Committee advances bill clarifying bond, reporting and penalty rules for tax filings

A Senate Finance and Taxation committee voted to give a due-pass recommendation to a bill that clarifies several technical tax-administration rules, including bond maintenance for corporate officers, changes to penalties for late informational returns and a short, administrative extension for certain fuel-related reports.

The bill—introduced to the committee in testimony by a department staff member identified only as Charles—would clarify that bonds posted to avoid personal liability for corporate officers must be posted and maintained, confirm that bonds generally equal an estimated one year of taxes, and preserve local control when a county negotiates contract-for-deed terms, testimony said. "The change here is just a clarification that the bond needs to be posted and maintained if you wanna avoid personal liability," Charles said.

Committee members also heard that the bill would raise the statutory penalty for late filing of informational returns such as W-2s and 1099s from $10 to $15 and would remove the existing $2,000 cap on that penalty. "Removing the cap helps us out because some of the companies that are filing with us, they're very large, and if you have a $2,000 cap ... it's cheaper for them to take the extra time and pay the penalty," Charles said. He framed the change as updating a penalty that was last set in the early 1990s and as improving incentives for timely filing so taxpayers receive refunds more quickly.

The bill also would give the tax commissioner authority to grant a short extension—up to 30 days, for good cause—on returns from refiners, suppliers, distributors, importers or exporters of motor fuels, special fuels and aviation fuels, testimony said. Under current practice the department assesses a penalty and later can consider waiving it; the proposed change would let staff waive or delay the due date proactively when a taxpayer raises a short-term problem such as software outage.

Senators asked for operational clarifications during the hearing about how the penalty is assessed when the department lacks complete information and about which officer is liable when multiple corporate officers exist. The department representative said the penalty is assessed per missing report and that in practice the department works with filers to adjust assessments after the missing reports are produced; and that bonds are obtained per corporation to cover the officer responsible for filing.

The committee adopted a motion, seconded by Senator Patton, and recorded a roll-call vote in which Chairman Weber, Vice Chair Romo, Senators Marsala, Patton, Powers and Wallen voted in favor. The committee assigned Senator Wallen to carry the bill forward. The committee record shows no formal opposition testimony at the hearing.

The vote was procedural: the committee recommended a due-pass report; the bill will not reach the floor until after crossover, committee staff said.