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-IR- Database: Indiana Register

DEPARTMENT OF STATE REVENUE
04-20130330P.LOF

Letter of Findings Number: 04-20130330P
Tax Administration
For the Tax Year 2013


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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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 § 6-8.1-10-2.1; 45 IAC 15-11-2.
Taxpayer protests the imposition of the penalty for late payment of sales tax, withholding tax, and tire fees.
II. Tax Administration–Interest.
Authority: IC § 6-8.1-10-1.
Taxpayer protests the imposition of interest on its tax liability.
STATEMENT OF FACTS
Taxpayer is a car dealer. Taxpayer remitted sales tax, withholding tax, and tire fees for April 2013 after the statutory deadline for those payments. The Indiana Department of Revenue ("Department") assessed a ten-percent penalty and interest on each of the tax types, which Taxpayer protested.
I. Tax Administration–Penalty.
DISCUSSION
Taxpayer protests the imposition of penalty for failure to remit taxes in a timely manner.
IC § 6-8.1-10-2.1 states in relevant part:
(a) If a person:
(1) fails to file a return for any of the listed taxes;
(2) fails to pay the full amount of tax shown on the person's return on or before the due date for the return or payment;
(3) incurs, upon examination by the department, a deficiency that is due to negligence;
(4) fails to timely remit any tax held in trust for the state; or
(5) is required to make a payment by electronic funds transfer (as defined in IC 4-8.1-2-7), overnight courier, or personal delivery and the payment is not received by the department by the due date in funds acceptable to the department; the person is subject to a penalty.
(b) Except as provided in subsection (g), the penalty described in subsection (a) is ten percent (10 [percent]) of:
(1) the full amount of the tax due if the person failed to file the return;
(2) the amount of the tax not paid, if the person filed the return but failed to pay the full amount of the tax shown on the return;
(3) the amount of the tax held in trust that is not timely remitted;
(4) the amount of deficiency as finally determined by the department; or
(5) the amount of tax due if a person failed to make payment by electronic funds transfer, overnight courier, or personal delivery by the due date.
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(d). 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.
Taxpayer explained that it failed to remit the taxes because the person in charge of filing the returns was ill. Taxpayer also claims that there have been no other late filing issues; however, Taxpayer has a history of late payments in the past. Based on the information provided, Taxpayer has not provided "reasonable cause" sufficient to justify penalty waiver.
FINDING
Taxpayer's protest is respectfully denied.
II. Tax Administration–Interest.
DISCUSSION
Taxpayer protests the imposition of interest with respect to its late payment of tax. For taxes unpaid by the due date for payment, IC § 6-8.1-10-1(b) provides for the imposition of interest. IC § 6-8.1-10-1(e) provides that the Department cannot waive interest even if reasonable cause otherwise exists for penalty waiver. Further, the interest is assessed from the due date of the payment for each period, pursuant to IC § 6-8.1-10-1.
FINDING
Taxpayer's protest is respectfully denied.

Posted: 10/30/2013 by Legislative Services Agency

DIN: 20131030-IR-045130473NRA
Composed: Sep 02,2014 10:06:21AM EDT
A PDF version of this document.