HB277 Alabama 2013 Session

Summary

Primary Sponsor

Napoleon BracyRepresentative

Democrat

Co-Sponsor

James E. Buskey

Session

Regular Session 2013

Title

Income tax, reportable transactions, taxpayer responsibility for disclosure, waivers, injunctive relief, penalties, Secs. 40-29-121 to 40-29-130, inclusive, added

Summary

HB277 would require Alabama taxpayers to report and disclose certain reportable tax avoidance transactions, define related terms, impose penalties for nondisclosure or understatement, extend the tax assessment window, and empower enforcement through penalties and injunctions.

What This Bill Does

It creates a new Article 7 in Title 40 Chapter 29 to establish a disclosure framework for reportable tax avoidance transactions and defines key terms such as disqualified opinion, material advisor, listed transaction, non-economic substance transaction, and tax shelter. Taxpayers must disclose these transactions on state income tax returns and attach required disclosures; material advisors must file reports and maintain lists of advisees. The bill imposes penalties for failure to disclose or maintain lists, for understatements arising from these transactions, and for promoting tax shelters; it also extends the statute of limitations for assessments related to these transactions and allows civil injunctions to stop related conduct. It sets up enforcement mechanisms, waivers in certain cases, and an effective date tied to governor action.

Who It Affects

• Taxpayers who participate in reportable tax avoidance transactions and file Alabama state income tax returns; they would need to disclose such transactions and could face penalties for nondisclosure or understatement.
• Material advisors and entities involved in organizing, promoting, or advising on reportable tax avoidance transactions or shelters; they would have reporting, disclosure, and recordkeeping duties and face penalties if they fail to comply.

Key Provisions

• Defines terms including Disqualified Opinion, Disqualified Tax Advisor, Listed Transaction, Material Advisor, Non-Economic Substance Transaction, Reportable Tax Avoidance Transaction, and Tax Shelter.
• Requires disclosure of each reportable tax avoidance transaction for the tax year on state returns, with copies filed to the department and attachments for certain years.
• Imposes penalties for failure to disclose, failure to maintain advisee lists, and for understatements caused by these transactions, including base penalties (e.g., 10,000/50,000 and 100,000/200,000 for listed transactions) and up to 10% of the tax benefit, with higher percentages under certain conditions.
• Extends the assessment period for taxes related to these transactions, potentially until two years after certain triggering dates, to allow for additional review.
• Requires material advisors to file returns, disclose transaction details, and maintain lists of state taxpayers and consolidated return members; allows waivers in some cases and requires records to be kept for seven years.
• Authorizes civil injunctions in the Circuit Court of Montgomery County to stop specified conduct related to reportable tax avoidance transactions and shelters.
• Provides for regulations, exemptions, and non-reviewability of certain commissioner decisions; includes confidentiality waivers for communications related to shelters.
• Effective date: becomes law upon the governor’s signature or as otherwise provided, with the article taking effect after the governor signs and the act becoming law.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation