Taxpayer is an Indiana corporation doing business in
Indiana. On April 16, 2012, Taxpayer filed its 2007, 2008, 2009, and 2010
Indiana Corporate Adjusted Gross Income tax returns. On the 2007 return,
Taxpayer reported an overpayment of tax which Taxpayer then carried forward as
successive payments on its 2008, 2009, and 2010 returns.
…
The Department denied Taxpayer the opportunity to carry
forward its 2007 overpayment to the 2008 through 2010 returns because Taxpayer
filed the 2007 return after the deadline for claiming refund/carryforward had
expired. The 2007 return was due on April 15, 2008. Taxpayer filed the 2007
return on April 16, 2012, a full year after the 3-year statute of limitation to
claim refund/carryforward had expired. IC § 6-8.1-9-1 governs the deadline for
requesting refund or carryforward of a tax overpayment. IC § 6-8.1-9-1(a) states:
If a person has paid more tax than the person determines is
legally due for a particular taxable period, the person may file a claim for a
refund with the department. Except as provided in subsections (f), (g), and
(h), in order to obtain the refund, the person must file the claim with the
department within three (3) years after the latter of the following:
(1) The due date of the return.
(2) The date of payment.
For purposes of this section, the due date for a return
filed for the state gross retail or use tax, the gasoline tax, the special fuel
tax, the motor carrier fuel tax, the oil inspection fee, or the petroleum
severance tax is the end of the calendar year which contains the taxable period
for which the return is filed. The claim must set forth the amount of the
refund to which the person is entitled and the reasons that the person is
entitled to the refund. (Emphasis added).
Taxpayer explains that it was late in filing its returns
because of problems with the accounting firm it had initially contracted with
to file its returns in which the current owners bought the company in 2000.
Taxpayer states it had difficulty tracking down the original documents it had
turned over to this accounting firm. Taxpayer explains that it then hired a
second accounting firm, in 2009, to clean up the mess created by the first
accounting firm and to file its federal and state returns.
Irrespective of the reason why the returns were filed late,
the 3-year statute of limitations to claim refund/carryforward of an overpayment
of tax had run out. Taxpayer's 2007 Corporate Income Tax return was due on
April 15, 2008, but was not filed until April 16, 2012, one full year after the
3-year statute of limitations had expired.
The Department correctly denied the carryforward of the 2007
overpayment to the subsequent tax years, 2008, 2009, and 2010.
…
Because the Department denied Taxpayer's carryforward from
the 2007 return Taxpayer's application of the carryforward was invalidated and
tax became due for the years 2008, 2009, and 2010. The Department billed
Taxpayer for the taxes due for those years, as well as penalties and interest.
Regarding interest, under IC § 6-8.1-10-1(e) interest cannot
be waived.
Penalty waiver, however, 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(d).
…
Taxpayer protested the assessment of penalties again
explaining that the late filing of its returns was connected to the problems it
had with the accountants it had originally hired to handle their tax returns as
explained above. While the circumstances relating to the professionals Taxpayer
hired to file its tax returns are unfortunate, Taxpayer's problems were not
limited to the first accounting firm Taxpayer hired. The second firm Taxpayer
hired also missed the statute of limitations for claiming the
refund/carryforward of the 2007 overpayment.
Given the problems Taxpayer had with the first accounting
firm it hired to handle its taxes, Taxpayer was on notice that it needed to
attend to its filing obligations more rigorously. Taxpayer has not provided
sufficient explanation to show that it had reasonable cause in the late filing
of its returns.
