(a) A taxable entity must file an amended report under this chapter if:
(1) the taxable entity’s taxable margin is changed as the result of an audit or other adjustment by the Internal Revenue Service or another competent authority; or
(2) the taxable entity files an amended federal income tax return or other return that changes the taxable entity’s taxable margin.
(b) The taxable entity shall file the amended report under Subsection (a)(1) not later than the 120th day after the date the revenue agent’s report or other adjustment is final. For purposes of this subsection, a revenue agent’s report or other adjustment is final on the date on which all administrative appeals with the Internal Revenue Service or other competent authority have been exhausted or waived.

(c) The taxable entity shall file the amended report under Subsection (a)(2) not later than the 120th day after the date the taxable entity files the amended federal income tax return or other return. For purposes of this subsection, a taxable entity is considered to have filed an amended federal income tax return if the taxable entity is a member of an affiliated group during a period in which an amended consolidated federal income tax report is filed.
(d) If a taxable entity fails to comply with this section, the taxable entity is liable for a penalty of 10 percent of the tax that should have been reported under this section and that had not previously been reported to the comptroller. The penalty prescribed by this subsection is in addition to any other penalty provided by law.