CHAPTER 202
COLLECTION OF STATE TAXES

Table of Contents

Sec. 12-35a. *(See end of section for amended version of subsection (a) and effective date.) Lien on personal property as security related to delinquent state taxes.
Sec. 12-35f. Offset of tax refunds.

      Sec. 12-35a. *(See end of section for amended version of subsection (a) and effective date.) Lien on personal property as security related to delinquent state taxes. *(a) Definitions. Whenever used in this section, unless the context otherwise requires: (1) "Goods" means goods, as defined in subdivision (44) of subsection (a) of section 42a-9-102; (2) "proceeds" means proceeds, as defined in subdivision (64) of subsection (a) of section 42a-9-102; (3) "debtor" means the taxpayer; (4) "secured party" means the state of Connecticut; (5) "collateral" means property which is the subject of the tax lien; (6) "obligations" means amount of tax and accrued penalties and interest claimed to be due the state in relation to the tax lien; (7) "person" means any individual, trust, partnership, association, company, limited liability company or corporation; (8) "purchase money security interest" means purchase money security interest, as defined in section 42a-9-103a; (9) "commercial transactions financing agreement" means an agreement entered into by a person in the course of his trade or business to make loans to the taxpayer, part or all of the security for repayment of any such loan being inventory acquired by the taxpayer in the ordinary course of trade or business; (10) "qualified property" when used with respect to a commercial transactions financing agreement, means inventory; (11) "obligatory disbursement agreement" means an agreement, entered into by a person in the course of trade or business, to make disbursements but such an agreement shall be considered within this term only to the extent of disbursements which are required to be made by reason of the intervention of the rights of a person other than the taxpayer; (12) "qualified property" when used with respect to obligatory disbursement agreement, means property subject to the lien imposed in accordance with this section, at the time of tax lien filing and, to the extent that the acquisition is directly traceable to the disbursements under an obligatory disbursement agreement, property acquired by the taxpayer after the time of tax lien filing; (13) "inventory" means inventory, as defined in subdivision (48) of subsection (a) of section 42a-9-102; (14) "lien creditor" means lien creditor, as defined in subdivision (52) of subsection (a) of section 42a-9-102; (15) "account" means account, as defined in subdivision (2) of subsection (a) of section 42a-9-102; (16) "chattel paper" means chattel paper, as defined in subdivision (11) of subsection (a) of section 42a-9-102; (17) "commercial tort claim" means commercial tort claim, as defined in subdivision (13) of subsection (a) of section 42a-9-102; (18) "deposit account" means deposit account, as defined in subdivision (29) of subsection (a) of section 42a-9-102; (19) "document" means document, as defined in subdivision (30) of subsection (a) of section 42a-9-102; (20) "general intangible" means general intangible, as defined in subdivision (42) of subsection (a) of section 42a-9-102; (21) "instrument" means instrument, as defined in subdivision (47) of subsection (a) of section 42a-9-102; (22) "investment property" means investment property, as defined in subdivision (49) of subsection (a) of section 42a-9-102; (23) "filing office" means filing office, as defined in subdivision (37) of subsection (a) of section 42a-9-102; and (24) "state" means state, as defined in subdivision (76) of subsection (a) of section 42a-9-102, except that "the state" or "this state" means the state of Connecticut.

      (b) Perfection of state's lien on goods of taxpayer. Upon failure of any person to pay any tax, except taxes under chapter 216, due the state within thirty days from its due date, or if before the due date of any tax, except taxes under chapter 216, the Commissioner of Revenue Services believes that the collection of such tax will be jeopardized by delay, the state shall have a lien, upon perfection as hereinafter provided, upon the goods, accounts, chattel paper, instruments, documents, investment property, deposit accounts, commercial tort claims and general intangibles situated in this state and owned by the taxpayer upon the date of perfection, or upon the goods, accounts, chattel paper, instruments, documents, investment property, deposit accounts, commercial tort claims and general intangibles thereafter acquired by the taxpayer. Such lien shall attach and become perfected at the time when notice of such lien is filed pursuant to the filing provisions of part 5 of article 9 of title 42a, except that the signature of the taxpayer against whose property the lien is claimed shall not be required on said notice of lien and, in each case, the lien shall be filed as if the debtor were located in this state. Nothing in this section shall be construed as prohibiting the commissioner from filing both a notice of lien as if the debtor were located in this state and a notice of lien with the filing office of a state other than this state, if the commissioner determines that it would be beneficial to this state to do so. Except as hereinafter provided, upon perfection, such lien shall have priority over all subsequently perfected liens and security interests.

      (c) Information required in notice of lien. Each such notice of lien shall contain such information as will identify (1) the owner of the property upon which the lien is claimed, (2) the residence or business address of such owner, (3) the specific property claimed to be subject to such lien, (4) the location of such property, (5) the type of tax, (6) the amount of tax and accrued penalties and interest claimed to be due the state in relation to the lien and (7) the tax period or periods for which such lien is claimed.

      (d) State lien effective for ten years. The lien shall be effective for a period of ten years from the date of filing unless discharged as hereinafter provided.

      (e) Rights and remedies of the state as secured party. A notice of tax lien having been filed, the state shall have the rights and remedies of a secured party, as provided in sections 42a-9-601 to 42a-9-628, inclusive, and the taxpayer against whom said lien has been filed shall have the rights and remedies of a debtor, as provided in said sections. In proceeding to enforce such lien, the state shall observe the procedures applicable to a secured party under sections 42a-9-601 to 42a-9-628, inclusive.

      (f) Security interests or property not subject to tax lien. Even though notice of tax lien has been filed, such lien shall not be valid with respect to: (1) A security interest which came into existence after tax lien filing but which (A) is in qualified property covered by the terms of a written agreement entered into before tax lien filing and constituting a commercial transactions financing agreement or an obligatory disbursement agreement and (B) is protected under the laws of this state against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation; (2) a security interest which came into existence after tax lien filing by reason of disbursements made before the forty-sixth day after the date of tax lien filing, or before the person making such disbursements had actual notice or knowledge of tax lien filing, whichever is earlier, but only if such security interest (A) is in property subject at the time of tax lien filing, to the lien imposed by this section and covered by the terms of a written agreement entered into before tax lien filing and (B) is protected under the laws of this state against a judgment lien arising, as of the time of tax lien filing, out of an unsecured obligation; (3) tangible personal property purchased at retail, as against a purchaser in the ordinary course of the seller's trade or business, unless at the time of such purchase such purchaser intends such purchase to, or knows such purchase will, hinder, evade, or defeat the collection of any tax; or (4) a purchase money security interest, if said purchase money security interest would be prior to a conflicting security interest in the same collateral under section 42a-9-324.

      (g) Discharge of state tax lien. When the amount of tax, penalty or interest with respect to which a lien has been created under this section has been satisfied, the Commissioner of Revenue Services, upon request of any interested party, shall issue a certificate discharging such lien, which certificate shall be filed with the Uniform Commercial Code Division of the office of the Secretary of the State in the same manner as termination statements are filed under section 42a-9-513.

      (P.A. 82-72, S. 1, 3; P.A. 95-79, S. 24, 189; P.A. 01-132, S. 155; P.A. 03-107, S. 1.)

      *Note: On and after July 1, 2013, subsection (a) of this section, as amended by section 26 of public act 11-108, is to read as follows:

      "(a) Definitions. Whenever used in this section, unless the context otherwise requires: (1) "Goods" means goods, as defined in subdivision (44) of subsection (a) of section 42a-9-102; (2) "proceeds" means proceeds, as defined in subdivision (64) of subsection (a) of section 42a-9-102; (3) "debtor" means the taxpayer; (4) "secured party" means the state of Connecticut; (5) "collateral" means property which is the subject of the tax lien; (6) "obligations" means amount of tax and accrued penalties and interest claimed to be due the state in relation to the tax lien; (7) "person" means any individual, trust, partnership, association, company, limited liability company or corporation; (8) "purchase money security interest" means purchase money security interest, as defined in section 42a-9-103a; (9) "commercial transactions financing agreement" means an agreement entered into by a person in the course of his trade or business to make loans to the taxpayer, part or all of the security for repayment of any such loan being inventory acquired by the taxpayer in the ordinary course of trade or business; (10) "qualified property" when used with respect to a commercial transactions financing agreement, means inventory; (11) "obligatory disbursement agreement" means an agreement, entered into by a person in the course of trade or business, to make disbursements but such an agreement shall be considered within this term only to the extent of disbursements which are required to be made by reason of the intervention of the rights of a person other than the taxpayer; (12) "qualified property" when used with respect to obligatory disbursement agreement, means property subject to the lien imposed in accordance with this section, at the time of tax lien filing and, to the extent that the acquisition is directly traceable to the disbursements under an obligatory disbursement agreement, property acquired by the taxpayer after the time of tax lien filing; (13) "inventory" means inventory, as defined in subdivision (48) of subsection (a) of section 42a-9-102; (14) "lien creditor" means lien creditor, as defined in subdivision (52) of subsection (a) of section 42a-9-102; (15) "account" means account, as defined in subdivision (2) of subsection (a) of section 42a-9-102; (16) "chattel paper" means chattel paper, as defined in subdivision (11) of subsection (a) of section 42a-9-102; (17) "commercial tort claim" means commercial tort claim, as defined in subdivision (13) of subsection (a) of section 42a-9-102; (18) "deposit account" means deposit account, as defined in subdivision (29) of subsection (a) of section 42a-9-102; (19) "document" means document, as defined in subdivision (30) of subsection (a) of section 42a-9-102; (20) "general intangible" means general intangible, as defined in subdivision (42) of subsection (a) of section 42a-9-102; (21) "instrument" means instrument, as defined in subdivision (47) of subsection (a) of section 42a-9-102; (22) "investment property" means investment property, as defined in subdivision (49) of subsection (a) of section 42a-9-102; (23) "filing office" means filing office, as defined in subdivision (37) of subsection (a) of section 42a-9-102; and (24) "state" means state, as defined in subdivision (77) of subsection (a) of section 42a-9-102, except that "the state" or "this state" means the state of Connecticut."

      (P.A. 82-72, S. 1, 3; P.A. 95-79, S. 24, 189; P.A. 01-132, S. 155; P.A. 03-107, S. 1; P.A. 11-108, S. 26.)

      History: P.A. 95-79 amended Subsec. (a) to redefine "person" to include a limited liability company, effective May 31, 1995; P.A. 01-132 amended Subsec. (a) to replace Sec. 42a-9-105(1)(h) with Sec. 42a-9-102(a)(44) as the statutory reference for the definition of "goods", replace Sec. 42a-9-306(1) with Sec. 42a-9-102(a)(64) as the statutory reference for the definition of "proceeds", replace Sec. 42a-9-107 with Sec. 42a-9-103a as the statutory reference for the definition of "purchase money security interest", replace Sec. 42a-9-109(4) with Sec. 42a-9-102(a)(48) as the statutory reference for the definition of "inventory" and replace Sec. 42a-9-301(3) with Sec. 42a-9-102(a)(52) as the statutory reference for the definition of "lien creditor", amended Subsec. (b) to replace reference to "part 4" with "part 5" of article 9 of title 42a and add provision that "in each case, the lien shall be filed as if the debtor were located in this state", amended Subsec. (e) to replace references to Secs. 42a-9-501 to 42a-9-507, inclusive, with Secs. 42a-9-601 to 42a-9-628, inclusive, amended Subsec. (f) to replace reference to Sec. 42a-9-312 with Sec. 42a-9-324 and amended Subsec. (g) to replace reference to Sec. 42a-9-404 with Sec. 42a-9-513; P.A. 03-107 amended Subsec. (a) to make technical changes and define "account", "chattel paper", "commercial tort claim", "deposit account", "document", "general intangible", "instrument", "investment property", "filing office", and "state", and amended Subsec. (b) to make a technical change, to provide for liens against accounts, chattel paper, instruments, documents, investment property, deposit accounts, commercial tort claims and general intangibles, and to add provision re filing of both a notice of lien as if debtor were located in this state and a notice of lien in another state, effective July 1, 2003; P.A. 11-108 amended Subsec. (a)(24) to replace Sec. 42a-9-102(a)(76) with Sec. 42a-9-102(a)(77) as the statutory reference for the definition of "state", effective July 1, 2013.

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      Sec. 12-35f. Offset of tax refunds. (a) For purposes of this section:

      (1) "Taxpayer" means any person identified by a claimant state to the Commissioner of Revenue Services under this section as owing taxes to such claimant state, including, in the case of a refund of any tax imposed upon the income of individuals, the spouse of the taxpayer, where such taxpayer filed a joint return with such spouse;

      (2) "Claimant state" means any other state or the District of Columbia which extends a like comity for the collection of taxes owned to this state;

      (3) "Taxes" means any amount of tax imposed under the laws of the claimant state, including additions to tax for penalties and interest, which is finally due and payable to the claimant state, and with respect to which any administrative or judicial remedies, or both, have been exhausted or have lapsed, and which is legally enforceable under the laws of the claimant state, whether or not there is an outstanding judgment for such sum;

      (4) "Refund" means any taxpayer's claim to repayment of an overpayment of a tax determined by this state to be owed to the taxpayer by this state; and

      (5) "Tax officer" means a unit or official of a claimant state, or the duly authorized agent of such unit or official, charged with the imposition, assessment or collection of taxes of that state.

      (b) (1) Upon the request and certification of the tax officer of a claimant state to the Commissioner of Revenue Services that a taxpayer owes taxes to such claimant state, the commissioner may withhold all or a portion of any refund to which such taxpayer would otherwise be entitled and pay over such withheld amount to the claimant state in accordance with the provisions of this section. The commissioner shall not withhold a refund unless the laws of the claimant state allow the Commissioner of Revenue Services to certify that a taxpayer owes taxes to this state and to request the tax officer of the claimant state to withhold all or a portion of any refund to which such taxpayer would otherwise be entitled, and provide for the payment over of such withheld amount to this state.

      (2) Such certification shall include the full name and address of the taxpayer; the taxpayer's Social Security number or federal employer identification number; the amount of taxes owed to such state; and a statement that any administrative or judicial remedies, or both, have been exhausted or have lapsed and that the amount of taxes is legally enforceable under the laws of such state.

      (3) Upon receipt by the commissioner of the required certification, the commissioner shall notify the taxpayer, if the taxpayer is otherwise entitled to a tax refund from this state, that the commissioner has received a request from the claimant state to withhold all or a portion of any refund, that the taxpayer has the right to protest the withholding of the refund, that failure to file a protest in accordance with subdivision (4) of this subsection shall constitute a waiver of any demand against this state on account of such withheld amount and that the withheld amount will be paid over to the claimant state. Thirty days after the date on which a notice under this subdivision is mailed, such notice shall be final except only for such amounts as to which the taxpayer has filed, as provided in subdivision (4) of this subsection, a written protest with the Commissioner of Revenue Services.

      (4) Any taxpayer notified in accordance with subdivision (3) of this subsection may, on or before the thirtieth day after the mailing of such notice by the Commissioner of Revenue Services, protest the withholding of all or a portion of a refund by filing with the commissioner a written protest in which the taxpayer shall set forth the grounds on which the protest is based. If a timely protest is filed, the commissioner shall impound the claimed amount of the refund, pay to the taxpayer the unclaimed amount, if any, of the refund, send a copy of the protest to the claimant state for determination of the protest on its merits in accordance with the laws of that state, and pay over to the taxpayer the impounded amount if the claimant state shall fail on or before the forty-fifth day after the sending of the copy of the protest by the commissioner to such claimant state to recertify to the commissioner that the claimant state has reviewed the stated grounds on which the protest is based, and to recertify the amount of taxes which is finally due and payable to the claimant state, which is legally enforceable under the laws of the claimant state against the taxpayer, and with respect to which any administrative or judicial remedies, or both, have been exhausted or have lapsed.

      (5) Where the amount withheld in accordance with this subsection is a refund of any tax imposed upon the income of individuals and in connection with which the taxpayer filed a joint return with his or her spouse, and the spouse is not a taxpayer, the spouse shall have the right to be paid his or her portion of the refund by establishing his or her share of such refund. The amount of such spouse's share of such refund shall be established by recomputing the spouse's share of the joint liability and subtracting that amount from the taxpayer's contribution toward the joint liability, provided the amount of the overpayment refunded to the spouse shall not exceed the amount of the joint overpayment.

      (6) Subject to the provisions of subdivisions (3), (4) and (5) of this subsection, the commissioner shall pay over to the claimant state the entire amount withheld or the amount certified, whichever is less; pay any refund in excess of the certified amount to the taxpayer; and, if the amount certified exceeds the amount withheld, withhold amounts from subsequent refunds due to the taxpayer, provided the claimant state agrees to withhold subsequent refunds due to taxpayers certified to the claimant state by the commissioner.

      (c) The commissioner may enter into agreements with the tax officers of claimant states relating to procedures and methods to be employed by a claimant state with respect to the operation of this section; safeguards against the disclosure or inappropriate use of any information that identifies, directly or indirectly, a particular taxpayer obtained or maintained pursuant to this subsection; and a minimum amount of taxes owed by a taxpayer to a claimant state, so that, if a taxpayer owes less than such amount to such claimant state, the claimant state will not avail itself of the provisions of this section with respect to that taxpayer.

      (d) The collection procedures prescribed by this section shall not be construed as a substitute for any other remedy available by law to the Commissioner of Revenue Services.

      (P.A. 98-244, S. 2, 35; P.A. 11-61, S. 54.)

      History: P.A. 98-244 effective June 8, 1998; P.A. 11-61 amended Subsec. (b) to remove requirement that certification include detailed statement showing tax, interest and penalty in Subdiv. (2) and to require notification by commissioner if taxpayer is entitled to tax refund from this state, remove requirement that copy of certification by claimant state be included in notice and make technical changes in Subdiv. (3), effective June 21, 2011.

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