Brief⁽¹⁾

S.B.419 relates to delinquent income taxes. First, beginning with tax years ending on or after December 31, 1998, the penalty for late filing would be changed from 10 percent for the first day, increasing to 25 percent after six months, to a penalty of 1 percent per month to a maximum of 24 percent.

Also, the limit for charge-off of uncollectible income tax accounts would be increased from $25 to $100.

Background

This bill was requested and supported by the Department of Revenue. There were no opponents.

The Department stated that a 10 percent penalty for missing a deadline for a few days seems excessive to taxpayers and they often request a waiver, which the Department has the authority to grant, and often does grant. The Department stated that the low starting rate and gradual phase-in would provide a penalty that is reasonable and can be uniformly applied. This change would be first effective for calendar year 1998 returns. The Department noted that a system capable of applying the new penalty would be operational in time for processing these returns.

The Department noted that the $25 limit for charge-off of uncollectible accounts has been in place since 1965 and that the increase to $100 would reflect inflation and reduce administrative costs.

According to the fiscal note, the revenue effects of S.B. 419 would be negligible.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.