Tennessee § 67-1-804 - Delinquency — Negligence — Fraud — Dishonor of check — Exceptions.

§ 67-1-804. Delinquency — Negligence — Fraud — Dishonor of check — Exceptions.

When any person fails to timely make any return or report or fails to timely pay any taxes shown to be due on the return or report, there shall be imposed against that person a penalty in the amount of five percent (5%) of the unpaid tax amount for each thirty (30) days or fraction thereof that the tax remains unpaid subsequent to the delinquency date, up to a maximum of twenty-five percent (25%) of the unpaid amount. Where a return or report is delinquent, the minimum penalty shall be fifteen dollars ($15.00), regardless of the amount of tax due or whether there is any tax due. A return, report, or payment shall be considered untimely if not made on or before the delinquency date under the applicable statutes, including any extensions of time granted. In the case of an untimely return, report, or payment, the penalty shall be calculated as of the original delinquency date, without reference to any extensions granted. In the case of quarterly tax payments made pursuant to § 67-4-308, the penalty shall be calculated as provided by that section. In the case of quarterly estimated tax payments made pursuant to § 67-4-2015, the penalty shall be calculated as provided by that section. In the case of an extension of time granted under § 67-4-2015, the penalty shall be calculated as provided by that section. When any person fails to report and pay the total amount of taxes determined to be due by the commissioner, if such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty in the amount of ten percent (10%) of the underpayment. When any person, upon the initial filing of the person’s franchise and excise tax return, fails to comply with the requirements described in § 67-4-2006(d) or (e) and such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty equal to the greater of ten thousand dollars ($10,000) or fifty percent (50%) of any adjustment to the initially filed return made under § 67-4-2006(b)(1)(K) or (e). The commissioner is authorized to waive the penalty, in whole or in part, for good and reasonable cause under § 67-1-803. Any penalty imposed under this subdivision (b)(2) shall be disregarded for purposes of determining the taxpayer’s filing record under subdivision (d)(3). When any person fails to pay the tax required by § 67-4-2007(f), if such failure is determined by the commissioner to be due to negligence, there shall be imposed a penalty in the amount of fifty percent (50%) of the underpayment. For the purpose of this section, “negligence” includes, but is not limited to, any failure to make a reasonable attempt to comply with any law relating to any tax collected or administered by the commissioner. A determination by the commissioner that a taxpayer has been negligent shall be deemed presumptively correct. Such determination may be rebutted only if the taxpayer makes a showing of due care. For purposes of this subdivision (b)(5), “due care” means that care that an ordinarily prudent business person would have exercised under the circumstances. This penalty is in addition to all other penalties provided by law, except as provided in subsection (c). When any person fails to report and pay the total amount of taxes determined to be due by the commissioner, if such failure is determined by the commissioner to be due to fraud, there shall be imposed against the taxpayer a penalty in the amount of one hundred percent (100%) of the underpayment. For the purpose of this subsection (c), “fraud” includes any deceitful practice or willful device resorted to with intent to evade the tax. A failure to pay the tax by one who charges or passes on the tax to others constitutes a presumption of fraud. Such presumption may be rebutted only if the taxpayer makes an affirmative showing of intent to pay the tax and comply with all other requirements of the taxing statute. Imposition of this penalty shall be in lieu of all other penalties imposed by the commissioner, except those provided in subsection (d) and part 14 of this chapter. If any check, money order, or electronic funds transfer in payment of any amount receivable under any law administered by the commissioner is dishonored, there shall be imposed a penalty upon the taxpayer in an amount equal to one percent (1%) of the amount of such check, money order, or electronic funds transfer; provided, that the penalty imposed shall be in an amount equal to ten percent (10%) of the amount of such check, money order, or electronic funds transfer for each dishonored check, money order, or electronic funds transfer in excess of two (2) issued by any one (1) person within one (1) calendar year. The minimum amount of the penalty imposed under this subdivision (d)(1) shall be fifteen dollars ($15.00). This subdivision (d)(1) does not apply if the person tendered such check, money order, or electronic funds transfer in good faith and with reasonable cause to believe that it would be duly paid. This penalty shall be in addition to all other penalties provided by law. For all purposes, the penalties imposed by any law administered by the commissioner shall be considered a part of the tax imposed. In no event shall judicial review of the commissioner's imposition of any penalty be other than as provided in part 18 of this chapter. This section shall apply to all taxes administered or collected by the commissioner, except that subsection (a) shall not apply to the tax imposed in § 67-4-409(b). Notwithstanding the provisions of this section, the penalty added to delinquent highway user fuel tax due shall be computed in accordance with § 67-3-1208. Subdivision (a)(1) shall not apply to litigation taxes to be collected by the clerk of the appellate courts. Acts 1988, ch. 526, § 4; 1993, ch. 142, § 16; 2002, ch. 559, § 4; 2004, ch. 786, § 4; 2009, ch. 530, § 31; 2010, ch. 1134, § 21; 2012, ch. 842, § 5; 2014, ch. 764, § 1. Compiler’s Notes. Acts 2009, ch. 530, § 133 provided that § 31 of the act, which rewrote subdivision (b)(2), shall apply to any tax period beginning on or after January 1, 2009. Acts 2012, ch. 842, § 9 provided that the act, which amended subdivision (b)(2), shall apply to all tax years ending on or after July 1, 2012. Amendments. The 2014 amendment substituted “check, money order, or electronic funds transfer” for “check or money order” in the first sentence of (d)(1) and substituted “check, money order, or electronic funds transfer” for “check” four times in (d)(1). Effective Dates. Acts 2014, ch. 764, § 4. April 24, 2014. Law Reviews. Statutory Tax Penalties and Equitable Relief: The Common Law Breaks Down, 22 Mem. St. U.L. Rev. 755 (1992). Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999). Attorney General Opinions. The penalty provisions of T.C.A. § 67-1-804 (b) and (c) do not apply to the collection of litigation taxes because T.C.A. § 67-1-804 applies only to taxpayers who fail to both report and pay taxes due; however, the penalty provisions of T.C.A. § 67-1-804(a) and (d) do apply to the collection of litigation taxes, OAG 01-154 (10/1/01).