Current through September 9, 2024
(a) If a joint
Connecticut income tax return was filed, pursuant to §
12-702(c)(1)-1
of this Part, on which there is a substantial understatement of Connecticut
income tax attributable to grossly erroneous items of one spouse, the other
spouse (the "innocent spouse") shall be relieved of liability for such
understated Connecticut income tax (including interest, penalties and other
amounts) for such taxable year if:
(1) the
spouse seeking relief establishes that, in signing such return, he or she did
not know, and had no reason to know, that there was such substantial
understatement; and
(2) taking into
account all the facts and circumstances, including whether or not the spouse
seeking relief benefited directly or indirectly from the grossly erroneous
items, it is inequitable to hold such spouse liable for the understated
Connecticut income tax for such taxable year.
(b) A spouse may make application for the
relief provided for in this section by filing with the Commissioner a sworn
statement stating all the facts and circumstances set forth in subdivisions
(a)(1) and (2) of this section in support of such application. The Commissioner
may request additional sworn statements, testimony under oath or any other
proof required to determine whether the applicant should be relieved of
liability for Connecticut income tax as provided in this section.
(c) For the purposes of this section:
(1) the term "grossly erroneous items" means,
with respect to any spouse, any item of Connecticut adjusted gross income
attributable to such spouse which is omitted from Connecticut adjusted gross
income and any claim for Connecticut income tax purposes of a deduction,
exemption, credit or basis by such spouse in an amount for which there is no
basis in fact or law;
(2) the term
"substantial understatement" means a difference between the amount of the
Connecticut income tax required to be reported on the Connecticut income tax
return for the taxable year and the amount of Connecticut income tax actually
reported on the Connecticut income tax return that exceeds $500; and
(3) the determination of the spouse to whom
items of Connecticut adjusted gross income (other than Connecticut adjusted
gross income derived from property) are attributable shall be made without
regard to community property laws.
(d) Connecticut income tax liability
attributable to a substantial understatement shall exceed the specified
percentage (as provided in subdivision (1) of this subsection) of the innocent
spouse's Connecticut adjusted gross income.
(1) Except as provided in subdivision (3) of
this subsection, the provisions of this section apply:
(A) if the innocent spouse's Connecticut
adjusted gross income for the most recent taxable year ending before the date
the deficiency notice is mailed is $20,000 or less, only if the liability for
Connecticut income tax described in subsection (a) of this section (including
interest, penalties and other amounts) attributable to the substantial
understatement is greater than 10% of such Connecticut adjusted gross income;
or
(B) if the innocent spouse's
Connecticut adjusted gross income for the most recent taxable year ending
before the date the deficiency notice is mailed is more than $20,000, only if
the liability for Connecticut income tax described in subsection (a) of this
section (including interest, penalties and other amounts) attributable to the
substantial understatement is greater than 25% of such Connecticut adjusted
gross income.
(2) For
purposes of this subsection, if the innocent spouse is married to another
spouse at the close of such year, the innocent spouse's Connecticut adjusted
gross income shall include the Connecticut adjusted gross income of the new
spouse, whether or not they file a joint Connecticut income tax
return.
(3) The requirements
contained in subdivision (1) of this subsection do not apply to a substantial
understatement attributable to an omission from Connecticut adjusted gross
income. Therefore, the relief provided by this section shall be available
without the need to meet the applicable percentage limitation specified in this
subsection where there is a substantial understatement attributable to an
omission from Connecticut adjusted gross income.
(f) While this section pertains to Section
12-702(c)(1)
of the general statutes, for purposes of supplementary interpretation, as the
phrase is used in Section
12-2
of the general statutes, the adoption of this section is authorized by Section
12-740(a)
of the general statutes.
