AB 226

Under this bill, interest on the amount of a taxpayer's unpaid income or sales

taxes does not accrue during the period when the taxpayer is subject to an audit by

the Department of Revenue (DOR). In addition, DOR's audit of a person that has

annual adjusted gross income of less than $5,000,000 may not last longer than 240

days unless DOR and the person enter into a written agreement to extend the time

for conducting the audit. Finally, if such a person is being audited for the first time,

DOR may not assess any interest or penalties on amounts owed by the person unless

the person commits fraud or willfully attempts to evade paying the taxes owed.

Under current law, a taxpayer must pay interest on any amount owed to DOR

that is past due, but not delinquent, at the rate of 12 percent per year. Under the bill,

DOR must reduce the interest rate on such amounts by 0.5 percent each year until

the rate equals 1 percent plus the prime rate, as reported by the Federal Reserve

Board.