Taxpayer is an Indiana corporation. The Indiana Department of Revenue ("Department") audited Taxpayer and determined that Taxpayer had failed to remit use tax for the years 2010, 2011, and 2012. For each tax year, the Department issued proposed assessments for base tax, a ten percent negligence penalty, and interest. Taxpayer protested the imposition of the penalties and interest.
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The Department issued proposed assessments for base tax, a ten percent negligence penalty, and interest for the tax years 2010, 2011, and 2012. Taxpayer protested the imposition of the penalties and interest.
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A taxpayer who "incurs a deficiency upon a determination by the department . . . is subject to interest on the nonpayment." IC § 6-8.1-10-1(a). Except in specific circumstances, the Department may not waive interest. IC § 6-8.1-10-1(e).
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A taxpayer who "incurs a deficiency upon a determination by the department . . . is subject to interest on the nonpayment." IC § 6-8.1-10-1(a). Except in specific circumstances, the Department may not waive interest. IC § 6-8.1-10-1(e).
A taxpayer who "incurs, upon examination by the department, a deficiency that is due to negligence . . . 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 deficiency determined by the Department "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 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).
Pursuant to IC § 6-8.1-10-1(e), Taxpayer's protest of the imposition of interest in this case is denied. However, Taxpayer has demonstrated reasonable cause in its failure to pay the deficiency determined by the Department. Taxpayer's protest of the imposition of the penalty is sustained. The Department takes this opportunity to notify Taxpayer that it is now aware of its use tax obligations and that a negligence penalty may be imposed if this scenario occurs again.
