Taxpayer is an S Corporation doing business in Indiana. Taxpayer has two shareholders and both reside outside of Indiana (the "nonresident shareholders"). The Indiana Department of Revenue ("Department") conducted an investigation which determined that Taxpayer failed to file composite returns and failed to withhold any tax from the nonresident shareholders for tax years 2009, 2010, and 2011. As a result, the Department assessed Taxpayer a negligence penalty.
Taxpayer protested the penalty.
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In this instance, Taxpayer is required to withhold from its nonresident shareholders but it did not do so. Taxpayer simply protested the penalty without providing any explanation. Given the totality of the circumstances, in the absence of supporting documentation, the Department is not able to agree that Taxpayer has demonstrated a reasonable cause for a waiver. Thus, Taxpayer's protest is respectfully denied.
