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Senate moves to reduce disproportionate tax penalties; bill passed to third-reading calendar
Summary
Senate Bill 33 would lower excessive tax penalties (replacing flat $50 or 10% charges with a 2% per month penalty up to 10%), a change advocates said would fix inequities produced by the prior tax code. The Senate approved moving the bill to third reading after debate about fiscal notes.
Senate Bill 33, aimed at reducing inequitable tax penalties for late filings and aligning some penalty rules with federal practice, cleared procedural steps on the Senate floor and was placed on the third-reading calendar.
Sponsor Senator Barton said the existing law (a flat $50 or 10% penalty, whichever is greater) produced unfair outcomes for small filers or inadvertent late filers. The substitute would replace that rule with a 2% per month penalty up to a 10% maximum, and would adjust extension-payment requirements from 80% to 90% (with a lower penalty rate for proper extensions), bringing certain elements into closer conformity with federal rules.
Senators acknowledged a large fiscal-note projection provided by the tax commission (in the millions) and debated whether delaying implementation by a year could mitigate budget impacts. Senator Peterson and others urged relief for low-income or inadvertent filers; proponents argued the change addresses an inequity and preserves penalties for intentional evasion.
After discussion and questions about the fiscal-note assumptions, the Senate voted to read SB33 for third time; the roll-call result on the procedural vote showed 23 ayes, 1 nay, 5 absent. Sponsors and several senators said they would continue examining the fiscal note and could consider implementation timing as budget figures become clearer.
