DEPARTMENT OF STATE REVENUE
0420060439P.LOF
Letter of Findings Number: 06-0439P
Sales Tax
For the Calendar Years 2002, 2003, and 2004
NOTICE: Under IC § 4-22-7-7, this document is required to be published in the Indiana Register and is effective on its date of publication. It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register. The publication of this document will provide the general public with information about the Department's official position concerning a specific issue.
ISSUE
I. Tax Administration – Penalty
The taxpayer protests the negligence penalty.
STATEMENT OF FACTS
The negligence penalty was assessed on an audit conducted for the calendar years 2002, 2003, and 2004. The taxpayer is an Indiana resident.
I. Tax Administration – Penalty
DISCUSSION
The taxpayer requests the penalty be abated as the taxpayer's error was small and the taxpayer did not commit willful negligence.
The taxpayer calculates the error rate as the use tax assessment per the audit divided by total purchases for the taxpayer which comes to less than 5 percent. The Department calculates the error rate as the use tax assessment per the audit divided by the total use tax liability for the taxpayer and for the audit period. Using the Department's method, the error rate is 36 percent which the Department considers material.
The taxpayer is being assessed the negligence penalty on the ground that taxpayer was inattentive of its duties. The regulation which controls the application of the inattention penalty is
45 IAC 15-11-2(b) which states,
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 Department finds the taxpayer was inattentive of tax duties. Inattention is negligence and negligence is subject to penalty. As such, the Department finds the penalty proper and denies the penalty protest.
FINDING
The taxpayer's penalty protest is denied.
Posted: 03/28/2007 by Legislative Services Agency
DIN: 20070328-IR-045070174NRA
Composed: May 05,2024 7:39:28PM EDT
A
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