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DEPARTMENT OF STATE REVENUE
01-20130291P.LOF

Letter of Findings Number: 01-20130291P
Late Payment Penalty
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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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.
ISSUE
I. Tax Administration – Late Payment Penalty.
Authority: IC § 6-8.1-10-2.1; 45 IAC 15-3-2; 45 IAC 15-11-2.
Taxpayer protests the imposition of the ten percent late payment penalty.
STATEMENT OF FACTS
Taxpayer was assessed a penalty for late payment of income tax. Taxpayer protested the penalty. After conferring with Taxpayer over the phone about his protest Taxpayer further explained his protest and elected that the Department make a final determination based on information Taxpayer already provided in lieu of a hearing. This Letter of Findings is therefore written based on the information in Taxpayer's protest file and other information available to the Department.
I. Tax Administration – Late Payment Penalty.
DISCUSSION
Taxpayer protests the imposition of a penalty for late payment of his income 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.
Even though Taxpayer has not provided all the information needed to ascertain that he clearly had reasonable cause for his late payment of income tax, Taxpayer has shown sufficient cause for a one-time waiver of the late payment penalty.
Since Taxpayer has already paid the penalty, the amount of the penalty will be returned to Taxpayer.
FINDING
Taxpayer's protest is sustained.

Posted: 09/25/2013 by Legislative Services Agency

DIN: 20130925-IR-045130424NRA
Composed: Sep 01,2014 11:36:12PM EDT
A PDF version of this document.