Preying on taxpayers to finance inefficient government

We often hear real life stories of people accused of crimes accepting a plea bargain even though they're innocent.  If the deck is stacked against you and the state is determined to convict, people commonly accept the lesser of two evils.  Standing on principal and refusing to plead guilty is often seen as foolhardy.  Thus, I may be considered a fool for what I'm about to tell you.

Since 2007 when the "great recession' began, the state, desperate for revenues, began aggressively pursuing corporations registered in other states who do  business in Connecticut without a Certificate of Authority.  The certificate requires a simple registration and annual fee, but many companies are unaware of the requirement because the state does nothing to publicize the fact. 

I did my due diligence in 1986 when I started my small, one-man, NY corporation with its sole office in Connecticut where I reside.  A prominent law firm and a CPA were engaged to make certain everything was done properly, but they knew nothing of this certificate.  We complied with all requirements by the Department of Revenue Services including the obtaining of a Sales and Use Permit allowing  us to charge CT sales tax.  For 28 years everything was copasetic until I recently received an assessment for $6,375 in past fees plus $59,985 in penalties for failure to obtain a Certificate of Authority. 

How could this have gone on for nearly three decades without a notice from the state?  If I never acquired a Certificate of Authority granting me permission to do business in the state, how could I be given the authority to charge sales tax?    

Currently, the state assesses a $300 penalty for each month the fee is not paid with no cap and apparently no statute of limitations.  The penalty is the same whether you are a Fortune 50 company or a tiny business like mine.  This poses a conflict of interest for the state.  By continuing to keep taxpayers in the dark, Connecticut makes a great deal of money.  

According to an August, 2013 article in the Hartford Courant, "State Collects At Least $1M Yearly In Penalties From Out-Of-State Firms," a spokesperson for the attorney general’s office, Susan Kinsman, admitted:  "Often companies are unaware of the requirements, rather than trying to deliberately circumvent the law."  And yet the state does nothing to effectively notify businesses of this statute.

There are two purported benefits for requiring out-of-state businesses to register.   One, is to protect consumers with grievances against out-of-state firms by requiring a point of contact in Connecticut to accept legal papers.  This does not apply to my company since the only point of contact is, and always has been, a Connecticut address.  The second is to protect in-state companies from unfair competition.  All my company's revenues have historically been from New York based businesses.  So neither of these justifications applies to my company.  In light of my circumstances, Governor Malloy's campaign claim of promoting small businesses seems a bit disingenuous.

In almost every instance where I have done wrong in my life, I can clearly see the mistake and learn from it.  But, in this particular case I see none.  I did my due diligence in setting up my company and dutifully paid my Connecticut corporate taxes for 28 years noting I was registered in New York.  And yet for nearly three decades I received no notification of wrongdoing.  Now, when the state is desperate for money they suddenly drop 28 years of fees and penalties on my company's lap at a time it is struggling to remain solvent.  

In light of my companies current financial situation, the state has reduced my assessment to $12,750 which still requires me to pay 28 years of fees within two years along with $6,375 in penalties.   Unfortunately, the amount would still pose a heavy burden and the penalties are draconian given the state does nothing to alert companies of the law. 

Although my home has been on the market since early May, I had planned to remain in the state to continue foster parenting which I hoped would lead to adoption.  This horrible situation will likely force me to file for bankruptcy and leave.  As a consequence, Connecticut stands to loose an honest, long-term corporate and individual taxpayer, as well as a foster parent and prospective adoptive parent. 

All this has been expressed repeatedly to state officials including two certified letters to the governor, and the only response has come from a state attorney who refuses to compromise any further or even admit the state bears some responsibility. 

Regardless of whether you deem me a fool or even ungrateful for the state's reduction of fees and penalties, the state should not prey on its own taxpayers to fuel its inefficient government.