HB467 Alabama 2015 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Session

Regular Session 2015

Title

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

Summary

The bill creates a new Article 7 to require disclosure of reportable tax avoidance transactions, imposes penalties for noncompliance, and enables enforcement and penalties for tax shelters and related advice in Alabama.

What This Bill Does

It adds new definitions and rules for reportable tax avoidance transactions, including the roles of taxpayers and material advisors. It requires disclosure of such transactions to the Alabama Department of Revenue, with attachments to state tax returns in many cases, and mandates maintenance of advisor lists. The bill establishes penalties for failure to disclose, understatements, and failures by advisors, extends the statute of limitations for assessments related to these transactions, and allows civil injunctive relief to prevent ongoing improper conduct.

Who It Affects

• Taxpayers who participate in reportable tax avoidance transactions (including listed transactions) would be required to disclose the transactions, face penalties for non-disclosure or understatements, and potentially have extended periods to assess taxes related to those transactions.
• Material advisors and others involved in organizing, promoting, or advising on such transactions, who must file disclosures, maintain advisor lists, and could face substantial penalties, plus potential injunctions, for noncompliance or assisting in listed transactions.

Key Provisions

• Creates Article 7 (Sections 40-29-121 to 40-29-130) to regulate reportable tax avoidance transactions.
• Defines terms: disqualified opinion; disqualified tax advisor; listed transaction; material advisor; non-economic substance transaction; and reportable tax avoidance transaction.
• Requires disclosures of reportable tax avoidance transactions to the department and attachment of disclosures to state tax returns for transactions entered after 2014.
• Imposes penalties for failure to disclose and for understatements, with specific amounts: $10,000 (natural person) or $50,000 (other) for non-disclosure; up to 10% of tax benefit; higher penalties for listed transactions ($100,000 natural person; $200,000 other) plus up to 10% of tax benefit.
• Extends the statute of limitations for assessments related to these transactions, with conditions and extensions described, including for posted information or amendments.
• Requires material advisors to file returns/disclosures and to maintain lists of state taxpayers and consolidated return participants; penalties for failure to file or maintain lists are substantial, including base penalties and potential percentages of gross income related to the advisory work.
• Provides for civil injunctive relief to stop specified conduct in Montgomery County, Alabama, when necessary to prevent recurrence.
• Authorizes waivers or abatements of penalties in certain circumstances and limits on judicial review of such determinations.
• Establishes effective date provisions and trigger dates for when the article becomes law and when it applies.

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