§ 11-1785 Additions to tax and civil penalties.
AC § 11-1785
(a)(1) Failure to file tax return. (A) In case of failure to file a tax return under this chapter on or before the prescribed date (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return five percent of the amount of such tax if the failure is for not more than one month, with an additional five percent for each additional month or fraction thereof during which such failure continues, not exceeding twenty-five percent in the aggregate. (B) In the case of a failure to file a return of tax within sixty days of the date prescribed for filing of such return (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax hereunder shall not be less than the lesser of one hundred dollars or one hundred percent of the amount required to be shown as tax on such return. (C) For purposes of this paragraph, the amount of tax required to be shown on the return shall 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.
(2)Failure to pay tax shown on return. In case of failure to pay the amounts shown as tax on any return required to be filed under this chapter on or before the prescribed date (determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount shown as tax on such return one-half of one percent of the amount of such tax if the failure is not for more than one month, with an additional one-half of one percent for each additional month or fraction thereof during which such failure continues, not exceeding twenty-five percent in the aggregate. For the purpose of computing the addition for any month, the amount of tax shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed upon the return. If the amount of tax required to be shown on a return is less than the amount shown as tax on such return, this paragraph shall be applied by substituting such lower amount.
(3)Failure to pay tax required to be shown on return. In case of failure to pay any amount in respect of any tax required to be shown on a return required to be filed under this chapter which is not so shown (including an assessment made pursuant to subdivision (a) of section 11-1782 of this title) within twenty-one calendar days of the date of a notice and demand therefor (ten business days if the amount for which such notice and demand is made equals or exceeds one hundred thousand dollars), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount of tax stated in such notice and demand one-half of one percent of such tax if the failure is not for more than one month, with an additional one-half of one percent for each additional month or fraction thereof during which such failure continues, not exceeding twenty-five percent in the aggregate. For the purpose of computing the addition for any month, the amount of tax stated in the notice and demand shall be reduced by the amount of any part of the tax which is paid before the beginning of such month.
(4)Limitations on additions. (A) With respect to any return, the amount of the addition under paragraph one of this subdivision shall be reduced by the amount of the addition under paragraph two of this subdivision for any month to which an addition applies under both paragraphs one and two of this subdivision. In any case described in subparagraph (B) of such paragraph one of this subdivision, the amount of the addition under such paragraph one shall not be reduced below the amount provided in such subparagraph. (B) With respect to any return, the maximum amount of the addition permitted under paragraph three of this subdivision shall be reduced by the amount of the addition under paragraph one of this subdivision (determined without regard to subparagraph (B) of such paragraph) which is attributable to the tax for which the notice and demand is made and which is not paid within ten days of such notice and demand.
(b)Deficiency due to negligence.
(1)If any part of a deficiency is due to negligence or intentional disregard of this chapter or rules or regulations hereunder (but without intent to defraud), there shall be added to the tax an amount equal to five percent of the deficiency.
(c)Failure by individual to pay estimated income tax.
(i)General. If the city adjusted gross income shown on the return of the individual for the preceding taxable year exceeds one hundred fifty thousand dollars, clause (ii) of subparagraph (B) of this paragraph shall be applied by substituting "one hundred ten percent" for "one hundred percent".
(ii)Separate returns. In the case of a husband and wife who file separate returns pursuant to subdivision (b) of section 11-1751 for the taxable year for which the amount of the installment is being determined, clause (i) of this subparagraph shall be applied by substituting "seventy-five thousand dollars" for "one hundred fifty thousand dollars".
(5)Definitions and special rules. (A) Definition of the term tax and application of credits against tax. For purposes of this subdivision and subdivision (d) of this section, the term "tax" means the tax imposed under this chapter minus the credits against tax allowed under this chapter, other than the credit under section 11-1773, relating to tax withheld on wages. The credit allowed under section 11-1773 for the taxable year shall be deemed a payment of estimated tax, and an equal part of such amount shall be deemed paid on each installment due date for such taxable year, unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld shall be deemed payments of estimated tax on the dates on which such amounts were actually withheld. (B) Special rule where return filed on or before January thirty-first. If, on or before January thirty-first of the following taxable year, the taxpayer files a return for the taxable year and pays in full the amount computed on the return as payable, then no addition to tax shall be imposed under paragraph one of this subdivision with respect to any underpayment of the fourth required installment for the taxable year. (C) Special rules for farmers and fishermen. For purposes of this subdivision, if an individual is a farmer or fisherman for any taxable year there shall be only one required installment for the taxable year, due on January fifteenth of the following taxable year in an amount equal to the required annual payment determined under paragraph three of this subdivision by substituting sixty-six and two-thirds percent for ninety percent and without regard to subparagraph (C) of paragraph three of this subdivision. Subparagraph (B) of this paragraph shall be applied by substituting March first for January thirty-first and by treating the required installment under this subparagraph as the fourth required installment. An individual is a farmer or fisherman for any taxable year if the individual's federal gross income from farming or fishing (including oyster farming) for the taxable year is at least two-thirds of the total federal gross income from all sources for the taxable year or if such individual's federal gross income from farming or fishing (including oyster farming) shown on the return of the individual for the preceding taxable year is at least two-thirds of the total federal gross income from all sources shown on such return. (D) Fiscal years. In applying this subdivision to a taxable year beginning on any date other than January first, there shall be substituted, for the months specified in this subdivision, the months which correspond thereto. (E) Short taxable year. This subdivision shall be applied to taxable years of less than twelve months in accordance with regulations prescribed by the tax commission. (F) Joint estimated tax of husband and wife. A husband and wife may make the required annual payment determined under paragraph three of this subdivision as if they were one taxpayer, in which case the liability under paragraph one of this subdivision with respect to the estimated tax shall be joint and several. No such joint payment may be made if husband and wife are separated under a decree of divorce or separate maintenance, or if they have different taxable years. If a joint payment is made but husband and wife determine their taxes under this chapter separately, the estimated tax for such year may be treated as the estimated tax of either husband or wife, or may be divided between them, as they may elect.
(6)Trusts and certain estates. (A) General. This subdivision shall apply to any trust or estate except as provided in subparagraphs (B) and (C) of this paragraph. (B) Exception for estates and certain trusts. This subdivision shall not apply with respect to any taxable year ending before the date two years after the date of the decedent's death to (i) the estate of such decedent or (ii) any trust all of which was treated (under subpart E of part 1 of subchapter J of chapter one of the internal revenue code) as owned by the decedent and to which the residue of the decedent's estate will pass under his will (or, if no will is admitted to probate, which is the trust primarily responsible for paying debts, taxes and expenses of administration). (C) Special rule for annualizations. In the case of any estate or trust, subparagraph (B) of paragraph four of this subdivision shall be applied by substituting "ending before the date one month before the due date for the installment" for "ending before the due date for the installment". (D) In the case of a trust, the trustee may elect to treat any portion of a payment of estimated tax made by such trust for any taxable year of the trust as a payment made by a beneficiary of such trust. Any amount so treated shall be treated as paid or credited to the beneficiary on the last day of such taxable year, and for purposes of this subdivision, the amount so treated shall not be treated as a payment of estimated tax made by the trust, but shall be treated as a payment of estimated tax made by such beneficiary on the January fifteenth following the end of the trust's taxable year. (E) An election under subparagraph (D) of this paragraph shall be made on or before the sixty-fifth day after the close of the taxable year and in such manner as the commissioner of taxation and finance may prescribe. (F) Extension to last year of estate. In the case of a taxable year reasonably expected to be the last taxable year of an estate, any reference in subparagraph (D) of this paragraph to a trust shall be treated as including a reference to an estate, and the fiduciary of the estate shall be treated as the trustee.
(d)Exceptions to addition to tax for failure to pay estimated income tax.
(e)Deficiency due to fraud.
(f)Non-willful failure to pay withholding tax. If any employer, without intent to evade or defeat any tax imposed by this chapter or the payment thereof, shall fail to make a return and pay a tax withheld by him or her at the time required by or under the provisions of section 11-1774, such employer shall be liable for such tax and shall pay the same together with interest thereon and the addition to tax provided in subdivision (a) of this section, and such interest and addition to tax shall not be charged to or collected from the employee by the employer. The tax commission shall have the same rights and powers for the collection of such tax, interest and addition to tax against such employer as are now prescribed by this chapter for the collection of tax against an individual taxpayer.
(g)Willful failure to collect and pay over tax. Any person required to collect, truthfully account for, and pay over the tax imposed by this chapter who willfully fails to collect such tax or truthfully account for and pay over such tax or willfully attempts in any manner to evade or defeat the tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No addition to tax under subdivision (b) or (e) of this section shall be imposed for any offense to which this subsection applies. The tax commission shall have the power, in its discretion, to waive, reduce or compromise any penalty under this subdivision.
(h)Failure to file certain information returns.
(j)Fraudulent statement or failure to furnish statement to employee. In addition to any criminal penalties provided by law, any person required under the provisions of section 11-1772 to furnish a statement to an employee, who willfully furnishes a false or fraudulent statement, or who willfully fails to furnish a statement in the manner, at the time, and showing the information required under section 11-1772, or regulations prescribed thereunder, shall for each such failure be subject to a penalty under this chapter of fifty dollars.
(k)Failure to supply identifying numbers. If any person who is required by regulations prescribed under subdivision (b) of section 11-1758: (1) to include his or her identifying number in any return, statement, or other document; (2) to furnish his or her identifying number to another person; or (3) to include in any return, statement or other document made with respect to another person the identifying number of such other person, fails to comply with such requirement at the time prescribed by such regulations, such person shall, unless it is shown that such failure is due to reasonable cause and not due to willful neglect, pay a penalty of five dollars for each such failure described in paragraph one of this subdivision and fifty dollars for each such failure described in paragraph two of this subdivision, and this paragraph, except that the total amount imposed on such person for all such failures during any calendar year shall not exceed ten thousand dollars; except that for failure to include his or her own identification number in any return, statement or other document, such penalty shall not be imposed unless such person shall have failed to supply his or her identification number to the tax commission within thirty days after demand therefor.
(l)Additions treated as tax. The additions to tax and penalties provided by this section shall be paid upon notice and demand and shall be assessed, collected and paid in the same manner as taxes, and any reference in this chapter to income tax or tax imposed by this chapter, shall be deemed also to refer to the additions to tax and penalties provided by this section. For purposes of section 11-1781, this subdivision shall not apply to: (1) any addition to tax under subdivision (a) except as to that portion attributable to a deficiency; (2) any addition to tax under subdivision (c); (3) any penalty under subdivision (h) and any additional penalty under subdivision (i); and (4) any penalties under subdivisions (j), (k), (q), (r), (s) and (t).
(m)Determination of deficiency. For purposes of subdivisions (b) and (e) of this section, the amount shown as the tax by the taxpayer upon his or her return shall be taken into account in determining the amount of the deficiency only if such return was filed on or before the last day prescribed for the filing of such return, determined with regard to any extension of time for such filing.
(n)Person defined. For purposes of subdivisions (g), (i), (o), (q) and (r) of this section, the term person includes an individual, corporation, partnership or limited liability company or an officer or employee of any corporation (including a dissolved corporation), or a member or employee of any partnership, or a member, manager or employee of a limited liability company, who as such officer, employee, manager or member is under a duty to perform the act in respect of which the violation occurs.
(o)Failure to make deposits of taxes. In case of failure by any person required by this chapter, or by regulations of the tax commission under this chapter, to deposit on the date prescribed therefor any amount of tax imposed by this chapter in a depository authorized pursuant to subdivision (a) of section 11-1792 to receive such deposits, unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be imposed on such person a penalty of five percent of the amount of the underpayment. For purposes of this subdivision the term "underpayment" means the excess of the amount of the tax required to be so deposited over the amount, if any, thereof, deposited on or before the date prescribed therefor.
(p)Substantial understatement of liability. If there is a substantial understatement of income tax for any taxable year, there shall be added to the tax an amount equal to ten percent of the amount of any underpayment attributable to such understatement. For purposes of this subdivision, there is a substantial understatement of income tax for any taxable year if the amount of the understatement for the taxable year exceeds the greater of ten percent of the tax required to be shown on the return for the taxable year, or two thousand dollars. For purposes of the preceding sentence, the term "understatement" means the excess of the amount of the tax required to be shown on the return for the taxable year, over the amount of the tax imposed which is shown on the return reduced by any rebate (within the meaning of subdivision (g) of section 11-1781). The amount of such understatement shall be reduced by that portion of the understatement which is attributable to the tax treatment of any item by the taxpayer if there is or was substantial authority for such treatment, or any item with respect to which the relevant facts affecting the item's tax treatment are adequately disclosed in the return or in a statement attached to the return. The tax commission may waive all or any part of the addition to tax provided by this subdivision on a showing by the taxpayer that there was reasonable cause for the understatement, or part thereof, and that the taxpayer acted in good faith.
(q)Frivolous tax returns. If any individual files what purports to be a return of any tax imposed by this chapter but which does not contain information on which the substantial correctness of the self-assessment may be judged, or contains information that on its face indicates that the self-assessment is substantially incorrect; and such conduct is due to a position which is frivolous, or an intent (which appears on the purported return) to delay or impede the administration of this chapter, then such individual shall pay a penalty not exceeding five hundred dollars. This penalty shall be in addition to any other penalty provided by law.
(r)Aiding or assisting in the giving of fraudulent returns, reports, statements or other documents.
(s)False information with respect to withholding. In addition to any criminal penalty provided by law, if any individual makes a statement under section 11-1771 which results in a decrease in the amounts deducted and withheld under this chapter, and as of the time such statement was made, there was no reasonable basis for such statement, such individual shall pay a penalty of five hundred dollars for such statement. The tax commission shall waive the penalty imposed under this subdivision if the taxes imposed with respect to the individual under this chapter for the taxable year are equal to or less than the sum of the credits against such taxes allowed by this chapter, and the payments of estimated tax which are considered payments on account of such taxes.
(t)Failure of tax return preparer to conform to certain requirements.
