DEPARTMENT OF STATE REVENUE
Letter of Findings Number: 11-20110338P
Motor Vehicle Rental Excise Tax – Penalty
For the Period March 2011
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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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.
I. Tax Administration–Penalty.
Taxpayer protests the imposition of the ten-percent late payment penalty.
STATEMENT OF FACTS
Taxpayer is a company doing business in Indiana. Taxpayer remitted its March 2011 motor vehicle rental excise tax after the statutory deadline. The Department assessed a ten-percent late payment penalty for the late payment. Taxpayer protested the penalty, the Department conducted an administrative hearing, and this Letter of Findings results.
I. Tax Administration–Penalty.
Taxpayer protests the imposition of the ten-percent penalty on its motor vehicle rental excise tax liability.
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
(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 states that it attempted a change in its computer system; however, the change led to an error processing the March payment. Once Taxpayer determined the error and corrected the error, Taxpayer remitted the tax; however, the tax was remitted two days after the statutory deadline. Based on the particular facts and circumstances in this case, Taxpayer has provided sufficient information to conclude that penalty waiver is justified in this case.
Taxpayer's protest is sustained.
Posted: 11/30/2011 by Legislative Services Agency
Composed: Jan 27,2015 8:30:30PM EST
version of this document.