Taxpayers, a husband and wife, jointly filed federal income
tax returns. The Indiana Department of Revenue ("Department")
conducted an income tax investigation of Taxpayers for the 2009 tax year and
assessed additional income tax, interest, and penalty. The Department relied
upon the taxpayers' reported federal adjusted gross income per the Internal
Revenue Service ("IRS").
…
Taxpayers maintain that the increase to their federal
adjusted gross income resulted from a mistake made when they filed their original
2009 federal income tax return. Taxpayers state that they forgot to attach Form
8917, which substantiates the tuition and fees deduction, to their federal
income tax return. Thus, the IRS did not allow the deduction at first. Since
then, Taxpayers have filed the Form 8917 and the IRS has accepted it and
modified Taxpayers' federal adjusted gross income to what was originally filed
on their federal income tax return.
During the hearing, Taxpayers presented documentation that
supported their assertions. Taxpayers have provided sufficient documentation to
demonstrate that Taxpayers' federal adjusted gross income should be adjusted to
reflect the decrease to Taxpayers' federal adjusted gross income that occurs
when the tuition and fees deduction is allowed.
…
Since Taxpayers were sustained on their protest to the
assessment of adjusted gross income tax, as discussed in Issue I, the issue of
the imposition of penalty becomes moot.
