[§231-36.8]  Erroneous claim for refund orcredit.  (a)  If a claim for refund or credit with respect to tax is madefor an excessive amount, the person making the claim shall be liable for apenalty in an amount equal to twenty per cent of the excessive amount; providedthat there shall be no penalty assessed where the penalty calculation underthis section results in an amount of less than $400.

(b)  It shall be a defense to the penalty underthis section that the claim for refund or credit had a reasonable basis.  Aperson claiming the reasonable basis defense shall have the burden of proof todemonstrate the reasonableness of the claim.

(c)  This section shall be construed inaccordance with regulations and judicial interpretations given to section 6676of the Internal Revenue Code.

(d)  For purposes of this section:

"Excessive amount" means the amountby which the amount of the claim for refund or credit for any taxable yearexceeds the amount of the claim allowable for such taxable year.

"Reasonable basis" means a standardof care used in tax reporting that is significantly higher than not frivolousor not patently improper.  A reasonable basis position will be more thanarguable and based on at least one or more authorities of either state or federaltax administration.  A position is considered to have a reasonable basis if areasonable and well-informed analysis by a person knowledgeable in tax lawwould lead that person to conclude that the position has approximately aone-in-four, or greater, likelihood of being sustained on the merits.  Areasonable basis includes innocent mistakes where the excessive amount is theresult of inadvertence, mathematical error, or where otherwise defined asinnocent by the director pursuant to a formal pronouncement issued withoutregard to chapter 91. [L 2009, c 166, §3]

 

Note

 

  Applicability of 2009 amendment.  L 2009, c 166, §27.