A BILL TO BE ENTITLED
AN ACT to clarify and reduce the penalties for a taxpayer's failure to file a return for which a refund is due.
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 as provided in this subdivision. For purposes of this subdivision, the "amount of the tax" means the net amount of tax imposed under Subchapters I, V, and VIII of this Chapter after subtracting the credits against the tax allowed by this Chapter other than the credits allowed by Articles 4A and 4C of this Chapter.
a.	If there is a refund due on the date the return is due, a penalty equal to five percent (5%) of the amount of the tax 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 ten percent (10%) in the aggregate, or five dollars ($5.00), whichever is the greater.
b.	If there is a no refund due on the date the return is due, a penalty equal to five percent (5%) of the amount of the tax 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), as amended by Section 1 of this act, 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 as provided in this subdivision. For purposes of this subdivision, the "amount of the tax" means the net amount of tax imposed under Subchapters I, V, and VIII of this Chapter after subtracting the credits against the tax allowed by this Chapter other than the credits allowed by Articles 4A and 4C of this Chapter.
a.	If there is a refund due on the date the return is due, a penalty equal to five percent (5%) of the amount of the tax 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 ten percent (10%) in the aggregate.
b.	If there is a no refund due on the date the return is due, a penalty equal to five percent (5%) of the amount of the tax 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.
(4)	Failure to Pay Tax When Due. – In the case of failure to pay any tax when due, without intent to evade the tax, the Secretary shall assess a penalty equal to ten percent (10%) of the tax. This penalty does not apply in any of the following circumstances:
a.	When the amount of tax shown as due on an amended return is paid when the return is filed.
b.	When the Secretary proposes an assessment for tax due but not shown on a return and the tax due is paid within 45 days after the later of the following:
1.	The date of the notice of proposed assessment of the tax, if the taxpayer does not file a timely request for a Departmental review of the proposed assessment.
2.	The date the proposed assessment becomes collectible under one of the circumstances listed in G.S. 105‑241.22(3) through (6), if the taxpayer files a timely request for a Departmental review of the proposed assessment.
c.	When a taxpayer timely files a consolidated or combined return at the request of the Secretary under Part 1 of Article 4 of this Chapter and the tax due is paid within 45 days after the latest of the following:
1.	The date the return is filed.
2.	The date of a notice of proposed assessment based on the return, if the taxpayer does not file a timely request for a Departmental review of the proposed assessment.
3.	The date the Departmental review of the proposed assessment ends as a result of the occurrence of one of the actions listed in G.S. 105‑241.22(3) through (6), if the taxpayer files a timely request for a Departmental review.
…."
SECTION 3.  Section 2.18 of S.L. 2012‑79 is repealed.
SECTION 4.  Section 1 of this act is effective for taxable years beginning on or after January 1, 2013. Section 2 of this act is effective for taxable years beginning on or after January 1, 2014. The remainder of this act is effective when it becomes law.