Effective March 24, 2009, Alabama is imposing a new failure to timely pay penalty. The new penalty applies to any tax amount that was required to be shown on any tax return, if the tax remains unpaid after 30 calendar days from the date the department notifies the taxpayer of the unpaid amount (Alabama Act 2009-144).
According to the Alabama Department of Revenue (ADOR), the most common situations where the new penalty would be imposed are tax audits or tax return adjustments. The new late payment penalty would apply to a tax liability determined during an audit or following the adjustment of a taxpayer's return, if the tax remains unpaid for over 30 days after the taxpayer receives notice that the tax is due.
Application to Annual Returns
For annual returns with unpaid tax amounts, the new late payment penalty is calculated at one percent of the amount of tax due per month, or fraction of a month, that the tax remains unpaid. The failure to pay penalty cannot exceed 25 percent of the total amount of tax determined to be due.
Application to Monthly or Quarterly Returns
In the case of monthly or quarterly returns with unpaid tax amounts, the new law provides that the failure to timely pay penalty will be 10 percent of any tax not paid after 30 days from the date the ADOR notifies the taxpayer of the liability.
For more information about Alabama's tax penalties, go to http://www.revenue.alabama.gov/.
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