DEPARTMENT OF STATE REVENUE
04-20060438.LOF
Letter of Findings: 06-0438
Withholding Tax
For the Tax Year 2005
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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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 the document will provide the general public with information about the Department's official position concerning a specific issue.
ISSUES
Authority: IC § 6-8.1-5-1; IC § 6-8.1-10-1
The taxpayer protests the imposition of sales tax by the Department.
II. Tax Administration–Negligence Penalty
Taxpayer protests the imposition of a ten percent negligence penalty.
STATEMENT OF FACTS
The taxpayer is engaged in manufacturing automotive parts. The taxpayer purchases various metal parts and welds them together to make instrument panels, pillars, suspension frames, and seat supports.
I. Sales Tax – Imposition
DISCUSSION
Taxpayer protests bills for sales tax and penalty. Taxpayer has failed to supply any documentation or analysis in support of the protest. The Department refers to IC § 6-8.1-5-1(b) which states in relevant part:
The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.
The Department issued bills for the base tax and penalties. Taxpayer has not provided any explanation for its protest, let alone met the burden of proving that the assessments are wrong under IC § 6-8.1-5-1(b).
FINDING
Taxpayer's protest is denied.
II. Tax Administration–Negligence Penalty
DISCUSSION
The Department issued proposed assessments and the ten percent negligence penalty for the tax year in question. Taxpayer protests the imposition of penalty. The Department refers to IC § 6-8.1-10-2.1(a), which states in relevant part:
If a person:
. . .
(3) incurs, upon examination by the department, a deficiency that is due to negligence;
. . .
the person is subject to a penalty.
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 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.
In this case, taxpayer incurred a deficiency which the Department determined was due to negligence under
45 IAC 15-11-2(b), and so was subject to a penalty under IC § 6-8.1-10-2.1(a). Taxpayer has not affirmatively established that the failure to pay the deficiency was due to reasonable cause and not due to negligence, as required by
45 IAC 15-11-2(c).
FINDING
Taxpayer's protest is denied.
Posted: 08/01/2007 by Legislative Services Agency
DIN: 20070801-IR-045070423NRA
Composed: Apr 29,2024 2:52:51PM EDT
A
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