Out of state crews, especially from states like Florida that have no income tax are going to learn that the government can really take a bite out of checks.
The Connecticut Department of Revenue Services reminded contractors and out of state companies that sent crews to help restore power that they must now register with the state and get a tax I.D.
When the storm started, Connecticut waived the registration requirement, but DRS Spokeswoman Sarah Kaufman explained those companies are now required to register so the state can collect income tax on the wages paid to the hundreds of emergency crews that worked here.
Linemen and other workers came from more than 16 states, including Florida, Texas and other regions where income tax does not exist or is significantly lower than here.
Connecticut like other states charges income tax on any income earned inside the borders of the state and Kaufman said wages were taxed for Irene’s recovery as well. It’s a trade off of sorts as the state lost probably millions in revenue as some people couldn’t get to work and lost income.
Many experts, were surprised the emergency crews were paying income tax on their storm earnings but so far it has not created a problem for attracting workers during these disasters.
One reason is that the companies sending crews negotiate the wages with the utilities and the taxes are probably factored in. However, as The Mines pointed out, if utilities here have to pay more to get workers in emergencies than other places, the ultimate cost is shifted to ratepayers.
One analyst said it’s a labor situation the Northeast might have to address in coming years, if it continues to get hit with storms like Sandy. He said States in South and and Midwest that deal with these disasters more often, have worked out agreements that cover these issues and ones involving the use of union or non union labor.
But, then again, if the storms don’t become a regular thing, we might not have to worry about it.
Here’s the notice from DRS on the matter:
Commissioner Sullivan Announces End of Registration Waiver
For Immediate Release: Tuesday, November 13, 2012
Hartford – Connecticut Commissioner of Revenue Services Kevin B. Sullivan thanked the many out-of-state businesses that came to residents’ aide following Storm Sandy and said they will need to begin registering with the Department of Revenue Services (DRS) on Wednesday.
Said Commissioner Sullivan, “Connecticut and its residents are grateful to the thousands of linemen who came to help us in our hour of need. They were a vital factor in helping return our state and our lives to normal. With that return to normal, the measures taken to expedite the cleanup and repair process are no longer needed and the registration process must begin.”
On October 29, Governor Malloy signed Executive Order 22, which granted a waiver allowing contractors and line technicians licensed in states other than Connecticut to work in the state without first registering. Commissioner Sullivan said that waiver comes to an end on Wednesday, November 14. A copy of the termination notice signed by Commissioner Sullivan is attached.
Businesses and independent contractors can visit the DRS website at www.ct.gov/DRS to register electronically through the agency’s Taxpayer Service Center. The free electronic filing program will help ensure they are registered for the proper business, sales, and withholding taxes. Registration can also be done in person at a DRS walk-in location in Bridgeport, Hartford, Norwich, or Waterbury. Click here for directions.
Taxpayers with questions about registration or other tax issues can contact the Taxpayer Services Division during business hours at 1-800-382-9463 (for in-state calls outside the Greater Hartford Area) or 860-297-5962 (from anywhere).