A BILL TO BE ENTITLED
AN ACT to ensure that the department of revenue does not change its longstanding interpretation of the failure to file penalty in a manner that would make the penalty harsher than the comparable federal penalty and would impose a penalty on a taxpayer even when the taxpayer paid tax timely and is due a refund.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑236(a)(3) reads as rewritten:
"§ 105‑236.  Penalties; situs of violations; penalty disposition.
(a)	Penalties. – The following civil penalties and criminal offenses apply:
…
(3)	Failure to File Return. – In case of failure to file any return on the date it is due, determined with regard to any extension of time for filing, the Secretary shall assess a penalty equal to five percent (5%) of the net amount of tax due if the failure is for not more than one month, with an additional five percent (5%) for each additional month, or fraction thereof, during which the failure continues, not exceeding twenty‑five percent (25%) in the aggregate, or five dollars ($5.00), whichever is the greater.
…."
SECTION 2.  G.S. 105‑236(a)(3), as amended by Section 1 of this act and Section 2.18(a) of S.L. 2012‑79, reads as rewritten:
"§ 105‑236.  Penalties; situs of violations; penalty disposition.
(a)	Penalties. – The following civil penalties and criminal offenses apply:
…
(3)	Failure to File Return. – In case of failure to file any return on the date it is due, determined with regard to any extension of time for filing, the Secretary shall assess a penalty equal to five percent (5%) of the net amount of tax due if the failure is for not more than one month, with an additional five percent (5%) for each additional month, or fraction thereof, during which the failure continues, not exceeding twenty‑five percent (25%) in the aggregate."
SECTION 3.  If the Department of Revenue has assessed a failure to file penalty under G.S. 105‑236(a)(3) against a taxpayer based on a calculation that includes taxes that were timely paid, the Department must take the following actions:
(1)	If the assessment is outstanding, the Department must cancel the assessment. The Department may then assess a penalty based on the net amount due.
(2)	If the assessment has been paid, the Department must refund the portion of the assessment that was calculated based on taxes that were timely paid. If all of the assessment is based on taxes that were timely paid, the Department must also cancel the assessment so that the taxpayer's record does not reflect the imposition of a penalty.
SECTION 4.  Section 2 of this act becomes effective on the same date as Section 2.18(a) of S.L. 2012‑79. The remainder of this act is effective when it becomes law.