Taxpayer purchased land in 2005 that contained two underground storage tanks (USTs). In September of 2012, the Department billed Taxpayer for unpaid UST registration fees for each year from 2000 to 2002. The Department also assessed a ten percent negligence penalty and interest on each fee. Taxpayer protested the imposition of the fees, interest, and penalty.
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IC § 13-23-12-1 imposes a fee on underground storage tanks. Although the Indiana Department of Environmental Management ("IDEM") regulates underground storage tanks for the State, IC § 13-23-12-4 mandates that the Indiana Department of Revenue ("Department") collect and deposit the UST fees. IC § 6-8.1-1-1 defines "listed tax" to include "the underground storage tank fee (
The fee on USTs is imposed at IC § 13-23-12-1 as follows:
(a) Each year the owner of an underground storage tank that has not been closed before July 1 of any year under:
(1) rules adopted under IC 13-23-1-2 ; or
(2) a requirement imposed by the commissioner before the adoption of rules under IC 13-23-1-2 ;
shall pay to the department of state revenue an annual registration fee.
(b) The annual registration fee required by this section is as follows:
(1) Ninety dollars ($90) for each underground petroleum storage tank.
(2) Two hundred forty-five dollars ($245) for each underground storage tank containing regulated substances other than petroleum.
(c) If an underground storage tank consists of a combination of tanks, a separate fee shall be paid for each tank.
Pursuant to the imposition statute, the UST annual registration fee is imposed on all USTs open and available for use on July 1 of that year. The party who owns the property during the tax period is the person liable for payment of the UST fees.
Taxpayer maintains that it purchased the facility in 2005, which means that it did not own the USTs prior to that time, and therefore it does not owe unpaid annual registration fees for the years 2000 through 2002. Taxpayer argues that it is not liable for the environmental penalties associated with the USTs owed during the period prior to its ownership.
IC § 13-11-2-150(a)(1)(A) describes an "owner" of a UST to mean "a person who owns the underground storage tank." In support of Taxpayer's contention that it was not the owner of the USTs prior to 2005, Taxpayer submitted a deed of sale and various other documents, showing that it purchased the property in 2005.
Taxpayer has clearly demonstrated that it was not the owner of the USTs prior to 2005. Thus, Taxpayer was not the owner of the USTs on July 1 during the tax period 2000 to 2002. Therefore, Taxpayer is not responsible for the payment of the UST fees due for the years 2000-2002.
However, Taxpayer is admonished that if the annual registration fees are not paid in full, Taxpayer or any future owner will not be eligible for full payments from the Excess Liability Trust Fund (ELTF) in the event that there is a gasoline spill or other environmental problem resulting from Taxpayer's USTs.
IC § 13-23-8 details the process for claiming monies from the ELTF. Further guidance is found in 328 IAC 1-3 . With regards to whether an UST owner (or operator) may make a claim for reimbursement, 328 IAC 1-3-3 (a) provides in pertinent part that:
A person listed in section 1 of this rule shall comply with the following for a claim for reimbursable costs or a third party liability claim to be considered for reimbursement from the fund by the administrator:
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(6) Pay all:
(A) past and currently due fees under IC 13-23-12-1 ; and
(B) interest and penalties that are due under subsections (e) and (f).
Tank fees under IC 13-23-12-1 (a) must be paid on any tanks that are not closed in accordance with 329 IAC 9-6-1 and are operable or in temporary closure.
(7) For a person who acquires ownership in accordance with subsection (d), make timely payment of all past due tank fees, interest, and penalties in accordance with subsection (f) to make a claim for reimbursable costs for any site characterization or corrective action related to a release that is first suspected, discovered, or confirmed after the payment of all past and currently due fees, interest, and penalties.
(Emphasis added).
This is meant to include any fees or penalties, regardless of whether the current owner was the owner of the USTs during the time period that the fee or penalty was assessed. Therefore, if these registration fees are not paid, neither Taxpayer nor any future owner will be eligible for full payments from the ELTF.
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The Department assessed interest on the unpaid UST annual registration fees. Taxpayer requested that the Department waive interest... Pursuant to IC § 6-8.1-10-1(e), the Department does not have the authority to waive the interest.
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Taxpayer requests that the Department abate the negligence penalty... Taxpayer has provided sufficient documentation demonstrating that the failure to pay tax was due to reasonable cause and not due to negligence.
