Tax legislation expected to be signed into law by President Obama increases certain civil penalties by indexing those penalties to inflation and also raises the threshold by which the IRS must report refund claims to the Joint Committee on Taxation (JCT).

H.R. 5771, which extended previously expired tax provisions to the end of 2014, also raises the threshold for JCT’s mandatory review of C corporation refund claims from $2 million to $5 million under Section 6405. Refunds exceeding $2 million for all other taxpayers remain the same. The change is effective for any refund claim that has not yet been reported by the IRS to JCT as of the date the bill is signed into law.

In addition, the Achieving a Better Life Experience (ABLE) Act, which creates tax-preferred accounts similar to Section 529 plans for certain people with disabilities, also indexes certain fixed-dollar civil penalties to inflation under Section 1(f)(3). Specifically, those penalties, which are effective after Dec. 31, 2014, are:

  • Section 6651, Failure to File Tax Return or to Pay Tax
  • Section 6652, Failure to File Certain Information Returns, Registration Statements, Etc.
  • Section 6695, Other Assessable Penalties with Respect to the Preparation of Tax Returns for Other Persons
  • Section 6698, Failure to File Partnership Return
  • Section 6699, Failure to File S Corporation Return
  • Section 6721, Failure to File Correct Information Returns
  • Section 6722, Failure to Furnish Correct Payee Statements

Read more information about this legislation.