Deficiency assessments

# (a)

After a final return in due form is filed, the commissioner shall cause the same to be examined and may make such further audit or investigation or reaudit as he may deem necessary, and if therefrom he shall determine that there is a deficiency with respect to the payment of any tax due under this chapter, he shall assess or reassess the additional taxes, penalties and interest due to this state, give notice of such assessment or reassessment to the taxpayer, and make demand upon him for payment. Within sixty days of the mailing of such notice, the taxpayer shall pay to the commissioner, in cash or by check, draft or money order drawn to the order of the Commissioner of Revenue Services, the amount of the deficiency. Such amount shall bear interest at the rate of one and one-fourth per cent per month or fraction thereof from the date when the original tax became due and payable. When it appears that any part of the deficiency for which a deficiency assessment is made is due to negligence or intentional disregard of the provisions of this chapter or regulations promulgated thereunder, there shall be imposed a penalty equal to ten per cent of the amount of such deficiency assessment. When it appears that any part of the deficiency for which a deficiency assessment is made is due to fraud or intent to evade the provisions of this chapter or regulations promulgated thereunder, there shall be imposed a penalty equal to twenty-five per cent of the amount of such deficiency assessment. No taxpayer shall be subject to more than one penalty under this section in relation to the same tax period. Any decision rendered by any federal court holding that a taxpayer has filed a fraudulent return with the Director of Internal Revenue shall subject the taxpayer to a penalty imposed by the preceding sentence without the necessity of further proof thereof, except when it can be shown that the return to the state so differed from the return to the federal government as to afford a reasonable presumption that the attempt to defraud did not extend to the state.

# (b)

Except in the case of a wilfully false or fraudulent return with intent to evade the tax, no assessment of additional tax shall be made after the expiration of more than three years from the date of the filing of a return or from the original due date of a return, whichever is later; provided, where no return has been filed as provided by law, the tax may be assessed at any time. Where, before the expiration of the period prescribed herein for the assessment of an additional tax, a taxpayer has consented in writing that such period may be extended, the amount of such additional tax due may be determined at any time within such extended period. The period so extended may be further extended by subsequent consents in writing before the expiration of the extended period. (June, 1969, P.A. 1, S. 32; June, 1971, P.A. 8, S. 15; P.A. 80-307, S. 27, 31; P.A. 81-64, S. 18, 23; 81-411, S. 37, 42; P.A. 87-84, S. 2, 4; P.A. 88-314, S. 43, 54; P.A. 91-236, S. 12, 25.) History: 1971 act increased interest from 0.75% to 1% and required that deficiency be not “deliberate” for waiver of penalty to be allowed; P.A. 80-307 temporarily increased interest to 1.25% for assessments due on or after July 1, 1980, but not later than June 30, 1981; P.A. 81-64 amended Subsec. (a) to include a minimum penalty of $50 and the waiver of penalty provisions applicable to other state taxes; P.A. 81-411 continued interest on the deficiency assessment at 1.25% per month, effective July 1, 1981, and applicable to taxes becoming due on or after that date; P.A. 87-84 amended the penalty provision in Subsec. (a) related to failure to pay tax when due by eliminating the minimum penalty requirement in the amount of $50; P.A. 88-314 amended Subsec. (a) by deleting the penalty provisions applicable to deficiency assessments and substituting in lieu thereof a restatement of the penalties to be imposed when the deficiency is due to negligence and the deficiency is due to fraud or intent to evade the tax, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; P.A. 91-236 amended Subsec. (a) to provide for 60, rather than 30, days for payment of deficiency amount, effective July 1, 1991, and applicable to taxes due on or after that date. (Return to ChapterTable of Contents) (Return toList of Chapters) (Return toList of Titles)

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