AN ACT CONCERNING THE DEVELOPMENT OF A PILOT PROGRAM FOR THE COLLECTION OF UNPAID TAXES FROM STATE CONTRACTORS AND THE DEPARTMENT OF REVENUE SERVICES' RECOMMENDATIONS FOR REVISIONS TO THE TAX AND RELATED STATUTES.

2025 Regular Session

Creates a pilot to collect unpaid state taxes from contractors doing state work, with DRS reviewing statutes and recommending changes to strengthen tax collection.

FILE NO. 865

Purpose / Intent

The bill directs the development of a pilot program aimed at improving collection of unpaid state taxes from entities that contract with the State of Connecticut. It also requires the Department of Revenue Services (DRS) to review existing tax and related statutes and report recommended statutory revisions to improve tax collection and enforcement.

Key provisions (summary of substantive elements)

Requires creation of a pilot program focused on collecting delinquent state taxes owed by state contractors. The bill sets the policy goal of reducing unpaid tax liabilities connected to entities that receive state funds.

Directs DRS to evaluate current tax, penalty, and enforcement statutes and related statutory provisions (including those touching licensing, contracting, and state payments) and submit recommended legislative changes to the General Assembly.

Anticipates coordination among DRS, the Office of Policy and Management (OPM) or other contracting agencies, and enforcement entities (e.g., Attorney General) to design operational features of the pilot (data sharing, certification of tax compliance, withholding or setoff against state payments, referral for civil action).

Allows consideration of existing administrative mechanisms (tax liens, setoff, offset of payments, suspension/denial of state contracts or renewals) and potential statutory changes to expand or clarify DRS authority.

The bill’s subject indexing indicates review of impacts on motor vehicle-related taxes/registrations, sales and use taxes, contractor licensing and fines, housing programs and authorities (including CHFA and housing rehabilitation), and tribal considerations (Mashantucket Pequot and Mohegan).

Who is affected

State contractors and subcontractors that do business with Connecticut — may face new tax-compliance checks, payment offsets, or certification requirements.

State agencies that procure goods/services — may need to implement the pilot (contract language, payment processing, data sharing).

Department of Revenue Services (responsible for designing the pilot and recommending statutory changes).

Office of the Attorney General and other enforcement entities (possible referrals for collection litigation).

Entities and programs identified in the bill’s subject list (DMV, CHFA, tribal entities) could be affected by recommended statutory changes.

Procedural / timeline notes

Introduced: March 27, 2025; public hearing held April 2, 2025.

Joint Favorable Substitute filed and recommended April 24, 2025.

Referred to Office of Legislative Research and Office of Fiscal Analysis May 2, 2025.

Reported out of LCO and favorably reported and tabled for House calendar on May 8, 2025 (House Calendar No. 556; File No. 865).

Potential impacts / considerations

Could increase state tax collections and reduce unpaid liabilities associated with state contracting.

May impose administrative burdens on contractors and state procurement offices; could affect contractor cash flow if payments are offset.

Recommendations may propose statutory changes with broader implications (licensing, motor vehicle registration, housing programs, tribal compacts) — these could require further legislative action.

Bill