Taxpayers are individuals residing in Indiana. For 2009, one
of the Taxpayers had wages withheld for New York State income taxes as opposed
to Indiana income taxes. Taxpayers filed their 2009 Indiana income tax return,
which reflected an underpayment. The Department imposed penalty and interest
based on the underpayment. Separately, the Department imposed a penalty for
failure to make sufficient estimated tax payments for the 2009 tax year.
…
Taxpayers protest the assessment of a penalty for failure to
remit Indiana individual income tax in a timely manner.
…
In this particular case, Taxpayers have provided evidence
that its failure to timely pay taxes was the result of a unique, one-time
occurrence beyond Taxpayers' control. Taxpayers' filing and payment history
shows a consistent pattern of timely filing and payment of taxes except for the
year at issue. Based on the circumstances present in this case, Taxpayers have
provided sufficient information to demonstrate that their failure to timely
remit taxes was due to reasonable cause.
Taxpayers protest the imposition of the ten percent penalty
on Taxpayers' failure to make sufficient estimated tax payments as required
pursuant to IC § 6-3-4-4.1, which provides for a ten-percent penalty for
failure to make sufficient estimated payments during the tax year.
Under IC § 6-3-4-4.1(a) and (b), a taxpayer is required to
make estimated payments equal to a percentage of the current year's Indiana
income tax liability or the prior year's Indiana income tax liability if the
taxpayer determines that the taxpayer's tax liability not otherwise paid by
withholding was greater than $1,000. The percentage requirements for the
minimum estimated tax payments are set forth in I.R.C. § 6654(d)(1)(B). The
estimated tax payments must be made in four installments, on the dates
specified by I.R.C. § 6654(c). Failure to make sufficient estimated tax
payments is subject to a ten (10) percent penalty in the amount of the
underpayment.
With regard to the tax year in question, Taxpayers have
provided sufficient information to conclude that the penalty for failure to
remit timely estimated tax payments should not be imposed.
…
Taxpayers protest the imposition of interest with respect to
its late payment of tax. For taxes unpaid by the due date for payment, IC §
6-8.1-10-1(b) provides for the imposition of interest. Notwithstanding
Taxpayers' circumstances, IC § 6-8.1-10-1(e), provides that the Department
cannot waive interest even if reasonable cause otherwise exists for penalty
waiver.
