§ 76. Additions to tax and civil penalties. 1. Failure to file
return.--In case of failure to file a return under the named parts on or
before the prescribed date (determined with regard to any extension of
time for filing), unless it is shown that such failure is due to
reasonable cause and not due to willful neglect, there shall be added to
the amount required to be shown as tax on such return five percentum of
the amount of such tax if the failure is for not more than one month,
with an additional five percentum for each additional month or fraction
thereof during which such failure continues, not exceeding twenty-five
percentum in the aggregate. For this purpose, the amount of tax required
to be shown on the return shall be reduced by the amount of any part of
the tax which is paid on or before the date prescribed for payment of
the tax and by the amount of any credit against the tax which may be
claimed upon the return.

2. Deficiency due to negligence.--If any part of a deficiency is due
to negligence or intentional disregard of this part or any of the named
parts or rules or regulations thereunder (but without intent to
defraud), there shall be added to the tax an amount equal to five
percentum of the deficiency.

3. Failure to file declaration or underpayment of estimated tax.--If
any taxpayer fails to file a declaration of estimated tax under part two
or part three, or fails to pay all or any part of an amount which is
applied as an installment against such estimated tax, it shall be deemed
to have made an underpayment of estimated tax. There shall be added to
the tax for the taxable year an amount at the rate set by the
commissioner of finance pursuant to section eighty-seven, or, if no rate
set, at the rate of six percentum per annum upon the amount of the
underpayment for the period of the underpayment but not beyond the
fifteenth day of the third month following the close of the taxable
year. The amount of the underpayment shall be, with respect to any
installment of estimated tax computed on the basis of the preceding
year's tax, the excess of the amount required to be paid over the
amount, if any, paid on or before the last day prescribed for such
payment or, with respect to any other installment of estimated tax, the
excess of the amount of the installment which would be required to be
paid if the estimated tax were equal to ninety percentum of the tax
shown on the return for the taxable year (or if no return was filed,
ninety per centum of the tax for such year) over the amount, if any, of
the installment paid on or before the last day prescribed for such
payment. In any case in which there would be no underpayment if "eighty
per centum" were substituted for "ninety per centum" each place it
appears in this subdivision, the addition to the tax shall be equal to
seventy-five per centum of the amount otherwise determined. No
underpayment shall be deemed to exist with respect to a declaration or
installment otherwise due on or after the termination of existence of
the taxpayer.

4. Exception to addition for underpayment of estimated tax.--The
addition to tax under subdivision three with respect to any underpayment
of any amount which is applied as an installment against estimated tax
under part two or part three of this title shall not be imposed if the
total amount of all payments of estimated tax made on or before the last
date prescribed for the payment of any such amount equals or exceeds the
amount which would have been required to be paid on or before such date
if the estimated tax were whichever of the following is the least--

(a) The tax shown on the return of the taxpayer for the preceding
taxable year, if a return showing a liability for tax was filed by the
taxpayer for the preceding taxable year and such preceding year was a
taxable year of twelve months, or

(b) An amount equal to the tax computed at the rates applicable to the
taxable year, but otherwise on the basis of the facts shown on the
return of the taxpayer for, and the law applicable to, the preceding
taxable year, or

(c) (i) An amount equal to ninety percentum of the tax for the taxable
year computed by placing on an annualized basis the taxable income--

(1) for the first three months or the first five months of the taxable
year, in the case of the installment required to be paid in the sixth
month,

(2) for the first six months, the first eight months or the first nine
months of the taxable year, in the case of the installment required to
be paid in the tenth month, and

(3) for the first nine months, the first eleven months or the full
twelve months of the taxable year, in the case of the installment
required to be paid in the first month of the next succeeding year.

(ii) For purposes of subparagraph (i), the taxable income shall be
placed on an annualized basis by--

(1) multiplying it by twelve (or, in the case of a taxable year of
less than twelve months, the number of months in the taxable year), and

(2) dividing the resulting amount by the number of months in the
taxable year (three, five, six, eight, nine, eleven or twelve, as the
case may be) referred to in subparagraph (i), or

(d) (i) If the base period percentage for any six consecutive months
of the taxable year equals or exceeds seventy percent, an amount equal
to ninety percent of the tax determined in the following manner--

(A) take the taxable income for all months during the taxable year
preceding the filing month,

(B) divide such amount by the base period percentage for all months
during the taxable year preceding the filing month,

(C) determine the tax on the amount determined under clause (B), and

(D) multiply the tax determined under clause (C) by the base period
percentage for the filing month and all months during the taxable year
preceding the filing month.

(ii) For purposes of subparagraph (i)--

(A) the base period percentage for any period of months shall be the
average percent which the taxable income for the corresponding months in
each of the three preceding taxable years bears to the taxable income
for the three preceding taxable years. The commissioner of finance may
by regulations provide for the determination of the base period
percentage in the case of reorganizations, new corporations, and other
similar circumstances, and

(B) the term "filing month" means the month in which the installment
is required to be paid.

5. Allocation of net income.--(a) Except as provided in paragraph (b)
hereof, paragraphs (a) and (b) of subdivision four of this section shall
not apply in the case of any corporation (or any predecessor
corporation) which had entire net income, or the portion thereof
allocated within the city, of one million dollars or more for any
taxable year during the three taxable years immediately preceding the
taxable year involved.

(b) The amount treated as the estimated tax under paragraphs (a) and
(b) of subdivision four of this section shall in no event be less than
seventy-five percent of the tax shown on the return for the taxable year
beginning in nineteen hundred eighty-three or, if no return was filed,
seventy-five percent of the tax for such year.

6. Deficiency due to fraud.--If any part of a deficiency is due to
fraud, there shall be added to the tax an amount equal to fifty
percentum of the deficiency. This amount shall be in lieu of any other
addition to tax imposed by subdivision one or two.

7. Additional penalty.--Any person who with fraudulent intent shall
fail to pay under the named parts any tax, or to make, render, sign or
certify any return or declaration of estimated tax, or to supply any
information within the time required by or under any of the named parts,
shall be liable to penalty of not more than one thousand dollars, in
addition to any other amounts required under this part to be imposed,
assessed and collected by the director of finance. The director of
finance shall have the power, in his discretion, to waive, reduce or
compromise any penalty under this subdivision.

8. Additions treated as tax.--The additions to tax and penalties
provided by this section shall be paid upon notice and demand and shall
be assessed, collected and paid in the same manner as taxes, and any
reference in this part to tax imposed by any of the named parts shall be
deemed also to refer to the additions to tax and penalties provided by
this section. For purposes of section seventy-two, this subdivision
shall not apply to--

(a) any addition to tax under subdivision one except as to that
portion attributable to a deficiency;

(b) any addition to tax under subdivision three; and

(c) any additional penalty under subdivision seven.

9. Determination of deficiency.--For purposes of subdivisions two and
six the amount shown as the tax by the taxpayer upon its return shall be
taken into account in determining the amount of the deficiency only if
such return was filed on or before the last day prescribed for the
filing of such return, determined with regard to any extension of time
for such filing.

10. Person defined.--For purposes of subdivision seven, the term
"person" includes an individual, corporation or partnership or an
officer or employee of any corporation (including a dissolved
corporation), or a member or employee of any partnership, who as such
officer, employee, or member is under a duty to perform the act in
respect of which the violation occurs.

11. Substantial understatement of liability.--If there is a
substantial understatement of tax for any taxable year, there shall be
added to the tax an amount equal to ten percent of the amount of any
underpayment attributable to such understatement. For purposes of this
subdivision, there is a substantial understatement of tax for any
taxable year if the amount of the understatement for the taxable year
exceeds the greater of ten percent of the tax required to be shown on
the return for the taxable year, or ten thousand dollars except that for
an electing small business corporation as defined in section thirteen
hundred sixty-one of the internal revenue code a substantial
understatement exists if the amount of the understatement exceeds ten
percent of the tax or five thousand dollars. For purposes of the
preceding sentence, the term "understatement" means the excess of the
amount of the tax required to be shown on the return for the taxable
year, over the amount of the tax imposed which is shown on the return.
The amount of the understatement under the preceding sentence shall be
reduced by that portion of the understatement which is attributable to
the tax treatment of any item by the taxpayer if there is or was
substantial authority for such treatment, or any item with respect to
which the relevant facts affecting the item's tax treatment are
adequately disclosed in the return or in a statement attached to the
return. The commissioner of finance may waive all or any part of the
addition to tax provided by this subdivision on a showing by the
taxpayer that there was reasonable cause for the understatement (or part
thereof) and that the taxpayer acted in good faith.