Penalty on responsible person or persons

(a) Penalty not imposed on employer. The penalty under subsection (a) of section 12-736 of the Connecticut General Statutes may not be imposed on an employer but only may be imposed on a person or persons who are required, on behalf of the employer, to collect, account for, or pay over Connecticut income tax to the Department (responsible person or persons). The employer, however, remains subject to other penalties, such as the penalty imposed by section 12-735 of the Connecticut General Statutes or the penalty imposed under section 12-728 of the Connecticut General Statutes.

(b) Taxes to be collected only once. Although the employer has the primary liability for deducting and withholding Connecticut income taxes from wages of employees and paying over such taxes to the Department, the Department is not required to attempt to collect the taxes from the employer before assessing the penalty against a responsible person or persons. A responsible person's liability is independent from that of the employer. However, the taxes required to be collected, truthfully accounted for and paid over to the Department will be collected only once by the Department, whether from the employer alone, or from one or more responsible persons, or from the employer and one or more responsible persons. In general, the Department will not assess the penalty imposed under subsection (a) of section 12-736 of the Connecticut General Statutes in the case of an approved and adhered to agreement by an employer to pay back taxes in full and in the case of a confirmed bankruptcy payment plan of an employer requiring the payment in full of back taxes. (However, the Department may gather information to support a possible assessment in the event of default on such agreement or plan.) The Department shall be considered to have once collected such taxes when its right to retain the amount collected is finally established.

(c) Responsible persons. Responsibility is a matter of status, duty, and authority. In general, there will be at least one responsible person, and a responsible person may or may not be an employee of the employer that has wilfully failed to collect Connecticut income taxes from employee wages or to truthfully account for and pay over such taxes to the Department. Those persons performing ministerial acts without exercising independent judgment will not be deemed responsible. The penalty will not be asserted against non-owner employees of the employer if they act solely under the dominion and control of others and are not in a position to make independent decisions on behalf of the employer. Nor will the penalty be imposed on unpaid, volunteer members of any board of trustees or directors, if the employer is an organization referred to in section 501 of the Internal Revenue Code to the extent such members are solely serving in an honorary capacity, do not participate in the day-to-day or financial operations of the organization, or do not have knowledge of the failure in relation to which such penalty is imposed.

(d) Wilful. A responsible person may not be held liable for the tax assessable hereunder unless such person has wilfully failed to collect, account for and pay over the tax. For purposes of subsection (a) of section 12-736, wilful action shall mean action that is voluntary, conscious and intentional. For example, wilful action may be established by a showing that the responsible person knew of the tax liability and either took no steps to satisfy such liability or used available funds to pay a creditor other than the Department (including another tax creditor). No showing of bad motive or intent to deceive is necessary to establish wilfulness.

(e) Procedure. The requirements of notice and procedure, and provisions for the right of the purportedly responsible person to protest and appeal any assessment of penalty made by the Commissioner pursuant to subsection (a) of section 12-736 of the Connecticut General Statutes, shall be the same as those of sections 12-728, 12-729, 12-729a and 12-730 of the Connecticut General Statutes and any regulations adopted thereunder. The commissioner may assess the penalty provided for by section 12-736 with respect to the Connecticut income tax that should have been collected from an employee, accounted for and paid over at any time not later than three years after a Form CT-941, Connecticut Quarterly Reconciliation of Withholding , is filed declaring the Connecticut income taxes deducted and withheld from wages of the employee. If no such return is filed, the commissioner may assess the penalty at any time.

(f) Employer. Wherever reference is made in this section to an employer, such reference shall include (1) any employer who registers solely for the purpose of withholding Connecticut income tax from wages under section 12-705(c)-2 of Part IX; (2) any person (other than an employer) who registers solely for the purpose of withholding Connecticut income tax from payments (other than wages) under section 12-705(c)-1 of Part IX; and (3) any person (other than an employer) who is required to register for the purpose of withholding Connecticut income tax under sections 12-705(b)-1, 12-705(b)-2, or 12-705(b)-3 of Part IX.