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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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.

Out-of-state business was not entitled to refund because it did not timely file and remit tax on or before the due date of the return. As such, penalty and interest were properly imposed.

I. Tax Administration - Penalty and Interest.

Authority: IC § 6-3-4-8; IC § 6-8.1-3-17; IC § 6-8.1-5-1; IC § 6-8.1-5-2; IC § 6-8.1-10-1; IC § 6-8.1-10-2.1; Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Ind. Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Wendt LLP v. Ind. Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Ind. Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); 45 IAC 15-11-2.

Taxpayer protests the Department's refund denial and the assessment, claiming that it is entitled to the full refund of overpayment.

Taxpayer, an out-of-state company, conducted business in Indiana. For several tax periods under tax years 2019 and 2020, Taxpayer did not timely file the required monthly returns, such as Form WH-1, or Form WH-3 (including the Wage Statements it issued to its employees) and/or remit tax it withheld on wages paid to its Indiana employees. In addition to interest, a penalty was assessed for each tax period in question.

In 2021, Taxpayer filed its 2020 Annual Withholding Reconciliation form (Form WH-3), requesting a refund of $115.26. Subsequently, the Indiana Department of Revenue ("Department") processed Taxpayer's filing and issued a proposed assessment of $41.73, in addition to denying Taxpayer's refund claim.

Taxpayer protested the refund denial and the assessment. This Letter of Findings results. Further facts will be provided, as necessary.

I. Tax Administration - Penalty and Interest.

Taxpayer filed its 2020 Form WH-3, requesting a $115.26 refund. The Department, upon reviewing Taxpayer's request, denied Taxpayer's refund request, and notified Taxpayer that Taxpayer has an outstanding balance due.

In this instance, the Department denied Taxpayer's refund claim and issued an assessment. Thus, as a threshold issue, all tax assessments are prima facie evidence that the Department's claim for the unpaid tax is valid; the taxpayer bears the burden of proving that any assessment is incorrect. IC § 6-8.1-5-1(c); Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012). Thus, the taxpayer is required to provide documentation explaining and supporting its challenge that the Department's assessment is wrong. 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). In reviewing a taxpayer's argument, the Indiana Supreme Court has held that when it examines a statute that an agency is "charged with enforcing . . . we 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).

Every employer is required to withhold taxes on payments of wages it pays to its employees pursuant to IC § 6-3-4-8, which states in part as follows:

Taxpayer in this instance claimed that it overpaid $115.26. However, the Department records showed that Taxpayer failed to timely file the required monthly returns - WH-1 or WH-3 forms - and/or remit tax it withheld on wages paid to its Indiana employees. In addition to interest, a penalty was assessed for each tax period in question. As a result, Taxpayer has an outstanding balance due.

Pursuant to IC § 6-8.1-10-1(e), the Department is only permitted to waive the interest under IC § 6-8.1-3-17(c), (e), IC § 6-8.1-10-2.1(k), and IC § 6-8.1-5-2. Taxpayer in this instance provided no documentation to support its request for the waiver. Thus, the Department does not have the authority to waive the interest imposed.

The Department may assess a negligence penalty if the taxpayer "(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; [or] (4) fails to timely remit any tax held in trust for the state . . . ." IC § 6-8.1-10-2.1(a).

The Department may waive a negligence penalty when "the taxpayer affirmatively establishes that the failure . . . was due to reasonable cause and not due to negligence." 45 IAC 15-11-2(c). 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." Id. The Department is mindful that "[r]easonable cause is a fact sensitive question and thus will be dealt with according to the particular facts and circumstances of each case."

In this instance, Taxpayer did not provide documents to affirmatively establish that its failure to timely file the required returns and/or pay tax was not due to negligence.

In short, in the absence of other supporting documentation, the Department is not able to agree that Taxpayer met its burden of proof.

Taxpayer's protest is respectfully denied.

April 13, 2021