Taxpayers filed their Indiana 2012 income tax return in October 2013, approximately six months after the original April 2013 due date. Taxpayers assert that they had obtained a federal extension regarding their 2012 federal income tax. Taxpayers did not pay at least ninety percent of their 2012 Indiana income tax by the original due date. Therefore, the Indiana Department of Revenue ("Department") issued a proposed assessment for penalty.
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Taxpayers protest the imposition of penalty. Taxpayers state that they received an extension for their federal 2012 income tax return and that they filed and paid their Indiana 2012 income taxes in a timely manner based upon that federal extension.
An analysis of relevant statutes begins with IC § 6-8.1-6-1, which states:
In this case, Taxpayers did not pay at least ninety percent of the final amount of income tax due by the original due date. The Department determined that this lack of payment constituted negligence under 45 IAC 15-11-2 (b), and so imposed penalty under IC § 6-8.1-10-2.1(a). During the administrative hearing, Taxpayers did not provide sufficient documentation or explanation to establish that they experienced unusual circumstances which prevented them from paying the amount of tax due to satisfy the applicable statutes and regulations. Taxpayers have not established that the failure to pay Indiana income tax for the 2012 tax year was due to reasonable cause and not due to negligence, as required by 45 IAC 15-11-2 (c).
