Excerpts of Revenue's Determination follow:
Taxpayer is a C corporation operating in Indiana. For tax year 2010, Taxpayer reported a corporate income tax liability of approximately $22,000. For tax year 2011, Taxpayer made an estimated tax payment of $22,000 on December 28, 2011. Taxpayer did not make any other tax payments prior to the April 17, 2012, deadline.
Taxpayer is a C corporation operating in Indiana. For tax year 2010, Taxpayer reported a corporate income tax liability of approximately $22,000. For tax year 2011, Taxpayer made an estimated tax payment of $22,000 on December 28, 2011. Taxpayer did not make any other tax payments prior to the April 17, 2012, deadline.
On or about May 3, 2012, Taxpayer filed its Indiana corporate income tax return reporting a $78,000 liability, self-assessed an estimated tax penalty of $2,200, and paid the estimated tax penalty plus the additional base tax without interest. The Indiana Department of Revenue ("Department") assessed a late payment penalty.
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Taxpayer protests the imposition of the ten percent negligence penalty imposed because of Taxpayer's failure to remit the full amount of corporate income tax on or before the due date for payment.
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In Taxpayer's case, Taxpayer indicated that its substantially increased income was the result of a "depreciation timing difference" and that "historically it had never experienced profitability like it did in 2011." In this case, Taxpayer has provided sufficient information to conclude that its increased income was the result of a one-time, larger-than-anticipated profit. Based on the totality of Taxpayer's facts and circumstances, Taxpayer's protest is sustained for the late payment penalty imposed for the 2011 tax year.
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Taxpayer protests the imposition of the ten percent penalty imposed because of Taxpayer's failure to make sufficient estimated tax payments as required pursuant to IC § 6-3-4-4.1(d).
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Taxpayer asserts that it used an annualization method for computing its estimated tax liabilities. While Taxpayer provides a calculation that it claims is an annualization computation, Taxpayer's computation does not follow the calculation methodology used under federal law. Taxpayer has not provided sufficient information to conclude that an annualized computation allowable under I.R.C. § 6655(e) was appropriate to Taxpayer's facts and circumstances. Furthermore, even assuming that an annualized computation of estimated taxes was appropriate for Taxpayer, Taxpayer has not established that its original penalty computation was incorrect.
Absent use of the annualization method under I.R.C. § 6655(e), IC § 6-3-4-4.1 merely requires payments based on the prior year's liability. A corporation's duty necessary to avoid penalty is straightforward: pay one-fourth of the prior year's liability. Taxpayer–despite the prior year's liability–did not meet the minimum statutory payment requirement for any quarter. Based on the facts and circumstances, Taxpayer has not provided sufficient legal or factual grounds to justify penalty waiver.
