(A) Except as otherwise provided, the civil penalties imposed by this penalty section apply to every revenue or tax law of the State that provides for the filing with the department of a return or statement of the tax or the amount taxable.

(B) The penalties described in this section must be added to and become a part of and collected as the tax imposed by the revenue or tax laws of this State.

(C)(1) In the case of failure to file a return on or before the date prescribed by law, determined with regard to any extension of time for filing, there must be added to the amount required to be shown as tax on the return, a penalty of five percent of the amount of the tax if the failure is for not more than one month, with an additional five percent for each additional month or fraction of the month during which the failure continues, not exceeding twenty-five percent in the aggregate.

(2) For the purpose of this subsection, the amount of tax required to be shown on the return must be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed upon the return.

(D) In case of failure to pay the amount shown as tax on any return on or before the date prescribed by law, determined with regard to any extension of time for paying, there must be added to the tax due a penalty of one-half of one percent of the amount of the tax if the failure is for not more than one month, with an additional one-half of one percent for each additional month or fraction of the month, during which the failure continues, not exceeding twenty-five percent in the aggregate.

(E) In case of failure to pay any amount of any tax required to be shown on a return which is not shown, including an assessment within ten days of the date of the notice and demand for payment, there must be added to the amount of tax stated in the notice and demand one-half of one percent of the amount of the tax if the failure is for not more than one month, with an additional one-half of one percent for each additional month or fraction of a month during which the failure continues, not exceeding twenty-five percent in the aggregate.

(F)(1) If part of an underpayment of tax or part of a claim for refund of tax paid is due to negligence or disregard of regulations, there must be added to the tax an amount equal to the sum of five percent of the underpayment or claimed refund and an amount equal to fifty percent of the interest payable under Section 12-54-25.

(2) A portion of an underpayment attributable to fraud with respect to which a penalty is imposed under subsection (G) must not be considered under this subsection.

(3) For purposes of this subsection, "negligence" includes a failure to make a reasonable attempt to comply with the provisions of this title, and "disregard" includes careless, reckless, or intentional disregard.

(G)(1) If a part of an underpayment of tax required to be shown on a return is due to fraud, there must be added to the tax an amount equal to the sum of seventy-five percent of the portion of the underpayment which is attributable to fraud and an amount equal to fifty percent of the interest payable under Section 12-54-25 with respect to that portion for the period beginning on the last day prescribed by law for payment of the underpayment, determined without regard to any extension, and ending on the date of the assessment of the tax or, if earlier, the date of the payment of the tax.

(2) If the department establishes that a portion of an underpayment is attributable to fraud, the entire underpayment must be treated as attributable to fraud, except that portion of the underpayment which the taxpayer establishes is not attributable to fraud.

(3) In case of a joint return, this subsection applies to a spouse only if some part of the underpayment is due to the fraud of the spouse.

(4) If a penalty is assessed under this subsection for an underpayment of tax which is required to be shown on a return, a penalty relating to failure to file the return or pay tax may not be assessed with respect to the portion of the underpayment which is attributable to fraud.

(H) A person who must obtain a license or purchase stamps for identification purposes, and who fails to obtain or display the license properly, or to affix the stamps properly, or to comply with statutory provisions, is subject to a penalty of not less than fifty dollars nor more than five hundred dollars for each failure. For failure to obtain or display a license as prescribed in Sections 12-21-2720 and 12-21-2730, the penalty is fifty dollars for each failure to comply.

(I) A person:

(1)(a) who files what purports to be a return of the tax imposed by a provision of law administered by the department but which:

(i) does not contain information on which the substantial correctness of the tax liability may be judged; or

(ii) contains information that on its face indicates the liability is substantially incorrect; or

(b) who files a claim, a protest, or document, other than a return, that contains information that on its face indicates its position is substantially incorrect; and

(2) whose conduct is due to:

(a) a position which is frivolous or groundless; or

(b) a desire, which appears on the purported return, claim, protest, or document, to delay or impede the administration of state tax laws;

(3) is liable to a penalty of five hundred dollars for the first filing, twenty-five hundred dollars for the second filing, and five thousand dollars for each subsequent filing. These penalties are in addition to all other penalties provided by law.

(J) Whenever it appears to an administrative law judge that proceedings before him have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in the proceedings is frivolous or groundless, damages in an amount not to exceed five thousand dollars must be awarded to the State in the administrative law judge's decision. These damages must be assessed at the same time as the deficiency, paid upon notice and demand from the department, and collected as a part of the tax.

(K) A failure to deposit or pay taxes deducted and withheld pursuant to Article 5, Chapter 8 subjects the withholding agent to a penalty of not less than ten dollars nor more than one thousand dollars. The penalty imposed by this item applies to failure to comply with the provisions of Section 12-54-250.

(L) If a taxpayer asserts a value for property used in, or owned by, a business for property tax purposes that is fifty percent or more below the property's property tax value, there must be added to the tax an amount equal to the fifty percent of the underpayment which would have resulted if the value asserted had been accepted.

(M) If a purchaser uses a resale, wholesale, or an exemption certificate issued or authorized by the department to purchase tangible personal property tax free which the purchaser knows is not excluded or exempt from the tax under the provisions of Chapter 36 of this title, then the purchaser, in addition to any other penalties due under this title, is liable for a penalty of five percent of the amount of the tax if the failure is for not more than one month, with an additional five percent for each additional month or fraction of the month during which the failure continues, not exceeding fifty percent in the aggregate. The provisions of this section do not apply to direct pay certificates.

HISTORY: 1999 Act No. 114, Section 4; 2000 Act No. 399, Section 3(J)(2), eff August 17, 2000; 2001 Act No. 89, Section 30, eff July 20, 2001; 2005 Act No. 145, Section 33.A, eff October 1, 2005; 2005 Act No. 145, Section 33.B, eff July 1, 2005; 2005 Act No. 161, Section 16.A, eff June 9, 2005.

Editor's Note

2000 Act No. 399, Section 3.Z., provides, in pertinent part, as follows:

"This section takes effect upon approval by the Governor, or as otherwise stated, except that ... subsection J.1. applies to taxable periods ending after December 31, 1999; subsection J.2. applies to tax returns due after October 31, 2000, and does not affect an action or proceeding commenced or a right accrued before October 1, 2000 ..."

2005 Act No. 161, Section 16.B, provides as follows:

"This SECTION [adding subsection (L)] takes effect upon approval by the Governor and is applicable for tax years beginning after December 31, 2005."