal Analysis (OFA), Office of Policy and Management (OPM) and other state agencies to propose and pass legislation to create a more taxpayer friendly atmosphere in the state;
- Creation of Ad Hoc Working groups (now known as the Business Users Group), whereby DRS works with industry representatives, private tax professionals, and other state agency officials to better our tax laws and regulations;
- Increased use of technology and creation of new electronic business and income tax filing options to simplify tax filing and encourage compliance;
- The 2001 Digital Survey of the States selected DRS as a “Best of Breed” for its continued development of easy, efficient electronic filing programs;
- Expanding partnerships with state and national professional and governmental organizations to share information, develop improved tax policy and improve enforcement; and
- Publication of articles which mark Connecticut as a leader in tax administration and policy.
DRS HIGHLIGHTS BY YEAR
Tax Amnesty Program
Developed by DRS as a response to the General Assembly’s call for revenue to plug a $31 million budget gap, the 1995 Tax Amnesty Program set a number of precedents:
it was the first time any state had attempted a second tax amnesty;
it exceeded its revenue goal by 160%;
it brought national recognition to Connecticut because of its ambitious marketing program;
it won a nationally recognized Gold Effie Award (the Oscar of television commercials) from the American Marketing Association for outstanding creativity, effectiveness and results of the marketing campaign.
As a result of Connecticut’s success, 6 states (i.e., Arkansas, New Hampshire, New Jersey, New York, Pennsylvania and Washington D.C.) have had their own tax amnesty program. In addition, Connecticut’s program was used as a model for a potential first ever federal tax amnesty program. (See New York Times article “Tax Amnesty Would Help Pay for Dole’s Economic Plan” authored by Commissioner Gavin, September 22, 1996.)
Public Service Excellence (PSE) Program (winner of Gold Innovation Prize from the Quality Improvement Award Partnership)
Based upon the Total Quality Management (TQM) concept, this award-winning DRS employee training program focused on developing the principles of customer service among DRS staff at every level of the Agency. Each employee received three days of training in identification of customers, customer problem resolution and cross-functional work techniques for continuous improvement of the way we fulfill our mission. Employees were empowered to develop their own ideas to better serve our customers, streamline operations, eliminate waste, and reduce costs of doing business.
Service delivery as measured by cycle times has continued to improve. One indicator is the processing of paper income tax returns and mailing of refund checks within 10 days of receipt. Through electronic filing innovations, taxpayers using this option can receive their refunds within four business days – “the fastest on the planet.”
DRS has been able to absorb mandated employee reductions of 20% (since January 1995 levels) through attrition alone (without layoffs) because of new efficiencies introduced by our employees.
Documented cost savings in the first year of the PSE alone contributed to a $2 million reduction in operating costs for DRS.
Cross-functional training contributed to the successful startup of a new Discovery Unit (see below) with assignments of staff from several divisions.
DRS formed a unique new compliance unit to enhance identification of taxpayers who are not paying their fair share of state taxes. The Discovery Unit was formed from personnel in other Agency divisions with the stated objective of using both traditional and non-traditional investigative techniques to increase compliance with the state’s tax laws. The cross-functional approach brings together diverse skills and training to tap new sources of information. During fiscal year 2002, the Discovery Unit identified and registered more than 4,000 new taxpayers that added over $25 million to the State coffers from the timely filing of tax returns in nine different tax types. Some of the projects that have been conducted include: identifying unregistered home improvement contractors; inspecting trucks to ensure payment of use tax on big ticket items shipped from out of state; visits to restaurants and clubs to ensure compliance with admissions, dues and cabaret taxes; marina investigations to find vessels on which sales or use tax has not been paid; identifying importers of tobacco products not paying the proper tax; cross-checking restaurant and bar receipts on alcohol purchased versus sales made; and reviewing Withholding Tax claimed on returns versus actual W-2 forms submitted.
DRS began the important process of self-evaluation and analysis that would enable it to implement the changes needed to meet the state government environment of the future, as envisioned by Governor John Rowland. Plans were developed to guide the organizational and operational change process in the years to come. The Agency’s comprehensive mission statement was developed that would serve as the focus of all business processes. The Agency’s mission statement is as follows:
The Mission of the Connecticut Department of Revenue Services is to administer the tax laws of the State of Connecticut and collect the tax revenues in the most cost effective manner; achieve the highest level of voluntary compliance through accurate, efficient and courteous customer services; and perform in a manner which instills public confidence in the integrity and fairness of the state’s tax programs.
Award for Excellence in State Government – Presented by CPEC
The Connecticut Policy and Economic Council (CPEC) honored only one governmental entity – DRS - with this prestigious award for the Agency’s outstanding progress in adding equity to the State’s tax system through programs such as the Tax Amnesty Program and legislation viewed as taxpayer- and user-friendly.
Distinguished Service Award – Presented by the Connecticut Marine Trades Association
DRS was recognized for supporting the State’s marine industry through tax policy and legislative initiatives that encourage growth of this core industry.
DRS/DMV Interagency Project (winner of Gold Innovations Prize from the Connecticut Quality Improvement Award Partnership)
In a unique example of interagency cooperation, DRS developed an award-winning training program for managers and supervisors of the Department of Motor Vehicles (DMV) to help them provide better customer service regarding registration and sales and use taxes on motor vehicles and vessels (areas where DRS and DMV have interrelating functions).
Bell Ringer Award for Excellence in Communications
Presented by the Publicity Club of New England in the category of public affairs.
Business Planning Project (BPP)
DRS launched an ambitious business planning project which developed the backbone for shaping the Agency, while fully implementing the Governor’s initiatives for state government. Those initiatives include:
Operating the Agency on a foundation of good business practices;
Providing excellent service to Connecticut citizens;
Shrinking the size of state government;
Increasing state revenues; and
The BPP created a comprehensive blueprint for taking the steps necessary to bring DRS into the 21st Century in both technology and human resources. (See succeeding years.)
DRS added direct deposit of tax refunds to the options available for taxpayers who electronically filed their income tax returns through the Fed-State electronic filing program.
DRS Internet Home Page
DRS recognized the Internet as an important means of providing enhanced service to our customers, and on November 1, 1996, launched a comprehensive web site. The DRS home page provides information on all tax types, notices, decisions and news about state tax policies. It also provides users with easily downloadable state tax forms and interactive capabilities such as registration for free seminars given by DRS throughout the state, and the ability to respond to surveys and e-mail to the Agency. The site provides links to the State of Connecticut home page, other agencies with related responsibilities as well as tax statutes. In ensuing years, the web site has provided taxpayers with the ability to register, file, and pay various taxes. (See “Fast-File” and “WebFile” below.)
The DRS home page has received national recognition for being among the most comprehensive and user-friendly of tax agency Internet sites. Since its creation, more than 25 categories of forms, publications and instruction sheets have been made available for download on the DRS web site – more than 350 in total. This feature is popular with taxpayers, with generally more than 500,000 forms downloaded during the month of February alone and generally by April, an additional 700,000.
Cigarette Sales to Minors Prevention Program/Vending Machine Compliance Program
The DRS Special Investigation Section (SIS) of the Collections & Enforcement (C&E) Division is the official liaison to the federal agencies responsible for tobacco control. SIS works in conjunction with other state agencies to ensure compliance with state cigarette and tobacco laws, particularly those prohibiting sales to minors. SIS and DRS Field Enforcement units conducted a joint inspection/investigation program to respond to potential violations of Public Act 96-240, regarding placement of cigarette vending machines in locations to restrict access by minors. DRS continues to support related initiatives through collaborative efforts with the state Department of Mental Health and Addiction Services and routinely conducts hearings for retailers who violate the law by selling cigarettes to minors.
Industry Ad Hoc Working Committees (Business Users Group)
At the request of the General Assembly’s Finance, Revenue and Bonding Committee, DRS formed a Manufacturing Ad Hoc Committee and a Telecommunications Ad Hoc Committee to study tax issues relating to those industries. This innovative approach brought together representatives of each respective industry, tax practitioners and government officials from various agencies to tackle challenging tax questions and formulate proposals that can streamline the tax statutes affecting these industry groups as well as give certainty and equity to all participants. The Committees’ teamwork resulted in the successful passage and implementation of Connecticut’s corporate partner legislation in 1996.
DRS has continued to reconvene its Ad Hoc Committees, now known as the Business Users Group (BUG), nearly every year to address a variety of issues complicating Connecticut tax statutes. The result of these BUG meetings has been the enactment of six new laws that more clearly define and simplify state tax statutes. BUG has also helped build Connecticut’s reputation as a business-friendly state that is willing to work with the private sector to resolve issues.
Connecticut Tax Policy and Administration Praised by CFO Magazine
An article in CFO magazine, STATE TAXES: A Guide for the Besieged, appeared in August 1996 and cited Connecticut DRS as a state that was working with companies in efforts to streamline audit procedures. Another article in the same issue, State Tax Reform: Only Small Victories, also cites DRS as a state agency that has worked to clarify its tax laws so that taxpayers will understand what auditors will be looking for and how tax laws will be interpreted.
Regional Participation Resulting in Legislation to End Double Taxation
DRS initiated actions that resolved long-standing domicile issues among neighboring states. DRS led its sister states in the Northeast State Tax Officials Association (NESTOA) through joint work sessions that ultimately spurred legislative action in Connecticut and other NESTOA states to alleviate the burden of double taxation. The legislation ended the unfair practice of Connecticut resident taxpayers who work in neighboring states being taxed twice on the same income. (See The Journal of MultiState Taxation article “The Long Arm of the Empire State Convenience Rule Discourages Interstate Telecommuting” co-authored by Commissioner Gavin and Stacey Pavano, tax attorney, March 2002.)
Integrated Tax Administration System (ITAS)
As part of the 1995 Strategic Planning project, DRS identified its aging technology infrastructure as a potential liability in meeting the State’s tax processing needs in the near future. At that time, DRS also began to evaluate the impact of the “century date change” (Year 2000) on its operations. Integration of all technology systems was given a high priority to optimize our ability to fulfill our mission. During 1997, DRS began laying the groundwork to acquire the necessary hardware and software to address these needs, as well as identifying the human resources to fully implement a successful technology system. (See “ITAS Implementation” below.)
Business Process Reengineering (BPR)
DRS undertook an in-depth Business Process Reengineering project as the next step toward reaching the goals set in the Business Planning Project. BPR enabled us to identify new operational approaches to fulfilling our mission more effectively and efficiently.
Nominated for the National American Society of Certified Public Accountants Outstanding CPA in Government Award by the Connecticut Society of Certified Public Accountants
Commissioner Gene Gavin, C.P.A., M.B.A., J.D., LL.M, received the Connecticut Society of Public Accountants award for Outstanding CPA in Government in recognition of his outstanding contributions to state tax administration, the community, and to the field of accounting. This group then nominated Commissioner Gavin for the national award.
Award from the Connecticut Marine Trades Association
Given in appreciation of DRS efforts to support the Connecticut marine industry.
Internet Top 100 Tax Delinquency List (winner of Gold Innovation Prize from the Connecticut Quality Improvement Partnership, semifinalist for the Council of State Governments Innovation Award)
In January 1997, DRS began publishing the names of Connecticut’s Top 100 tax delinquents on the DRS home page. Each month, a fresh list is posted based on the billing list of accounts receivable. Taxpayers appearing on the list have exhausted their appeal rights for the tax bill owed, and more than 90 days have passed since those appeal rights were exhausted. The Agency has statutory authority to post these names.
Since its inception, more than 1,560 top dollar overdue accounts from a list of 2,000 that were eligible for publication have been cleared;
More than $133.5 million in overdue tax debts have been collected through this mechanism and DRS anticipates an additional $18.6 million in future revenues from approved payment plans;
This compliance tool has encouraged other taxpayers to respond to DRS billing notices more promptly and contributed to a reduction in the monthly inventory of delinquent tax accounts receivable by an average of 32%;
The collection turnover rate for taxpayers receiving the certified letters of posting on the Internet is 70%. The projected fiscal year turnover rate is 65% for the same period;
DRS has gained national media attention for this innovation in compliance programs (including the Wall Street Journal and leading national tax journals);
The U.S. General Accounting Office, 38 states, as well as federal and municipal government offices have contacted us to find out details of how we were able to launch the list; in addition to China, Japan, and the Province of Ontario.
Weaver Academy of Finance and High School Internship Programs
DRS participates in the Weaver High School (Hartford) Academy of Finance Program and provides predominantly minority sophomore students with job shadowing opportunities so that they could learn more about revenue administration and finance-based careers.
Also, the DRS C&E Division and the Audit Division began working with the Hartford school system to establish an intern program to interest minority students in law enforcement and accounting careers. Several high school students were selected to work with our SIS and Audit units. Employees worked with the students as mentors to develop the work habits and skills that they will need in their future educational and career pursuits. A number of interns have continued their employment with DRS.
Connecticut Telefile (winner of Gold Innovation Prize from the Connecticut Quality Improvement Partnership)
DRS introduced Telefile, an income tax return filing program that allows as many as 750,000 taxpayers annually to file their CT-1040EZ using a touch-tone phone. This option offers taxpayers faster refunds (mailed or direct deposited within four business days), with no need to make calculations or study tax tables. Returns can also be filed and confirmed at any hour of the day or night, seven days a week. Telefile streamlines DRS operations by removing the processing and handling of paper forms, which results in lower costs to government through the use of technology.
Introduction of Income Tax Filing via Personal Computer
DRS implemented a pilot program that allows taxpayers to file their tax return utilizing software for their personal computer. This gave taxpayers an avenue, besides using a paid tax preparer, to file their income tax return electronically. That first year, 222 taxpayers participated in the program. During the 2001 Income Tax Filing Season, more than 51,000 taxpayers used software to file their tax returns over the Internet.
Creation of Tax Products Group
A new Tax Products Group was established to oversee all taxpayer forms, instructions and other informational publications. This unit is responsible for instilling clarity, accuracy and user-friendliness into the more than 300 documents produced annually by DRS for individual taxpayers, business taxpayers and tax professionals. As new documents are developed and existing ones revised, the unit focuses on the use of plain language for better user understanding.
Offer of Compromise
Offer of Compromise procedures were established to assist in the review of tax debts where the Department may not be able to collect the full amount owed because of possible questions as to actual liability, or when the offered amount reasonably reflects collection potential.
Development of the Managed Audit Program (winner of Gold Innovation Prize from the Connecticut Quality Improvement Partnership)
The Managed Audit Program was developed to shift some of the responsibility for examination efforts back to the taxpayer. The Managed Compliance Program includes a function for prospective monitoring of sales and use tax reporting and payment, a managed audit program for traditional look-back monitoring of tax compliance, and an expanded “direct pay” program for larger taxpayers of sales and use tax. This cooperative effort provides DRS with the means of expanding audit coverage, increasing taxpayer awareness and improving voluntary compliance. (See The Journal of MultiState Taxation article “Connecticut’s Innovative Managed Compliance Program Benefits Taxpayers and the State” authored by Commissioner Gavin and a private practitioner, August 2000.)
State-to-State Offsets of Tax Refunds
DRS introduced resolutions to member states of the North Eastern State Tax Officials Association (NESTOA) to enable them to enter into state-to-state offsets of tax refunds. Patterned on the federal/state offset program, this enables states to collect revenue due them when a taxpayer has a refund due from another state. Enabling legislation for Connecticut to enter into such agreements was passed by the General Assembly and signed into law.
DRS worked closely with the Governor’s Office and the General Assembly to allow taxpayers to share in the state’s 1997-98 surplus through the Rebate ’98 program. The cross-functional teamwork among divisions as diverse as Information Services, Operations, Taxpayer Services, Legal and Administration was the key to successfully implementing the program which distributed $102 million of the prior fiscal year’s surplus to more than 950,000 Connecticut taxpayers.
Financial Services Ad Hoc Study Committee (BUG)
DRS, through its Business Ad Hoc Study Committee, created a new and innovative tax policy for the financial services industry. The law, passed through the Committee’s efforts, set Connecticut far ahead of other states as a premier location for this type of business by establishing an inclusive definition of financial services industries. The law also established a single-factor apportionment formula for the corporation business tax, based on the business address of customers; allowing companies to establish mortgage passive investment companies; and limits the deductibility of certain intangible expenses and certain interest expenses with a related member. (See The Journal of MultiState Taxation article “Connecticut Takes Bold Steps in the Taxation of Financial Service Companies” by Richard W. Tomeo, private sector tax attorney.)
Corporate Business Tax Credit Seminars
Responding to the interests of corporations, DRS hosted two Corporate Business Tax Credit seminars in Newington and Bridgeport. A capacity attendance learned about 12 state tax credit programs administered by DRS, and other state agencies. The seminars helped tax practitioners and corporate/business representatives gain a clearer understanding of how participation in legislated programs could reward the participating companies with tax credits that could lower their Connecticut tax liabilities.
DRS earned recognition as the first major state agency to be rated compliant at the April 1999 reporting milestone set by the Department of Information Technology. With the assistance of an outside vendor, the Information Services Division (ISD) coordinated the remediation of existing systems and tested all applications. This project was accomplished by significant teamwork, redeployment of staff, and reprioritization of services. As part of the Y2K initiative, all hardware and supporting operating systems were upgraded to be Y2K compliant. Nearly 400 new personal computers were installed by ISD throughout the Agency. In order to provide the resources necessary to support all end users, ISD completed an upgrade of the entire network infrastructure. The new network provides backup capabilities and access for everyone to office productivity products, electronic mail, the Internet (when appropriate) and the Agency’s internal Intranet.
DRS launched Operation EQUITY - a program allowing the Commissioner to share with revenue agencies of other states certain use tax revenue collected by DRS as a result of information shared by other states. Participating state’s revenue departments provide DRS with information about purchases of tangible personal property or services made in their state by Connecticut taxpayers so that assessments can be made. Information has been provided by Rhode Island, New York, New Jersey, Florida, South Carolina, New Hampshire, Maine, and Pennsylvania. While Operation Equity provides revenue sharing opportunities to other state tax agencies, so far, all have refused the revenue for various legislative and administrative reasons but have continued to provide information to our Department.
Spanish Language Assistance
DRS realized the importance of addressing the tax assistance needs of the state’s growing population of Hispanic, Latino and other Spanish-speaking taxpayers who have a limited understanding of English. A special option was added to the DRS toll-free telephone menu that allowed taxpayers access to Spanish-speaking DRS employees who volunteered during the income tax filing season to offer assistance. The volunteer group logged more than 1,300 hours for the 2 ½-month period in 1999, during which they also performed their regular, full-time jobs. The Spanish Language Assistance Program has continued to grow and during filing season 2001, Spanish-speaking DRS employees answered more than 1,600 phone calls for assistance.
DRS/Institute of Professionals in Taxation Seminar
DRS partnered with the Institute of Professionals in Taxation (IPT), a national educational organization, to present co-sponsored tax seminars in Connecticut each year. DRS staff conduct presentations on a number of tax topics to educate local tax professionals about tax law, DRS policy and procedures, and tax changes. The events also include experts on property taxes in local Connecticut jurisdictions, as well tax experts from the private sector.
Property Tax Calculator
During the tax-filing season, DRS Information Services Division developed an on-line Property Tax Calculator for the DRS web site. The calculator helps taxpayers automatically calculate the appropriate property tax credit to use on their individual income tax returns.
DRS E-News Updates
DRS Taxpayer Services Division inaugurated a free subscriber service, DRS E-News, to update interested taxpayers and tax professionals automatically by e-mail when new publications or forms are issued, or when changes are made to existing DRS materials. Notices include on-line links to the document referenced, providing instant access for reading and downloading for the subscriber. The fast and efficient tool provides the latest tax information to both Connecticut and out-of-state interested parties.
Sales Tax Rebate
At the suggestion of Commissioner Gavin, the Governor introduced, and the General Assembly approved a tax rebate program based on the sales tax so that the rebate money would not be subject to federal and state income tax. DRS successfully administered the rebate program that distributed more than $116 million in rebates to over 2.3 million Connecticut residents. Exceptional commitment to our customers on the part of DRS employees resulted in DRS implementing this program within the mandated schedule and budget, while maintaining all other agency functions at their highest performance levels.
Suspicious Filer Exchange Program (winner of Connecticut Innovation Prize from the Connecticut Quality Improvement Award Partnership)
The DRS Special Investigation Section created the Suspicious Filer Exchange Program. The program is designed to protect Connecticut and participating states from possible losses of fraudulent income tax refund schemes. Utilizing inexpensive software and secure digital file encryption, tax investigators can instantaneously share information about tax refund frauds perpetrated in multiple jurisdictions. Fourteen state tax agencies have adopted the program, with many other jurisdictions, including some municipalities, preparing to participate.
Manufacturers Ad Hoc Study Committee (BUG)
DRS launched a study of factor relief for manufacturers that resulted in new legislation that continues to build Connecticut’s reputation as a desirable location for industry. Representatives of major state manufacturers, tax professionals and other state agencies joined DRS on the Committee to examine Connecticut’s taxation of manufacturers compared to other states. The Committee recommended several options for tax relief to the General Assembly. The resulting legislation that was passed changed the basis for the corporation business tax for manufacturers from a three-factor formula based on sales, payroll and property to a single factor basis of sales only.
Commercial Vehicle Information Systems and Network (CVISN)
Working with the Department of Motor Vehicles (DMV) and the Department of Transportation (DOT) in a multi-agency endeavor, DRS helped to create the Commercial Vehicle Information Systems and Network (CVISN). CVISN allows motor carriers to electronically register vehicles with the DMV, DOT and DRS for their various permits and tax liabilities. These taxpayers can also electronically file tax returns and remittances and gain electronic clearance through weigh stations.
Business Systems Plan
DRS created a Business Systems Plan to provide a detailed description of the Agency’s current environment and desired changes to its 14 primary processes. The Plan also outlines a technology architecture designed to support a new approach to tax collection that is generally described as relational database –oriented integrated applications, also known as the Integrated Tax Administration System (ITAS). ITAS will incorporate a “case management” approach to customer relations and tax collection. It will also provide the financial management tools appropriate to an organization which has an annual operating budget greater than $50 million and manages more that $9 billion in tax revenue.
Streamlining tax processes for customers
The DRS Operations Division implemented a processes to allow business taxpayers to access the tax registration form on the DRS Web site, fill it in, print it and then mail it with their payment. DRS also added the option to pay income tax by credit card and expanded the direct deposit option for income tax refunds to Telefilers, providing faster, more convenient availability of funds. During the filing season, DRS began accepting the IRS personal identification number for Connecticut taxpayers, eliminating the necessity of tax practitioners continuing to file paper documents with DRS for their electronic filing customers.
Participation in ct-clic.com
DRS is an active partner with other state and federal agencies to automate and simplify the multi-jurisdictional requirements for licensing and registration processes for businesses, as well as the filing of tax returns and payment of taxes. In cooperation with the Connecticut Office of Policy and Management, the Department of Economic and Community Development and the Connecticut Economic Resources Council, DRS participates in ct-clic.com, the one-stop electronic registration process.
Fast-File Program for Business Taxpayers (winner of Connecticut Innovation Prize from the Connecticut Quality Improvement Award Partnership)
The Fast-File Program for business taxpayers was launched to enable businesses to file their tax returns and remit payments by telephone or through a secure page on the DRS web site, with no additional expense for software or third party processing. Taxpayers have hailed this as a truly remarkable step forward in tax reporting. Initially, business taxpayers could use Fast-File to file returns and payments for sales and use taxes, room occupancy taxes and income tax withholding. During 2002, DRS added a registration component to the program. In just one year, Fast-File has logged 24,400 electronic returns and 57,919 registrations for new or additional taxes.
Tax Relief for 9-11 Victims
DRS granted an extension of filing and payment immediately after the Pentagon and World Trade Center attacks on September 11, 2001.
Uncashed Refund Checks
New legislation enables DRS to use its web site to post the names of taxpayers whose tax refund checks have been returned to us as undeliverable. This new public service ensures that the rightful owners of the refunds will have their money as quickly as possible and in 2002 was duplicated by the IRS.
Commissioner Gavin Named President of the Northeastern States Tax Officials Association
DRS maintains an active role in tax administration organizations both regionally and nationally. During 2001, Commissioner Gavin held the position of president of the Northeastern States Tax Officials Association (NESTOA) and Connecticut was host to the NESTOA annual conference. During his tenure, the Commissioner emphasized further cooperation among the 13 member states to provide consistency and fairness to taxpayers.
b>Outstanding Customer Service Award
Recognizing the importance of DRS employees in providing outstanding customer service to taxpayers, DRS began awarding a quarterly DRS Outstanding Customer Service Award to a deserving employee. The award rewards employees for their efforts and encourages other to give their best to taxpayers and the Agency. One of the quarterly award winners also receives the Governor’s Outstanding Customer Service Award.
Mobile Audit Referral System (winner of the Office of Policy and Management Innovation Award)
The Office of Policy and Management granted an Innovation Award to a DRS revenue examiner who developed a fast and efficient way to research the tax registration status of audit subjects. The Mobile Audit Referral System (MARS) provides field revenue examiners access to taxpayer information and search results in five seconds, streamlining the on-the-spot audit process. This system also has provided benefits to other areas of DRS where remote registration searches are necessary.
The Integrated Tax Administration System (ITAS) continued to be a catalyst for the overriding 21st century business strategy of DRS during 2001. DRS worked closely with the Department of Information Technology, and the Office of Policy and Management to develop and issue a request for proposals for the implementation of the next phase of technological and organizational enhancements. Evaluation of proposals received was completed.
Bankruptcy Section E-mail Notification
DRS continuing update of technology and data systems has enabled the Special Investigations Section to improve their management of criminal investigations and caseflow. The Bankruptcy Section now receives bankruptcy notices by e-mail from 43 bankruptcy district courts, expediting receipt of the notices and assignment for processing.
2001 Digital Survey of the States: Revenue and Taxation
The third installment of the 2001 Digital Survey of the States was released in August 2001. In the Revenue and Taxation category, Connecticut received the highest possible scores in three out of four survey focus areas. DRS’ electronic filing program, which enables one to electronically file both federal and Connecticut resident income tax returns was also selected as a “Best of Breed” Practice among the states.
State Employees Campaign for Giving Record
Commissioner Gavin served as the 2001 State Employees Campaign for Charitable Giving Co-Chairman. Under his watch, the campaign raised a record $1.6 million for Connecticut charities. Employee donations exceeded the $1.5 million goal set for the 2001 Campaign for Giving. Some of the highlights of the campaign include 92 percent employee participation at the Department of Banking, more than $20,000 contributed by 690 state employee retirees, and more than $1 million raised by state employees working in the Greater Hartford Area.
Connecticut Tax Amnesty Program
During the June 2002 Special Session, the General Assembly approved the state’s third Tax Amnesty Program to plug a $24 million budget gap. Operating under time constraints, DRS implemented the 2002 Connecticut Tax Amnesty Program, which broke all previous records and has been lauded by the national Federation of Tax Administrators as one of the most successful tax amnesty programs on record. Some of the early highlights of the 2002 Connecticut Tax Amnesty include:
collecting over $109 million, more than $85 million over the statutory goal;
processing more than 13,000 amnesty applications; and
returning about $500,000 of the $2 million allocated to DRS to administer the program.
WebFile Income Tax Program
DRS introduced WebFile, which enabled 15,700 Connecticut taxpayers to file their 2001 Income Tax Returns free of charge using the secure DRS web site. The program, in conjunction with other electronic filing options, is expected to significantly reduce the cost of processing tax returns in the long term. During 2001-2002, a total of 534,100 paperless tax returns were filed, and 587,386 in electronic fund transfers totaling more than $4.8 billion were made.
Cigarette Tax Increase
DRS employees from the Collection and Enforcement Division and Audit Division were instrumental in implementing and administering the April 3 cigarette tax increase. Operating on a short schedule, the team was able to design, procure, and distribute more than 15.5 million floor tax stamps. This compliance team inspected nearly 3,000 cigarette vendors and distributors, completing more than ten times the number of projected inspections. When finished, the project produced more than $8 million in additional revenue.
DRS began implementation of the Integrated Tax Administration System (ITAS), which will provide a case management approach to customer service and tax administration management for the Agency. Once completed, ITAS will provide the comprehensive technological backbone for vertical and horizontal interaction between internal and external data. It will also enable the Agency’s highly trained workforce to maximize that information for the highest performance of tax administration. This year, DRS worked closely with the Department of Information Technology and the Office of Policy and Management to select a contractor for the much-anticipated program. The first phase of the project will convert the sales and use, withholding and corporation taxes to the new, integrated information management system. This phase will be complete by December of 2003. The entire project is slated for completion in 2005.
Jenkins Act Taskforce
DRS initiated a partnership with the state Attorney General’s Office, the federal Bureau of Alcohol, Tobacco & Firearms (ATF) and the General Accounting Office (GAO) to address the issue of Internet and mail order tobacco sellers who violate state and federal tax and age restriction laws. DRS, with the help of the taskforce, is seeking better enforcement of the federal Jenkins Act, which regulates the interstate retail sale of cigarettes.
In September, DRS conducted an undercover sting operation that resulted in the apprehension of a Middletown resident for possessing untaxed cigarettes. The operation, which involved DRS, local law enforcement and an unnamed common carrier, marked the first arrest of a state resident who had purchased untaxed cigarettes over the Internet. Also in September, Commissioner Gavin headed a roundtable discussion with members of the taskforce at the annual DRS/IPT One-Day Tax Seminar.
Expansion of Electronic Filing
In a continuing effort to make the benefits of electronic filing and processes available to all taxpayers, DRS will accept Non-Resident/ Part Year Connecticut income tax returns during the 2002 filing season. Also, DRS will make direct deposit of income tax refunds available to paper filers. The continued promotion of electronic forms of processing is expected to increase efficiency and reduce Agency costs.