DEPARTMENT OF STATE REVENUE

15-20060235.LOF

Letter of Findings Number: 06-0235

Motor Fuel Tax

For Period Ended April 30, 2006

ISSUE

The taxpayer protests the imposition of the ten percent negligence penalty.

STATEMENT OF FACTS

The taxpayer was given the opportunity to provide additional information and/or to request a hearing. The taxpayer called on August 23, 2006 stating that the taxpayer had just received the letter dated July 17, 2006. The taxpayer was given additional time (until September 10, 2006) to submit additional information or request a hearing. The taxpayer had not provided additional information or requested a hearing. Therefore, this letter of findings is based on the information contained in the file. The Indiana Department of Revenue, hereinafter referred to as the "department," assessed additional interest, and penalty. The taxpayer protested the imposition of the ten percent negligence penalty.

DISCUSSION

The taxpayer protests the imposition of the ten percent negligence penalty pursuant to IC§ 6-8.1-10-2.1. Indiana Regulation 45 IAC 15-11-2 (b) clarifies the standard for the imposition of the negligence penalty as follows:

Negligence, on behalf of a taxpayer is defined as the failure to use such reasonable care, caution, or diligence as would be expected of an ordinary reasonable taxpayer. Negligence would result from a taxpayer's carelessness, thoughtlessness, disregard or inattention to duties placed upon the taxpayer by the Indiana Code or department regulations. Ignorance of the listed tax laws, rules and/or regulations is treated as negligence. Further, failure to read and follow instructions provided by the department is treated as negligence. Negligence shall be determined on a case by case basis according to the facts and circumstances of each taxpayer.

The standard for waiving the negligence penalty is given at 45 IAC 15-11-2 (c) as follows:

The department shall waive the negligence penalty imposed under IC 6-8.1-10-1 if the taxpayer affirmatively establishes that the failure to file a return, pay the full amount of tax due, timely remit tax held in trust, or pay a deficiency was due to reasonable cause and not due to negligence. In order to establish reasonable cause, the taxpayer must demonstrate that it exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed under this section. Factors which may be considered in determining reasonable cause include, but are not limited to:

(1) the nature of the tax involved;

(2) judicial precedents set by Indiana courts;

(3) judicial precedents established in jurisdictions outside Indiana;

(4) published department instructions, information bulletins, letters of findings, rulings, letters of advice, etc;

(5) previous audits or letters of findings concerning the issue and taxpayer involved in the penalty assessment.

Reasonable cause is a fact sensitive question and thus will be dealt with according to the particular facts and circumstances of each case.

The taxpayer did not provide substantial documentation to indicate that its failure to pay the assessed motor fuel tax was due to reasonable cause rather than negligence.

FINDING

The taxpayer's protest is denied.

DIN: 20061129-IR-045060525NRA

Composed: Apr 27,2024 8:36:17PM EDT

A PDF version of this document.