Taxpayer is a corporation doing business in Indiana. Taxpayer remitted withholding tax after the statutory deadline for that payment.
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Taxpayer argues that it is entitled to abatement of the penalty for late payment of withholding tax.
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IC § 6-8.1-10-2.1(d) allows the Department to waive the penalty upon a showing that the failure to pay the deficiency was based on "reasonable cause and not due to willful neglect." Departmental regulation 45 IAC 15-11-2 (c) requires that in order to establish "reasonable cause," the taxpayer must demonstrate that it "exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed...."
Taxpayer provided information that it paid its regular employee withholding tax timely but failed to remit taxes withheld on a Form 1099 in a timely manner. Taxpayer indicated that it had interpreted the due date for the Form 1099 withholding to be a date that was later than the statutory due date. Taxpayer paid the tax on the date on which it–erroneously–thought the tax was due. Based on the circumstances presented by Taxpayer in this case, Taxpayer has provided sufficient information to conclude that it acted reasonably with regard to its late payment of withholding tax payment in this particular instance only.
