§ 105-236. Penalties; situs of violations; penalty disposition.
§ 105‑236. Penalties;situs of violations; penalty disposition.
(a) Penalties. Thefollowing civil penalties and criminal offenses apply:
(1) Penalty for BadChecks. When the bank upon which any uncertified check tendered to theDepartment of Revenue in payment of any obligation due to the Departmentreturns the check because of insufficient funds or the nonexistence of anaccount of the drawer, the Secretary shall assess a penalty equal to tenpercent (10%) of the check, subject to a minimum of one dollar ($1.00) and amaximum of one thousand dollars ($1,000). This penalty does not apply if theSecretary finds that, when the check was presented for payment, the drawer ofthe check had sufficient funds in an account at a financial institution to paythe check and, by inadvertence, the drawer of the check failed to draw thecheck on the account that had sufficient funds.
(1a) Penalty for BadElectronic Funds Transfer. When an electronic funds transfer cannot becompleted due to insufficient funds or the nonexistence of an account of thetransferor, the Secretary shall assess a penalty equal to ten percent (10%) ofthe amount of the transfer, subject to a minimum of one dollar ($1.00) and amaximum of one thousand dollars ($1,000). This penalty may be waived by theSecretary in accordance with G.S. 105‑237.
(1b) Making Payment inWrong Form. For making a payment of tax in a form other than the formrequired by the Secretary pursuant to G.S. 105‑241(a), the Secretaryshall assess a penalty equal to five percent (5%) of the amount of the tax,subject to a minimum of one dollar ($1.00) and a maximum of one thousanddollars ($1,000). This penalty may be waived by the Secretary in accordancewith G.S. 105‑237.
(2) Failure to Obtain aLicense. For failure to obtain a license before engaging in a business, tradeor profession for which a license is required, the Secretary shall assess apenalty equal to five percent (5%) of the amount prescribed for the license permonth or fraction thereof until paid, not to exceed twenty‑five percent(25%) of the amount so prescribed, but in any event shall not be less than fivedollars ($5.00). In cases in which the taxpayer fails to obtain a license asrequired under G.S. 105‑449.65 or G.S. 105‑449.131, the Secretarymay assess a penalty of one thousand dollars ($1,000).
(3) Failure to FileReturn. 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 shallassess a penalty equal to five percent (5%) of the amount of the tax if thefailure is for not more than one month, with an additional five percent (5%)for each additional month, or fraction thereof, during which the failurecontinues, not exceeding twenty‑five percent (25%) in the aggregate, orfive dollars ($5.00), whichever is the greater.
(4) Failure to Pay TaxWhen Due. In the case of failure to pay any tax when due, without intent toevade the tax, the Secretary shall assess a penalty equal to ten percent (10%)of the tax, subject to a minimum of five dollars ($5.00). This penalty does notapply in any of the following circumstances:
a. When the amount oftax shown as due on an amended return is paid when the return is filed.
b. When the Secretaryproposes an assessment for tax due but not shown on a return and the tax due ispaid within 45 days after the date of the notice of proposed assessment of thetax.
(5) Negligence.
a. Finding ofnegligence. For negligent failure to comply with any of the provisions towhich this Article applies, or rules issued pursuant thereto, without intent todefraud, the Secretary shall assess a penalty equal to ten percent (10%) of thedeficiency due to the negligence.
b. Large individualincome tax deficiency. In the case of individual income tax, if a taxpayerunderstates taxable income, by any means, by an amount equal to twenty‑fivepercent (25%) or more of gross income, the Secretary shall assess a penaltyequal to twenty‑five percent (25%) of the deficiency. For purposes ofthis subdivision, "gross income" means gross income as defined insection 61 of the Code.
c. Other large taxdeficiency. In the case of a tax other than individual income tax, if ataxpayer understates tax liability by twenty‑five percent (25%) or more,the Secretary shall assess a penalty equal to twenty‑five percent (25%)of the deficiency.
d. No double penalty. If a penalty is assessed under subdivision (6) of this section, no additionalpenalty for negligence shall be assessed with respect to the same deficiency.
e. (Effective untilJanuary 1, 2009) Inheritance and gift tax deficiencies. This subdivisiondoes not apply to inheritance, estate, and gift tax deficiencies that are theresult of valuation understatements.
e. (EffectiveJanuary 1, 2009) Estate tax deficiencies. This subdivision does not applyto estate tax deficiencies that are the result of valuation understatements.
(5a) Misuse of ExemptionCertificate. For misuse of an exemption certificate by a purchaser, theSecretary shall assess a penalty equal to two hundred fifty dollars ($250.00).An exemption certificate is a certificate issued by the Secretary thatauthorizes a retailer to sell tangible personal property to the holder of thecertificate and either collect tax at a preferential rate or not collect tax onthe sale. Examples of an exemption certificate include a certificate of resale,a direct pay certificate, and a farmer's certificate.
(5b) Road TaxUnderstatement. If a motor carrier understates its liability for the road taximposed by Article 36B of this Chapter by twenty‑five percent (25%) ormore, the Secretary shall assess the motor carrier a penalty in an amount equalto two times the amount of the deficiency.
(6) Fraud. If there isa deficiency or delinquency in payment of any tax because of fraud with intentto evade the tax, the Secretary shall assess a penalty equal to fifty percent(50%) of the total deficiency.
(7) Attempt to Evade orDefeat Tax. Any person who willfully attempts, or any person who aids orabets any person to attempt in any manner to evade or defeat a tax or itspayment, shall, in addition to other penalties provided by law, be guilty of aClass H felony.
(8) Willful Failure toCollect, Withhold, or Pay Over Tax. Any person required to collect, withhold,account for, and pay over any tax who willfully fails to collect or truthfullyaccount for and pay over the tax shall, in addition to other penalties providedby law, be guilty of a Class 1 misdemeanor. Notwithstanding any other provisionof law, no prosecution for a violation brought under this subdivision shall bebarred before the expiration of six years after the date of the violation.
(9) Willful Failure toFile Return, Supply Information, or Pay Tax. Any person required to pay anytax, to make a return, to keep any records, or to supply any information, whowillfully fails to pay the tax, make the return, keep the records, or supplythe information, at the time or times required by law, or rules issued pursuantthereto, shall, in addition to other penalties provided by law, be guilty of aClass 1 misdemeanor. Notwithstanding any other provision of law, no prosecutionfor a violation brought under this subdivision shall be barred before theexpiration of six years after the date of the violation.
(9a) Aid or Assistance. Anyperson, pursuant to or in connection with the revenue laws, who willfully aids,assists in, procures, counsels, or advises the preparation, presentation, orfiling of a return, affidavit, claim, or any other document that the personknows is fraudulent or false as to any material matter, whether or not thefalsity or fraud is with the knowledge or consent of the person authorized orrequired to present or file the return, affidavit, claim, or other document, isguilty of a felony as follows:
a. If the person whocommits an offense under this subdivision is an income tax return preparer andthe amount of all taxes fraudulently evaded on returns filed in one taxableyear is one hundred thousand dollars ($100,000) or more, the person is guilty ofa Class C felony.
b. If the person whocommits an offense under this subdivision is an income tax return preparer andthe amount of all taxes fraudulently evaded on returns filed in one taxableyear is less than one hundred thousand dollars ($100,000), the person is guiltyof a Class F felony.
c. If the person whocommits an offense under this subdivision is not covered under sub‑subdivisiona. or b. of this subdivision, the person is guilty of a Class H felony.
(10) Failure to FileInformational Returns.
a. Repealed by SessionLaws 1998‑212, s. 29A.14(m), effective January 1, 1999.
b. The Secretary mayrequest a person who fails to file timely statements of payment to anotherperson with respect to wages, dividends, rents, or interest paid to that personto file the statements by a certain date. If the payer fails to file thestatements by that date, the amounts claimed on the payer's income tax returnas deductions for salaries and wages, or rents or interest shall be disallowedto the extent that the payer failed to comply with the Secretary's request withrespect to the statements.
c. For failure to filean informational return required by Article 36C or 36D of this Chapter by thedate the return is due, there shall be assessed a penalty of fifty dollars($50.00).
(10a) Filing a FrivolousReturn. If a taxpayer files a frivolous return under Part 2 of Article 4 ofthis Chapter, the Secretary shall assess a penalty in the amount of up to fivehundred dollars ($500.00). A frivolous return is a return that meets both ofthe following requirements:
a. It fails to providesufficient information to permit a determination that the return is correct orcontains information which positively indicates the return is incorrect, and
b. It evidences anintention to delay, impede or negate the revenue laws of this State or purportsto adopt a position that is lacking in seriousness.
(10b) MisrepresentationConcerning Payment. A person who receives money from a taxpayer with theunderstanding that the money is to be remitted to the Secretary for applicationto the taxpayer's tax liability and who willfully fails to remit the money tothe Secretary is guilty of a Class F felony.
(11) Repealed by SessionLaws 2006‑162, s. 12(b), effective July 24, 2006.
(12) Repealed by SessionLaws 1991, c. 45, s. 27.
(b) Situs. Violationof a tax law is considered an act committed in part at the office of theSecretary in Raleigh. The certificate of the Secretary that a tax has not beenpaid, a return has not been filed, or information has not been supplied, asrequired by law, is prima facie evidence that the tax has not been paid, thereturn has not been filed, or the information has not been supplied.
(c) PenaltyDisposition. Civil penalties assessed by the Secretary are assessed as anadditional tax. The clear proceeds of civil penalties assessed by the Secretarymust be credited to the Civil Penalty and Forfeiture Fund established in G.S.115C‑457.1. (1939,c. 158, s. 907; 1953, c. 1302, s. 7; 1959, c. 1259, s. 8; 1963, c. 1169, s. 6;1967, c. 1110, s. 9; 1973, c. 476, s. 193; c. 1287, s. 13; 1979, c. 156, s. 2;1985, c. 114, s. 11; 1985 (Reg. Sess., 1986), c. 983; 1987 (Reg. Sess., 1988),c. 1076; 1989, c. 557, ss. 7 to 10; 1989 (Reg. Sess., 1990), c. 1005, s. 9;1991, c. 45, s. 27; 1991 (Reg. Sess., 1992), c. 914, s. 2; c. 1007, s. 10;1993, c. 354, s. 22; c. 450, s. 10; c. 539, ss. 709, 710, 1292, 1293; 1994, Ex.Sess., c. 24, s. 14(c); 1995, c. 390, s. 36; 1995 (Reg. Sess., 1996), c. 646,s. 10; c. 647, s. 51; c. 696, s. 1; 1997‑6, s. 8; 1997‑109, s. 3;1998‑178, ss. 1, 2; 1998‑212, s. 29A.14(m); 1999‑415, ss. 2,3; 1999‑438, ss. 15, 16; 2000‑119, s. 2; 2000‑120, s. 7; 2000‑140,s. 70; 2002‑106, ss. 2, 4; 2005‑276, s. 6.37(n); 2005‑435, s.1; 2006‑162, s. 12(b); 2007‑491, s. 26; 2008‑107, s.28.18(b).)