Taxpayer is an out-of-state corporation with operations in
Indiana.
...
The Department issued a proposed assessment for a ten
percent late payment penalty regarding withholding tax for the tax year 2011.
Taxpayer protests the imposition of penalty.
The Department refers to IC § 6-8.1-10-2.1, which states in
relevant part:
If a person:
. . .
(4) fails to timely remit any tax held in trust for the
state;
. . .
the person is subject to a penalty.
...
(d) If a person subject to the penalty imposed under this
section can show that the failure to file a return, pay the full amount of tax
shown on the person's return, timely remit tax held in trust, or pay the
deficiency determined by the department was due to reasonable cause and not due
to willful neglect, the department shall waive the penalty.
....
(Emphasis added).
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.
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.
In this case, Taxpayer has affirmatively established that
its failure to timely remit the tax held in trust was due to reasonable cause
and not due to negligence, as required by 45 IAC 15-11-2(c).
