KRS 154.20-262: Penalties and interest -- Liability of investors -- Powers and duties of

Department of Revenue.

(1) An investment fund that violates the provisions of KRS 154.20 -250 to 154.20 -284

shall pay to the State Treasurer a penalty in an amount equal to the amount of all

credits claimed by the investors when these credits are determined to be derived

from unqualified investments, plus interest at the rate of two percent (2%) per

month, compounded monthly, from the date the credits were taken. If the

investment fund fails to pay the penalty and interest in full as required by the

Department of Revenue, each investor shall be personally liable to the Department

of Revenue for that investor's share of the unpaid penalty, which shall be

determined by the amount o f credits received and utilized by the investor and all

applicable interest. Any payment of unpaid penalty by an investor shall be included

with the investor's state tax return for the period in which the failure or violation

occurred. The commissioner of the Department of Revenue shall give notice in

writing to the authority, the investment fund manager, and the investors of any

penalties imposed. The commissioner of the Department of Revenue may abate any

imposed penalty upon written request, if the inves tment fund manager establishes

reasonable cause for the failure to make qualified investments in small businesses

under the provisions of KRS 154.20 -250 to 154.20 -284, or to otherwise comply

with the provisions of KRS 154.20 -250 to 154.20 -284. The State Tr easurer shall

deposit any amounts received pursuant to this section in the Commonwealth's

general fund.

(2) The administration of this section shall be the responsibility of the Department of

Revenue.