DEPARTMENT OF STATE REVENUE
Letter of Findings Number: 01-20130087P
For Tax Year 2012
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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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.
Authority: IC § 6-8.1-10-5.
Taxpayer protests the imposition of a ten percent penalty.
STATEMENT OF FACTS
Taxpayer is an Indiana resident. The Indiana Department of Revenue ("Department") determined that Taxpayer had dishonored tax payment during the tax year 2012. The Department therefore issued a proposed assessment for dishonored payment penalty. Taxpayer protested the imposition of the penalty. An administrative hearing was held and this letter of findings results. Further facts will be supplied as required.
I. Tax Administration–Penalty.
The Department issued proposed assessment for penalty on failure to timely remit an estimated individual income tax payment for one quarter in the tax year 2012. Taxpayer protests that he tried to file in the same manner that he had successfully filed several times before, but that the Department's filing system did not recognize Taxpayer's bank account number. Taxpayer states that the bank account number is the same one that he has always used to file in this manner and that it has always worked before and since the filing at issue. Taxpayer protests the imposition of penalty and requests a waiver of that penalty.
The Department refers 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.
(b) When a penalty is imposed under subsection (a), the department shall notify the person by mail that the check, credit card, debit card, or electronic funds transfer was not honored and that the person has ten (10) days after the date the notice is mailed to pay the tax and the penalty either in cash, by certified check, or other guaranteed payment. If the person fails to make the payment within the ten (10) day period, the penalty is increased to one hundred percent (100 [percent]) multiplied by the value of the check, credit card, debit card, or electronic funds transfer, or the unpaid tax, whichever is smaller.
(c) If a person has been assessed a penalty under subsection (a) more than one (1) time, the department may require all future payments for all listed taxes to be remitted with guaranteed funds.
(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.
In this case, Taxpayer was unable to remit a quarterly estimated income tax payment. The Department considered this to constitute negligence and so imposed penalties under IC § 6-8.1-10-5. As a result of the protest process, Taxpayer has affirmatively established that it acted reasonably in his efforts to comply with Indiana's tax filing requirements. The penalty will be waived.
Taxpayer's protest is sustained.
Posted: 05/29/2013 by Legislative Services Agency
Composed: Dec 05,2013 8:01:29PM EST
version of this document.