§1604.1. Negligence penalty

A. Finding of negligence. For negligent failure to comply with any provisions of this Part or any rules and regulations of the department, when the secretary finds that a taxpayer did not have willful intent to defraud the state, the secretary may assess a penalty equal to ten percent of the tax deficiency found to be due as a result of the taxpayer's negligence.

B. Large individual income tax deficiency. In the case of individual income tax, if a taxpayer understates tax table income, by any means, by an amount equal to twenty-five percent or more of adjusted gross income or has otherwise demonstrated a willful intent to disregard the tax laws of this state, the secretary may assess a penalty equal to twenty percent of the deficiency. However, in the case of individual income tax, if a taxpayer understates tax table income by an amount equal to twenty-five percent or more of adjusted gross income but the secretary finds that the taxpayer did not have willful intent to disregard the tax laws of this state, the secretary may assess a penalty of fifteen percent of the deficiency.

C. Other large tax deficiency. In the case of a tax other than individual income tax, if a taxpayer understates tax liability by twenty-five percent or more, or has otherwise demonstrated a willful intent to disregard the tax laws of this state, the secretary may assess a penalty equal to twenty percent of the deficiency. However, in the case of a tax other than individual income tax, if a taxpayer understates tax liability by twenty-five percent or more, but the secretary finds that the taxpayer did not have willful intent to disregard the tax laws of this state, the secretary may assess a penalty of fifteen percent of the deficiency.

D. For purposes of this Section, the following terms shall have the following meanings unless the context clearly indicates otherwise:

(1) "Adjusted gross income" means gross income as defined in Section 62 of the Internal Revenue Code.

(2) "Willful" means voluntarily and intentionally acting in violation of the tax laws of this state. The secretary shall use this definition of "willful" when determining whether a penalty shall be imposed for the willful intent to defraud this state or willful intent to disregard the tax laws of this state.

Added by Acts 1958, No. 240, §1; Acts 2015, No. 128, §1, eff. July 1, 2015.