CHAPTER 101

FORMERLY

HOUSE BILL NO. 263

AN ACT TO AMEND CHAPTERS 3 AND 11 OF TITLE 30 OF THE DELAWARE CODE RELATING TO CERTAIN ASSESSMENTS OCCASIONED BY TAXPAYER POSITIONS OR STATEMENTS THAT ARE FRIVOLOUS OR WITHOUT REASONABLE BASIS OR ARISE OUT OF A DESIRE TO DELAY OR IMPEDE THE ADMINISTRATION OF TAX LAWS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each House thereof concurring therein):

Section 1. Amend Chapter 3, Title 30 of the Delaware Code by adding thereto a new §332 to read as follows:

"Whenever it appears to the Tax Appeal Board that proceedings before it have been instituted or maintained by a taxpayer primarily for delay or that the taxpayer's position in such proceedings is frivolous or without reasonable basis, damages in an amount not in excess of $5,000 shall be awarded to the State of Delaware by the Board as part of the Board's decision. Damages so awarded shall be paid upon notice and demand from the Secretary of Finance and shall be collected as part of tax."

Section 2. Amend §1194, Chapter 11, Title 30 of the Delaware Code by adding thereto a new subsection (g) to read as follows:

"(g)(1) The Secretary of Finance shall assess a penalty of $500 against any

individual who files what purports to be a return of the tax imposed by this Chapter but which:

(A) does not contain information upon which the substantial correctness of the self-assessment may be judged or contains information that on its face indicates that the self-assessment is substantially incorrect; and

(B) evidences a position that is frivolous or a desire to delay or impede the administration of the State income tax laws."

Section 3. Amend §1195, Chapter 11, Title 30 of the Delaware Code by redesignating subsections (h), (i), and (j) respectively as subsections (i), (j), and (k) of said Section and by adding thereto a new subsection (h) to read as follows:

"(h)(1) In addition to any criminal penalty provided by law, the Secretary shall assess a penalty of $500 whenever:

(A) any individual makes a statement under §1151 of this Title which results in a decrease in the amounts deducted and withheld under Subchapter VII of this Chapter, and as of the time such statement was made, there was no reasonable basis for such statement.

(2) The Secretary of Finance may waive in whole or to part the penalty imposed under paragraph (1) of this Section if the taxes imposed with respect to the individual under this Chapter for the taxable year are equal to or less than the sum of:

(A) the credits against such taxes allowed by this Chapter, and

(B) the payments of estimated tax on account of such taxes."

Approved July 8, 1987.