1.
(a)Except as provided in IC 6-3-4-12(k)
and IC 6-3-4-13(l), a person that:
(1)fails to file a return for any of the listed taxes;
(2)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;
(3)incurs, upon examination by the department, a deficiency that
is due to negligence;
(4)fails to timely remit any tax held in trust for the state;
(5)fails to file a return in the electronic manner required by the
department if such return is required to be filed electronically; or
(6)is required to make a payment by electronic funds transfer (as
defined in IC 4-8.1-2-7), overnight courier, personal delivery, or
any other electronic means and the payment is not received by the
department by the due date in such manner and in funds
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1. (a) Except as provided in IC 6-3-4-12(k)
and IC 6-3-4-13(l), a person that:
(1) fails to file a return for any of the listed taxes;
(2) 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;
(3) incurs, upon examination by the department, a deficiency that
is due to negligence;
(4) fails to timely remit any tax held in trust for the state;
(5) fails to file a return in the electronic manner required by the
department if such return is required to be filed electronically; or
(6) is required to make a payment by electronic funds transfer (as
defined in IC 4-8.1-2-7), overnight courier, personal delivery, or
any other electronic means and the payment is not received by the
department by the due date in such manner and in funds
acceptable to the department;
is subject to a penalty.
(b) Except as provided in subsection (g), the penalty described in
subsection (a) is ten percent (10%) of:
(1) the full amount of the tax due if the person failed to file the
return or, in the case of a return required to be filed electronically,
the return is not filed in the electronic manner required by the
department;
(2) the amount of the tax not paid, if the person filed the return
but failed to pay the full amount of the tax shown on the return;
(3) the amount of the tax held in trust that is not timely remitted;
(4) the amount of deficiency as finally determined by the
department; or
(5) the amount of tax due if a person failed to make payment
required to be made by electronic funds transfer, overnight
courier, personal delivery, or any other electronic means by the
due date in such manner.
(c) For purposes of this section, the filing of a substantially blank or
unsigned return does not constitute a return.
(d) If a person subject to the penalty imposed under this section can
show that the failure to file a return, pay the full amount of tax shown
on the person's return, timely remit tax held in trust, 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.
(e) A person who wishes to avoid the penalty imposed under this
section must make an affirmative showing of all facts alleged as a
reasonable cause for the person's failure to file the return, pay the
amount of tax shown on the person's return, pay the deficiency, or
timely remit tax held in trust, in a written statement containing a
declaration that the statement is made under penalty of perjury. The
statement must be filed with the return or payment within the time
prescribed for protesting departmental assessments. A taxpayer may
also avoid the penalty imposed under this section by obtaining a ruling
from the department before the end of a particular tax period on the
amount of tax due for that tax period.
(f) The department shall adopt rules under IC 4-22-2 to prescribe the
circumstances that constitute reasonable cause and negligence for
purposes of this section.
(g) A person who fails to file a return for a listed tax that shows no
tax liability for a taxable year, other than an information return (as
defined in section 6 of this chapter), on or before the due date of the
return shall pay a penalty of ten dollars ($10) for each day that the
return is past due, up to a maximum of two hundred fifty dollars
($250).
(h) A:
(1) corporation which otherwise qualifies under IC 6-3-2-2.8(2);
(2) partnership; or
(3) trust;
that fails to withhold and pay any amount of tax required to be withheld
under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15 shall pay a penalty
equal to twenty percent (20%) of the amount of tax required to be
withheld under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15. This penalty
shall be in addition to any penalty imposed by section 6 of this chapter.
(i) Subsections (a) through (c) do not apply to a motor carrier fuel
tax return.
(j) If a pass through entity (as defined in IC 6-3-1-35) fails to
include all nonresident partners, nonresident shareholders, or
nonresident beneficiaries in a composite return as required by IC 6-3-4-12(i), IC 6-3-4-13(j), or IC 6-3-4-15(h), a penalty of five hundred
dollars ($500) per pass through entity is imposed on the pass through
entity.
(k) If a person subject to the penalty imposed under this section
provides the department with documentation showing that the person
is or has been subject to incarceration for a period of a least one
hundred eighty (180) days, the department shall waive any penalty
under this section and interest that accrues during the time the person
was incarcerated, but not to an extent greater than the penalty or
interest relief to which a person would otherwise have been entitled
under the federal Servicemembers Civil Relief Act (50 U.S.C.
3901-4043), if the person was in military service. Nothing in this
subsection shall preclude the department from issuing a proposed
assessment, demand notice, jeopardy proposed assessment, jeopardy
demand notice, or warrant otherwise permitted by law.
(l) Beginning after December 31, 2024, reasonable cause under this
section for failure to file a timely and complete form IT-65 partnership
return will be presumed if the partnership (or any of its partners) is able
to show that all of the following conditions have been met:
(1) The partnership had no more than ten (10) partners for the
taxable year. (A husband and wife filing a joint return count as
one (1) partner.)
(2) Each partner during the tax year was a natural person (other
than a nonresident alien), or the estate of a natural person.
(3) Each partner's proportionate share of any partnership item is
the same as the partner's proportionate share of any other
partnership item.
(4) The partnership did not elect to be subject to the rules for
federal consolidated audit proceedings under Sections 6221
through 6234 of the Internal Revenue Code.
(5) All partners reported their distributive share of partnership
items on their timely filed income tax returns.