Thursday, July 10, 2014

Revenue Waives Penalty for Late Filing as a "Courtesy"

Excerpts of Revenue's Determination follow:

Taxpayer is an Indiana S corporation. Taxpayer filed its 2008 and 2011 returns late. The Department assessed late payment penalties for both years, but then waived the penalty relating to the 2008 year as a matter of routine courtesy.

Taxpayer protests the imposition of a penalty for late payment of its income tax for 2011. Taxpayer states that it had timely submitted the missing returns, including the 2011 return.

Taxpayer provided additional documentation before and after the hearing to demonstrate that it had timely filed its returns. To show that it filed the 2011 return before the April 15, 2012 due date, Taxpayer presented a copy of a letter dated March 28, 2012 from its accountant to Taxpayer that had attached a copy of an unsigned 2011 return that the accountant had prepared for Taxpayer. Taxpayer stated that it had promptly filed that return – prior to the April 15, 2012 deadline – as prepared by its accountant. Taxpayer, however, did not retain any copies of the signed and dated returns it states that it submitted to the Department, nor any proof that the returns had been submitted to the Department. The Department only has a record of a 2011 return postmarked September 20, 2013, which is over a year late. Apart from the 2008 and 2011 returns, Taxpayer's other returns were timely filed, some with extensions.

In this case, the Department determined that Taxpayer did not timely file an Indiana adjusted gross income tax return for 2008 and 2011. The Department considered the filings to be late payments and so imposed penalties under IC § 6-8.1-10-2.1. As a matter of courtesy, the Department waived the assessment for the first penalty imposed on the late filing of the 2008 return. Since the 2008 and 2011 returns were both filed in September 2013, and because the Department waived the penalty associated with the 2008 late filing, this final determination will extend the same courtesy to Taxpayer and waive the $250 penalty associated with the late filing of the 2011 return. However, the Department takes this opportunity to notify Taxpayer that penalty may be imposed in the unlikely event that this scenario occurs again.