DISCUSSION
At
the outset, the Department notes that IC § 6-8.1-10-5 states:
(a) If a person makes a tax payment with a check, credit card, debit card, or electronic funds transfer, and the department is unable to obtain payment on the check, credit card, debit card, or electronic funds transfer for its full face amount when the check, credit card, debit card, or electronic funds transfer is presented for payment through normal banking channels, a penalty of ten percent (10[percent]) of the unpaid tax or the value of the check, credit card, debit card, or electronic funds transfer, whichever is smaller, is imposed.
(b) When a penalty is imposed under subsection (a ), the department shall notify the person by mail that the check, credit card, debit card, or electronic funds transfer was not honored and that the person has ten (10) days after the date the notice is mailed to pay the tax and the penalty either in cash, by certified check, or other guaranteed payment. If the person fails to make the payment within the ten (10) day period, the penalty is increased to one hundred percent (100[percent]) multiplied by the value of the check, credit card, debit card, or electronic funds transfer, or the unpaid tax, whichever is smaller.
…
Under IC § 6-8.1-10-5(d), the penalty can be waived upon a showing of reasonable cause.
…
As part of their protest, Taxpayers provided the Department with various documents. Among the documents provided by Taxpayers was information from Taxpayers' bank relating to the NSF check. Based upon the documents and information provided by Taxpayers, the Department finds that Taxpayers have established reasonable cause for purposes of IC § 6-8.1-10-5.
FINDING
Taxpayers' protest of the 100 percent penalty is sustained.
http://www.in.gov/legislative/iac/20120229-IR-045120074NRA.xml.pdf
