Taxpayer is an out-of-state leasing and IT acquisition company with a customer base that ranges from the Fortune 1000 to venture capital-backed startup companies. Taxpayer does business in Indiana and has filed annual Indiana sales tax returns since 2010.
Taxpayer was notified by the Indiana Department of Revenue
("Department") of a change in its filing status from annual to
monthly in a letter from the Department mailed on December 20, 2011. The
Department did not receive Taxpayer's monthly sales tax payments for the
periods January through May 2012. The Department issued Taxpayer "best
information available" assessments of sales tax and penalty for those
periods. The Department abated the penalty for the first period, January 2012.
Taxpayer protested the imposition of the ten percent negligence penalty on each
of the remaining periods.
...
Taxpayer protests the imposition of the negligence penalty
assessed for late filing of sales tax returns.
...
Taxpayer states that it had no intent to disregard, nor
willfully neglect, the laws of Indiana regarding its sales and use tax
obligations. Taxpayer points out that it only received notice of its change in
filing frequency from the Department on June 11, 2012. Taxpayer states that it
never received the letter from the Department notifying Taxpayer of a change in
its required filing frequency which was sent to Taxpayer on December 20, 2011.
Taxpayer states that upon receipt of the June 11, 2012, notice, it filed the
missing returns for January through May on July 3, 2012, and made payments to
the Department. Taxpayer also pointed to the fact it has not been penalized for
non-payment of tax in prior years, nor has it previously requested waiver of
taxes.
Indiana law requires Taxpayer to demonstrate that it had
reasonable cause for not paying the full amount of sales or use tax due. In
order to establish reasonable cause, Taxpayer must demonstrate that it
exercised "ordinary business care and prudence" in conducting the
duties from which the additional tax and penalty arose. 45 IAC
15-11-2(c).
The Department has no record that the December 20, 2012,
letter it sent to Taxpayer as notification of its status change was returned to
the Department as undeliverable mail. The address to which the December 20
letter was mailed is the same address as all the other correspondence sent to
and received by Taxpayer. The Department did abate the penalty on the January 2012
period presumably in recognition of the short time span between the December
20, 2011, notification date and the January/February deadline for filing for
the January 2012 period.
The Department finds that Taxpayer has not made an
affirmative showing of reasonable cause for not remitting sales tax for the
periods February to May 2012.
