Taxpayer is an out-of-state business that provides services and sells equipment in Indiana. The Indiana Department of Revenue ("Department") conducted a sales and use tax audit of Taxpayer, for the years 2009 through 2011. Based upon that audit, the Department issued a proposed assessment for sales tax, penalty, and interest.
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Taxpayer protests the imposition of penalty and interest. In its protest letter, Taxpayer states:
Based on the fact that the proposed penalties on the tax due are for were [ sic] taxes that we did not know we were required to file until the determination was made and that we were liable for the tax. [Taxpayer] has registered with the State of Indiana and going forward will file all taxes due in a timely manner. We are requesting that the State of Indiana reverse all penalties and interest as noted on the proposed assessments.
Regarding Taxpayer's protest of the interest, the Department is barred by statute from waiving interest under IC § 6-8.1-10-1(e).
Turning to Taxpayer's protest of the penalty, the Department notes that 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.
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The Audit Report states in part:
[T]axpayer is a distributor of [] fire suppression products. Service calls are made in Indiana which range from servicing and re-charging fire extinguishers to inspection of [] haulers at a local steel mill.
Taxpayer at the time of the audit was not registered to conduct business in Indiana, believing it lacked nexus. Examination of taxpayer records revealed that total work in Indiana, which consists of sales of tangible personal property (to both taxable and exempt customers) as well as service work account for between 5[percent] and 7[percent] of taxpayer's annual volume. These transactions all took place in Indiana.
Taxpayer states that although it "did not know" that it was "required to file" Indiana taxes, Taxpayer does not cite to, nor develop an argument, regarding the case law on sales tax nexus. Under IC § 6-8.1-5-1(c) the Department's proposed assessments (in this instance, the penalties), are presumed to be correct. Taxpayer has not met its burden of proof; Taxpayer has not established reasonable cause.
