Crackdown On Unregistered Out-Of-State Businesses
By SUSAN HAIGH, Associated Press
HARTFORD, Conn. (AP) _ An effort by officials to track down out-of-state companies operating illegally in Connecticut, by not having registered with the state, has netted $1.3 million in fines.
Secretary of the State Denise Merrill and Attorney General George Jepsen are scheduled to announce Thursday they’ve discovered nearly 330 firms had not registered with the state to transact business. The Associated Press first obtained a copy of their report on Wednesday.
The five largest settlements were paid by DAN Services Inc. in North Carolina, The Providence Journal Co. in Rhode Island, Global Med Technologies Inc., formerly of Colorado, Harris Environmental Systems Inc. in Massachusetts and Superior Technical Resources Inc. in New York. Each was fine slightly more than $20,000.
Charles Rohrbach, chief financial officer at Harris Environmental Systems in Andover, Mass., said he’s part of a group that acquired the company in 2007. It manufactures and installs climate-controlled rooms, mostly for bio-tech and pharmaceutical companies and universities.
He said the settlement reached with state officials covers back to the 1980s and he believes it “appeared to be a coin flip” as to whether the firm should have registered. He said Harris Environmental does not have a Connecticut office and uses Connecticut-based subcontractors to perform work here, not employees from Massachusetts.
“We had, over all those years, paid sales and use tax, employment and state income taxes, so there was no issue on paying any taxes,” he said. “It was merely an issue with should we have filed with the secretary of the state and paid the $200 a year or whatever the amount was.”
Harris Environmental settled with the state by paying $20,842.50. Rohrbach said the company is now properly registered.
Messages seeking comment left with the other four companies were not immediately returned.
Av Harris, a spokesman for Merrill, acknowledged that some firms didn’t realize they had to pay for a “certificate of authority” to do business in Connecticut, a one-time fee that ranges from $40 to $120. Companies also have to pay an annual reporting fee that’s typically about $150 or $185, he said.
Harris said state officials want to educate the business community about their filing requirements as well as provide a disincentive to those trying to skirt the rules by releasing the list of the nearly 330 companies. The state’s definition of transacting business in Connecticut includes various activities ranging from maintaining an office to having point of sale take place in the state, he said.
“It is hard enough for Connecticut businesses to make a profit in this economic climate, without unfair competition from out-of-state companies who fail to register with the state,” Merrill said in a statement. She said her office has heard from Connecticut companies who are being undercut by outside firms that don’t properly register. She said the registration also helps to protect consumers because an out-of-state company is required to appoint someone to accept legal papers if any court action is taken.
Under state law, business corporations, non-stock corporations, limited partnerships, limited liability companies, limited liability partnerships and statutory trusts formed outside of Connecticut must obtain the certificate of authority to do business in the state. More than 50,000 out-of-state businesses have properly filed, according to Merrill’s office.
The $1.3 million in penalties collected in fiscal year 2011, which ended June 30, was the highest amount collected since 2007, when more than $1.7 million in fines were amassed.
DAN Services Inc., which is a for-profit arm of a scuba safety association that sells dive accident insurance, settled with Connecticut for $26,955. The Providence Journal Co. paid $22,192.50; Global Med Technologies, which has since been taken over by Haemonetics of Braintree, Mass., paid 20,910 and Superior Technical Resources paid $20,685.
(Copyright 2011 by The Associated Press. All Rights Reserved.)