Taxpayer is an out-of-state business with Indiana operations. As the result of a review of Taxpayer's 2012 Indiana adjusted gross income tax ("AGIT") return, the Indiana Department of Revenue ("Department") determined that Taxpayer had under-reported its 2012 Indiana AGIT. The Department therefore issued a proposed assessment for AGIT, penalty, and interest for 2012.
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Taxpayer protests the imposition of AGIT for the tax year 2012. The Department determined that additional AGIT was due after reviewing Taxpayer's 2012 Indiana AGIT return and reversing a modification which Taxpayer had made. Taxpayer protests that the modification was properly made and that no additional Indiana AGIT is due. The Department notes that the burden of proving a proposed assessment wrong rests with the person against whom the proposed assessment is made, as provided by IC § 6-8.1-5-1(c).
The adjusted gross income tax is imposed under IC § 6-3-2-1. Taxpayer protests that it changed from a cash accounting method in 2011 to an accrual accounting method in 2012. The change in accounting methodology resulted in additional income, which had been generated in prior years, being reported on Taxpayer's 2012 federal income tax return. Taxpayer protests that it had no Indiana operations prior to 2012 and that income generated in prior years would not be applicable to Indiana AGIT for 2012.
Taxpayer was unable to provide documentation to establish when it began its Indiana operations. Since there is no evidence that Taxpayer did not have an Indiana filing requirement for years prior to 2012, the Department is unable to agree with Taxpayer that it did not have Indiana AGIT for years prior to 2012. Taxpayer has not met the burden imposed by IC § 6-8.1-5-1(c).
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The Department issued proposed assessments for income tax and the ten percent negligence penalty for the tax years in question. Taxpayer protests the imposition of penalty.
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In this case, Taxpayer incurred a deficiency which the Department determined was due to negligence under 45 IAC 15-11-2 (b), and so was subject to a penalty under IC § 6-8.1-10-2.1(a). Taxpayer has affirmatively established that its failure to pay the deficiency was due to reasonable cause and not due to negligence, as required by 45 IAC 15-11-2 (c).
