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 five percent penalty 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 mandates that the Department of Revenue notify taxpayers of any deficiencies before imposing penalties.

Additionally, the bill allows for the possibility of waiving penalties if the taxpayer can demonstrate that a duplicate claim was unintentional or if they present other valid reasons for waiver. 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