DEPARTMENT OF STATE REVENUE
01-20170964.LOF
Letter of Findings: 01-20170964
Income Tax
For the Years 2014 & 2015
NOTICE: IC § 6-8.1-3-3.5 and IC § 4-22-7-7 require the publication of this document in the Indiana Register. This document provides the general public with information about the Department's official position concerning a specific set of facts and issues. This document is effective as of its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register. The "Holding" section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Letter of Findings.
HOLDING
Individual did not develop any arguments regarding proposed assessment for Indiana individual income tax, thus the protest was denied.
ISSUES
I. Income Tax–Proposed Assessments.
Authority: IC § 6-8.1-5-1;
Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014);
Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012);
Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012);
Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010);
Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007);
45 IAC 3.1-1-1.
Taxpayer protests the Department's Indiana individual income tax proposed assessments for the tax years 2014 and 2015.
II. Tax Administration–Penalty and Interest.
Taxpayer protests the imposition of penalty and interest.
STATEMENT OF FACTS
On June 12, 2017, the Indiana Department of Revenue ("Department") issued proposed assessments ("AR-80") for Indiana individual income tax for the years 2014 and 2015. The proposed assessments were for base tax, penalty, and interest. Taxpayer filed a protest and an administrative telephone hearing was held. Further facts will be supplied as required.
I. Income Tax–Proposed Assessments.
DISCUSSION
As a threshold issue, it is Taxpayers' responsibility to establish that the existing tax assessment is incorrect. As stated in IC § 6-8.1-5-1(c), "The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made." Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Consequently, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department's position is wrong. Further, "[W]hen [courts] examine a statute that an agency is 'charged with enforcing. . .[courts] defer to the agency's reasonable interpretation of [the] statute even over an equally reasonable interpretation by another party.'" Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, all interpretations of Indiana tax law contained within this decision, as well as the preceding audit, shall be entitled to deference.
The Department's "Explanation of Adjustments" cites to
45 IAC 3.1-1-1, which states:
Adjusted Gross Income for Individuals Defined. For individuals, "Adjusted Gross Income" is "Adjusted Gross Income" as defined in Internal Revenue Code § 62 modified as follows:
(1) Begin with gross income as defined in section 61 of the Internal Revenue Code.
(2) Subtract any deductions allowed by section 62 of the Internal Revenue Code.
Regarding the Department's adjustments to Taxpayer's 2014 and 2015 Indiana individual income tax, the adjustments were made pursuant to the "best information available". IC § 6-8.1-5-1(b) provides that "If the department reasonably believes that a person has not reported the proper amount of tax due, the department shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available to the department."
Taxpayer's protest letter simply states "consider this correspondence to be a written protest and a request for an Appeal." No further argument is made or developed in the protest letter. At the hearing, Taxpayer's representative conceded that Taxpayer agreed with that the proposed assessments for 2014 and 2015 were due. Poorly developed and non-cogent arguments are subject to waiver. Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480, 486 n.9 (Ind. Tax Ct. 2012). Taxpayer's protest is denied.
FINDING
Taxpayer's protest is denied.
II. Tax Administration–Penalty and Interest.
DISCUSSION
Taxpayer was also assessed a negligence penalty and interest. Regarding the latter, interest cannot be waived pursuant to IC § 6-8.1-10-1(e). The Department notes that 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 in relevant part:
(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's representative at the hearing stated that Taxpayer did not want a "double penalty." It is unclear what Taxpayer's representative is referring to, but as with Issue I no argument was elaborated or developed regarding the penalty. Taxpayer's protest on this issue is denied.
FINDING
Taxpayer's protest of the imposition of penalty and interest is denied.
SUMMARY
Taxpayer's protest regarding the Department's adjustments to his 2014 and 2015 Indiana individual income tax is denied; Taxpayer's protest regarding the imposition of penalty and interest is also denied.
Posted: 03/28/2018 by Legislative Services Agency
DIN: 20180328-IR-045180135NRA
Composed: Apr 30,2024 5:42:25PM EDT
A
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