in-20260729-IR-045260240NRA: LETTER OF FINDINGS: 04-20251548

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20251548 Tax Administration For the Tax Years 2019, 2020, and 2021 HOLDING Business met its burden of proof demonstrating that penalty abatement should be granted. ISSUE

I. Tax Administration – Negligence Penalty.

Authority: IC 6-8.1-5-1; IC 6-8.1-5-4; IC 6-8.1-10-2.1; Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); 45 IAC 15-11-2. Taxpayer requests that the Department abate the penalty. STATEMENT OF FACTS Taxpayer is a company doing business in Indiana and outside of Indiana. In 2024, the Indiana Department of Revenue (“Department”) audited Taxpayer’s business records for tax years 2019, 2020, and 2021. The Department assessed additional tax, penalty, and interest pursuant to the audit. Taxpayer paid the assessment under protest, requesting that the Department abate the penalty. Taxpayer elected to have a “Final determination without a hearing.” This Letter of Findings results.

I. Tax Administration – Negligence Penalty.

DISCUSSION Taxpayer paid the audit assessment under protest and requested that the Department abate the penalty. Taxpayer, in a letter, stated that it “acted in good faith and with reasonable diligence to determine and remit the Indiana Sales & Use tax liability due” and it cooperated fully with the Department during the audit. “Every person subject to a listed tax must keep books and records so that the [D]epartment can determine the amount, if any, of the person’s liability for that tax by reviewing those books and records. The records . . . include all source documents necessary to determine the tax, including invoices, register tapes, receipts, and canceled checks.” IC 6-8.1-5-4(a). The person also “must allow inspection of the books and records and returns by the [D]epartment or its authorized agents at all reasonable times.” IC 6-8.1-5-4(c). In addition, the Department “shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available to the [D]epartment” if the Department “reasonably believes that a person has not reported the proper amount of tax due[.]” IC 6-8.1-5-1(b). All tax assessments are prima facie evidence that the Department’s claim for the unpaid tax is valid; the taxpayer bears the burden of proving that any assessment is incorrect. IC 6-8.1-5-1(c). The taxpayer is required to provide documentation to explain and support its challenge. When an agency is charged with enforcing a statute, the jurisprudence defers to the agency’s reasonable interpretation of that statute “over an equally reasonable interpretation by another party.” Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Poorly developed and non-cogent arguments are subject to waiver. Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010). A person is subject to a ten percent penalty if the person “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.” IC 6-8.1-10-2.1(a)(2) and (b). IC 6-8.1-10-2.1(d) states that “[i]f a person subject to the penalty imposed under this section can show that the failure to . . . pay the full amount of tax shown on the person’s return, . . . or pay the deficiency determined by the department was due to reasonable cause and not due to willful neglect, the department shall waive the penalty.” 45 IAC 15-11-2(b) further explains: The Department shall abate the penalty when a taxpayer “affirmatively establishes that the failure to . . . pay the full amount of tax due . . . or pay a deficiency was due to reasonable cause and not due to negligence.” 45 IAC 15-11-2(c); see also IC 6-8.1-10-2.1(d). Finally, in order to establish reasonable cause, the taxpayer is required to demonstrate that it “exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed . . . . ” 45 IAC 15-11-2(c). The Department is mindful that “[r]easonable cause is a fact sensitive question and thus will be dealt with according to the particular facts and circumstances of each case.” Id. In determining whether the taxpayer has reasonable cause, the Department is required to consider the following factors: Here, Taxpayer requested that the Department waive the penalty and explained, in part: Taxpayer demonstrated that it made a good faith effort to provide verifiable documents requested by the Department during the audit. Taxpayer also demonstrated that subsequently, it made some changes to its tax reporting and compliance process based on the audit results to comply with the Indiana law. Thus, given the totality of the circumstances, the Department is prepared to abate the penalty. FINDING Taxpayer’s protest is sustained. May 1, 2026 Replaces Finding Document: New