Taxpayers are individuals. The Indiana Department of Revenue ("Department") determined that Taxpayers filed their 2011 Indiana individual income tax return late and had not paid individual income tax due. The Department issued proposed assessments for base tax, penalties, and interest. Taxpayers protest the assessment of base tax and the imposition of the penalties and interest.
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The Department issued proposed assessments for base tax, penalties, and interest. Taxpayers protest the assessment of base tax.
All tax assessments are prima facie evidence that the Department's claim for the tax is valid, and the taxpayer bears the burden of proving that an assessment is incorrect. IC § 6-8.1-5-1(c); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). In this case, Taxpayers have not provided any explanation, evidence or documentation which supports its assertion that the Department's proposed assessment of base tax is incorrect. Taxpayers have not met their burden, and their protest is respectfully denied.
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The Department issued proposed assessments for base tax, penalties, and interest. Taxpayers protest the assessments of penalties and interest.
A taxpayer who "fails to file a return . . ." or "fails to pay the full amount of tax shown on the person's return on or before the due date for the return or payment . . . is subject to a penalty." IC § 6-8.1-10-2.1(a). The Department shall waive the penalty if the taxpayer demonstrates that the failure to pay the outstanding taxes "was due to reasonable cause and not due to willful neglect." IC § 6-8.1-10-2.1(d); see also 45 IAC 15-11-2 . The taxpayer may demonstrate reasonable cause by showing affirmatively that it used "ordinary business care and prudence" in not filing a return on time or paying the outstanding taxes. Whether a taxpayer demonstrates reasonable cause for penalty purposes is a fact-sensitive question and determined on a case-by-case basis. 45 IAC 15-11-2 (b) and (c).
In this case, Taxpayers provided a letter to the Taxpayers from the Internal Revenue Service indicating that no changes would be made to the Taxpayers' federal tax return. Taxpayers indicate in correspondence to the Department that they have "shown reasonable cause and [were] not willful and neglectful based upon the recent audit by the Internal Revenue Service . . . ." However, Taxpayers do not explain how this correspondence demonstrates they used "ordinary business care and prudence" in not filing the required return on time or paying the outstanding taxes. Additionally, they do not explain how a recent audit of their federal tax return is a reasonable cause to fail to file their Indiana individual income tax return by its due date or pay Indiana individual income taxes. Consequently the penalties imposed are not waived, and Taxpayers' protest of the penalties is respectfully denied.
Finally, "If a person fails to file a return for any of the listed taxes [or] fails to pay the full amount of tax shown on the person's return by the due date for the return or the payment . . . the person is subject to interest on the nonpayment." IC § 6-8.1-10-1(a). The Department may not waive the interest imposed except in specific circumstances that do not apply in this case. IC § 6-8.1-10-1(e). The interest is not waived, and Taxpayers' protest of the interest is respectfully denied.
