Congress Passes Trade Enforcement Bill That Would Increase Penalty for Failure to File Return

On February 11, the Senate, by a vote of 75 to 20, passed H.R. 644, the “Trade Facilitation and Trade Enforcement Act of 2015.” In addition to authorizing U.S. Customs and Border Protection and making permanent the Internet Tax Freedom Act banning taxes on internet access, the bill contains a number of tax provisions, including stiffer penalties for failure to file returns. Under current law, unless due to reasonable cause and not willful neglect, the minimum penalty for failure to file certain types of tax returns (including income, estate, and gift tax returns) within 60 days of the due date (including extensions) is equal to the lesser of $135 (for 2015 and 2016) or 100% of the amount of tax required to be shown on the return. H.R. 644 would raise the minimum penalty to $205 or 100% of the amount of tax required to be shown on the return, effective for returns required to be filed in calendar years after 2015.

The bill, which was previously passed by the House on December 11, will now go to the President for his signature.

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