(a) The commissioner may examine the records of any person subject to a tax imposed under the provisions of this chapter as the commissioner deems necessary. If the commissioner determines that there is a deficiency with respect to the payment of any such tax due under the provisions of this chapter, the commissioner shall assess or reassess the deficiency in tax, give notice of such deficiency assessment or reassessment to the taxpayer and make demand upon the taxpayer for payment. Such amount shall bear interest at the rate of one per cent per month or fraction thereof from the date when the original tax was due and payable. 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 promulgated thereunder, there shall be imposed a penalty equal to ten per cent of the amount of such deficiency assessment, or fifty dollars, whichever is greater. 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 promulgated thereunder, there shall be imposed a penalty equal to twenty-five per cent of the amount of such deficiency assessment. No taxpayer shall be subject to more than one penalty under this subsection in relation to the same tax period. Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalties provided under this chapter when it is proven to the commissioner's satisfaction that the failure to pay any tax was due to reasonable cause and was not intentional or due to neglect. 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 penalty imposed by this section 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 return filed with the state. Within thirty days of 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 of Revenue Services, any additional amount of tax, penalty and interest shown to be due.

(b) Except in the case of a wilfully false or fraudulent return with intent to evade the tax, no assessment of additional tax shall be made after the expiration of more than three years from the date of the filing of a return or from the original due date of a return, whichever is later. If no return has been filed as provided under the provisions of this chapter, the commissioner may make such return at any time thereafter, according to the best information obtainable and according to the form prescribed. To the tax imposed upon the basis of such return, there shall be added an amount equal to ten per cent of such tax, or fifty dollars, whichever is greater. The tax shall bear interest at the rate of one per cent per month or fraction thereof from the due date of such tax to the date of payment. No person shall be subject to a penalty under both this subsection and section 12-547. Where, before the expiration of the period prescribed herein for the assessment of an additional tax, a taxpayer has consented in writing that such period may be extended, the amount of such additional tax due may be determined at any time within such extended period. The period so extended may be further extended by subsequent consents in writing before the expiration of the extended period.

(1971, P.A. 837, S. 11; P.A. 76-322, S. 19, 27; P.A. 77-614, S. 139, 610; P.A. 80-307, S. 29, 31; P.A. 81-64, S. 20, 23; 81-411, S. 40, 42; P.A. 88-314, S. 46, 54; May Sp. Sess. P.A. 94-4, S. 63, 85; P.A. 95-26, S. 27, 52; 95-160, S. 64, 69; P.A. 99-121, S. 19, 28.)

History: P.A. 76-322 increased interest rate from 0.75% to 1%; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 80-307 temporarily increased interest rate to 1.25% for taxes due on or after July 1, 1980, but not later than June 30, 1981; P.A. 81-64 added a minimum penalty of $50 and replaced previous waiver provision with waiver of penalty provisions applicable to other state taxes; P.A. 81-411 continuedinterest on the deficiency assessment at 1.25% per month, effective July 1, 1981, and applicable to taxes becoming due on or after that date; P.A. 88-314 revised the language in Subsec. (a) describing a deficiency assessment and the applicable penalties when the deficiency is due to wilful negligence in respect to the provisions of this chapter and to fraud or intent to evade the provisions of this chapter, and revised the language in Subsec. (b) concerning the commissioner's power to prepare a return when the taxpayer has not filed as required, including the penalties imposed in such case, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; May Sp. Sess. P.A. 94-4 in Subsec. (b) reduced interest rate from 1.25% to 1% and provided that such interest may only be applied on the tax rather than on the tax and any penalty, effective July 1, 1995, and applicable to taxes due and owing on or after said date; 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. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 99-121 amended Subsec. (a) to allow commissioner to waive all or part of penalties for reasonable cause and to make technical changes, effective June 3, 1999.

Cited. 231 C. 355.