CHAPTER 10. PENALTIES AND INTEREST
IC 6-8.1-10
Chapter 10. Penalties and Interest
IC 6-8.1-10-1
Liability for interest
Sec. 1. (a) If a person fails to file a return for any of the listedtaxes, fails to pay the full amount of tax shown on the person's returnby the due date for the return or the payment, or incurs a deficiencyupon a determination by the department, the person is subject tointerest on the nonpayment.
(b) The interest for a failure described in subsection (a) is theadjusted rate established by the commissioner under subsection (c),from the due date for payment. The interest applies to:
(1) the full amount of the unpaid tax due if the person failed tofile the return;
(2) the amount of the tax that is not paid, if the person filed thereturn but failed to pay the full amount of tax shown on thereturn; or
(3) the amount of the deficiency.
(c) The commissioner shall establish an adjusted rate of interestfor a failure described in subsection (a) and for an excess taxpayment on or before November 1 of each year. For purposes ofsubsection (b), the adjusted rate of interest shall be the percentagerounded to the nearest whole number that equals two (2) percentagepoints above the average investment yield on state money for thestate's previous fiscal year, excluding pension fund investments, asdetermined by the treasurer of state on or before October 1 of eachyear and reported to the commissioner. For purposes ofIC 6-8.1-9-2(c), the adjusted rate of interest for an excess taxpayment must be the same as the adjusted rate of interest determinedunder this subsection for a failure described in subsection (a). Theadjusted rates of interest established under this subsection shall takeeffect on January 1 of the immediately succeeding year.
(d) For purposes of this section, the filing of a substantially blankor unsigned return does not constitute a return.
(e) Except as provided by IC 6-8.1-3-17(c) and IC 6-8.1-5-2, thedepartment may not waive the interest imposed under this section.
(f) Subsections (a) through (c) do not apply to a motor carrier fueltax return.
As added by Acts 1980, P.L.61, SEC.1. Amended by P.L.60-1990,SEC.13; P.L.48-1994, SEC.3; P.L.2-1995, SEC.36; P.L.2-2005,SEC.23; P.L.236-2005, SEC.2; P.L.1-2006, SEC.147; P.L.211-2007,SEC.43.
IC 6-8.1-10-2
Repealed
(Repealed by P.L.1-1991, SEC.69.)
IC 6-8.1-10-2.1
Liability for penalty Sec. 2.1. (a) If a person:
(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'sreturn on or before the due date for the return or payment;
(3) incurs, upon examination by the department, a deficiencythat is due to negligence;
(4) fails to timely remit any tax held in trust for the state; or
(5) is required to make a payment by electronic funds transfer(as defined in IC 4-8.1-2-7), overnight courier, or personaldelivery and the payment is not received by the department bythe due date in funds acceptable to the department;
the person is subject to a penalty.
(b) Except as provided in subsection (g), the penalty described insubsection (a) is ten percent (10%) of:
(1) the full amount of the tax due if the person failed to file thereturn;
(2) the amount of the tax not paid, if the person filed the returnbut 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 timelyremitted;
(4) the amount of deficiency as finally determined by thedepartment; or
(5) the amount of tax due if a person failed to make payment byelectronic funds transfer, overnight courier, or personal deliveryby the due date.
(c) For purposes of this section, the filing of a substantially blankor unsigned return does not constitute a return.
(d) If a person subject to the penalty imposed under this sectioncan show that the failure to file a return, pay the full amount of taxshown on the person's return, timely remit tax held in trust, or pay thedeficiency determined by the department was due to reasonablecause and not due to willful neglect, the department shall waive thepenalty.
(e) A person who wishes to avoid the penalty imposed under thissection must make an affirmative showing of all facts alleged as areasonable cause for the person's failure to file the return, pay theamount of tax shown on the person's return, pay the deficiency, ortimely remit tax held in trust, in a written statement containing adeclaration that the statement is made under penalty of perjury. Thestatement must be filed with the return or payment within the timeprescribed for protesting departmental assessments. A taxpayer mayalso avoid the penalty imposed under this section by obtaining aruling from the department before the end of a particular tax periodon the amount of tax due for that tax period.
(f) The department shall adopt rules under IC 4-22-2 to prescribethe circumstances that constitute reasonable cause and negligence forpurposes of this section.
(g) A person who fails to file a return for a listed tax that showsno tax liability for a taxable year, other than an information return (asdefined 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 thereturn 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 bewithheld under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15 shall pay apenalty equal to twenty percent (20%) of the amount of tax requiredto be withheld under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15. Thispenalty shall be in addition to any penalty imposed by section 6 ofthis chapter.
(i) Subsections (a) through (c) do not apply to a motor carrier fueltax return.
(j) If a partnership or an S corporation fails to include allnonresidential individual partners or nonresidential individualshareholders in a composite return as required by IC 6-3-4-12(h) orIC 6-3-4-13(j), a penalty of five hundred dollars ($500) perpartnership or S corporation is imposed on the partnership or Scorporation.
As added by P.L.1-1991, SEC.70. Amended by P.L.71-1993, SEC.26;P.L.18-1994, SEC.43; P.L.211-2007, SEC.44; P.L.182-2009(ss),SEC.258.
IC 6-8.1-10-3
Failure to file return; preparation by department; penalty
Sec. 3. (a) If a person fails to file a return on or before the duedate, the department shall send him a notice, by United States mail,stating that he has thirty (30) days from the date the notice is mailedto file the return. If the person does not file the return within thethirty (30) day period, the department may prepare a return for him,based on the best information available to the department. Thedepartment prepared return is prima facie correct.
(b) If the department prepares a person's return under this section,the person is subject to a penalty of twenty percent (20%) of theunpaid tax. In the absence of fraud, the penalty imposed under thissection is in place of and not in addition to the penalties imposedunder any other section.
As added by Acts 1980, P.L.61, SEC.1.
IC 6-8.1-10-3.5
Failure to file return; penalty for past due returns
Sec. 3.5. If a person fails to file a return on or before the due dateas required by IC 6-3-4-1(1) or IC 6-3-4-1(2), where no remittanceis due with the return, the person is subject to a penalty of ten dollars($10) per day for each day that the return is past due, up to amaximum of five hundred dollars ($500).
As added by P.L.131-2008, SEC.31.
IC 6-8.1-10-4
Failure to file return; fraudulent intent to evade tax; penalty
Sec. 4. (a) If a person fails to file a return or to make a full taxpayment with that return with the fraudulent intent of evading thetax, the person is subject to a penalty.
(b) The amount of the penalty imposed for a fraudulent failuredescribed in subsection (a) is one hundred percent (100%) multipliedby:
(1) the full amount of the tax, if the person failed to file areturn; or
(2) the amount of the tax that is not paid, if the person failed topay the full amount of the tax.
(c) In addition to the civil penalty imposed under this section, aperson who knowingly fails to file a return with the department orfails to pay the tax due under IC 6-6-5, IC 6-6-5.1, or IC 6-6-5.5commits a Class A misdemeanor.
(d) The penalty imposed under this section is imposed in place ofand not in addition to the penalty imposed under section 2.1 of thischapter.
As added by Acts 1980, P.L.61, SEC.1. Amended by P.L.26-1985,SEC.16; P.L.6-1987, SEC.14; P.L.335-1989(ss), SEC.24;P.L.1-1991, SEC.71; P.L.181-1999, SEC.8; P.L.131-2008, SEC.32.
IC 6-8.1-10-5
Faulty payment; penalty; required use of guaranteed funds
Sec. 5. (a) If a person makes a tax payment with a check, creditcard, debit card, or electronic funds transfer, and the department isunable to obtain payment on the check, credit card, debit card, orelectronic funds transfer for its full face amount when the check,credit card, debit card, or electronic funds transfer is presented forpayment through normal banking channels, a penalty of ten percent(10%) of the unpaid tax or the value of the check, credit card, debitcard, or electronic funds transfer, whichever is smaller, is imposed.
(b) When a penalty is imposed under subsection (a), thedepartment shall notify the person by mail that the check, credit card,debit card, or electronic funds transfer was not honored and that theperson has ten (10) days after the date the notice is mailed to pay thetax and the penalty either in cash, by certified check, or otherguaranteed payment. If the person fails to make the payment withinthe ten (10) day period, the penalty is increased to one hundredpercent (100%) multiplied by the value of the check, credit card,debit card, or electronic funds transfer, or the unpaid tax, whicheveris smaller.
(c) If a person has been assessed a penalty under subsection (a)more than one (1) time, the department may require all futurepayments for all listed taxes to be remitted with guaranteed funds.
(d) If the person subject to the penalty under this section can showthat there is reasonable cause for the check, credit card, debit card,or electronic funds transfer not being honored, the department maywaive the penalty imposed under this section.As added by Acts 1980, P.L.61, SEC.1. Amended by P.L.26-1985,SEC.17; P.L.18-1994, SEC.44; P.L.131-2008, SEC.33;P.L.182-2009(ss), SEC.259.
IC 6-8.1-10-6
Failure to file information return; penalty
Sec. 6. (a) As used in this section, "information return" means thefollowing when a statute or rule requires the following to be filedwith the department:
(1) Schedule K-1 of form IT-20S, IT-41, or IT-65.
(2) Any form, statement, or schedule required to be filed withthe department with respect to an amount from which tax isrequired to be deducted and withheld under IC 6 or from whichtax would be required to be deducted and withheld but for anexemption under IC 6.
(3) Any form, statement, or schedule required to be filed withthe Internal Revenue Service under 26 C.F.R. 301.6721-1(g)(1993).
The term does not include form IT-20FIT, IT-20S, IT-20SC, IT-41,or IT-65.
(b) If a person fails to file an information return required by thedepartment, a penalty of ten dollars ($10) for each failure to file atimely return, not to exceed twenty-five thousand dollars ($25,000)in any one (1) calendar year, is imposed.
(c) For purposes of this section, the filing of a substantially blankor unsigned return does not constitute a return.
As added by Acts 1980, P.L.61, SEC.1. Amended by P.L.18-1994,SEC.45.
IC 6-8.1-10-7
Maximum and minimum penalties
Sec. 7. Notwithstanding the various penalty provisions of thischapter, the maximum total penalty that may be assessed against aperson under sections 2.1 through 5 of this chapter is one hundredpercent (100%) of the unpaid tax and the minimum penalty, if any,that may be assessed under those sections is five dollars ($5).
As added by Acts 1980, P.L.61, SEC.1. Amended byP.L.383-1987(ss), SEC.2; P.L.1-1991, SEC.72; P.L.71-1993,SEC.27.
IC 6-8.1-10-8
Repealed
(Repealed by P.L.107-1987, SEC.50.)
IC 6-8.1-10-9
Dissolution, liquidation, or withdrawal of corporation; notification;clearance
Sec. 9. (a) As used in this section:
(1) "Dissolution" refers to dissolution of a corporation underIC 23-1-45 through IC 23-1-48, IC 23-17-23, or IC 23-17-24. (2) "Liquidation" means the operation or act of winding up acorporation's affairs, when normal business activities haveceased, by settling its debts and realizing upon and distributingits assets.
(3) "Withdrawal" refers to the withdrawal of a foreigncorporation from Indiana under IC 23-1-50 or IC 23-17-26.
(b) The officers and directors of a corporation effectingdissolution, liquidation, or withdrawal shall do the following:
(1) File all necessary tax returns in a timely manner as requiredby this title.
(2) Make all tax payments due or determined due to thedepartment or a county treasurer in a timely manner as requiredby this title.
(3) File with the department a form of notification within thirty(30) days of the issuance of a certificate of dissolution, decreeof dissolution, the adoption of a resolution or plan, or the filingof a statement of withdrawal. The form of notification shall beprescribed by the department and may require informationconcerning:
(A) the corporation's assets;
(B) the corporation's liabilities;
(C) details of the plan or resolution;
(D) the names and addresses of corporate officers, directors,and shareholders;
(E) a copy of the minutes of the shareholders' meeting atwhich the plan or resolution was formally adopted; and
(F) such other information as the department may require.
The department may accept, in lieu of its own form ofnotification, a copy of Form 966 that the corporation filed withthe Internal Revenue Service.
(c) Unless a clearance is issued under subsection (g), for a periodof one (1) year following the filing of the form of notification withthe department, or the filing of all necessary tax returns as requiredby this title, including the final tax return, whichever is later, thecorporate officers and directors remain personally liable, subject toIC 23-1-35-1(e) or IC 23-17, for any acts or omissions that result inthe distribution of corporate assets in violation of the interests of thestate or a political subdivision (as defined in IC 36-1-2-13). Anofficer or director held liable for an unlawful distribution under thissubsection is entitled to contribution:
(1) from every other director who voted for or assented to thedistribution, subject to IC 23-1-35-1(e) or IC 23-17; and
(2) from each shareholder for the amount the shareholderaccepted.
(d) The corporation's officers' and directors' personal liabilityincludes all taxes, penalties, interest, and fees associated with thecollection of the liability due the department or the county. Inaddition to the penalties provided elsewhere in this title, a penalty ofup to thirty percent (30%) of the unpaid tax may be imposed on thecorporate officers and directors for failure to take reasonable steps
to set aside corporate assets to meet the liability due the departmentor the county.
(e) If the department or the county treasurer fails to begin acollection action against a corporate officer or director within theperiod prescribed by subsection (c), the personal liability of thecorporate officer or director expires. The filing of a substantiallyblank form of notification or a form containing misrepresentation ofmaterial facts does not constitute filing a form of notification for thepurpose of determining the period of personal liability of the officersand directors of the corporation.
(f) In addition to the remedies contained in this section, thedepartment or county treasurer is entitled to pursue corporate assetsthat have been distributed to shareholders in violation of the interestsof the state or political subdivision. The election to pursue one (1)remedy does not foreclose the state's or the county's option to pursueother legal remedies.
(g) The department may issue a clearance to a corporationeffecting dissolution, liquidation, or withdrawal if:
(1) the officers and directors of the corporation have met therequirements of subsections (b) through (c); and
(2) request for the clearance is made in writing by the officersand directors of the corporation within thirty (30) days after thefiling of the form of notification with the department.
(h) The issuance of a clearance by the department undersubsection (g) releases the officers and directors from personalliability under this section.
(i) This section does not limit the liability of a responsiblecorporate officer for withheld income taxes or collected gross retailtaxes.
As added by P.L.107-1987, SEC.1. Amended by P.L.73-1988, SEC.1;P.L.179-1991, SEC.11.
IC 6-8.1-10-10
Reserved
IC 6-8.1-10-11
Repealed
(Repealed by P.L.254-2003, SEC.14.)
IC 6-8.1-10-12
Additional penalty; failure to participate in amnesty program
Sec. 12. (a) This section applies to a penalty related to a taxliability to the extent that the:
(1) tax liability is for a listed tax;
(2) tax liability was due and payable, as determined underIC 6-8.1-3-17(d), for a tax period ending before July 1, 2004;
(3) department establishes an amnesty program for the taxliability under IC 6-8.1-3-17(c);
(4) individual or entity from which the tax liability is due waseligible to participate in the amnesty program described in
subdivision (3); and
(5) tax liability is not paid:
(A) in conformity with a payment program acceptable to thedepartment that provides for payment of the unpaid listedtaxes in full in the manner and time established in a writtenpayment program agreement entered into between thedepartment and the taxpayer under IC 6-8.1-3-17(c); or
(B) if clause (A) does not apply, before the end of theamnesty period established by the department.
(b) Subject to subsection (c), if a penalty is imposed or otherwisecalculated under any combination of:
(1) IC 6-8.1-1-8;
(2) section 2.1 of this chapter;
(3) section 3 of this chapter;
(4) section 4 of this chapter;
(5) section 5 of this chapter;
(6) section 6 of this chapter;
(7) section 7 of this chapter;
(8) section 9 of this chapter; or
(9) IC 6-6;
an additional penalty is imposed under this section. The amount ofthe additional penalty imposed under this section is equal to the sumof the penalties imposed or otherwise calculated under the provisionslisted in subdivisions (1) through (9).
(c) The additional penalty provided by subsection (b) does notapply if all of the following apply:
(1) The department imposes a penalty on a taxpayer orotherwise calculates the penalty under the provisions describedin subsection (b)(1) through (b)(9).
(2) The taxpayer against whom the penalty is imposed:
(A) timely files an original tax appeal in the tax court underIC 6-8.1-5-1; and
(B) contests the department's imposition of the penalty or thetax on which the penalty is based.
(3) The taxpayer meets all other jurisdictional requirements toinitiate the original tax appeal.
(4) Either the:
(A) tax court enjoins collection of the penalty or the tax onwhich the penalty is based under IC 33-26-6-2; or
(B) department consents to an injunction against collectionof the penalty or tax without entry of an order by the taxcourt.
(d) The additional penalty provided by subsection (b) does notapply if the taxpayer:
(1) has a legitimate hold on making the payment as a result ofan audit, bankruptcy, protest, taxpayer advocate action, oranother reason permitted by the department;
(2) had established a payment plan with the department beforeMay 12, 2005; or
(3) verifies with reasonable particularity that is satisfactory to
the commissioner that the taxpayer did not ever receive noticeof the outstanding tax liability.
As added by P.L.236-2005, SEC.3. Amended by P.L.1-2009, SEC.59.
IC 6-8.1-10-13
Civil penalties for violations
Sec. 13. (a) A person that:
(1) obtains a permit, license plate, cab card, or any othercredential issued by the registration center established underIC 6-8.1-4-4; and
(2) alters the permit, license plate, cab card, or other credential;
is subject to a civil penalty of five hundred dollars ($500) for the firstviolation and one thousand dollars ($1,000) for each subsequentviolation.
(b) A person that:
(1) is required to obtain a permit, a license plate, a cab card, orother credential issued by the registration center establishedunder IC 6-8.1-4-4; and
(2) operates without obtaining the required permit, license plate,cab card, or other credential;
is subject to a civil penalty of five thousand dollars ($5,000) for eachviolation.
(c) A civil penalty imposed under this section:
(1) shall be deposited in the motor carrier regulation fundestablished by IC 8-2.1-23-1; and
(2) is in addition to any fines levied by a court.
As added by P.L.176-2006, SEC.7.