DEPARTMENT OF STATE REVENUE
04-20090717P.LOF
Letter of Findings Number: 09-0717P
Sales and Use Tax
For Tax Years 2006-08
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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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–Negligence Penalty.
Taxpayer protests the imposition of ten percent negligence penalties.
STATEMENT OF FACTS
Taxpayer is an Indiana corporation. The Indiana Department of Revenue ("Department") issued proposed assessments for sales tax, use tax, and ten percent negligence penalty for the tax years 2006, 2007, and 2008. Taxpayer agrees to the proposed assessments of sales tax and use tax, but protests the imposition of negligence penalties. Taxpayer did not request a hearing. The Letter of Findings was written based on the materials in the file. Further facts will be supplied as required.
I. Tax Administration–Negligence Penalty.
DISCUSSION
Taxpayer protests the imposition of ten percent negligence penalties on assessments made for the tax years 2006-08. Taxpayer states that it acted in a reasonable manner and that it has an excellent record regarding its Indiana tax duties. Taxpayer believes that these circumstances are sufficient to warrant waiver 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.
(Emphasis added.)
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.
The Department's records show that Taxpayer does have an excellent record regarding its Indiana tax duties. After reviewing the circumstances which resulted in the assessments of sales and use taxes for this audit period, the Department agrees with Taxpayer that it exercised ordinary business care and therefore Taxpayer's actions constitute reasonable cause, as provided by
45 IAC 15-11-2(c). The negligence penalties will be waived.
FINDING
Taxpayer's protest is sustained.
Posted: 04/28/2010 by Legislative Services Agency
DIN: 20100428-IR-045100215NRA
Composed: Apr 28,2024 2:13:58PM EDT
A
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