Mayoral candidate Henry Fernandez took aim at a top opponent, state Sen. Toni Harp, for joining a budget vote in Hartford that he said could could help bail out her son’s business from $1.1 million in delinquent state taxes.
Fernandez made the accusation in a press release Tuesday, after Harp joined the state Senate in voting to approve a new $37.6 billion two-year budget.
Harp and Fernandez are two of seven candidates seeking the Democratic nomination for mayor in a Sept. 10 primary.
In his press release, Fernandez questioned Harp’s role in the budget vote, arguing that her son’s real-estate business, Renaissance Management, will benefit from a tax amnesty program included in the budget. The amnesty program waives penalties for people and companies owing back taxes for any period up to Nov. 30, 2012. The goal is to encourage people to pay back taxes.
Renaissance Management, owned by Harp’s son, Matthew Harp, owes $1.1 million in delinquent sales tax, making it number one on a list of 100 delinquent businesses, according to a recent story by the Register’s Mary O’Leary.
In Tuesday afternoon’s press release, Fernandez couched Renaissance as Toni Harp’s “family business,” because it is owned by her family member. Matthew Harp inherited the business when his dad, Wendell, Harp’s husband, died.
“Toni Harp voted for a tax amnesty that could save her family’s business hundreds of thousands of dollars, as well as from the repercussions of owing delinquent taxes,” Fernandez said. “Whatever Toni’s relationship is to the family business, she should be taking a leadership role in ensuring the Harp family business pays its back taxes, not making excuses and helping to create an amnesty and do-over.”
“We all have to pay our taxes, and when we don’t there are legal ramifications,” Fernandez continued. “This is the most basic social contract we as citizens have with our government. It is a fair question to ask why Senator Harp doesn’t think that social contract applies to her family’s business.”
Reached Tuesday, Harp campaign manager Jason Bartlett dismissed the charge. He said it’s “ridiculous” to ask the senator to recuse herself from voting on the entire budget because of the tax amnesty program, which is a statewide program. The state has routinely approved tax amnesty programs as a way to raise revenue; the last time a program was approved, it brought in $25 million. Harp has voted to approve such programs twice in the past 10 years, Bartlett noted.
Bartlett said Harp “has had nothing to do with Renaissance Management. She is financially independent.”
Further, he said, Renaissance Management is already addressing its outstanding debt and does not intend to apply for the tax amnesty.
Bartlett said Fernandez’s press release amounts to baseless “character assassination.”
“It’s despicable that Fernandez would desperately use Toni’s deceased husband to score political points,” he said.
Following is the bill analysis of the amnesty measure prepared by the legislature’s nonpartisan staff:
§ 70 — TAX AMNESTY PROGRAM
The bill requires the Department of Revenue Services (DRS) commissioner to establish a tax amnesty program for individuals, businesses, or other taxpayers that owe Connecticut state taxes (other than motor carrier road taxes) to DRS. The amnesty runs from September 16, 2013 to November 15, 2013 and covers any taxable period ending on or before November 30, 2012.
Amnesty Conditions
The DRS commissioner must prepare an amnesty application that requires applicants to specify the taxes and taxable periods for which they seek amnesty. The bill allows the commissioner to require that taxpayers file amnesty applications electronically.
If a taxpayer files the application during the amnesty period and pays all the taxes owed for the applicable tax periods, plus interest, the commissioner must waive applicable civil penalties and refrain from seeking criminal prosecution for those periods. The commissioner may only grant amnesty to affected taxpayers (i. e. , those who owe taxes for the applicable tax periods) who pay the taxes and interest that the commissioner determines they owe when they file their applications.
If the commissioner grants amnesty, the affected taxpayer relinquishes all unexpired administrative and judicial appeal rights as of the payment date. The bill bars taxpayers from receiving any refund or credit of amnesty tax payments. Failure to pay all amounts due invalidates the amnesty. A taxpayer is not entitled, by virtue of penalty waivers and interest reductions under the amnesty, to any refund or credit of previously paid amounts. The commissioner may not consider any request to cancel the unpaid portion of any erroneously or illegally assessed tax, penalty, or interest in connection with any amnesty application.
Interest Reduction
If a taxpayer pays the taxes due by November 15, 2013, the bill reduces the interest rate on those taxes to one-fourth of the interest that the department’s records show to be due and payable as of the application’s filing. (The interest rate on overdue taxes is generally 1% per month. ) Any tax due for the applicable tax periods paid after the filing deadline is subject to interest of 1% per month or part of a month from the date it was originally due until the payment date.
Amnesty Exclusions
The bill bars any amnesty for those who:
1. are parties to any criminal investigation or criminal litigation pending on July 1, 2013 in any federal or Connecticut court,
2. are parties to a closing agreement with the DRS commissioner,
3. have made a compromise offer that has been accepted by the commissioner, or
4. are parties to a managed audit agreement.
Penalty for Failing to File for Amnesty
The bill imposes a penalty on any taxpayer who (1) owes any tax for the applicable tax periods for which a tax return was required, but not previously filed and (2) fails to file a timely amnesty application. The penalty (1) is equal to 25% of the tax owed and (2) may not be waived. It applies in addition to any other applicable interest and penalties under existing law.
Implementation
The bill gives the DRS commissioner authority to do anything necessary to implement the program in a timely fashion.
EFFECTIVE DATE: July 1, 2013