What is a non-compliant event? Tier Penalty What is tiered penalty? -- Tiered penalty was implemented in 2002. The purpose was to help apply a more fair and consistent penalty and compromise structure. What taxes qualify? -- Tiered penalty covers only Sales and Use tax and other taxes imposed by Chapter 212 What is a strike? -- We use the term strike to indicate a non-compliant event on the part of the taxpayer. What is a non-compliant event? -- When…Sales and Use tax return or payments are late. -- When…Sales and Use tax payments are not remitted in full -- When…Sales and Use tax return is incomplete -- When…Sales and Use tax return is delinquent -- When…Sales and Use tax liability or delinquency is outstanding and is 31 days old or older.

Tiered penalty structure for filing frequency -- Only applies to Monthly and Quarterly Sales tax filers. -- Monthly filers receive two forgiveness strikes before being sent a bill that requires extraordinary circumstances to compromise -- Quarterly filers receive only one forgiveness strike before being sent a bill that Tiered penalty is on a 12 month basis, not calendar year -- As an account progresses over time and the first non-compliant event “drops off” the tiered penalty history (i.e. is older than 12 months), the second and third non-compliant events now count as two strikes. When is a taxpayer not eligible for an “automatic” compromise -- One or more non-compliant events in the previous 12 months for Quarterly filers -- Two or more non-compliant events in the previous 12 months for Monthly

Informal Conferences/Compromises Definition -- Taxpayers informal appeal to the Department for dispute resolution When should an informal conference be requested -- When there are circumstances and additional evidence to show just cause Voluntary Disclosure -- When a taxpayer voluntarily self-discloses a liability for tax to the department, the department may settle and compromise the liabilities due under voluntary self-disclosure. -- A voluntary self-disclosure does not occur if the department has contacted or informed the taxpayer of any indebtedness

Accrual of Penalties and Interest on deficiencies -- When do penalties and interest start to accrue -- If notice and demand is made for the payment of any amount due and if the amount is paid within 30 days after the date of the billing, no additional penalties or interest on the amount paid shall be imposed. -- Administrative collection Fee -- An administrative collection processing fee shall be imposed to offset payment processing and administrative cost incurred by the state due to late payment of a collection event. -- A collection event means when a taxpayer fails to: Timely file a complete return, timely pay the full amount of tax reported on a return. -- The department shall collect the fee from a taxpayer who fails to pay the full amount of tax, penalties, and interest due within 90 days following initial notification of the collection event. -- The fee is equal to 10 percent of the total amount of tax, penalty and interest which remains unpaid after 90 days, or $10 for each collection event, whichever is greater. This fee shall be imposed in addition to the taxes, fees, penalties, and interest prescribed by law.

Closing Agreements Purpose -- A closing agreement is required to compromise a tax, penalty or interest assessment, if the amount compromised is greater than $30,000. Procedures -- A written closing agreement, signed by the taxpayer and the Department, is used to settle the taxpayer’s liability for tax, interest, and/or penalty for specific periods. The execution of a closing agreement constitutes a written agreement to the liability. It also takes away the taxpayer’s protest and appeal rights on the remaining balance.