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An Act Providing for Clarification and Uniformity
in Penalties Imposed for Failure to File State
Tax Returns and to Make Payments to State Taxes

 This TSSN is obsoleted by AN 94(6)

House Bill 5332 is currently before Governor O'Neill, but has yet to be signed. The bill was passed by both the House and Senate, and is expected to become law.

The bill is technical in nature, and will impact most taxes collected by the Department of Revenue Services. The bill is effective July 1, 1988, for all taxes and returns due on or after said date. The bill establishes uniform penalties and sets new interest rates for some taxes.

** Penalties **
The penalties described below are applicable to the following taxes:
Admissions, Dues & Cabaret
Air Carriers
Alcoholic Beverages
Corporation Business
Estate Income
Hazardous Waste
Hospital & Medical Service Corporations
Insurance Companies
Motor Carrier
Motor Fuel
Petroleum Company Gross Earnings
Sales & Use (inc. Room Occupancy and Business Use)
Solid Waste
Telecommunications, Express, Telegraph, Cable & Community Antenna Television System Cos.
Utility Companies

Penalties will be assessed according to the following criteria:

Late Filing Penalties:

A. Late Filing - $50 for filing a tax return late.

B. Late Payment - 10% of the amount due and unpaid, or $50, whichever is greater, for failure to remit the tax due in a timely manner.

Penalties are not compounded, therefore, only one of the above penalties will be imposed, the greater of the two, but not both.

Penalties for Audit Assessments:

A. Negligence - 10% of the underpayment, or $50, whichever is greater, when it appears that any part of the underpayment is due to negligence or intentional disregard of the law.

B. Fraud - 25% of the underpayment, when it appears that any part of the underpayment is due to fraud or intent to evade the law.

The penalties for fraud and negligence resulting from an audit assessment cannot be imposed simultaneously.

Penalties for Criminal Offenses:

A. Willful Failure to File - A maximum fine of $1,000 or imprisonment up to one year, or both, when one willfully fails to file a return, pay a tax, keep records, or supply required information.

B. Filing A Fraudulent Return - A maximum fine of $5,000 or imprisonment from one to five years, or both, when one willfully delivers or discloses fraudulent or false information.

* Interest *

The following monthly interest rates for the late payment of taxes are also established under House Bill 5332 as follows:
Admissions, Dues & Cabaret 1.25%
Air Carriers 1.66%
Alcoholic Beverages 1.25%
Cigarette 1.25 % (New Rate)
Corporation Business 1.66%
Estate Income 1.25%
Hospital & Medical Service Corps. 1.66% (New Rate)
Insurance Companies 1.66% (New Rate)
Motor Carrier 1.25%
Motor Fuel 1.25%
Petroleum Company Gross Earnings 1.66%
Railroad 1.66% (New Rate)
Sales & Use 1.25%
Telecommunications, Express, Cable Telegraph & Community Antenna TV 1.66%
Utility Companies 1.66%

The new rates will be effective for the late payment of taxes which are due on or after July 1, 1988. Please note that interest will be charges per month or portion thereof, from the date the tax was due until payment is made.

TSSN-03 (5/31/88)