42-1109. Failure to file return; false or fraudulent return; limited scope review; mandamus; order to produce documents; electronic portal

A. If a person who is required to file a report or return fails to do so within fifteen days after written demand by the department, the department shall proceed to obtain facts and information on which to base the tax, and for that purpose the department or its agent may examine the books, records and papers of the person and may take evidence on oath of any person who the department believes has facts or information pertinent to the inquiry. The director or the director's agent may administer the oath. As soon as the department procures the information, it shall hold a hearing to determine the amount of tax payable by the person. The department shall give at least ten days' notice in writing of the time and place of holding the hearing, which shall be mailed to the person's last known address or served personally. The levy of the tax is final after the hearing as to any person who fails or refuses to file a return.

B. If a taxpayer files a false or fraudulent return or fails or neglects to file a return within fifteen calendar days after written or electronic demand by the department, the department, at any time, may require a return or a supplementary return or may estimate the taxable income from any available information and may propose to assess the amount of tax, interest and penalties due. The provisions of this article relating to delinquent taxes apply to the tax, interest and penalties computed pursuant to this subsection. A proceeding in court to collect the tax, interest and penalties provided for in this subsection may be begun without assessment at any time. Notwithstanding section 42-1004, subsection C, the assessment of tax, interest or penalties under this subsection does not preclude subsequent deficiency assessments under section 42-1108.

C. The department may conduct a limited scope review of a filed individual income tax return if it discovers a discrepancy between amounts reported on the return and the information the department receives pursuant to section 43-412. In a notice to the taxpayer, the department may request records from a taxpayer in support of the taxpayer's filed returns and propose a tentative amount of tax, interest and penalties due on the basis of this additional information. The taxpayer shall have at least thirty calendar days to respond to this notice on a form prescribed by the department. A limited scope review under this subsection may be conducted only once per taxable year per taxpayer and shall not be considered an initial audit contact for purposes of section 42-2075 if any of the following applies:

1. The taxpayer provides documentation or an explanation that resolves the discrepancy between the originally filed return and the information received pursuant to section 43-412.

2. The taxpayer files an amended return that corrects the discrepancy.

3. The department, at the taxpayer's request, adjusts the return filed by the taxpayer based on an agreed amount. An adjustment made at the taxpayer's request under this paragraph is not considered an audit and does not preclude a future audit of the same year under section 42-1108.

4. The department notifies the taxpayer requesting the taxpayer to resolve the discrepancy by filing an amended return in order to avoid a possible future audit and reduce possible future penalties and interest. Any future audit shall be conducted pursuant to section 42-1108.

D. If an assessment is proposed under this section, the taxpayer has the right to protest the assessment, to have an oral hearing on the protest if requested and to appeal to the state board of tax appeals from the department's action on the protest. The taxpayer shall proceed under this section in the manner and within the time prescribed by article 6 of this chapter.

E. In addition to the remedies provided by subsection B of this section, if a taxpayer fails to file a return within sixty days after the time prescribed by this chapter, the department may petition the tax court to issue a writ of mandamus requiring the person to file a return. The petition shall be returnable not later than ten days after filing the petition. The petition shall be heard and determined on the return day or on such day thereafter as the court shall fix, having regard to the speediest possible determination of the case, consistent with the rights of the parties. The court shall provide at least ten days' written notice of the hearing to the taxpayer, which shall be mailed to the taxpayer's last known address or served on the taxpayer personally. The judgment shall include costs in favor of the prevailing party. Proceedings on such suits shall comply with the rules of procedure for special actions.

F. If a person wilfully refuses to make available any books, papers or records for examination by the department, or wilfully refuses to attend and testify, in connection with any proceedings instituted under subsection A of this section, the department may apply to the tax court for an order directing that person to produce the books, papers or records or to compel the person's attendance and testimony. If the books, papers or records required by the department are in the custody of a corporation, the order of the court may be directed to any principal officer of the corporation or its registered statutory agent. The failure to obey such an order of the court may be punished by the court as contempt.

G. The department may issue notice of its determination of deficiency under subsection B of this section by using an electronic portal in lieu of mail if all of the following requirements are met:

1. The taxpayer agrees in writing to allow the department to use the electronic portal to issue notice of the department's determination of deficiency for specified tax periods. The agreement shall include an email address that the department may use to notify the taxpayer as required by paragraph 2 of this subsection. A taxpayer that provides an email address is certifying that the taxpayer regularly monitors that email address. If the taxpayer's email address changes, the taxpayer shall notify the department of a new email address.

2. The department notifies the taxpayer via the email address when the notice of the department's determination of deficiency is posted to the electronic portal.

3. The email notification under paragraph 2 of this subsection is sent on the same day the notice of the department's determination of deficiency is posted to the electronic portal.

4. The date of receipt for a notice of the department's determination of deficiency is the later of the date the notice is posted to the electronic portal or the date the taxpayer receives the email notification required under paragraph 3 of this subsection. An email notification is deemed received by the taxpayer on the day it is sent by the department.