US Laws, Codes, Statutes & Cases

 
    § 11-525 Additions to tax and civil penalties. (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 tax return 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  under subparagraph (A) of this paragraph 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
  11-522  of  this  chapter)  within  ten days of the date of a notice and
  demand therefor, 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 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  one)
  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.
    (2)  There  shall  be  added  to  the  tax  (in addition to the amount
  determined under paragraph (1) of this subdivision) an amount  equal  to
  fifty  percent  of the interest payable under subdivision (a) of section
  11-524 with respect to the portion of the deficiency described  in  such
  paragraph  (1)  which  is  attributable to the negligence or intentional
  disregard referred to in such paragraph (1), for the period beginning on
  the  last  date  prescribed  by  law  for  payment  of  such  deficiency
  (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).
    (3)  If  any payment is shown on a return made by a payor with respect
  to dividends, patronage dividends and interest under subsection  (a)  of
  section  six  thousand forty-two, subsection (a) of section six thousand
  forty-four or subsection (a) of section six thousand forty-nine  of  the
  internal  revenue code of nineteen hundred fifty-four, respectively, and
  the payee fails to include any portion of such payment in unincorporated
  business gross income, as that term is defined in  section  11-506,  any
  portion  of  a deficiency attributable to such failure shall be treated,
  for purposes of this subdivision, as due to negligence in the absence of
  clear and convincing evidence to the contrary. If any addition to tax is
  imposed under this subdivision by reason of the preceding sentence,  the
  amount  of  the  addition  to  tax  imposed  by  paragraph  one  of this
  subdivision shall be five percent of the portion of the deficiency which
  is attributable to the failure described in the preceding sentence.
    * NB Amended Ch. 765/85 § 68, language juxtaposed per Ch. 907/85 § 14
    (c) Failure to file declaration or underpayment of estimated  tax.  If
  any  taxpayer  fails  to file a declaration of estimated tax or fails to
  pay all or any part of an installment of  estimated  tax,  the  taxpayer
  shall  be  deemed  to  have made an underpayment of estimated tax. There
  shall be added to the  tax  for  the  taxable  year  an  amount  at  the
  underpayment rate set by the commissioner of finance pursuant to section
  11-537  of  this  chapter,  or,  if  no  rate is set, at the rate of six
  percent per annum upon the amount of the underpayment for the period  of
  the  underpayment  but  not beyond the fifteenth day of the fourth month
  following the close of the taxable year. The amount of the  underpayment
  shall  be  the  excess  of  the amount of the installment which would be
  required to be paid if the estimated tax were equal to ninety percent of
  the tax shown on the return for the taxable year (or if  no  return  was
  filed, ninety percent of the tax for such year) over the amount, if any,
  of  the  installment  paid on or before the last day prescribed for such
  payment. No underpayment shall be deemed to  exist  with  respect  to  a
  declaration  or  installment  otherwise  due  on or after the taxpayer's
  death. In any case in which there  would  be  no  underpayment  if  this
  subdivision  were  applied  by substituting "eighty percent" for "ninety

  percent" where it appears in the second preceding sentence, the addition
  to tax under this subdivision shall be equal to seventy-five percent  of
  the amount otherwise determined under this subdivision.
    (d)  Exception  to  addition  for  underpayment  of estimated tax. The
  addition to tax under subdivision (c) of this section  with  respect  to
  any  underpayment  of  any installment shall not be imposed if the total
  amount of all payments of estimated tax made on or before the last  date
  prescribed  for  the  payment  of  such  installment  equals  or exceeds
  whichever of the following is the lesser:
    (1) The amount which would have been required to be paid on or  before
  such  date  if  the estimated tax were whichever of the following is the
  least:
    (A) The tax shown on the return of  the  taxpayer  for  the  preceding
  taxable  year,  if a return showing a liability for tax was filed by the
  taxpayer for the preceding taxable year and such preceding  year  was  a
  taxable year of twelve months, or
    (B)  An  amount  equal to the tax computed, at the rates applicable to
  the taxable year, but otherwise on the basis of the facts shown  on  the
  taxpayer's  return for, and the law applicable to, the preceding taxable
  year, or
    (C) An amount equal to ninety percent of the tax for the taxable  year
  computed  by  placing on an annualized basis the unincorporated business
  taxable income for the months in the  taxable  year  ending  before  the
  month  in  which the installment is required to be paid. For purposes of
  this subparagraph, the unincorporated business taxable income  shall  be
  placed on an annualized basis by:
    (i)  multiplying  by twelve (or, in the case of a taxable year of less
  than twelve months, the number  of  months  in  the  taxable  year)  the
  unincorporated  business  taxable  income  for the months in the taxable
  year ending before the month in which the installment is required to  be
  paid, and
    (ii)  dividing  the  resulting  amount  by the number of months in the
  taxable year ending before the month  in  which  such  installment  date
  falls, or
    (D)(i) If the base period percentage for any six consecutive months of
  the  taxable  year equals or exceeds seventy percent, an amount equal to
  ninety percent of the tax determined in the following manner:
    (I) take the unincorporated business taxable  income  for  all  months
  during the taxable year preceding the filing month,
    (II)  divide  such amount by the base period percentage for all months
  during the taxable year preceding the filing month,
    (III) determine the tax on  the  amounts  determined  under  subclause
  (II), and
    (IV)  multiply  the  tax  determined under subclause (III) by the base
  period percentage for the filing month and all months during the taxable
  year preceding the filing month.
    (ii) For purposes of clause (i) of this subparagraph:
    (I) the base period percentage for any period of months shall  be  the
  average percent which the unincorporated business taxable income for the
  corresponding  months  in each of the three preceding years bears to the
  unincorporated business taxable income for the three  preceding  taxable
  years.  The  commissioner  of finance may by regulations provide for the
  determination  of  the  base  period  percentage  in  the  case  of  new
  unincorporated businesses and other similar circumstances, and
    (II)  the term "filing month" means the month in which the installment
  is required to be paid;
    (2) An amount equal to ninety percent of  the  tax  computed,  at  the
  rates  applicable  to  the  taxable  year,  on  the  basis of the actual

  unincorporated business taxable income for the  months  in  the  taxable
  year  ending before the month in which the installment is required to be
  paid.
    (e)(1)  Except  as provided in paragraph two hereof, subparagraphs (A)
  and (B) of paragraph one of subdivision (d) of this  section  shall  not
  apply  in  the  case  of  any taxpayer which had unincorporated business
  taxable income, or the portion thereof allocated within the city, of one
  million dollars or more for any taxable year during  the  three  taxable
  years immediately preceding the taxable year involved.
    (2)  The  amount  treated as the estimated tax under subparagraphs (A)
  and (B) of paragraph one of subdivision (d) of this section shall in  no
  event  be  less than seventy-five percent of the tax shown on the return
  for the taxable year beginning in nineteen hundred eighty-three  or,  if
  no return was filed, seventy-five percent of the tax for such year.
    * (f)  Deficiency due to fraud. (1) If any part of a deficiency is due
  to fraud, there shall be added to the  tax  an  amount  equal  to  fifty
  percent of the deficiency.
    (2)  There  shall  be  added  to  the  tax  (in addition to the amount
  determined under paragraph (1) of this subdivision) an amount  equal  to
  fifty  percent  of the interest payable under subdivision (a) of section
  11-524 with respect to the portion of the deficiency described  in  such
  paragraph  (1)  which is attributable to fraud, for the period beginning
  on the last day  prescribed  by  law  for  payment  of  such  deficiency
  (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).
    (3) The addition to tax under this subdivision shall be in lieu of any
  other addition to tax imposed by subdivision (a) or (b).
    * NB Amended Ch. 765/85 § 68, language juxtaposed per Ch. 907/85 § 14
    (g)  Additional  penalty. Any taxpayer who with fradulent intent shall
  fail to pay any tax, or to make, render, sign or certify any  return  or
  declaration  of  estimated  tax, or to supply any information within the
  time required by or under this chapter shall be liable to a  penalty  of
  not  more  than  one  thousand dollars, in addition to any other amounts
  required under this chapter, to be imposed, assessed  and  collected  by
  the  commissioner of finance. The commissioner of finance shall have the
  power, in his or her discretion, to  waive,  reduce  or  compromise  any
  penalty under this subdivision.
    * (h)  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 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 11-521, 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); and
    (3) any additional penalties under subdivisions (g) and (k).
    * NB Amended Ch. 765/85 § 68, language juxtaposed per Ch. 907/85 § 14
    (i) Determination of deficiency. For purposes of subdivisions (b)  and
  (c)  of  this section, the amounts 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.
    * (j)   Substantial   understatement  of  liability.  If  there  is  a
  substantial understatement of 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  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 five 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
  11-521).  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 commissioner of
  finance 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.
    * NB Amended Ch. 765/85 § 68, language juxtaposed per Ch. 907/85 § 14
    * (k)  Aiding  or  assisting  in  the  giving  of  fraudulent returns,
  reports, statements or other documents. (1) Any  person  who,  with  the
  intent  that tax be evaded, shall, for a fee or other compensation or as
  an incident to the performance of other services for which  such  person
  receives  compensation, aid or assist in, or procure, counsel, or advise
  the preparation or presentation under, or in connection with any  matter
  arising under this chapter of any return, report, declaration, statement
  or  other  document  which  is  fraudulent  or  false as to any material
  matter, or supply any false or fraudulent information,  whether  or  not
  such  falsity  or  fraud  is with the knowledge or consent of the person
  authorized or required to  present  such  return,  report,  declaration,
  statement  or  other  document  shall  pay  a  penalty not exceeding ten
  thousand dollars.
    (2) For purposes of  paragraph  (1)  of  this  subdivision,  the  term
  "procures"  includes ordering (or otherwise causing) a subordinate to do
  an act, and knowing of, and not attempting to prevent, participation  by
  a  subordinate  in an act. The term "subordinate" means any other person
  (whether or not a member, employee, or agent of the  taxpayer  involved)
  over whose activities the person has direction, supervision, or control.
    (3)  For  purposes  of  paragraph  (1)  of  this subdivision, a person
  furnishing typing, reproducing,  or  other  mechanical  assistance  with
  respect  to  a document shall not be treated as having aided or assisted
  in the preparation of such document by reason of such assistance.
    (4) The penalty imposed by this subdivision shall be  in  addition  to
  any other penalty provided by law.
    * NB Added Ch. 765/85 § 68, language juxtaposed per Ch. 907/85 § 14