20101222-IR-045100762NRA Letter of Findings Numbers: 10-0399P; 10-0400P Sales Tax and Tire Fee –Penalty For the Period April 2010  

  • DEPARTMENT OF STATE REVENUE
    04-20100399P.LOF
    60-20100400P.LOF

    Letter of Findings Numbers: 10-0399P; 10-0400P
    Sales Tax and Tire Fee –Penalty
    For the Period April 2010


    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 It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register.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 ten percent late-payment penalty.
    STATEMENT OF FACTS
    Taxpayer is a company doing business in Indiana. Taxpayer attempted to remit its April 2010 sales tax and tire fees prior to the statutory due date. However, Taxpayer's payment was not credited to its account. Taxpayer later remitted the tax after the statutory deadline. The Indiana Department of Revenue ("Department") assessed interest and penalty on the tax. Taxpayer protested the penalty.
    The Department sent a letter to Taxpayer stating that Taxpayer could request a hearing by replying to the letter within twenty (20) days of the date of the letter. Taxpayer did not reply to the Department's letter. Due to Taxpayer's failure to reply, this Letter of Findings is written based on the information in Taxpayer's protest file and other Department records relating to Taxpayer.
    I. Tax Administration–Penalty.
    DISCUSSION
    Taxpayer protests the imposition of the ten percent penalty on its late sales tax and tire fee payments.
    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.
    Taxpayer has provided information listing its electronic fund transfer tax payments for the prior year. During the period in which it has remitted taxes via electronic funds transfer, the two payments in this protest are the only late payments. Taxpayer has demonstrated that it acted with "ordinary business care" with regard to the tax payment obligations and therefore is sustained with regard to the penalties.
    FINDING
    Taxpayer's protest is sustained.

    Posted: 12/22/2010 by Legislative Services Agency

    DIN: 20101222-IR-045100762NRA
    Composed: Nov 01,2016 1:03:09AM EDT
    A PDF version of this document.

Document Information

Rules:
45IAC15-11-2