DEPARTMENT OF STATE REVENUE

04-20070003P.LOF

Letter of Findings Number: 07-0003P

Sales Tax-Penalty

For the Period October 2006

ISSUE

Taxpayer protests the imposition of the ten percent negligence penalty.

STATEMENT OF FACTS

Taxpayer remitted sales tax for the month. The payment was remitted eight days late. The Department of Revenue ("Department") assessed a penalty for the late payment of tax, which Taxpayer protested. The Department conducted a hearing and this Letter of Findings results.

DISCUSSION

Taxpayer protests the imposition of the ten percent penalty on Taxpayer's late remittance of sales tax.

Penalty waiver is permitted if the taxpayer shows that the failure to pay the full amount of the tax was due to reasonable cause and not due to willful neglect. IC § 6-8.1-10-2.1. The Indiana Administrative Code, 45 IAC 15-11-2, further provides:

(b) "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.

(c) 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.

Taxpayer had been late on prior payments and previously had one prior penalty abated. Based on the prior payment record, Taxpayer has not provided sufficient information to conclude that it acted with reasonable care in its sales tax payment duties for this period in controversy.

FINDING

Taxpayer's protest is denied.

DIN: 20071226-IR-045070865NRA

Composed: May 05,2024 6:30:12PM EDT

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