-IR- Database Guide
-IR- Database: Indiana Register

DEPARTMENT OF STATE REVENUE
01-20120539P.LOF

Letter of Findings Number: 01-20120539P
Tax Administration
For Tax Year 2010


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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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.
Authority: IC § 6-8.1-10-5.
Taxpayer protests the imposition of a ten percent penalty.
STATEMENT OF FACTS
Taxpayer is an Indiana resident who owed individual income tax. Two of Taxpayer's electronic funds transfers were returned for insufficient funds. The Indiana Department of Revenue ("Department") assessed penalty for these returned transfers. Taxpayer protests the imposition of this penalty. This Letter of Findings was written based on a telephone hearing and on the information found in the protest file. Further facts will be presented as required.
I. Tax Administration–Penalty.
DISCUSSION
Taxpayer made payments weekly through an automatic electronic funds transfer. Two of the electronic funds transfers were returned for insufficient funds. The Department assessed a penalty according to IC § 6-8.1-10-5, which states:
(a) If a person makes a tax payment with a check, credit card, debit card, or electronic funds transfer, and the department is unable to obtain payment on the check, credit card, debit card, or electronic funds transfer for its full face amount when the check, credit card, debit card, or electronic funds transfer is presented for payment through normal banking channels, a penalty of ten percent (10 percent) of the unpaid tax or the value of the check, credit card, debit card, or electronic funds transfer, whichever is smaller, is imposed.
. . .
(d) If the person subject to the penalty under this section can show that there is reasonable cause for the check, credit card, debit card, or electronic funds transfer not being honored, the department may waive the penalty imposed under this section.
(Emphasis added)
Taxpayer shows that there was reasonable cause for the electronic transfers not being honored. The payments were satisfied within a few days after they were returned. Additionally, Taxpayer does not have a history of making payments with insufficient funds and quickly paid the amount due.
FINDING
Taxpayer's protest is sustained.

Posted: 05/29/2013 by Legislative Services Agency

DIN: 20130529-IR-045130185NRA
Composed: Oct 01,2014 9:27:45PM EDT
A PDF version of this document.