An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in sales and use tax, providing for frivolous refund claim.

PRINTER'S NO. 1856
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1552
Session of
2025
INTRODUCED BY SIEGEL, JUNE 6, 2025
REFERRED TO COMMITTEE ON FINANCE, JUNE 9, 2025
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in sales and use tax, providing for frivolous
refund claim.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding a section to
read:
Section 252.1. Frivolous Refund Claim.--(a) If a taxpayer
files a claim for refund of tax paid under this article as
described in subsection (b), the department shall assess and
collect, in addition to other penalties provided by law, a
penalty as follows:
(1) Five per centum of the amount of the refund claim if the
claim is found to be materially incomplete.
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(2) Ten per centum of the amount of the refund claim that is
found to be duplicative or lacking a reasonable basis in law or
in fact.
(b) A claim for refund is subject to the penalty under this
section if:
(1) the claim is incomplete;
(2) the claim includes a purchase for which an earlier claim
for refund has already been filed;
(3) the claim, or any part of it, lacks a reasonable basis
in law or in fact; or
(4) the taxpayer fails to provide the department with proof
the tax for which a refund is claimed was actually paid.
(c) (1) A claim for refund is incomplete if it does not
include the form and substantially all of the pertinent data,
information and documentation required by section 2703 and the
department's regulations.
(2) Prior to assessing a penalty for a claim for refund due
to incompleteness under subsection (b)(1), the department shall
notify the taxpayer or the preparer of the claim that the claim
appears to be incomplete. The notification shall specify the
pertinent data, information and documentation that appears to be
missing and shall state that failure to either correct the
omission or withdraw the claim for refund within sixty days of
the date of the notice, plus any additional time allowed by the
department for reasonable cause shown, will result in the
assessment and collection of the penalty under subsection (b).
Correcting the omission shall require the taxpayer or preparer
of the claim to provide the missing data, information and
documentation and to demonstrate why the claim is not
incomplete.
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(d) If an application for refund is identified at the time
of filing as a protective claim filed in order to preserve the
right to a refund prior to the expiration of the statute of
limitations, the department shall determine if the claim for
refund is subject to the penalty under this section after the
claim for refund is perfected.
(e) The department may waive the penalty imposed by this
section if the person against whom the penalty is assessed:
(1) establishes that a duplicate claim was not intentional
and was either minimal or immaterial; or
(2) demonstrates other good cause for waiver of the penalty.
(f) The penalty imposed by this subsection applies only to
claims totaling five thousand dollars ($5,000) or more.
(g) The department shall assess and collect the penalty
imposed by this section from the taxpayer unless the claim for
refund is prepared, in whole or in part, by a person other than
the taxpayer, in which case the penalty shall be imposed on that
person. The penalty imposed by this section shall be assessed
and collected in the manner provided for in Chapter IV.
Section 2. This act shall take effect immediately.
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