Taxpayer is a retail store, which sells tangible personal property
in Indiana. As a retail merchant, Taxpayer is required to file its Indiana
sales tax returns, ST-103 forms, and to remit the sales tax it collects, in
this case, within twenty (20) days after the end of the month.
Taxpayer timely filed its sales tax return for the tax
period May 2012 on June 18, 2012. However, Taxpayer did not remit the sales tax
to the Indiana Department of Revenue ("Department") until June 21,
2012, which was one day after the statutorily required filing due date, June 20,
2012.
...
The Department's audit imposed a ten percent negligence
penalty for the tax period in question. Taxpayer requested that the Department
abate the negligence penalty.
Pursuant to IC § 6-8.1-10-2.1(a), the Department may assess
a ten (10) percent negligence penalty if the taxpayer:
(1) fails to file a return for any of the listed taxes;
(2) fails to pay the full amount of tax shown on the
person's return on or before the due date for the return or payment;
(3) incurs, upon examination by the department, a deficiency
that is due to negligence;
(4) fails to timely remit any tax held in trust for the
state; or
(5) is required to make a payment by electronic funds
transfer (as defined in IC 4-8.1-2-7),
overnight courier, or personal delivery and the payment is not received by the
department by the due date in funds acceptable to the department. (Emphasis
added).
45 IAC 15-11-2(b)
further states:
"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 may waive a negligence penalty as provided in
45 IAC 15-11-2(c),
in part, as follows:
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. Factors which may
be considered in determining reasonable cause include, but are not limited to:
(1) the nature of the tax involved;
(2) judicial precedents set by Indiana courts;
(3) judicial precedents established in jurisdictions outside
Indiana;
(4) published department instructions, information
bulletins, letters of findings, rulings, letters of advice, etc.;
(5) previous audits or letters of findings concerning the
issue and taxpayer involved in the penalty assessment.
Reasonable cause is a fact sensitive question and thus will
be dealt with according to the particular facts and circumstances of each case.
In this instance, Taxpayer stated that "It was
oversight and was paid next day." The Department's records also confirm
that Taxpayer remitted the sales tax due for May 2012 tax period on June 21,
2012–one day after the statutory due date. Given the facts that Taxpayer
promptly remitted the sales tax after it discovered its oversight, although it
was one day after the filing due date, the Department is willing to abate the
penalty for this time only.
Taxpayer is on notice that, going forward, it will be
responsible for the negligence penalty if it fails to timely file the returns
and pay the taxes due as statutorily required.
