Summary:

 House Bill 198 (HB 198) proposes to amend multiple provisions of the Tax Administration Act to modify installment payment agreements, interest calculations on deficiencies and overpayments, and penalties for noncompliance. The bill increases the threshold for public disclosure of installment agreements, raises penalties for failure to pay taxes or file returns, and enhances enforcement measures against tax fraud. HB 198 takes effect on July 1, 2025, with additional provisions effective on January 1, 2026, if passed. 

Legislation Overview:

 House Bill 198 (HB 198) modifies various aspects of tax administration under the Tax Administration Act. The bill increases the threshold for public disclosure of installment agreements from $1,000 to $10,000. It also revises the interest rate applied to tax deficiencies and overpayments, raising the minimum amount of interest the Taxation and Revenue Department (TRD) must pay on overpaid taxes from $1 to $10.

The bill increases penalties for tax noncompliance, including failure to pay taxes, failure to file a return, interfering with tax administration, assaulting TRD employees, and unauthorized disclosure of taxpayer return information. Specific penalty increases include raising the minimum penalty for failure to file a tax return from $5 to $15 and increasing the fine for tax fraud convictions to a maximum of $50,000. HB 198 also introduces heightened enforcement mechanisms for addressing tax evasion through fraudulent returns and the use of sales suppression software.

Implications
HB 198 is expected to increase state revenue by raising penalties for noncompliance and improving tax enforcement. The increased penalties may deter fraudulent tax practices and improve compliance. However, taxpayers with outstanding obligations may experience greater financial burdens due to higher penalties and interest rates. Administrative costs for enforcing these new provisions are expected to be minimal, as they primarily involve modifying existing enforcement mechanisms. 

Current Law:

 Current law allows installment agreements to remain confidential for amounts under $1,000. The interest threshold for overpayments is $1, and penalties for tax-related violations are lower than those proposed in HB 198. The bill updates these provisions to align with contemporary enforcement standards and aims to strengthen tax compliance.