The bill amends the Tax Reform Code of 1971 by introducing a new section, Section 252.1, which establishes penalties for frivolous refund claims filed by taxpayers. Under this new provision, if a taxpayer submits a claim for a tax refund that is found to be materially incomplete, duplicative, or lacking a reasonable basis in law or fact, they will incur a penalty. Specifically, a penalty of five percent will be applied for incomplete claims, while a ten percent penalty will be assessed for claims that are duplicative or lack a reasonable basis. The bill outlines the criteria for what constitutes an incomplete claim and the process for notifying taxpayers of deficiencies in their claims.

Additionally, the bill allows the Department of Revenue to waive penalties under certain circumstances, such as if the taxpayer can demonstrate that a duplicate claim was unintentional or if there is good cause for waiving the penalty. The penalties will only apply to claims totaling $5,000 or more, and the responsibility for the penalty will fall on the taxpayer unless the claim was prepared by someone else, in which case the penalty will be imposed on that individual. The act is set to take effect immediately upon passage.

Statutes/Laws affected:
Printer's No. 1856 (Jun 09, 2025): P.L.6, No.2