§ 76 — Additions to tax and civil penalties

§ 76. Additions to tax and civil penalties. 1. Failure to file\nreturn.--In case of failure to file a return under the named parts on or\nbefore the prescribed date (determined with regard to any extension of\ntime for filing), unless it is shown that such failure is due to\nreasonable cause and not due to willful neglect, there shall be added to\nthe amount required to be shown as tax on such return five percentum of\nthe amount of such tax if the failure is for not more than one month,\nwith an additional five percentum for each additional month or fraction\nthereof during which such failure continues, not exceeding twenty-five\npercentum in the aggregate. For this purpose, the amount of tax required\nto be shown on the return shall be reduced by the amount of any part of\nthe tax which is paid on or before the date prescribed for payment of\nthe tax and by the amount of any credit against the tax which may be\nclaimed upon the return.\n 2. Deficiency due to negligence.--If any part of a deficiency is due\nto negligence or intentional disregard of this part or any of the named\nparts or rules or regulations thereunder (but without intent to\ndefraud), there shall be added to the tax an amount equal to five\npercentum of the deficiency.\n 3. Failure to file declaration or underpayment of estimated tax.--If\nany taxpayer fails to file a declaration of estimated tax under part two\nor part three, or fails to pay all or any part of an amount which is\napplied as an installment against such estimated tax, it shall be deemed\nto have made an underpayment of estimated tax. There shall be added to\nthe tax for the taxable year an amount at the rate set by the\ncommissioner of finance pursuant to section eighty-seven, or, if no rate\nset, at the rate of six percentum per annum upon the amount of the\nunderpayment for the period of the underpayment but not beyond the\nfifteenth day of the third month following the close of the taxable\nyear. The amount of the underpayment shall be, with respect to any\ninstallment of estimated tax computed on the basis of the preceding\nyear's tax, the excess of the amount required to be paid over the\namount, if any, paid on or before the last day prescribed for such\npayment or, with respect to any other installment of estimated tax, the\nexcess of the amount of the installment which would be required to be\npaid if the estimated tax were equal to ninety percentum of the tax\nshown on the return for the taxable year (or if no return was filed,\nninety per centum of the tax for such year) over the amount, if any, of\nthe installment paid on or before the last day prescribed for such\npayment. In any case in which there would be no underpayment if "eighty\nper centum" were substituted for "ninety per centum" each place it\nappears in this subdivision, the addition to the tax shall be equal to\nseventy-five per centum of the amount otherwise determined. No\nunderpayment shall be deemed to exist with respect to a declaration or\ninstallment otherwise due on or after the termination of existence of\nthe taxpayer.\n 4. Exception to addition for underpayment of estimated tax.--The\naddition to tax under subdivision three with respect to any underpayment\nof any amount which is applied as an installment against estimated tax\nunder part two or part three of this title shall not be imposed if the\ntotal amount of all payments of estimated tax made on or before the last\ndate prescribed for the payment of any such amount equals or exceeds the\namount which would have been required to be paid on or before such date\nif the estimated tax were whichever of the following is the least--\n (a) The tax shown on the return of the taxpayer for the preceding\ntaxable year, if a return showing a liability for tax was filed by the\ntaxpayer for the preceding taxable year and such preceding year was a\ntaxable year of twelve months, or\n (b) An amount equal to the tax computed at the rates applicable to the\ntaxable year, but otherwise on the basis of the facts shown on the\nreturn of the taxpayer for, and the law applicable to, the preceding\ntaxable year, or\n (c) (i) An amount equal to ninety percentum of the tax for the taxable\nyear computed by placing on an annualized basis the taxable income--\n (1) for the first three months or the first five months of the taxable\nyear, in the case of the installment required to be paid in the sixth\nmonth,\n (2) for the first six months, the first eight months or the first nine\nmonths of the taxable year, in the case of the installment required to\nbe paid in the tenth month, and\n (3) for the first nine months, the first eleven months or the full\ntwelve months of the taxable year, in the case of the installment\nrequired to be paid in the first month of the next succeeding year.\n (ii) For purposes of subparagraph (i), the taxable income shall be\nplaced on an annualized basis by--\n (1) multiplying it by twelve (or, in the case of a taxable year of\nless than twelve months, the number of months in the taxable year), and\n (2) dividing the resulting amount by the number of months in the\ntaxable year (three, five, six, eight, nine, eleven or twelve, as the\ncase may be) referred to in subparagraph (i), or\n (d) (i) If the base period percentage for any six consecutive months\nof the taxable year equals or exceeds seventy percent, an amount equal\nto ninety percent of the tax determined in the following manner--\n (A) take the taxable income for all months during the taxable year\npreceding the filing month,\n (B) divide such amount by the base period percentage for all months\nduring the taxable year preceding the filing month,\n (C) determine the tax on the amount determined under clause (B), and\n (D) multiply the tax determined under clause (C) by the base period\npercentage for the filing month and all months during the taxable year\npreceding the filing month.\n (ii) For purposes of subparagraph (i)--\n (A) the base period percentage for any period of months shall be the\naverage percent which the taxable income for the corresponding months in\neach of the three preceding taxable years bears to the taxable income\nfor the three preceding taxable years. The commissioner of finance may\nby regulations provide for the determination of the base period\npercentage in the case of reorganizations, new corporations, and other\nsimilar circumstances, and\n (B) the term "filing month" means the month in which the installment\nis required to be paid.\n 5. Allocation of net income.--(a) Except as provided in paragraph (b)\nhereof, paragraphs (a) and (b) of subdivision four of this section shall\nnot apply in the case of any corporation (or any predecessor\ncorporation) which had entire net income, or the portion thereof\nallocated within the city, of one million dollars or more for any\ntaxable year during the three taxable years immediately preceding the\ntaxable year involved.\n (b) The amount treated as the estimated tax under paragraphs (a) and\n(b) of subdivision four of this section shall in no event be less than\nseventy-five percent of the tax shown on the return for the taxable year\nbeginning in nineteen hundred eighty-three or, if no return was filed,\nseventy-five percent of the tax for such year.\n 6. Deficiency due to fraud.--If any part of a deficiency is due to\nfraud, there shall be added to the tax an amount equal to fifty\npercentum of the deficiency. This amount shall be in lieu of any other\naddition to tax imposed by subdivision one or two.\n 7. Additional penalty.--Any person who with fraudulent intent shall\nfail to pay under the named parts any tax, or to make, render, sign or\ncertify any return or declaration of estimated tax, or to supply any\ninformation within the time required by or under any of the named parts,\nshall be liable to penalty of not more than one thousand dollars, in\naddition to any other amounts required under this part to be imposed,\nassessed and collected by the director of finance. The director of\nfinance shall have the power, in his discretion, to waive, reduce or\ncompromise any penalty under this subdivision.\n 8. Additions treated as tax.--The additions to tax and penalties\nprovided by this section shall be paid upon notice and demand and shall\nbe assessed, collected and paid in the same manner as taxes, and any\nreference in this part to tax imposed by any of the named parts shall be\ndeemed also to refer to the additions to tax and penalties provided by\nthis section. For purposes of section seventy-two, this subdivision\nshall not apply to--\n (a) any addition to tax under subdivision one except as to that\nportion attributable to a deficiency;\n (b) any addition to tax under subdivision three; and\n (c) any additional penalty under subdivision seven.\n 9. Determination of deficiency.--For purposes of subdivisions two and\nsix the amount shown as the tax by the taxpayer upon its return shall be\ntaken into account in determining the amount of the deficiency only if\nsuch return was filed on or before the last day prescribed for the\nfiling of such return, determined with regard to any extension of time\nfor such filing.\n 10. Person defined.--For purposes of subdivision seven, the term\n"person" includes an individual, corporation or partnership or an\nofficer or employee of any corporation (including a dissolved\ncorporation), or a member or employee of any partnership, who as such\nofficer, employee, or member is under a duty to perform the act in\nrespect of which the violation occurs.\n 11. Substantial understatement of liability.--If there is a\nsubstantial understatement of tax for any taxable year, there shall be\nadded to the tax an amount equal to ten percent of the amount of any\nunderpayment attributable to such understatement. For purposes of this\nsubdivision, there is a substantial understatement of tax for any\ntaxable year if the amount of the understatement for the taxable year\nexceeds the greater of ten percent of the tax required to be shown on\nthe return for the taxable year, or ten thousand dollars except that for\nan electing small business corporation as defined in section thirteen\nhundred sixty-one of the internal revenue code a substantial\nunderstatement exists if the amount of the understatement exceeds ten\npercent of the tax or five thousand dollars. For purposes of the\npreceding sentence, the term "understatement" means the excess of the\namount of the tax required to be shown on the return for the taxable\nyear, over the amount of the tax imposed which is shown on the return.\nThe amount of the understatement under the preceding sentence shall be\nreduced by that portion of the understatement which is attributable to\nthe tax treatment of any item by the taxpayer if there is or was\nsubstantial authority for such treatment, or any item with respect to\nwhich the relevant facts affecting the item's tax treatment are\nadequately disclosed in the return or in a statement attached to the\nreturn. The commissioner of finance may waive all or any part of the\naddition to tax provided by this subdivision on a showing by the\ntaxpayer that there was reasonable cause for the understatement (or part\nthereof) and that the taxpayer acted in good faith.\n