S*1330 Session 107 (1987-1988)
S*1330(Rat #0780, Act #0660 of 1988) General Bill, By M.B. Williams
A Bill to amend Section 12-54-20, as amended, Code of Laws of South Carolina,
1976, relating to interest on unpaid or additional tax, so as to provide that
whenever the Tax Commission issues a warrant of tax execution, interest must
be calculated on the amount of tax due from the time the tax was due until
paid in its entirety, and to amend Section 12-54-30, relating to refunds or
credits for overpayment of taxes and the interest on the refunds or credits,
so as to provide that interest may also be paid on income tax refunds provided
for under Section 12-7-1980 and to amend Section 12-54-40, as amended,
relating to penalties for failure to file a return or to pay required amount
of taxes, so as to provide, among other things, new and additional penalties
for failure to file or pay or report the appropriate amount of tax, and to
amend the 1976 Code by adding Section 12-54-155 so as to establish a penalty
for a substantial understatement of tax and to amend the 1976 Code by adding
Section 12-54-225 so as to authorize the South Carolina Tax Commission to
enter into agreements with other states for the mutual exchange of information
concerning tax returns.-amended title
03/16/88 Senate Introduced and read first time SJ-3
03/16/88 Senate Referred to Committee on Judiciary SJ-4
04/06/88 Senate Committee report: Favorable Judiciary SJ-126
04/19/88 Senate Read second time SJ-51
04/27/88 Senate Read third time and sent to House SJ-42
04/28/88 House Introduced and read first time HJ-3401
04/28/88 House Referred to Committee on Labor, Commerce and
Industry HJ-3402
05/11/88 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-8
05/26/88 House Amended HJ-4126
05/26/88 House Read second time HJ-4129
05/26/88 House Unanimous consent for third reading on next
legislative day HJ-4129
05/27/88 House Read third time HJ-4257
05/27/88 House Returned HJ-4257
05/30/88 Senate House amendment amended SJ-36
05/30/88 Senate Returned SJ-38
06/02/88 House Senate amendment amended HJ-4688
06/02/88 House Returned HJ-4694
06/02/88 Senate Concurred in House amendment and enrolled SJ-87
06/20/88 Ratified R 780
06/27/88 Signed By Governor
06/27/88 Effective date 01/01/89
06/27/88 Act No. 660
06/27/88 See act for exception to or explanation of
effective date
08/01/88 Copies available
(A660, R780, S1330)
AN ACT TO AMEND SECTION 12-54-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO INTEREST ON UNPAID OR ADDITIONAL TAX, SO AS TO PROVIDE THAT
WHENEVER THE TAX COMMISSION ISSUES A WARRANT OF TAX EXECUTION, INTEREST MUST BE
CALCULATED ON THE AMOUNT OF TAX DUE FROM THE TIME THE TAX WAS DUE UNTIL PAID IN
ITS ENTIRETY, AND TO AMEND SECTION 12-54-30, RELATING TO REFUNDS OR CREDITS FOR
OVERPAYMENT OF TAXES AND THE INTEREST ON THE REFUNDS OR CREDITS, SO AS TO PROVIDE
THAT INTEREST MAY ALSO BE PAID ON INCOME TAX REFUNDS PROVIDED FOR UNDER SECTION
12-7-1980 AND TO AMEND SECTION 12-54-40, AS AMENDED, RELATING TO PENALTIES FOR
FAILURE TO FILE A RETURN OR TO PAY REQUIRED AMOUNT OF TAXES, SO AS TO PROVIDE,
AMONG OTHER THINGS, NEW AND ADDITIONAL PENALTIES FOR FAILURE TO FILE OR PAY OR
REPORT THE APPROPRIATE AMOUNT OF TAX, AND TO AMEND THE 1976 CODE BY ADDING
SECTION 12-54-155 SO AS TO ESTABLISH A PENALTY FOR A SUBSTANTIAL UNDERSTATEMENT
OF TAX AND TO AMEND THE 1976 CODE BY ADDING SECTION 12-54-225 SO AS TO AUTHORIZE
THE SOUTH CAROLINA TAX COMMISSION TO ENTER INTO AGREEMENTS WITH OTHER STATES FOR
THE MUTUAL EXCHANGE OF INFORMATION CONCERNING TAX RETURNS.
Be it enacted by the General Assembly of the State of South Carolina:
Period; calculating interest
SECTION 1. Section 12-54-20 of the 1976 Code, as last amended by Act 170 of
1987, is further amended to read:
"Section 12-54-20.
(A) Any person who fails to remit the tax due or additional tax as provided
by law must be charged interest at the rate established by the commission in the
same manner and at the same time as the underpayment rate prescribed by the
Internal Revenue Code. Interest must be calculated on the full amount of tax or
portion of it, exclusive of penalties from the time the tax or additional tax was
due until paid in its entirety. The provisions of this section apply to all
taxes levied or assessed by the commission.
(B) Whenever the commission issues a warrant or tax execution under its hand,
interest must be calculated on the amount of tax due from the time the tax or
additional tax was due until paid in its entirety."
Overpayment; refund; interest
SECTION 2. Section 12-54-30 of the 1976 Code is amended to read:
"Section 12-54-30. If the commission discovers on examination of a return
or otherwise that the tax, penalty, or interest paid by any person is in excess
of the amount legally due, the commission may order a refund or give credit for
the overpayment. Upon the allowance of a credit or refund of any tax, penalty,
or interest paid, interest is allowed and paid on the amount of the credit or
refund at the rate provided for in Section 12-54-20 from the date the tax,
penalty, or interest was paid to the date the order for refund or credit was
issued. No interest may be paid on income tax refunds provided for under
Sections 12-9-380 and 12-7-1980 during the first seventy-five days following the
due date for the filing of the return or the date the return was filed, whichever
occurs later."
Penalties; failure to file, payor
SECTION 3. Section 12-54-40(b)(1), (2), and (3) of the 1976 Code are amended
to read:
"(1) In the case of failure to file a return on or before the date
prescribed by law, (determined with regard to any extension of time for filing),
there must be added to the amount required to be shown as tax on the return, a
penalty of five percent of the amount of the tax if the failure is for not more
than one month, with an additional five percent for each additional month or
fraction of the month during which the failure continues, not exceeding
twenty-five percent in the aggregate. For the purpose of this paragraph, the
amount of tax required to be shown on the return must 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. In case of a failure to file a return of tax within sixty days
of the date prescribed for filing the return (determined with regard to any
extension of time for filing), the addition to tax must not be less than the
lesser of one hundred dollars or one hundred percent of the amount required to
be shown as tax on the return.
(2) (a) In case of failure to pay the amount shown as tax on any return on
or before the date prescribed by law (determined with regard to any extension of
time for paying), there must be added to the tax due a penalty of one-half of one
percent of the amount of the tax if the failure is for not more than one month,
with an additional one-half of one percent for each additional month or fraction
of the month, during which the failure continues, not exceeding twenty-five
percent in the aggregate.
(b) In case of failure to pay any amount in respect of any tax required to
be shown on a return which is not so shown (including an assessment) within ten
days of the date of the notice and demand for payment, there must be added to the
amount of tax stated in the notice and demand one-half of one percent of the
amount of the tax if the failure is for not more than one month, with an
additional one-half of one percent for each additional month or fraction of a
month during which the failure continues, not exceeding twenty-five percent in
the aggregate.
(c)(1) If any part of an underpayment is due to negligence or disregard of
regulations, there must be added to the tax an amount equal to the sum of five
percent of the underpayment and an amount equal to fifty percent of the interest
payable under Section 12-54-20.
(2) There must not be taken into account under this subsection any
portion of an underpayment attributable to fraud with respect to which a penalty
is imposed under subsection (d).
(3) For purposes of this subsection, 'negligence' includes any failure
to make a reasonable attempt to comply with the provisions of this title, and
'disregard' includes any careless, reckless, or intentional disregard.
(d)(1) If any part of any underpayment of tax required to be shown on a
return is due to fraud, there is added to the tax an amount equal to the sum of
seventy-five percent of the portion of the underpayment which is attributable to
fraud and an amount equal to fifty percent of the interest payable under Section
12-54-20 with respect to that portion for the period beginning on the last day
prescribed by law for payment of the underpayment (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.
(2) If the commission establishes that any portion of an underpayment is
attributable to fraud, the entire underpayment must be treated as attributable
to fraud, except with respect to any portion of the underpayment which the
taxpayer established is not attributable to fraud.
(3) In case of a joint return, this subsection does not apply with
respect to a spouse unless some part of the underpayment is due to the fraud of
the spouse.
(e) If any penalty is assessed under subsection (d) for an underpayment of
tax which is required to be shown on a return, no penalty (relating to failure
to file such return or pay tax) must be assessed with respect to the portion of
the underpayment which is attributable to fraud.
(3) A person who is liable to obtain a license or purchase stamps for
identification purposes, who fails to obtain or display the license properly, or
who fails to affix the stamps properly, or fails to comply with statutory
provisions, is subject to a penalty of not less than fifty dollars nor more than
five hundred dollars for each failure. For failure to obtain or display a
license as prescribed in Sections 12-21-2720 and 12-21-2730, the penalty is fifty
dollars for each failure to comply."
Understatement of tax
SECTION 4. The 1976 Code is amended by adding:
"Section 12-54-155.
(a) If there is a substantial understatement of tax for any taxable period,
there must be added to the tax an amount equal to twenty-five percent of the
amount of any underpayment attributable to the understatement.
(b)(1)(A) For purposes of this section, there is a substantial understatement
of tax for any taxable period if the amount of the understatement for the taxable
period exceeds the greater of ten percent of the tax required to be shown on the
return for the taxable period or five thousand dollars.
(B) In the case of a corporation other than an S corporation or a personal
holding company (as defined in IRC Section 542), paragraph (1) must be applied
by substituting 'ten thousand dollars' for 'five thousand dollars'.
(2)(A) For purposes of paragraph (1), 'Understatement' means the excess of
the amount of the tax required to be shown on the return for the taxable period
over the amount of the tax imposed which is shown on the return.
(B) The amount of the understatement under subparagraph (A) must be
reduced by that portion of the understatement which is attributable to (i) the
tax treatment of any item by the taxpayer if there is or was substantial
authority for such treatment or (ii) 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.
(C) (i) In case of any item attributable to a tax shelter:
(I) subparagraph (B)(ii) does not apply; and
(II) subparagraph (B)(i) does not apply unless (in addition to meeting
the requirements of the subparagraph) the taxpayer reasonably believed that the
tax treatment of the item by the taxpayer was more likely than not the proper
treatment.
(ii) For purposes of clause (i), 'tax shelter' means:
(I) a partnership or other entity;
(II) and investment plan or arrangement, or
(III) any other plan or arrangement if the principal purpose of the
partnership, entity, plan, or arrangement is the avoidance or evasion of income
tax."
Section repealed
SECTION 5. Section 12-54-150 of the 1976 Code is repealed.
Commission; agreements, exchange of information, other states
SECTION 6. (A) Chapter 54 of Title 12 of the 1976 Code is amended by adding:
"Section 12-54-225. The commission may enter into agreements with other
states of the United States or their authorized representatives for the mutual
exchange of tax returns, information thereon, and related information. The
commission may, if it chooses, designate a third person to act as its agent for
the receipt and exchange of the returns and information, including the
assimilation of the material for proper use. The exchange may be in any form
suitable to the parties, including, but not limited to, cards, tapes, and other
electronic means. The returns and information exchanged may be used for the
exclusive purpose of administering the tax laws of the exchanging jurisdictions,
including any administrative or judicial proceeding that involves the
administration, collection, or recovery of any tax. The agreements may be on
such terms and conditions as the commission and the other states may agree and
designate. However, any such agreement entered into by the commission must
include a provision that the agreement may be canceled upon notice and that any
use of the returns or information except as specifically provided in this section
must immediately terminate the agreement.
(B) This section takes effect upon approval by the Governor."
Time effective
SECTION 7. This act, upon approval by the Governor, is effective for all
assessments issued after January 1, 1989. |