Sec. 12-728. Deficiency assessments. Notice. Penalty.
Sec. 12-728. Deficiency assessments. Notice. Penalty. (a)(1) After a final return
pursuant to the provisions of this chapter is filed, the commissioner shall cause the
same to be examined and may make such further audit or investigation or reaudit as
the commissioner deems necessary, and if the commissioner determines that there is a
deficiency with respect to the payment of any tax due under this chapter, the commissioner shall assess or reassess the additional taxes, penalties and interest due to this state,
give notice of such assessment or reassessment to the taxpayer and make demand upon
the taxpayer for payment. Not later than sixty days after the mailing of such notice, the
taxpayer shall pay to the commissioner, in cash or by check, draft or money order drawn
to the order of the commissioner, the amount of the deficiency. Such amount shall bear
interest at the rate of one per cent per month or fraction thereof from the date when the
original tax became due and payable.
(2) When it appears that any part of the deficiency for which a deficiency assessment
is made is due to negligence or intentional disregard of the provisions of this chapter
or regulations adopted thereunder, there shall be imposed a penalty equal to ten per
cent of the amount of such deficiency assessment. When it appears that any part of the
deficiency for which a deficiency assessment is made is due to fraud or intent to evade
the provisions of this chapter or regulations adopted thereunder, there shall be imposed
a penalty equal to twenty-five per cent of the amount of such deficiency assessment.
For audits of returns commencing on or after January 1, 2006, when it appears that any
part of the deficiency for which a deficiency assessment is made is due to failure to
disclose a listed transaction, as defined in Section 6707A of the Internal Revenue Code
of 1986, or any subsequent corresponding internal revenue code of the United States,
as from time to time amended, on the taxpayer's federal tax return, there shall be imposed
a penalty equal to seventy-five per cent of the amount of such deficiency assessment.
(3) No taxpayer shall be subject to more than one penalty under this section in
relation to the same tax period.
(4) Any decision rendered by any federal court holding that a taxpayer has filed a
fraudulent return with the Director of Internal Revenue shall subject the taxpayer to the
twenty-five per cent penalty imposed by this subsection without the necessity of further
proof thereof, except when it can be shown that the return to the state so differed from
the return to the federal government as to afford a reasonable presumption that the
attempt to defraud did not extend to the state.
(b) A notice of deficiency shall set forth the reason for the proposed assessment.
The notice shall be mailed to the taxpayer at his last-known address. In the case of a
joint return, the notice of deficiency may be a single joint notice except that if the
commissioner is notified by either spouse that separate residences have been established
he shall mail joint notices to each spouse. If the taxpayer is deceased or under a legal
disability, a notice of deficiency may be mailed to his last-known address unless the
commissioner has received notice of the existence of a fiduciary relationship with respect
to such taxpayer.
(June Sp. Sess. P.A. 91-3, S. 79, 168; P.A. 95-26, S. 40, 52; P.A. 99-121, S. 23, 28; P.A. 05-116, S. 3; 05-260, S. 8.)
History: June Sp. Sess. P.A. 91-3, S. 79, effective August 22, 1991, and applicable to taxable years of taxpayers
commencing on or after January 1, 1991; P.A. 95-26 amended Subsec. (a) to lower interest rate from 1.25% to 1%, effective
July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due
before said date; P.A. 99-121 amended Subsec. (a) to make technical changes and to provide that 25% penalty applies
where federal court held taxpayer filed a fraudulent federal income tax return, effective June 3, 1999; P.A. 05-116 amended
Subsec. (a) by dividing it into Subdivs. (1) to (4), made technical changes in Subdiv. (1) and amended Subdiv. (2) to add
a penalty for failure to disclose a listed transaction, effective June 24, 2005, and applicable to taxable years commencing
on or after January 1, 2005; P.A. 05-260 amended Subsec. (a)(2) to allow the 75% penalty for failure to report listed
transactions to apply to returns audited on or after January 1, 2006, effective July 13, 2005.
See Sec. 12-30c re penalty on promoter of abusive tax shelters.