Excerpts of Revenue's Determination follow:
Taxpayer
protests the imposition of a penalty for late payment of his income tax.
Penalty
waiver is permitted if the taxpayer shows that the failure to pay the full
amount of the tax was due to reasonable cause and not due to willful neglect.
IC § 6-8.1-10-2.1. The Indiana Administrative Code, 45 IAC
15-11-2 further provides:
(b)
"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.
(c) 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.
Even though
Taxpayer has not provided all the information needed to ascertain that he
clearly had reasonable cause for his late payment of income tax, Taxpayer has
shown sufficient cause for a one-time waiver of the late payment penalty.
Since
Taxpayer has already paid the penalty, the amount of the penalty will be
returned to Taxpayer.
