Taxpayer is an Indiana domestic for-profit corporation (also referred to as "Company"), which purchased and distributed cigarettes and other tobacco products ("OTP") in Indiana. Taxpayer has two shareholders who are also the officers of Taxpayer; one is the chief operating officer ("CEO") and the other is the president (collectively, "Officers"). Each of the Officers owns fifty (50) percent interest of Taxpayer.
Taxpayer ceased its business operation in late 2011. On April 25, 2012, Officers filed an Indiana Business Tax Closure Request, BC-100 form, with the Indiana Department of Revenue ("Department") informing the Department that Taxpayer has been "out of business" as of "August 15, 2011."
The Department's audit, in addition to finding that Taxpayer is out of business, determined that Taxpayer failed to remit the taxes on cigarettes which it purchased during July, August, and September 2011. The Department also determined that Taxpayer failed to remit the taxes on OTP which it purchased and distributed during January 1 through September 30, 2011. As a result, the Department assessed Taxpayer additional cigarette tax, other tobacco product tax, interest, and penalty (the "Liabilities").
Taxpayer and Officers protested. An administrative hearing was conducted. In both March 21, 2012 and May 23, 2012, protest letters, Taxpayer and Officers stated that Taxpayer "admits the [L]iabilities" and "there is no defense." The Letters of Findings Numbers 05-20120252 and 99-20120340 ("LOFs") found that since Taxpayer admits its Liabilities and that Taxpayer is no longer doing business in Indiana, Officers remain personally responsible for the Liabilities pursuant to IC § 6-8.1-10-9.
Taxpayer and Officers subsequently requested a rehearing, claiming that IC § 6-8.1-10-9 is not applicable in this instance because Taxpayer is "still listed as active with the Indiana Secretary of State [("Secretary of State")]." Rehearing was granted to address the issue of Taxpayer's status in the context of IC § 6-8.1-10-9. The Department's audit and LOFs found Taxpayer "out of business." Taxpayer and Officers challenge this, arguing that Taxpayer is still an active company and therefore IC § 6-8.1-10-9 is not applicable.
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Both Taxpayer and Officers admitted that Taxpayer is liable for the Liabilities, but Taxpayer and Officers argued that IC § 6-8.1-10-9 is not applicable to them personally as officers of Taxpayer. Taxpayer and Officers argued that Taxpayer has not been dissolved and is "active" according to the website of the Secretary of State.
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In both protest letters, and also at the hearing and the rehearing, Taxpayer and Officers admitted that Taxpayer is liable for, and the Department correctly assessed, taxes on the cigarettes and OTP at issue. Taxpayer and Officers, however, objected to the conclusion of LOFs that Officers are currently personally responsible for Taxpayer's Liabilities pursuant to IC § 6-8.1-10-9. The Department's LOFs found that Taxpayer was "out of business" and therefore Officers were personally liable pursuant to IC § 6-8.1-10-9. The LOFs relied on the audit's findings and on the BC-100 form signed by both Officers and filed with the Department on April 25, 2012, stating that Taxpayer was closed.
Taxpayer and Officers asserted that IC § 6-8.1-10-9 is not currently applicable because Taxpayer is "still listed as active with the Indiana Secretary of State" and has not initiated any liquidation or dissolution of Taxpayer. Taxpayer and Officers asserted that they "provided none of the documents referenced on the [BC-100] form (minutes of final board meeting, articles of dissolution, etc.), because [Taxpayer] has not been dissolved, as the Secretary of State's office has confirmed, and the form was not signed under seal." (March 6, 2013 e-mail from the attorney representing Taxpayer and Officers).
Upon review, the BC-100 form at issue filed with the Department was signed by both Officers. Officers certified that Taxpayer has "been out of business or no longer required to be registered for the indicated tax type" as of "8-15-11." Additionally, both Officers certified that they "may also be responsible for all liabilities or unfiled returns proven to be due and owed at a later date." However, Officers stated that they "provided none of the documents referenced on the [BC-100] form (minutes of final board meeting, articles of dissolution, etc.) and the form was not signed under seal." Taxpayer's 2011 Indiana S Corporation Income Tax Return, which was timely filed in April 2012, also did not state that Taxpayer filed its "final return." Given the totality of the circumstances, in the absence of other supporting documentation, the Department is prepared to agree that Taxpayer has not been technically "dissolved" or been "liquidated" as required under IC § 6-8.1-10-9. While Taxpayer and Officers admit that Taxpayer is responsible for the Liabilities, since Taxpayer has not been technically "dissolved" or "liquidated," IC § 6-8.1-10-9 is not applicable at this time.
