Taxpayer is an Indiana company.
Taxpayer operates an auto body shop. Taxpayer started operating in 1976 and is
required to file annual Corporate Income Tax returns. In August 2012, the
Indiana Department of Revenue ("Department") sent a letter to
Taxpayer stating that the refund for the period ending 10/31/2010 was being
held due to an unfiled return. The Department intercepted the 2010 refund
because a tax return was not filed in 1998. Taxpayer immediately provided a
copy of the tax return and contends that they did file the return in 1998. Taxpayer
also states that they have been audited by Department since 1998, have not
changed their address, and received no notice of an unfiled return until August
2012.
...
Taxpayer protests the imposition of
the penalty for failure to timely file its corporate income tax return.
IC § 6-8.1-10-2.1(g) provides that
if a person:
[F]ails to file a return for a
listed tax that shows no tax liability for a taxable year, other than an
information return (as defined in section 6 of this chapter), on or before the
due date of the return shall pay a penalty of ten dollars ($10) for each day
that the return is past due, up to a maximum of two hundred fifty dollars
($250).
...
Taxpayer states that it had no
intent to disregard, nor willfully neglect, the laws of Indiana regarding its
tax obligations. Taxpayer states that they did not receive notice that the 1998
Corporate Income tax return was not filed. Taxpayer questioned why they did not
receive notice on a delinquent return within a year from the filing deadline.
Taxpayer contends that the Department has audited them at least two times since
1998 and the Department did not tell Taxpayer about a missing tax return until
nearly fourteen years later.
Indiana law requires Taxpayer to
demonstrate that it had reasonable cause for not filing its Corporate Income
Tax return. 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).
Taxpayer claims that they did not
receive notice of the missing tax return before 2012. Taxpayer contends that
this should have been addressed during the audits conducted by the Department.
Taxpayer has demonstrated a reasonable cause that it exercised ordinary
business care and prudence.
The Department finds that Taxpayer
has made an affirmative showing of reasonable cause.
